Giant investment funds are poised to start buying Japanese property in the first half of next year when prices are expected to be at rock bottom, it is claimed.
Global investors including Carlyle Group, Blackstone Group and Lone Star Funds are still waiting for prices to drop a bit further, according to Ben Duncan, managing director of CB Richard Ellis Japan.
‘The market is steering toward big, opportunistic funds. They’re waiting for prices to fall further. At the moment they are not seeing as much distress as they hope for. But as the market starts to bottom out they’ll probably start to buy,’ he explained.
Commercial land prices in Japan fell 4.7% to a three-year low in 2008, with the decline increasing to 5.4% in the three largest metropolitan areas of Tokyo, Osaka and Nagoya, official government figures show. Office vacancies in Tokyo’s main business districts increased for the 17 month in a row in June to 7.25%.
Blackstone has already said publicly that is plans to invest in Japanese property companies that need financing.
One factor that is hampering a move forward is that Japan’s banks have been lenient in allowing companies to refinance borrowing rather than forcing them to liquidate assets, Duncan said.
‘That’s held back recovery in that the market hasn’t corrected. If there had been more pressure we’d see more transactions and investment from all sectors,’ he added.
Firms like Barclays Capital are indicating a turnaround is not far off. ‘Pessimism has been retreating recently with the re-emergence of office contract and condominium sales transactions,’ it said in a statement.
Other factors are being taken into account. Tokyo, for example, recently overtook Shanghai as Asia’s most attractive city for real estate investment, according to the Urban Land Institute and PricewaterhouseCoopers LLP.
‘What we’ve seen in the last three quarters is a lot of upgrading. Companies in good shape are taking advantage of the market to move into more attractive quarters at no increase in cost,’ Duncan said.
Source: http://www.propertywire.com/
Asian investors, particularly from China, are setting their sights on property in Australia as it has not been as severely hit by recession and is regarded as a safe place to invest.
Richard butler, senior managing director of CB Richard Ellis International Investments said there were lots of bids for a prominent building in Sydney recently.
His firm has calculated that overseas investors accounted for 12% of total transactions in Australia in the first half of this year, up from around 9% in 2008.
‘What they are seeing is Australia probably is a safer bet, where returns will be more secure and safe because of the transparency. Whereas no one wants to go into markets that are decimated like Singapore at the moment which is suffering from massive oversupply,’ Butler explained.
The fact that values have not been decimated in Australia adds to the feeling of safeness. According to Jones Lang LaSalle prices for commercial properties in Sydney fell some 15% in the first quarter of 2009 from a year ago, but that is compared with a more than 30% drop in Shanghai, Hong Kong, Tokyo and Mumbai.
It also says that rents fell around 25% in Sydney while Singapore, Tokyo and Mumbai saw more than a 30% drop in the first quarter.
Recently in the commercial sector those investing include Woori Investment from South Korea, and Japanese builder Sekisui which is to develop homes in Sydney and Brisbane. The Chinese are active in the residential sector too. ‘There is a fair bit of movement, with wealthy Chinese having their children study in Australia,’ said John Bongiorno, director for real estate agent Marshall White based in Victoria.
The company is considering opening an office in Shanghai or Beijing to attract more buyers. ‘They are attracted by the safety of the country, by the high standard of education we offer, by the high standard of living we offer,’ he said.
Analysts said the timing may be good for foreign investors to enter the market as many local players are currently inactive due to tight credit. David Green-Morgan, Asia Pacific research director for DTZ, said that he expects transactions to pick up as foreign investors are likely to rush and get the best deals.
‘They are coming in at this point of the cycle as they see opportunities. They will be happy to hold for five to eight years and then they’ll get out when the market gets back up,’ he added.
Source: http://www.propertywire.com/
Property vultures are circling to pick the bones clean of deals as the US property clock has wound prices back to the same levels as they were in 2003, according to financial researchers Standard and Poor’s.
House prices fell 18% in April in S&P’s 10 and 20 city indices.
Commercial property has crashed alongside home prices registering a 20% decline, with market expectations of another good way to go – perhaps another 20%.
“Now that the meltdown has happened, the new emerging market is the United States,” Tom Shapiro, president of real estate investment firm GoldenTree InSite Partners, said at the Reuters Global Real Estate Summit in New York.
“I think there’s going to be the best opportunity to make money in the last 20 years in real estate in the US.”
