The number of transactions is rising month on month and rental trends have shown positive figures, according to a recent industry report.
Dubai is expecting to see around 28,000 new units completed this year with the majority falling in the popular freehold areas. The ever popular Dubai Marina is expected to see 3,081 units completed in 2012 as rents continue to push demand in Dubai’s premium locations.
Last year most of the completions were apartments that are proving to be very popular with international investors. The report quoted that “the general rental trend across the market is positive” which has resulted in many investors choosing Dubai for their next property investments.
The villa market has also seen increased interest towards the end of 2011 and in the first quarter of 2012. Villas are becoming a popular choice for people who want to buy a property in Dubai as a second home or investment and one property industry expert stated: “This trend has continued in 2012 with sale indices now three percent higher than in January 2008.”
The news has shone a positive light on Dubai’s real estate market and more investors are returning to the emirate while properties are still well-priced. Dubai is expected to perform very well in 2012 and investors are keen to grab the opportunity with both hands before prices rise.
Source: Emirates247.com
In 2008, the collapse of the overheated real estate market nearly toppled the global economy. Four years later, real estate as an asset class is rebuilding its image by providing much needed stability and diversity for investors. With low property prices, cheap financing and yields that are better than most bonds, the attractions are many, despite the inherent downsides.
“If you remember where yields were four or five years ago, you didn’t have to go to real estate for a reasonable return,” says Peter Boyle, principal and chief investment officer of Clifford Swan Investment Counsel in Pasadena, Calif. Like many other planners, Boyle is adding real estate to his clients’ portfolios.
Most are using public REITs, mutual funds or, in some cases, mortgage-backed securities. But some are also investing directly via nonpublic REITs, limited partnerships or mortgage pools. Some advisors are also urging clients to buy properties outright. Even the structural problems of direct property ownership – illiquidity and management costs – can be outweighed by overall yields, compared with other investments. A strong rental market is providing steady “dividend” income.
“This is a very good time to be buying real estate,” says Brian Parker, co-founder of EP Wealth Advisors in Torrance, Calif. “About 15% to 20% of our clients have done some sort of real estate transaction recently. In most cases, I think they have made good investment decisions.”
Financial Planning spoke with planners across the country to gauge how their real estate investing strategies have changed – or not – in the past several years. We discovered a greater willingness to embrace real estate as an investment option among planners who historically had considered it outside their expertise.
THE DOWNSIDE
There are plenty of challenges to this strategy. Planners can take a hit when their clients choose to buy real estate directly. “It’s hard to figure out how to get paid,” Boyle points out. “We charge a percentage of assets under management and it’s hard to get a percentage of zero.” Even worse, many clients have ruined themselves in this recent real estate bust.
One client who inherited $2.5 million from her grandmother’s estate invested it all into a single home near the top of the real estate bubble.
“I tried to explain to her that she would pay $200,000 in fees and commissions,” says the woman’s planner. “I was shocked that she wanted to do it.”
The woman, the planner presumes, probably lost heavily in the dramatic slide of home values. He doesn’t know for sure because, with none of her assets remaining for him to manage after the purchase, he lost her as a client before the bust.
Yesterday’s trials and changing global markets have helped to lay fertile ground for real estate investors in the post-bust era. The allure of real estate’s noncorrelated returns to the stock market have inspired some planners to look hard for unique opportunities.
INVESTING AND HELPING
Last year, John Bailey, founder and CEO of Spruce Private Investors in Stamford, Conn., took 15 clients and prospective clients on a trip to view real estate in Brazil. The group, which included heads of large families and a few foundations, surveyed several residential apartment developments in Sao Paolo and Rio de Janeiro that were valued at up to $100 million. Units in the properties, marketed to Brazil‘s emerging middle class, were expected to sell for as much as $100,000.
The group explored the local political and cultural landscape. They visited Vik Muniz, one ofBrazil‘s most famous artists who sources materials from one of the world’s largest landfills. Proceeds from his art sales are distributed to residents of the landfill who survive by combing through trash, looking for sellable recyclables.
“There were people in tears,” Bailey says, referring to the trip attendees. “It put a face to the challenges of poverty that many people in Brazil are facing. We don’t [travel] just to see good investments. We want people to have life experiences. We don’t want them to think of their investments as black lines on a document. We did [the trip] because we wanted people to understand the variety of aspects of the culture, as well as the risk.”
Bailey is betting that the Brazilian real estate investments will generate hefty returns while fueling social progress. As Brazil‘s leaders try to integrate the residents of the favelas, or slums, into the civic fabric, affordable housing will be a vital part of the solution, he says. “Many of our clients feel good that they are contributing to the build-out of the middle class inBrazil,” Bailey says.
Source: Financial-Planning
Sound economic fundamentals, a solid fiscal stance, and a stable political environment offer an encouraging outlook for the Abu Dhabi real estate sector in 2012, but analysts warn downside risks still persist with the imminent delivery of new developments for the year in both the commercial and residential sectors.
According to a recent market report released by global research consultants CBRE, economic growth in Abu Dhabi was estimated at 4.5 per cent in 2011, projected to grow by five per cent in 2012. Meanwhile, residential rental rates on the main island fell by 16 per cent year-on-year, while declines on the Abu Dhabi mainland were more pronounced with a 30 per cent drop.
For the office sector, by the end of 2011, total supply in the Emirate had reached 2.74 million square metres, with average office rental rates ending the year at Dh1,400 per square metres per annum. An estimated 600,000 square metres of space is expected to be delivered in 2012, while a further 23,000 residential units are also expected to be handed over.
The figures have been released ahead of Cityscape Abu Dhabi, which takes place from April 22-25 at the Abu Dhabi National Exhibition Centre, and while there are further deflationary pressures in rents and sales anticipated over the next 12 months, the market appears to be steadier than at the same point last year.
“The overall fundamentals of the Abu Dhabi real estate market remain strong with both economic and population growth anticipated for the year ahead,” said Matthew Green, Head of Research & Consultancy UAE, CBRE.
“Despite a more constrained transactional market, the occupier segment is starting to show more signs of life with limited available completed stock helping to maintain high occupancy rates from premium offerings.”
