Many major global property markets recorded positive price growth in 2008 but by the end of the year that had stopped or fallen in 75% of locations, according to a new report.

There were wide variations in performance around the world with Hong Kong showing the sharpest annual drop in property prices with a fall of 24.5%, the Knight Frank 2009 Wealth Report, shows.

While Bangkok saw residential prices rise by 22.5% and overall just under 50% of the locations featured managed to record positive price growth on an annual basis in 2008.

Other real estate markets saw a drastic change from boom to bust. For example, Dubai recorded annual overall growth of almost 11% but property prices fell by 19% in the last quarter of 2008.

The report, which includes new research from Knight Frank and Citi Private Bank, shows that prime property in Monaco is the most expensive in the world costing an average of €55,000 per square metre for the best properties with London and Manhattan in second and third place.

But despite house price falls almost 55% of high net worth individuals plan to increase their exposure to residential property over the next two years.

Global farmland prices started to slip last year on the back of falling commodity prices, but remain more resilient than residential or commercial property. Exchange rate fluctuations mean affordability in some countries has increased for US dollar and euro-backed buyers, despite strong price increases in local currencies.

‘Covering a period of global wealth destruction rather than creation, the report’s annual analysis of prime residential property markets and the behaviour and attitudes of the wealthy has become even more relevant,’ said Liam Bailey, head of residential research at Knight Frank.

‘Even the world’s richest people have cut their discretionary spending and most desirable prime residential property markets have now been affected by the global downturn. Although almost half the locations in Knight Frank’s Prime International Residential Index managed to show a positive overall return in 2008, price growth had either stalled or started to decline in nearly 75% of them by the end of the final quarter,’ he added.

But it is a positive sign that the rich are committed to property despite the gloom, he added.

Source: http://www.propertywire.com/

Contractors in Dubai hope that Saudi projects are more sustainable. Local companies will take the majority of the available work.
Contractors in Dubai have been spoilt over the past five years. Mega projects were launched on a monthly basis and major contract awards were made each week. There was so much work that managers even used to boast that filling order books was easy.

Those days have gone. Real estate projects have dried up. Government authorities have come to realise that if their planned developments will probably never be built, they do not need to build access roads and sewers either. Many of Dubai’s supposedly safe infrastructure projects will start to slowly fade away.

As contractors realise that Dubai just does not have the projects any more, companies are looking elsewhere for work.

Abu Dhabi is the obvious answer, and tender lists now include Dubai-based companies that until recently showed little interest in working in the UAE capital.

Doha is another option, but like Abu Dhabi, the volume of work available is limited. Both markets serve more than 1 million people each, and their populations are also growing more slowly than expected.

Saudi Arabia is different. It already has 23 million people who need more homes and the schools, hospitals and roads that come with them. Contractors hope that Saudi Arabia’s projects are more sustainable and will survive the economic downturn.

There is certainly a lot of work to be done, but will it fill the Dubai contractors’ empty order books? The answer is no. Private development in Saudi Arabia – like in the rest of the world – has slowed as banks and investors get cold feet.

But there is some good news. The government is moving ahead with a raft of projects, and although Saudi companies will take the majority of the work, there will be opportunities for Dubai-based firms. However, compared with the mega projects that were on offer in Dubai, the pickings in Saudi Arabia will be slim indeed.

Author: Colin Foreman. Gulf Bureau Chief
Dubai

The world’s most respected property professional’s organisation is to undertake a global consultation to develop an enhanced regulatory frame work for real estate.

The Royal Institution of Chartered Surveyors aims is to raise professional standards, improve confidence for clients and help secure the accurate valuations that underpin most economic activity.

It wants all members involved in the valuation of commercial and residential property and specialist areas such as rural property, plant and equipment, personal and business property along with mineral asset valuations to have their competence monitored on a continuing basis to satisfy clients, and public authorities that RICS is able to properly regulate its members in a testing environment.

It also wants to introduce an accreditation scheme for RICS valuers which will provide a recognizable ‘kitemark’ covering the method and practice of valuations and require re-accreditation every three years.

The organization said that there is an even greater public demand for measures that ensure that markets and other stakeholders can have the highest level of confidence in the competence and probity of professionals working in key sectors of the economy.

‘The value of property is the key component which underpins economic activity. It is vital that there is an effectively regulated gold standard for valuation across the globe which inspires public confidence in the profession,’ said RICS spokesman Mark Gerold.

‘The economic and social importance of all property assets can not be underestimated especially towards wealth generation in a functioning economy. The current financial turmoil highlights the need for raising standards to ensure a stabilising foundation for future economic development,’ he added.

Source: http://www.propertywire.com/

Dubai will have to deal with the thorny issue of what to do with the projects that have been put on hold.
There are now fewer projects being built than there are on hold in Dubai. This will come as no surprise to consultants, contractors or suppliers working in the emirate.

Since October last year, real estate projects have fallen like dominoes as investors have stopped buying properties and developers run out of funds.