GoldenTree InSite pulled the plug on US real estate investment in 2006 and focused attention and cash on Brazil instead, with investment in residential and office properties.
The company has a war chest of about a $1 billion to sink in to property, and is ready to return to the US market and take advantage of the right projects that need or will need money when they come up short.
“We are just at the point now where we are seeing some very interesting entry points on certain transactions,” he said.
New York-based GoldenTree InSite invests institutional funds.
Shapiro said his firm likes big cities, such as Los Angeles and New York where struggling commercial real estate markets tend to rebound strong.
“San Francisco right now is a pretty interesting place to think about because San Francisco is a very diversified economy,” he said.
Meanwhile, residential property prices fell – but the rate of decline is beginning to show signs of holding steady fueling hopes that the market will soon hit rock bottom.
“While one month’s data cannot determine if a turnaround has begun; it seems that some stabilization may be appearing in some of the regions,” said David Blitzer, chairman of the committee in charge of S&P’s index. “We are entering the seasonally strong period in the housing market, so it will take some time to determine if a recovery is really here.”
Phoenix posted the largest annual decline of 35.3%, while Las Vegas slipped 32.2% from last year and San Francisco fell 28%. Denver, Dallas and Boston posted the best performance in terms of annual declines, down 4.9%, 5% and 7.7%, respectively. On a month-on-month basis, Dallas saw 1.7% gain from March while Las Vegas lost 3.5%.
Source: http://www.nuwireinvestor.com/
There has been a rise in demand for residential units in the area known as ‘New Dubai’ during the second half of 2009, according to a new report from Asteco, a property services company.
Apartment and villa sales prices across Dubai decreased by an average 15 per cent and 13 per cent respectively, representing a significant slowdown in negative growth compared to the quarter-on-quarter decline from Q4 2008 to Q1 2009, the report said.
However, Palm Jumeirah, which along with the Dubai Marina forms the area known as ‘New Dubai’, has reported a surge in sales prices during the second half of the year, the report claims.
It was found that villa prices rose by 20 per cent and apartment prices have risen seven per cent. With more properties being handed over, owners are reluctant to sell at a reduced cost and are therefore leasing their units, Asteco claim.
This has led to apartment and villa rental rates on the Palm dropping by 12 per cent and 25 per cent respecively.
“The last few months have also seen distressed sellers being flushed out the market, with remaining owners now refusing to drop below a certain price level,” said Vincent Easton, sales director at Engel and Volkers estate agency in Dubai.
“Increasing numbers of peo-ple are prepared to commute to Abu Dhabi from Jumeirah Lake Towers and Discovery Gardens,” Easton told 7DAYS.
Andrew Chambers, Asteco’s managing director, said the “demand has mostly been for one- and two-bedroom apart-ments and for three- and four-bedroom townhouses” in the ‘New Dubai’ areas.
Source: http://www.zawya.com/
The number of new properties being built is increasing but they are still way below what they were a year ago and the situation is set to result in severe shortages in years to come.
The latest figures from the NHBC show that private sector starts are 36% on a year ago although they have reached the highest point in almost a year.
The warranty and insurance provider received 8,305 applications in June 2009 for builders to start new properties in the combined private and public sectors, the greatest number since July 2008, when 9,530 applications were received. However, private sector new starts (excluding housing associations) were down 36% on the same three-month period a year ago (20,973).
There is a significant fluctuation in the number of applications across the UK, with figures for some regions, including Greater London and Merseyside, more than 50% down on a year ago.
A shortage of new build housing will emerge particularly in the South East of England next year, according to the latest Knight Frank residential development review.
New build starts in the region this year are likely to amount to the lowest since the 1950s. When combined with the lack of supply in the second-hard market, caused by the number of potential vendors opting to ‘wait out’ the recession, this could lead to a real shortage of properties for sale next year.
‘Developers who opt to move now may be in the position of being able to sell into an undersupplied market next year. However, they need to be very cautious, opting to deliver in-demand family housing into those areas with resilient housing markets. Elsewhere, a greater number of forced sales could undermine this strategy,’ said Jon Neale, head of development research at Knight Frank.
The property consultants have noticed a growing interest from residential developers and housebuilders for well located locations. This is in complete contrast to the last quarter of 2008 where there seemed to be little appetite for any form of speculative land acquisition.
But the report suggests that, given the current constraints in the market, it will be difficult for the required delivery levels to be achieved unless new models are found for regeneration schemes or more Greenfield land is released for development.