“The existing CBD should also remain in high demand for both residential and commercial spaces, particularly as Abu Dhabi awaits further completions of projects in Sowwah Square, Marina Square and the wider Reem Island development.” Chris Speller, group director for Cityscape Abu Dhabi said: “The Abu Dhabi real estate market is now a far more stable environment with sales and rental rate declines slowing against the same period last year. There is some downside pressure still present in the market, although the increased level of options is good news for occupiers.”
Now in its 6th year, Cityscape Abu Dhabi has firmly established itself as the region’s leading real estate development and investment event. Last year, the exhibition attracted more than 25,000 visitors from 78 countries looking to learn of the latest developments and real estate market trends. “Cityscape Abu Dhabi has become the annual barometer for the real estate market,” added Speller. “For investors and occupiers, the event offers the opportunity to meet with the developers behind more than 300 real estate developments, and given the amount of new residential and commercial units being delivered this year, there certainly is a lot for them to look forward to.”
Source: Pakistan Observer
Honolulu is one of the 10 markets identified as a “hot spot” when it comes for foreign investment in residential real estate.
According to Inman News, which follows the real estate industry’s market conditions and trends, Honolulu ranks 8th in the United States for the number of homes sold to international buyers.
Using public record data compiled by San Diego-based real estate data analysis from DataQuick, Inman Newsreported that the majority of the markets, if not all, are recognizable as tourist destinations. Six of the 10 areas are in Florida, including the top spot – Lakeland-Winter Haven – three are in the West (Arizona, Hawaii and Nevada) and one is in the Northeast (New York).
No Midwest markets made the list.
The markets in this report were chosen based on the percentage of all homes sold in the area from May 2011 through Jan. 2012 for which a foreign mailing address was listed for the buyer on the property deed.
Foreign buyers account for a small but growing segment of overall U.S. sales, which totaled $1.07 trillion in the 12 months through last March according to the National Association of Realtors’.
Source: Pacific Business News
One of the most stimulating things about real estate investing is understanding what markets will produce the best long term returns – particularly while in the middle of a challenging real estate market.
In a down market, savvy investors in real estate are enthusiastic to discover how they can best leverage their resources. And expert forecasts are some of the finest tools they can utilize to back up their methods. An excellent example comes from property consulting firm John Burns Real Estate (JBRE), that has forecast that home-ownership will fall from 70.0% to 62.1% by 2015 thanks to a soft economy, low consumer confidence, limited mortgage availability, increased rates of foreclosures and short sales, among other things.
John Burns Real Estate predicted, although based primarily on broad market conditions, points out that we’re going to see a rising number of renters and so a larger demand and need for rental housing.
Savvy investors in real estate select investment properties that are located in markets with the best long-term growth potential. This enables them to invest intelligently today while hedging their bets on the future expansion and appreciation of their target markets.
Our 2012 Housing Market Forecast lists the Top 100 Metropolitan Markets based on future job growth and projected price appreciation. If you’re interested in finding growth markets with robust appreciation potential, then the McAllen-Edinburgh-Mission, Texas metropolitan area could be your primary choice. We project its 10-year future job expansion to jump by 32.3% and home values to appreciate by 37.9% in 5 years. Additionally, property values remain comparatively affordable with the median sales price around $100,000.
Apart from this Texas metropolitan investment area, our report uncovers other real estate markets with great potential including 2 from Colorado (Colorado Springs and Denver-Aurora) along with California (Sacramento-Arden-Arcade-Roseville, and Oxnard-Thousand Oaks-Ventura). Other markets that made the Top 10 include North Port-Bradenton-Sarasota, FL; Las-Vegas-Paradise, NV; Hartford, CT; Springfield, MA; and Phoenix-Mesa-Glendale, AZ. These areas have a five-year appreciation outlook well above 21%. (You can download the full report here.)
And what does this mean for property investors? There’s a gold-mine out there waiting for you to take advantage of! A fall in home-ownership means a rise in rental units to deal with the surge in demand from people who have recently lost their homes to foreclosure, people who can’t afford to purchase property, and people who are still saving up for a new home. Last October 2011, the National Association of Realtors (NAR) announced that the amount of rental houses had gone up to 38 million units in 2Q11 and the vacancy rate of single-family houses and multi -family units was at a record low rate of 9.2%.
Investors never think twice about snapping up bargain properties with positive cash flow. As NAR chief economist, Lawrence Yun, puts it, “The dynamics of falling rental vacancy rates mean increased owner pricing power. Naturally as a consequence rents have been pushed higher… Rising rents mean an improved rate of return for property investors.”
Cash flow investment properties are indeed your best hedge against the negative impacts of a down market. Take it from Morgan Stanley’s “Housing 2.0 The New Rental Paradigm” report. The financial services company observes that gross rents are “historically attractive relative to current distressed prices. Adding to this attractiveness is the fact that multi-family data shows rents continuing to rise.” Therefore it favors single-family houses as the most ideal type of property investment in today’s market due to their large rental potential.
JBRE’s outlook also reveals that home-ownership won’t be on an upturn until 2025 at 67.1% on the back of foreclosed homes returning to ownership, improved market conditions and regular mortgage credit, and a rise in the tendency of households to own a house. That can signal the time to think about selling your portfolio and taking a decent profit, or trading up into more real estate utilizing the IRS 1031 tax deferred exchange.
There are many real estate investing opportunities out there today. Be certain to take action, do your homework and invest intelligently. As John Burns puts it, “The American dream of home-ownership is still alive and well.”
Source: http://www.empadvisers.com/pages/real-estate-investing-how-to-make-money
The total number of property sales in Dubai in the first quarter of 2012 rose 53 percent year-on-year, although the volume of transactions is still less than half the size it was during the fast-paced days of the Dubai property boom in 2008, according to official data from the Dubai Land Department (DLD).
Figures show 654 land sales, consisting of apartments, villas and townhouses, were registered between January 1 and March 31 this year, compared to 426 during the same period in 2011. While this was a 53 percent rise in volume, the total value only rose 32 percent to US$1.43bn.
“The overall trend in the marketplace is positive, with stability and even growth seen in certain locations over the past six months. Residential sale transactions saw a natural increase in January and February particularly in the villa market,” real estate firm Cluttons said in its own Q1 report.
“Villa stock in Dubai has seen optimistic gains, the best performing are the Emirates Living developments of The Lakes, up 7.2 percent from 3Q11, The Meadows, up 6.4 percent from Q3 2011 and The Springs, again up 6.4 percent from 3Q11.