The impact on the construction market has been profound. Some $335bn of projects are now on hold compared with $254bn that are being built. Of those that are continuing, many are progressing using extended schedules and minimal workforces.

But despite the suspensions and cancellations, some projects are still moving ahead, and most Dubai-based contractors are confident that they have enough work to see them through the rest of 2009.

The bigger problem is 2010. According to the data, there is some cause for hope. About $334bn worth of projects are still in the planning stages, and if these schemes do go ahead, contractors will have nothing to fear. The question is, will these projects go ahead?
A lot has to happen for developers to stick to their plans. On the finance side, banks must solve their credit problems, and liquidity needs to return to the market. And on the population side, the number of people in the emirate must continue to grow and tourism numbers remain strong if there is a chance of these projects remaining viable.

To make matters worse, if and when market conditions do become more favourable Dubai will have to deal with the thorny issue of what to do with all the projects that have been put on hold before it can move ahead with new schemes.

Until there is a clear strategy outlining what should be done with these abandoned construction sites, it is unlikely that Dubai’s once white-hot construction market will be able to make a convincing return to form.

Author: Colin Foreman. Gulf Bureau Chief
Dubai

Buildings in the US with a high energy star rating are attracting higher rental premiums than non green buildings of the same size, location and function, according to the latest research.

It is the first credible evidence on the economic value of the certification of green buildings in the commercial property sector, the research commissioned by the Royal Institution of Chartered Surveyors shows.

Its report, Doing Well by Doing Good, shows that buildings with energy star ratings command a premium of 3% per square foot. In addition when looking at effective rents, the true rent of a property, considering rental concessions, spread over the life of the lease, the premium is at least double at 6% and above.

The researchers also examined the impact on the selling prices of green buildings, and here the premium is even higher, in the order of 16%. This implies that upgrading the average non-’green’ building to a ‘green’ one would increase its capital value by some $5.5 million, the report says.

The results suggest that tenants and property investors are currently willing to pay more for an energy-efficient building, but not for buildings that are ‘sustainable’ in a broader sense, it concludes.
‘This piece of research is an important first step in building an evidence base on the topic of the value of green buildings. Previously with only anecdotal evidence available on which to base decisions surrounding development of energy efficient buildings, it is understandable that the uptake of some measures has been frustratingly slow,’ said Simon Rubinsohn, RICS Chief Economist.

‘With more comprehensive evidence based research, such as this paper, the economic argument for having an energy efficient building will be strong. Any businesses wishing to maximise profits will have to start looking at increasing the energy efficiency of the buildings in order to remain competitive. By proving that green buildings are economically beneficial due to the savings they can make and the higher rental yields they attract, non-green buildings will eventually become an outdated model,’ he added.

The research, carried out by Piet Eichholtz and Nils Kok of Maastricht University, the Netherlands, and John Quigley of the University of California, Berkeley, United States of America, is the first of its kind to examine the financial performance of green office buildings in the US.

Source: www.propertywire.com

Residential property prices in the UK increased in March for the first time in 16 months but economists are warning that it is not yet a sign of recovery.

The monthly housing price index published by the Nationwide Building Society showed a 0.9% increase last month, the first since October 2007. The price of an average home increased above £150,000.

But economist said the figure should not be taken as a sign that the UK property market is one the road to recovery. Colin Ellis, economist at Daiwa Securities described the reading as likely to be a blip. ‘Even if these glimmers of hope continue to build, households still need access to affordable credit before a sustainable recovery can ensue,’ he explained.

‘It is still too soon to say that this will be the beginning of sustained house price rises and a reflection of a wholesale return of confidence to the market,’ she added.

Abstract from source: www.propertywire.co

Property industry analysts have already published dire figures for the Dubai property market but real estate brokers fear they are proving even worse than predicted.

Freehold property prices in Dubai have plunged by as much as 70% since March of last year, real estate agents say but expect them to bottom out in another six months.

The disclosures indicate that those involved at grass roots level have seen prices fall severely and although there are variations, the steep decline appears universal.

‘We have seen prices plummet across Dubai’s property sector by 50 to 70% to the level of 2005. We expect the plunge to continue for the next six to eight months to bring prices down to their original level five years ago,’ said Mohammed Khan, Managing Director of New World Capital, a Dubai-based real estate brokerage.

Dubai’s property prices, propelled by a swelling expatriate population, speculative investments and rising construction costs, surged by 25% in the first half of 2008 over the first half of 2007.

But because of the global downturn a drastic decline set in during the last quarter of 2008 and first quarter of this year, especially for higher priced property. The price decline has been less severe for lower cost developments but still considerable.

A drop in residential as well as commercial rents is also evident, brokers said. The slide has been more pronounced in areas of New Dubai, where rents have fallen by up to 40%.

Hafiz Sohail Ijaza, Property Consultant at Wood Bridge Real Estate, expects the property market will remain balanced in terms of supply and demand through 2009. ‘We don’t see a recovery for the off-plan property sector till 2010,’ he said.

Abstract from source www.propertywire.com