The National Institute of Economic and Social Research warned that it is a lack of available homes that is driving up recent prices increases in parts of the UK.
As a result, the think tank expects the house price slump to persist for another two years.
‘The temporary rise in prices is probably the result of limited supply. There has been talk of stabilisation and some recovery in the housing market, but we don’t think this is the case. We only see growth in the housing market returning in 2012,’ it said.
Source: http://www.propertywire.com/
The United Arab Emirates is leading the way in development in the Gulf region with almost $930 billion worth of projects currently underway, according to a new report.
A study from the Kuwait National Bank says that this amounts to 45% of all projects planned in the Gulf area which amounts to some $2.1 trillion.
The report shows the extent of the boom in development in the region. The value of property construction is four times higher than had been estimated in June 2005 and represents an annual growth rate of nearly 50%.
‘The UAE accounts for by far the biggest share of project activity, totalling around $929 billion and affirming its position as the leading GCC country in attracting capital investment. Some 81% of the UAE projects are in the construction sector,’ the report says.
The report shows that the construction sector dominates in every GCC country while the total value of projects in the UAE is far higher than anywhere else. Although Saudi Arabia has a much larger base of non-construction related projects, some $224 billion which is 28% more than in the UAE. ‘This probably reflects the larger size of the Saudi economy in absolute terms, necessitating a greater degree of industrial diversification,’ the report says.
Also the higher value of non-construction related projects in Saudi Arabia stems largely from the petrochemical, power and utilities sectors. At a combined $127 billion, the value of the Kingdom’s projects in those sectors is about 35% larger than in the UAE.
The overwhelming balance of non-construction-related projects in other GCC countries comes in the oil and gas, power and utilities sectors, with the latter reflecting the region’s growing domestic power needs, the report adds.
Source: http://www.propertywire.com/
Dubai property prices and rents recovered slightly in June, signaling that the worst for the sector may be over, Deutsche Bank said in a report on Monday.
The average house price for apartments and villas rose 6.5 percent month-on-month in June to AED1,285 ($349.9) per square foot, while rents rose 1.1 percent over the same period following a 10 percent fall, Deutsche Bank said in its proprietary price index, which covers 13 locations in Dubai.
“Although monthly data should be viewed with caution given the limited number of transactions, recent numbers tend to confirm the stabilization in the market we saw in May,” said Nabil Ahmed, head of research at Deutsche Bank in Dubai in comments published by newswire Dow Jones.
“This might not be the bottom yet, but the worst increasingly looks behind us,” he said.
The global financial crisis has taken its toll on the UAE’s once-booming property sector with the slump so far wiping an estimated 50 percent off Dubai prices since their peak in August 2008, Deutsche said earlier this month.
“We believe the stabilisation in prices was mainly driven by easing pressure from distress sales and potential remaining sellers now being unwilling to sell at current prices, off 50% from peaks on average,” Deutsche Bank said.
“Our industry contacts confirm that prices have tended to stabilise, even increased in some areas, but the level of transactions/ demand remains very low,” it said.
Deutsche said it still expects property prices to bottom out at the end of the year after falling a further 15-20 percent.
“We continue to see risks of further weakness on the combination of expatriates’ exodus during the summer and new supply flowing into the market in the second half of 2009. However, the worst regarding property prices increasingly looks behind us,” Deutsche added.
The latest report on the Dubai market comes just days after one senior analyst described it as one of the “riskiest” property markets of the post war era.
Saud Masud, analyst at Swiss investment UBS, said problems of over-supply and population shrinkage with thousands of jobless expatriates expected to return home when the schools break up next week, would mean continued pressure on house prices.
“In my view Dubai’s property risk profile appears to be one of the highest in the post war era and while one may debate the potential support factor from Abu Dhabi the fundamental oversupply and population dynamics risks are very much there,” he told Arabian Business.
Source: http://www.arabianbusiness.com/
What is the current situation of properties in Dubai and its surrounding states, you can imagine from the following news:
A new property regulatory authority has been introduced in Ras Al Khaimah giving a new layer of protection to real estate investors in the emirate.
The Ras Al Khaimah Investment Authority (RAKIA) Real Estate Regulatory Agency will oversee the implementation of escrow accounts law fro all freehold development projects, officials said.
Several property developers have already registered their projects with RAKIA RERA, which is similar to the Real Estate Regulatory Authority operating in Dubai, and the new watchdog will now monitor developments with a collective value of AED6 billion.