“Villa developments such as Jumeirah Village or Green Community have proved less desirable locations and consequently have seen value drop 2.5 percent down from 3Q11,” Cluttons added.
The report found values of apartments in less desirable locations have continued to be eroded, with Discovery Gardens and International City values down 7.8 percent and 5.6 percent respectively from Q3 2011.
However, the higher end of the market has remained strong over the past five months and has experienced positive growth since 3Q11 in locations such as the Burj District, also known as Downtown Dubai (up 5.3 percent), The Greens (up 4.8 percent), The Views (up 5.2 percent) and certain higher end developments in Dubai Marina (up 1.35 percent).
Dubai was one of the hardest hit markets as a result of the global downturn in the property sector, with prices tumbling by nearly 60 percent and half of projects put on hold or canceled.
While the volume and value of transactions is up year-on-year, the market is still far below the boom era of 2008, when 1,500 transactions worth US$5.09bn took place, demonstrating that 2012 is still down 56 percent and 71 percent respectively over the four-year period.
Source: http://www.arabianbusiness.com/dubai-property-transactions-surge-53-in-q1-452137.html
Residential prices in England and Wales increased by 0.1% in February compared with the previous month, according to the latest land registry figures published today (Friday 23 March).
The Land Registry’s flagship House Price Index also shows that there has been an annual price decrease of 0.6%, bringing the average house prices to £161,588.
The region in England and Wales which experienced the highest increase in its average property value over the last 12 months is London with an increase of 4.2%. Wales experienced the greatest monthly rise with a rise of 2%.
The North West of England saw the greatest annual price fall with a decrease of 3.5% while the North East saw the most significant monthly price fall with a decrease of 2.6%.
The most up to date figures available show that, during December 2011, the number of completed house sales in England and Wales
increased by 8% to 61,470 compared to 56,875 in December 2010.
The number of properties sold in England and Wales for over £1 million in December 2011 decreased by 13% to 488 from 559 in December 2010.
The South East tops the table of regional applications with 250,045 in February. Over 56,000 residential property sale prices in England and Wales were lodged for registration in February.
As part of its commitment to the Government’s priorities of economic growth and data transparency, detailed Land Registry price paid information is now available monthly in addition to the House Price Index and transaction data.
The first free Price Paid Data released by Land Registry, as a founder member of the Public Data Group, includes details of over 6,000 residential property sales in England and Wales that were lodged for registration in February 2012.
It includes the full address, the price paid, the date of transfer, the property type, whether it is new build or not, and whether it is freehold or leasehold.
The modest rise in house prices last month is a vindication of the proactive approach mortgage lenders have taken over the last few months, according to Paul Hunt, managing director of Phoebus Software.
‘The Council of Mortgage Lenders announced recently that gross mortgage lending has risen for seven consecutive months as the combination of low interest rates and steady house prices have provided an opportunity to lenders to make highly affordable finance available to a growing number of house purchasers,’ he said.
‘But we’re not out of the woods yet. On an annual basis, property prices are still falling and the return of stamp duty for first time buyers, as well as the hefty levy on properties at the top end of the market announced in the budget will put downward pressure on property values,’ he explained.
‘Whether lenders are able to maintain their confidence in the UK’s mortgage borrowers in a more hostile fiscal environment is by no means certain. But the MPC’s ongoing commitment to a doveish monetary policy and the implementation of the government’s NewBuy scheme provide good grounds for optimism that buyers will continue to be able to access the finance with which to support prices,’ he added.
However, David Brown, commercial director of LSL Property Services, points out that while the housing market has been gradually improving in recent months, with both activity and house prices picking up, much of the recent momentum in the sales market has been driven by the flurry of first time buyers hurrying to beat the stamp duty holiday deadline which ends tomorrow.
‘The litmus test for the recovery will be what normal level first time buyer activity returns to in coming months. Lending at this level of the market has begun to show signs of falling back, and while the NewBuy scheme may help to support a limited number of new buyers, we are likely to see a renewed increase in rental demand from frustrated first timers in the coming months, and the private rented sector will continue its growth as the year progresses,’ he said.
Source:www.propertywire.com
A sharp rise in demand for new homes in Singapore in January continued last month with data from the Urban Redevelopment Authority showing that figures were up 29% month on month.
In February 2,413 new homes were sold, up from the 1,872 sold in January and almost three times more than December’s sales.
For February, the best selling projects were mostly located in the suburban areas. The top seller was Parc Rosewood with 380 units sold. Guillemard Edge, which is located in the city fringe, also performed well with sales of 275 units.
Home buyers are also snapping up executive condominium (EC) with 257 sold at Twin Waterfalls, 187 units at The Tampines Trilliant and 186 units at The Rainforest.
Including ECs, a total of 3,138 units were sold last month, up 51% compared to January and analysts said low interest rates are fuelling demand for private properties in Singapore.They also expect demand to hold up in March and said sales will remain healthy going forward and this could result in the government introducing more cooling measures.
‘After the December cooling measures, in January and February, you see that sales volume has in fact increased a lot more. And if it continues to be at a high level, say above 1,500 units per month excluding ECs, then it is very likely that the government will come up with more cooling measures,’ said Chua Chor Hoon, head of Asia Pacific research at DTZ.
Although analysts do not rule out further property cooling measures from the government, some said the likely impact this time will be muted.
It is not like a sudden surprise; after five rounds, it has come to a conclusion that whenever markets are strong, there is a serial tendency to impose more and more measures. That impact itself, the moment you expect it to happen, it is not a shocker. It will not have a great impact on the negative side,’ explained Alan Cheong, research head at Savills Singapore.
The majority of home buyers in the suburbs have been first time buyers or second home local investors. And as such, they are not affected by the additional buyer stamp duty.
Prices are not necessarily expected to go up. ‘Prices are likely to stay stable, because there is a huge amount of supply coming on. If you look at GLS (Government Land Sales), there have been quite a number of sites that have been sold already, and queuing up to be launched,’ said Ong Teck Hui, executive director and research head at Credo Real Estate.
‘With that in mind, I think the developer will not be able to up the pricing. So long as the demand remains buoyant, it will keep the prices stable. Because at that price level, they are able to move the units,’ he added.
Source: www.propertywire.com
Saudi Arabia-based developer Al Hokair Group is planning to resume construction on its stalled Al Sahara Kingdom hotel and entertainment project in Dubailand in 2013, its deputy CEO has said.