Developers can only register when their project’s concept design has been approved, which will then allow them to open an escrow account and start selling properties. RAKIA RERA will also oversee the construction by sending out a team of engineers to inspect projects.
‘The escrow account has been implemented to prevent mishandling of construction funds and ensure that investors’ money is spent according to the master plan of the project,’ said Yahia Kambris, general manager.
‘The establishment of the new real estate watchdog is an important step in our efforts to safeguard and protect the interest of investors and reinforce the reputation of Ras Al Khaimah as an attractive and practical investment destination in the region,’ he added.
Among the developers that have registered with RAKIA RERA include Select Group, the developer of Pacific; Manazil Real Estate, which is developing Marbella Bay; Pure Real Estate, developer of Blue Mirage; Stallion Properties, which is developing Santorini; and e-myproperty, developer of Bab Al Badr.
Yes Properties, developer of The Quay, is also currently completing the registration process and will soon open an escrow account.
Several banks, including Badr Al Islami-Mashreq, Bank of Baroda, Commercial Bank of Dubai, Abu Dhabi Commercial Bank and Dubai Islamic Bank, have also signed an agreement with RERA to offer escrow accounts.
Source: www.propertywire.com
The property market in Dubai has undergone a substantial drop in the last few months offering excellent investment possibilities, according to the latest research.
Residential rents fell 23% in the first quarter, with Discovery Gardens posting the biggest drop, while prime office rents declined 18%, according to the analysis from CB Richard Ellis.
Both off plan and finished properties witnessed a sharp drop in sale prices over the last quarter as the number of transactions fell by 60% from the corresponding period last year.
The fall in rents was particularly steep in Nakheel’s Discovery Gardens development, where the average rent for studios and one bedroom apartments fell by 28%.
The exit of speculators from the market would see further interest from real time investors/end users and investment funds entering the market during the rest of the year with the focus on properties which are ready to occupy or expected to enter the market over the next 12 months.
‘In some of the developments prices have already bottomed out, providing excellent investment opportunities for investors,’ said analyst Matt Green.
Many projects currently due to be completed this year are likely to be further delayed and pushed back into next year, the commercial property consultant said. Developers of off plan properties have revised payment plans and in a few cases their prices in order to retain a steady flow of funds for their developments.
In the commercial sector prime office rents in Dubai fell by around 18% on the quarter. Secondary locations with Grade A office buildings, mainly in the freehold locations of Jumeirah Lakes Towers and TECOM, are experiencing a sharp decline in lease and occupancy rates, the research indicates.
The drop in demand for commercial and rental space, following the decline in an expatriate workforce, will have a significant impact on the lease and occupancy rates in all areas of Dubai throughout 2009, it predicts.
A new rental index for Dubai to be published this week is expected to a 30% fall in rents since March for Palm Jumeirah villas and other residential hotspots in Dubai such as apartments in Jumeirah Beach Residence and townhouses in the Springs will show rental falls of 8%.
Source: http://www.propertywire.com/
There is a two-bedroom apartment on the 25th floor of Jumeirah Beach Residence with an excellent view of Dubai’s property market; where it has been and where it is heading.
In February, the apartment’s British owner sold it for Dh1.5 million (US$408,000) to a compatriot, reaping a Dh680,000 profit on what he had paid for it less than two years earlier – a return equal to 44 per cent a year.
Then in mid-March, as the global economic crisis raged on, the apartment’s new owner decided to sell it for a little more than Dh1.43m to a Russian buyer, escaping with a loss of about Dh66,000. That works out equal to a loss of 42 per cent a year.
Since peaking last September, property prices in Dubai have dived, according to data from Reidin.com, a Dubai-based company that has compiled an online database of every property transaction registered with the Dubai Land Department since 1973.
An analysis by The National of the more than 24,000 transactions registered in the past two years reveals that the average property price in Dubai has tumbled about 33 per cent from its peak last September, with prices in the first quarter slipping 11 per cent since the start of this year.
But prices in the first three months of this year were still 12 per cent higher – not lower – than they were in the same quarter last year.
“That is a surprise,” says Ryan Mahoney, the managing director at the Dubai property agency Better Homes.
Mr Mahoney and other property experts predict prices will keep falling for at least the next three months before finding their footing.
In the meantime, they say, the property market is diverging. Where once investors were willing to buy from blueprints, the emphasis now is on finished properties that offer high-quality, affordability and a convenient location close to amenities such as cafes, restaurants and shopping.
As the market has shifted, Mr Mahoney says, buyers are thinking less about whether a property will earn quick profits and instead asking themselves how much they might enjoy living there.
How they answer will reshape the future of the country’s property industry. In the meantime, the continuing slump has troubling implications for the economy. Property and construction still account for about 15 per cent of the nation’s economy and represent the largest source of jobs.
Yet lenders such as the mortgage company Amlak Finance predict more defaults as job losses mount and property prices fall, a trend that will put further pressure on the country’s banks.
Some foresee a vicious circle of layoffs, expatriate departures, slower economic growth and falling property prices.
“We will see a slowdown or contraction in a number of economic sectors, most notably in real estate and construction as projects are cancelled or put on hold,” Monica Malik, an economist with EFG-Hermes, wrote in a March report that forecast a 30 per cent decline in Dubai’s population of construction workers. “The fall in population will further result in weaker demand for housing.”
The Reidin.com statistics are not perfect. Analysts note that the data is only as reliable as the human beings at the Land Department whose job it is to input data on each transaction.
And since registration of property became mandatory in November, the department’s employees have apparently been inundated with owners rushing to register deals dating back as far as 1997. In March alone, the land department registered more than 500 deals that took place before 2007.
The data also probably fail to fully capture the frenzy last year in off-plan sales, in which buyers made down-payments to developers for property still under construction.
If the value of the property fell below their purchase price, many probably walked away from their deals, never bothering to register them.
Nevertheless, the data provide what is probably the most comprehensive look yet at trends in Dubai’s property market. According to Reidin.com’s data, the property craze peaked in April last year as prices were rising at a rate of 43 per cent a year.
Prices continued to rise until September, even as the number of deals dwindled.
Then, after rising 37 per cent in the third quarter from the previous quarter to Dh1,106 a square foot (sq ft), property prices dropped, losing 15 per cent in the fourth quarter and another 11 per cent in the first quarter to an average of Dh839 a sq ft.
The numbers look even worse when adjusted for inflation. The latest official estimate of inflation, from March of last year, is 11.5 per cent. In real terms, then, property prices managed to eke out a 0.5 per cent gain over the past year.
To gain some comparison, Dubai residential prices in February dropped by 7 per cent in inflation-adjusted terms. In the US, home prices fell by almost 19 per cent.
One of the market’s vulnerabilities, property executives say, is that it is driven primarily by foreign buyers and is therefore even more susceptible than others to global economic trends.
One of Dubai’s primary sources of demand, for example, has in recent years come from increasingly affluent Indians. But in September, Indians became net sellers of Dubai property.
That is when panic seized the market, executives said, as widespread predictions of Dubai’s immunity to global economic trends proved to be wishful thinking.
Property owners rushed to sell. But would-be buyers found themselves stymied by a sudden freeze in lending as UAE banks faced a global liquidity crunch that forced the country’s two main mortgage lenders, Amlak Finance and Tamweel, to stop financing new mortgages.
Now, with global liquidity recovering and local banks slowly easing lending restrictions, analysts say buyers are tip-toeing back into the market to hunt for bargains.
They are proving pickier than in the past, agents and executives say. Properties that are still under construction are out of favour. What’s in? “Anything that’s ready,” says Anjili Samtani, an agent at Megabucks Realty in Dubai.
In part, this shift reflects the disappearance of short-term speculative buyers, the kind of investors who bought “unbuilt” properties with only a small cash down payment, without ever obtaining a home loan.
After being driven sky-high by investors eager to own property in the shadow of the world’s tallest building, prices at two properties near Burj Dubai, Old Town and The Residences, have fallen since September by more than 50 per cent.
Likewise, villas on Palm Jumeirah, some of the world’s most high-profile properties, have fallen in value by 44 per cent.
Analysts say there is also a shift among buyers to quality, a move made possible now that more and more developments have been completed.
“Investors are able to look and touch and feel something that previously they could only see in a brochure,” says Blair Hagkull, the managing director of Jones Lang LaSalle in Dubai. “The motivation of an end-user is quite different from that of a speculator. End-users focus on size and views and parking. People are starting to look at who the developer is, who the contractor is. Design issues are becoming more important.”
Some developments have therefore bucked the trend and risen in value. Affordable housing in developments such as Discovery Gardens and International City, for example, has managed to rise in value through the slump.