The Al Sahara Kingdom has been master-planned over a 50 million sq ft area in Dubailand, the delayed real estate development backed by Dubai Properties Group (DPG).
The project is set to include two four-star hotels – to be run by Al Hokair-owned MENA Hotels & Resorts, an indoor theme park, restaurants, residential areas and a retail souk.
“This is on hold now, but we will try to [restart construction] of the hotels and theme park in 2013, combined with the apartments and villas. This is our plan,” said Sami AM Al-Hokair in comments published by Hotelier Middle East.
When asked when the firm expected the project to be completed, Al-Hokair said construction would take two years.
“[We’re] starting with the theme park, hotels and with the serviced apartments, and the retail – it’s coming phase by phase, but phase one [will open in] 2014,” he said.
Al-Hokair added that the developer’s plan to resume the project was in response to increased demand in line with growing tourist numbers to the emirate.
“There is a lot of demand. We expect more tourism is coming to Dubai. I think we’re expecting 15 million visitors to Dubai by 2015,” he said.
Dubailand was one of the Gulf emirate’s most ambitious developments, announced at the height of the real estate bubble.
The resort was originally slated to be twice the size of Walt Disney World, and was reportedly worth AED335bn at its peak. It was placed on hold after the financial crisis triggered the collapse of Dubai’s real estate market in late-2008.
In Octobe, DPG said the firm was in talks to renegotiate four projects in the resort, with plans to unveil details of a sustainable city by end-2012.
Alongside details of a planned sustainable city within the resort, three further projects funded by Middle East investors will be confirmed in 2012, CEO Khalid Al Malik said.
He added: “We are currently in talks with three other investors. They [include] a couple of investors from the region who would like to start projects in Dubailand.
“We are in serious negotiations with them, hopefully next year [in 2012, we can expect announcements], in the first and second quarter.”
Source: http://www.arabianbusiness.com/saudi-developer-set-restart-dubailand-project-447931.html
Dubai is back in business, or at least on its way to repairing an image devastated by a debt crisis.
Less than three years ago foreign investors turned their backs on Dubai, the tiny desert city-state with grand ambitions built on massive debt, after state-conglomerate Dubai World announced it would restructure about $25bn in debt.
But now, Dubai’s flagship airline has successfully marketed a $1bn bond, hotels have attracted thousands more guests and unrest across the Middle East has persuaded some businesses to move their offices to the more stable emirate.
“At one point I had investors tell me they didn’t want Dubai at all in their portfolios,” said a banker.
But the success of Emirates bond this month, attracting orders of over $6bn, is one of the clearest signs yet of returning confidence and served to show the airline’s importance to Dubai’s economy and international image.
“Being able to get any airline debt away in a world with $100-plus crude oil prices, the biggest component of an airline’s costs, is impressive,” said Daniel Broby, chief investment officer of UK-based asset manager Silk Invest.
“The fact that it was a Dubai-based airline is even more impressive.”
Emirates priced its bond on the same day that global ports operator DP World, another of Dubai’s prized possessions, made its debut on the London Stock Exchange.
“The DP World listing and Emirates bond are the sort of instruments to show that Dubai has returned,” said Saj Ahmad, analyst at FBE Aerospace in London.
Appetite for Dubai debt has been rising in recent months, and CDS levels have sunk back to pre-2009 crisis levels.
Not only is the Dubai government planning to issue new bonds this week after a London investor roadshow, but it recently announced an extension of its bond programme to $5bn.
The pick-up in sentiment is a far cry from November 2009, when Dubai World’s plan to restructure about $25bn in debt sent investors fleeing practically overnight and translated into negative growth for the once high-flying economy.
There is also an unavoidable sense of optimism. In 2010, Dubai’s GDP per capita was just under $42,000, one of the highest in the world.
Driven by trade, financial services and tourism, Dubai’s economy recovered in 2010 with 2.4 percent growth and is projected to expand by another 3 to 3.5 percent this year.
In contrast, the World Bank expects 1.9 percent growth in the Middle East and North Africa in 2011.
Cranes are purring back to life and tourists are flocking back to Dubai’s delights such as a ski slope in the desert, one of the world’s largest shopping malls and its tallest tower.
In the first quarter, hotel guests numbered more than 1.8 million, a 14 percent increase compared with the same period last year, according to the Dubai Statistics Center.
“With the so-called Arab Spring shutting down other major tourists markets in the region, notably Egypt, Jordan and Bahrain, tourists flocked to Dubai,” said Guy Wilkinson, managing partner at Viability Managements Consultants, a hospitality consultancy based in Dubai.
Businesses and capital inflows into Dubai — though hard to quantify accurately — have also increased largely because of political uncertainty in Bahrain, a well established financial hub in the region, money managers and bank executives say.
Many companies have shifted offices or staff to the city, while UAE bank deposits climbed to their highest level in at least more than two years in April.
“Companies are physically moving to Dubai — for some, the regional unrest is an opportunity to have a reasonably large presence in Dubai,” said Ghanem Nuseibeh, founder of Cornerstone Global Associates and senior analyst at Political Capital.
Nuseibeh said it was too soon to gauge whether the liquidity at banks and people moving to Dubai would have any impact on a recovery in the real estate sector – one of the worst affected by the crisis.
But he said between 30 and 50 percent of businesses which relocate to Dubai would remain on a permanent or semi-permanent basis.
On Dubai’s streets, conversations once more centre on eating out at the latest restaurant and watching pop acts like Usher, Macy Gray and Joe Cocker who have all played to packed houses.
But Dubai has been accused of storing up its troubles by postponing debt payments rather than resolving them. Dubai World’s 2010 debt deal delays repayment to after five and eight years, and no Dubai asset sales have yet been announced.
The emirate faces about $30bn in redemptions over the coming two years and refinancing risk remains one of the biggest investor concerns. Issues of creditors taking over assets and enforceability are extremely politically sensitive.
“A lot of debt restructuring was for five years or seven to eight years,” said Monica Malik, chief economist at EFG-Hermes.
“While this gave a sort of breathing space in the shorter term, you still have the issue to try to reduce these debts in the medium term.”
Despite a recovery in global trade and more stability in the banking and property sectors, Dubai’s economic expansion is far behind growth rates seen during the oil and property-fuelled boom years before the global credit crunch struck in 2008.
The size of the emirate’s economy shrunk by 14 percent in 2009, and the overall debt load of Dubai and its companies is estimated at $115bn or 140 percent of its economic output, not far below 143 percent for debt-troubled Greece.
UAE private sector credit growth has been anaemic, at a mere 2.0 percent in February, compared with annual rates of well over 50 percent in 2008, when a construction frenzy peaked. Increased deposits have so far failed to kick-start lending.
But Dubai’s saving grace may prove to be the widely-held assumption that neighbouring Abu Dhabi, the wealthiest of the seven emirates, will be ready to help with the burden if, and when, required
Source: www.arabianbusiness.com June 15, 2011
Increased tenant demand and low levels of rental property coming onto the market pushed rents higher in the three months to April, according to the latest Residential Lettings Survey from the Royal Institution of Chartered Surveyors.
Overall, 42% more surveyors reported rents rose rather than fell in the three months to April, up from 40% in the previous quarter, according to the survey published today (Thursday June 09). Although rents increased across Great Britain, it was London and the South East which saw the most notable increases.
Comments from surveyors reveal that rents in some areas have now risen so sharply that previously affordable homes are now unattainable to many, as an increasing number of renters are priced out of the market.
Despite an upturn in new instructions, supply to the market still remains unable to keep up with demand. Tenants are staying longer, resulting in less availability, while fewer landlords are selling their properties at the end of a tenancy. Just 2.8% of landlords sold property in the three months to April, down from 4%.
Looking ahead, the overall rental outlook remains strong, with 33% more surveyors expecting rents to rise rather than fall. Expectations for rental prices were highest in London, followed by the Midlands, the South East and the North.
‘Although we are beginning to see more mortgages aimed at first time buyers, many potential homeowners are still restricted from getting a foot on the property ladder, leading to increased demand in an already oversubscribed rental market. There has been a small uplift in supply, but the imbalance between demand and availability can only mean rents will continue to rise,’ said RICS spokesperson James Scott-Lee.
The RICS Residential Lettings Survey began in 1998. This quarterly survey provides a comprehensive picture of the lettings market across England, Wales and Scotland as well as a regional breakdown.
Meanwhile, home ownership remains out of reach for many would be buyers, partly because of the high deposits required by lenders, but also due to the cost of available mortgage finance. As a result, surveyors report that many people have little choice but to rent. In the three months to April, 35% more respondents reported demand rose rather than fell, the highest level for over two years.
Regarding supply of rental property to the market, 6% more surveyors reported new instructions from landlords increased rather than fell, taking the net balance into positive territory for the first time since April 2009. Instructions from landlords to let flats showed the most pronounced change, with a net balance of +6% from -7%. The increase for houses was slightly less than in the previous three month period, +2% compared with +5%.
The UK government plans to release public land for house building to help alleviate the nation’s chronic shortage of residential properties.
From this autumn every government department with significant land banks will publish plans to release thousands of acres of previously developed land to house builders to build up to 100,000 new homes and create 25,000 jobs by 2015.
The Public Expenditure Committee, a Cabinet Committee chaired by Francis Maude, will go through each department’s plans with a fine tooth comb, to make sure every possible site is made available for house building.
Alongside this, property specialists from across Government will work with each department and challenge them to release as much land as they can for new homes.
Ministers are also encouraging councils to follow the lead set by central Government and make their unused land available for development.
Later this year, a new map will be launched to show land and buildings owned by public bodies in each area. A new Community Right to Reclaim Land has been introduced enabling residents to apply to organisations including central Government departments and councils to bring their sites back into use, opening up the books so local people can see for themselves the assets held by central and local Government alike.
Housing Minister Grant Shapps also announced a radical Build Now, Pay Later deal, which offers a boost to house builders who will only pay for the land once work has started on the new homes, providing a lifeline to those struggling with cash flow problems, and enabling them to start building straight away.
‘As one of the country’s biggest landlords, the government has a critical role to play in making sites available for developers so we can get the homes this country needs built. Over the coming months, property specialists will work to make sure no stone is left unturned and no site is left unused, and every department’s plans will come under the close scrutiny of a Cabinet committee,’ he said.
‘It is now up to developers to come forward to make the most of this unique opportunity, and help contribute to our country wide efforts to help get the homes this country needs built,’ he added.
Builders and developers reacted positively. ‘This is a big step in the right direction. The rapid release of publicly owned land has the potential to be an effective catalyst for increasing the supply of land for new homes in this country during the next few years,’ said Mark Clare, chief executive of Barratt Developments.
Liz Peace, chief executive of the British Property Federation, said that as one of the biggest holders of land in the country it’s right that the Government does what it to help alleviate the housing crisis.
‘However, government must give consideration to who has the resources available to get on and build these homes, particularly while banks are still nervous about lending. Institutional investors have access to the scale of funding needed to develop first rate homes to rent, and central and local Government, through its planning powers and capacity to release land can ensure that such schemes become reality,’ she added.
Jasper Masters, head of residential Land Agency at consultants CB Richard Ellis, said the payment deals are important. ‘Since the crash, many of the larger land deals outside of London have been conditional on planning and generally on deferred payment terms, so the government’s new model will fit with the reality of the marketplace,’ he explained.
His colleague Stephen Clark, senior director, Government & Infrastructure, described using public sector land for housing development through an accelerated disposal programme as an excellent proposal. ‘Increasing housing supply is critical at present to support future economic growth,’ he said.
But he added that the government will need to be committed to the programme for it to be successful as previous initiatives such as the public land register have fallen by the wayside. ‘Much will depend on where the major sites lie, as the housing market is quite stagnant outside London and pockets of the South East. Encouragingly 28% of the Homes & Communities Agency’s holdings lie in the South East and East of England, although just 3% is in London.
‘Innovative funding structures in the form of asset backed vehicles and Build now, Pay later should help to progress the programme, particularly given the continuing lack of bank lending. In order to create sustainable communities, it will be important to bring open market and affordable housing on-stream together as no grant will be available for the latter. This will impact on the level of receipts although it is acknowledged that this is only part of the government’s overall consideration,’ he added.
In the current market where residential transactions across the UK have slowed, the residential market in London is showing few signs of a slowdown with strong rental, transactional and development market activity, according to the report from Colliers International.
In terms of rental activity, London is proving resilient in comparison to the rest of the UK. Demand in the London rental market is driving rental prices higher, especially as supply is low.
According to LSL Property Services, monthly rents in London have risen by 8% since April 2010 and reached £988 in April 2011. With the rental market providing such a robust performance, the buy to let market is beginning to recover. S&P recently reported that conditions ‘appear to be supportive for BTL borrower performance in the medium term’, analysts point out.
However, risk adverse lenders and a lack of available finance is putting pressure on the supply of buy to let properties. S&P also reported that due to a fall in debt servicing ratios, buy to let borrowers have less of a financial cushion to cover mortgage payments.
On the residential sales side, London is outperforming the rest of the UK. The Communities and Local Government House Price Index for March 2011, indicates the largest increase in house prices was in London at 5.6%. The smallest increase was in the East Midlands at 0.9%. The key drivers in the London housing market are a lack of supply, with around 1,300 sales recorded over the quarter in Central London. Stock levels remain constrained because potential vendors are reluctant to sell and have no incentive to do so.
The report says that developers are taking advantage of the changes in planning allowing the conversion from office to residential. There are several big deals in the marketplace where developers have taken advantage of the market downturn to turn a profit on their investment.
For example, Marcus Cooper is seeking planning permission to convert the old QVC UK headquarters at Marco Polo House, which it bought in 2006 for £63 million into a residential led scheme worth £500 million. The same developer received planning permission to redevelop 6-10 Cambridge Terrace and 1-2 Chester Gate, NW1 into a £100 million mansion complex. These properties were purchased for £23.7 million in 2006. It is currently involved in converting British Land’s HQ into residential.
Orion European Real Estate fund has bought a site at City Road Basin, London EC1 and it will be the first residential scheme set up by a private equity fund.
Ballymore is seeking planning permission to build a 41 acre scheme at Minoco Wharf in London. The scheme will include 3,500 homes, a high street and new school and is one of the largest ever planning applications in the capital. And Mountgrange is launching a mezzanine fund dedicated to residential development, a first for the UK market.
With the residential market in London outperforming the rest of the UK it is not surprising to see proactive landlords and developers taking advantage of opportunities in the market, the Colliers report adds.
Source: www.propertywire.com
Bulgaria’s crisis-hit real estate Bulgaria’s crisis-hit real estate sector is pinning its hopes on Russian holiday-home buyers rediscovering one of their favorite communist-era travel destinations.
Russians with money to burn are replacing British property buyers who rushed to buy second homes on credit several years ago and are now re-selling at half-price following the economic crisis, according to Antonia Wirt, Bulgarian section chief of the International Real Estate Federation FIABCI.
“In the past three or four years, over 200,000 Russians have bought property in Bulgaria, worth over US$1 billion (726 million euros)” in total, FIABCI president-elect Alex Romanenko told AFP on the sidelines of a conference in the ski resort of Bansko.
“Bulgaria occupies a dominant position in the real estate market in the Balkans, which has a great potential,” he added.
The similarities of the Bulgarian and Russian languages, which both use Cyrillic script, close cultural ties and the common Orthodox religion facilitate contacts and make Russians feel quite at home in Bulgaria, real estate agents say.
“Bulgaria is a familiar country, part of the former Soviet sphere, where our parents traditionally spent their holidays,” said Marina Nekrasova, head of the Russian real estate agency Best.
If not formally part of the Soviet Union, Bulgaria used to be one of Moscow’s staunchest satellites during communism.
The “excellent” quality-to-price ratio offered in Bulgaria’s holiday resorts has also made it a top property investment spot for Moscow and St. Petersburg’s middle class, Nekrasova added.
Antonia Wirt of FIABCI meanwhile highlighted “the accessibility and relatively low costs of high-end services such as spas and golf.”
The Russian wave is welcome news for Bulgarian real estate.
A boom in sales to British buyers before Bulgaria joined the European Union in 2007 led to ballooning prices and massive construction, explained Galina Maximova, head of the Bulgarian property agency Sofconsult.
But in the following years, the crisis caused drastic drops in the sector.
While the total value of real estate deals in 2007 was 1.9 billion euros, this figure slumped by 33 percent year-on-year in 2008, before shrinking by an additional 45 percent in 2009 and by 51 percent in 2010, according to data from the Invest Bulgaria Agency.
Abundant offers have also lowered prices.
“Apartments in luxury mountain resort complexes are selling at unbelievably low prices of less than 750 euros per square meter,” Maximova said.
Five years ago when these complexes were built, prices would have been over 1,000 euros per square meter.
Targeting a well-off clientele, these closed complexes on the outskirts of popular holiday spots have emerged in recent years as an alternative to the wild construction that ruined once-picturesque resorts like Bansko or Nesebar on the Black Sea.
However, with current prices from 875 euros per square meter in Black Sea resorts further south, the Yavlena real estate agency is now forecasting a 300-percent rise in sales along the coast this year compared to 2010, with Russians again dominating the market.
Russians — along with Germans, Greeks and Romanians — make up the majority of tourists both in Bulgaria’s summer and winter resorts and their number is expected to rise further this winter.
Source: www.chinapost.com.tw
The overheating of the Hong Kong property market has left the private housing market severely unaffordable and the trend is expected to continue for the next 20 years, according to research carried out by the Royal Institution of Chartered Surveyors.
Its new report on property affordability over the next five, ten and 20 years, is being submitted to the government to help finalise annual budgets.
Based on the housing needs of Hong Kong’s demographics, the government should be providing enough land for about 22,000 per year for the next five to ten 10 years, the report points out.
Yet current policy only allows for 18 500 units per year. The RICS report says that more land will need to be released for construction if the shortfall is to be made up.
‘At present, there appears to be a mismatch between the supply of small sized flats, Class A flats, and the needs of the average households, but in recent years, we noticed that the unit price per square feet price of large sized flats, Class C, D and E flats, of three or four bedrooms were rising much faster than those small sized flats with one or two bedrooms,’ said David Tse, RICS International Governing Councillor and Chairman of RICS Hong Kong Housing Task Force.
‘RICS is calling on the government to conduct regular surveys on the future aspirations of the average households on types and sizes of flats before laying down appropriate housing and land supply policies to meet the functional and future needs of Hong Kong households,’ he added.
The recently announced My Home Purchase Scheme aims to provide 1,000 housing units a year for the sandwich class populace of Hong Kong. Given the income and asset ceiling requirements of the My Home Purchase Scheme applicants, 35% of total households in Hong Kong are eligible for the Scheme, according to the 2006 Census results.
So there will be a severe undersupply of these housing units, unless amendments are to be made regarding the income ceiling and/or the amount of housing units proffered, this scheme is not going to address the housing demand of all middle income people of Hong Kong,’ said KK Wong, Chairman of RICS Hong Kong.
‘In our recommendation to the government, we have drawn reference from nearby Asian countries or cities including public rental housing that targets middle-income residents in mainland China, rent-to-own option for affordable housing in Singapore and Malaysia and concessionary mortgage provision targeting young people in Taiwan,’ explained professor Eddie Hui, of the department of building and real estate at the Hong Kong Polytechnic University.
‘We wish government could take these as examples and form its own sustainable and long-term housing supply strategy for Hong Kong,’ he added.
‘Based on the survey results, we found that housing in general has becoming less and less affordable as property prices continue to escalate. This situation has become worse since the ceasing of Hone Ownership Scheme construction and supply in 2003,’ he explained.
‘For those who are not eligible for public rental housing, or do not seek government housing assistance, purchasing a property has a big impact on their living quality. It could only be worse for them if interest rates rise in the future, or they are forced to purchase even more costly flats due to the lack of supply of lower-cost private properties on the market.’
UK residential property prices fell 0.9% last month and fell at their fastest annual rate for 16 months as faltering demand continues to put downward pressure on the real estate market, according to the latest index, published today (Friday March 04).
The Halifax index shows that prices were 0.4% lower in the three months to February and on an annual basis have fallen 2.8%m making the average house price now £162,867.
But the index flies in the face of two other reports from earlier this week showing that property prices in the UK have edged upward in both January and February.
The January data from the Land Registry’s flagship House Price Index shows that prices increased 0.2% from December and the February index from the Nationwide Building Society shows that prices in the UK increased by 0.3% and are now just 0.1% lower than a year ago.
Halifax said that with prices 2.8% lower than a year ago as measured by the average for the three months to February against the same period a year earlier, this is the biggest annual decline since October 2009 and sales remain low.
Also the number of mortgages approved to finance house purchase, a leading indicator of completed house sales, increased by 7% between December and January on a seasonally adjusted basis, according to Bank of England industry wide figures. Despite this increase, approvals remain historically low with the total number in the three months to January being 4% lower than in the preceding three months.
The decline in properties coming onto the market continues. The latest Royal Institution of Chartered Surveyors survey showed a reduction in new seller instructions for the fourth successive month in January. This trend, if sustained, should improve the balance between demand and supply and help to prevent a more significant fall in house prices.
‘There has, however, been little change in house prices over the first two months of 2011 as a whole. February’s monthly decline of 0.9% offset January’s 0.8% gain. Overall, we expect a modest 2% decrease in house prices in 2011. Uncertainty over the economic outlook is likely to weigh down on housing demand this year,’ said Martin Ellis, housing economist at the Halifax.
‘Fewer properties have been coming onto the market in recent months. This trend, if sustained, should improve the balance between demand and supply and help to prevent a more significant fall in house prices,’ he added.
Most economists reckon house prices will fall this year as tight credit conditions and a weak economic recovery deter homebuyers. Howard Archer, economist at IHS Global Insight expects house prices to fall by around 5% in 2011 and ultimately decline by around 10% from their 2010 levels.
‘It is clear that critical to the development of house prices over the coming months will be the amount of houses coming on to the market, mortgage availability, how well the economy and jobs hold up as the fiscal squeeze increasingly kicks in, and what happens with interest rates,’ he said.
Paul Hunt, managing director of Phoebus Software said that although these figures show house price growth has been flat since the beginning of the year, given that the Halifax index is compiled through the number of approvals it makes, the sample size may be partly to blame for this volatility.
‘The valuable message from this index is that sustained growth is unlikely to return to the wider market until mortgage lending picks up. While most house price indexes showed small price increases last month, this will not become sustained growth until doubts about rising inflation and unemployment are lifted from lenders’ minds,’ he explained.
‘While I am sceptical that prices have been moving as much as Halifax suggest, it’s worth remembering that market activity remains subdued and this will keep a check on prices as the year goes on,’ he added.
Source: www.propertywire.com
Vietnam remains as an attractive destination for real estate investors in 2011, said CBRE Vietnam General Director Marc Townsend here.
Townsend quoted head of Franklin Templeton Fund’s market integration section Mark Mobisus as saying that Vietnam would witness the return of big investors to its private investment market this year, reported Vietnam news agency.
He also cited the assessment of the Association of Foreign Investors in Real Estate (AFIRE) as saying that Vietnam is one of the five leading integration markets together with China, India, Brazil and Mexico for real estate investors in 2011.
Townsend also predicted that the tendency of buying houses will sharply increase as the Vietnamese dong devalues and people shift their investment focus on real estate.
The market for retail space will be the most attractive one as the retail space in the centre is limited and retailers will invest in small trading areas and suburban areas and rent front street houses.
He affirmed that real estate services like training, market survey, material sources and marketing will be improved and put online.
Source: www.bernama.com
Next year is likely to be more of the same for the UK real estate private lettings market with tenant demand remaining high, it is claimed.
The autumn has seen demand from tenants increase by 32% compared to the same period last year with rental stock, on the other hand, down by 12% over the same period, according to Caroline Kavanagh, group lettings director of Badger Holdings Group, parent company to Townends Estate Agent.
The record levels of demand are being driven by the large number of people either priced or consciously opting out of the sales market and deciding that renting, rather than buying a property, is their best option for the time being, she believes.
‘On the supply side, we are seeing more tenants staying on in their existing properties, preferring to accept a rent increase rather than risk searching for something suitable in the open market. This has been exacerbated by a reduction in the number of new investors entering the market to satisfy additional demand,’ said Kavanagh.
‘Much of what we have seen in 2010 is likely to continue as we head into 2011. Tenant demand is likely to remain high and outstripping the supply that will be available. Factors to consider for any current and new landlords stepping into the market will be the VAT increase and possible likelihood of interest rates rising,’ she explained.
‘As would be buyers remain in the rental market for longer due to the ongoing challenges in securing a mortgage, I would expect to see strong applicant levels, as we have done throughout 2010. However, if landlords raise prices, it is possible we will see more tenants giving notice as they will no longer see the benefit of staying from a price point of view and may well make the move,’ she added.
Mortgage finance is still the main obstacle for those wishing to invest, but Kavanagh thinks it is possible that we may see a few new landlords dipping their toes in the market as buy to let mortgage lending improves and the opportunity for long term investment and stable rental income continues to present itself as an attractive proposition.
There are still some vendors switching to the lettings option, although not as many as in 2009. ‘Going forward, those that are in a position to let will do so and value the rental income they receive. This is where working alongside a sales business works well, as it enables those landlords that originally wanted to sell to try and find an investor with a tenant in situ, which is something we have seen more of towards the end of 2010,’ she said.
‘The lettings market remains strong and landlords have more choice because of the level of demand which, as we enter into 2011, will enable them to achieve the best tenants at the best possible prices,’ she added.
Douglas Sleaper, group sales director of Townends Estate Agents, believes that despite recent price falls, property values will still end the year higher than they started for most of the market.
‘It is possible that the first half of 2011 will see further house price decline, with signs of recovery coming in the second half of the year, the opposite of what happened in 2010. We are also seeing a return of buy to let investors, attracted by an increased range of specialist mortgages available and of course enhanced yields due to rising rents and falling prices,’ he explained.
He also points out that the impact of Government spending cuts will vary from region to region, with London and the South East faring better than northern regions, not least because a smaller percentage of employment comes from the public sector.
Source: www.propertywire.com
The construction and real estate sectors in Dubai have seen a decrease of almost 5% in 2010 and recovery is some way off, according to officials.
The property and construction sectors are the worst hit in the emirate by the global economic downturn, according to Sami al-Qamzi, director general of the Dubai department of economic development.
‘I believe that all the main sectors have registered varying proportions of growth (in 2010), except property and construction which saw a five percent drop,’ he told AFP.
Growth in the construction sector is based on supply and demand, thus ‘its recovery will take a longer time,’ added Qamzi, who was speaking on the sidelines of the Global Agenda Summit in Dubai.
The world debt crisis has exacerbated economic woes in Dubai as its real estate sector plummeted when international finance dried up. Property sale prices in the emirate are estimated to have more than halved in value since peaking in 2008.
And the emirate is likely to see an increase in vulture funds targeting the rise in distressed real estate assets coming onto the market towards the end of the year.
The Global Distressed Property Monitor, compiled by the Royal Institution of Chartered Surveyors (RICS), found that the number of distressed assets coming onto the market in the UAE increased in the third quarter of 2010 and will increase further in the last quarter of the year.
Jonathan Fothergill, director of valuations at Cluttons UAE, which took part in the RICS survey, said it is no surprise. He confirmed that a number of GCC and international funds are ‘currently undertaking due diligence on the Dubai and Abu Dhabi commercial and residential real estate markets who are taking the view that we are moving close now to the bottom of the market, and that the next six months or so provides the optimum time horizon for real estate acquisitions’.
Evidence of such vehicles operating in the market was highlighted last week by the launch of the UAE’s first Real Estate Investment Trust (REIT), a joint venture by Dubai Islamic Bank and French property firm Eiffel Asset Management.
‘The timing of this would indicate that there are both an increasing number of assets available to buy at the right price, and a growing confidence that property investment requirements are changing to long-term, low risk and secure profiles,’ said Murray Strang, senior valuations officer at Cluttons UAE.
The increase in distressed selling was echoed by Tom Bunker, investment sales consultant at Dubai based agency Better Homes. “We have already seen examples of distressed properties hitting the market well below what they were purchased for and in some cases below the price level at which they were originally sold by the developer,’ Bunker told Arabian Business.
Residential property prices in the UK fell for the fifth month in a row as demand from buyers slums, the latest indices show.
Average house values dropped 0.8% in November as the seasonal winter slowdown starts a month early, according to the latest data from Hometrack. This follows fall of 0.9% in October and 0.4% in September.
‘The seasonal slowdown in the housing market has kicked in a month early, with demand for housing falling at the fastest rate for 20 months,’ said Richard Donnell, director of research at Hometrack.
‘Concerns over the economic outlook on the back of recent spending cuts, together with widespread expectations that house prices are set for a period of retrenchment, are driving the continued weakness in demand. It is inevitable that this trend will continue as we move into the new year from both a seasonal and sentiment perspective,’ he added.
Demand for property fell 4.3% this month, the biggest monthly decline since January 2009. However, the number of homes on the market is also set to fall in coming months as vendors reduce asking prices or withdraw property from the market. Hometrack expects this to shore up prices in the second part of next year.
As the outlook has become uncertain, so the supply of homes coming to the market has begun to fall, the Hometrack report also shows. The number of properties for sale fell by 0.4% in November, the first time in nine months that the survey has registered a fall in supply.
Prices are set to remain under downward pressure but a tightening in supply means that by the end of 2011 prices are forecast to fall by 2%. ‘A continued reduction in the supply of homes for sale seems inevitable in the coming months as vendors either reduce asking prices or withdraw property from the market. We expect this to act as a support to pricing levels over the second part of 2011,’ added Donnell.
The latest figures from the Land Registry show that prices fell 0.8% in October, the largest monthly drop since February 2009 on the index that is based on actual sales.
At the same time mortgage approvals have reached a 19 month low as a result of weak consumer confidence, low wage increases and tough conditions imposed by lenders.
Eight regions in England and Wales experienced increases in their average property values over the last 12 months. The region with the highest annual price change is London with an increase of 7.6%. The East experienced the greatest monthly rise with an increase of 1%.
The region with the greatest annual price fall is the North East with a fall of 0.9%. While Yorkshire and the Humber experienced the most significant monthly price decrease, down 1.8%. ‘Data from the Land Registry provides further evidence of a modest slowdown in the housing market. Prices have now fallen for two consecutive months according to this series although it is worth bearing in mind that they are still somewhat higher than where they were a year ago,’ said Simon Rubinsohn, Royal Institution of Chartered Surveyors chief economist.
‘The latest numbers do show significant regional variation and the likelihood is the divergence in pricing between different parts of the country will become more marked over the coming year as public spending cuts begin to bite,’ he explained.
Source: propertwire.com