Properties with prime locations or outstanding amenities have performed even better. Yacht Bay, with views of Dubai Marina Yacht Club, has enjoyed a 55 per cent jump in price.
The Waterfront, one of several luxury developments by Trident International Holdings, has jumped in value by 62 per cent. “The finishing is superb,” says Ms Samtani.
The bluest of the blue-chip properties have lost little of their lustre. The most expensive property in Dubai, for example, remains the luxurious La Reve Tower, where prices remain at roughly Dh2,500 a sq ft even after falling 26 per cent since the start of the year.
But prices at La Reve are still 35 per cent higher than they were a year ago.
This differentiation, property executives say, is likely to determine which developers survive the downturn and which don’t.
“In this process of natural selection, buyers will be killing off the brands of developers that didn’t deliver on their promises,” Mr Mahoney says.
Analysts warn that there is little to keep prices from falling further during the summer slowdown in business activity. “The panic is still there,” says Sharjeel Bijdani, a banker in Dubai who owns four apartments. While transaction numbers improved in February and March, analysts say not to expect any improvement until after Ramadan.
Some also warn that easing mortgage terms could unleash a wave of pent-up selling as buyers obtain financing to pick up bargains.
When the market finally recovers, analysts say, it is likely to be much more robust. The Land Department’s statistics, for example, could help reduce volatility in prices by improving transparency, and the shift from short-term, speculative property investing to long-term purchases by people who want to live in the homes they buy will tend to make prices more stable, they say.
The market’s current malaise, therefore, is helping push Dubai’s urban development into a more mature phase. “This whole move, as painful as it is for everyone, particularly for us,” says Mr Mahoney, “is better for the city in the long term.”
Source: http://www.thenational.ae/
Residential property prices in the UK fell slightly in April putting an end to optimisim that had been created by a small rise in March.
Prices fell 0.4% and the average price of a home is now £151,861 according to the April House Price Index from Nationwide, the country’s larges building society. The price of a house is now 15% less than it was a year ago.
Nationwide had said after the March figures that too much should not be read into the small rise and now it is saying that recent measures announced in the Budget were unlikely to turn things around.
But it said that the extension of the stamp duty threashold might encourage first time buyers and this combined with falling prices should have some kind of effect on the property market.
The building society said the government could have done more to aid the availability of credit. ‘The chancellor announced several measures aimed at boosting the housing market in his Budget,’ said Fionnuala Earley, Nationwide’s chief economist.
‘The scheme for government guarantees for new, high-quality residential mortgage backed securities are welcome and may help to boost the amount of mortgage credit available. However, since the availability of credit is only part of the reason why the housing market is in the doldrums it is unlikely to lead to a swift turnaround in its fortunes,’ she explained.
‘Lenders have already indicated that the availability of credit is less of an issue than it has been, but at the same time expect that the demand for secured lending will fall further. Given the weakness of the economy and the expected further increase in unemployment this comes as no surprise,’ she added.
Earley pointed out that the effects of unemployment would have an effect the property market is very sensitive to income and, as a result, conditions in the labour market are crucial to its performance.
‘That said, the correction in house prices and improved affordability conditions provide a good grounding for the market once domestic and global economic conditions once again become more favourable,’ she concluded.
Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors said the figures were not a surprise.
Source: www.propertywire.com
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
Six million property owners in the UK fear their home could end up being repossessed while millions more are anxious that they will end up in a negative equity situation this year, research shows.
A report from consumer watchdog Which? Indicates that almost two thirds of people fear either they or their partner could lose their job during the current recession and more than four in ten are anxious this could make them unable to cover their mortgage.
Meanwhile, 4.2 million people are worried that they could end up in negative equity, almost a quarter of all those who have mortgages and 73% feel the government should be doing more to help them out.
‘It’s dreadful that six million people fear losing the roof over their heads,’ said Which? personal finance campaigner Doug Taylor.
‘With people spending sleepless nights worrying about job losses and repossessions, the industry needs to demonstrate that it wants to win back the trust of the British public by fully embracing government initiatives,’ he added.
The Which? Report calls for a statutory ban on 100% mortgages after its research found that three quarters of people want them banned. It also wants robust protection against people losing their homes because of unsecured debt and for the government to force lenders to become part of the Homeowner Mortgage Support Scheme if they fail to join voluntarily.
Figures from the Council of Mortgage Lenders predict as many as 75,000 repossessions in the UK this year although this has been described by others as optimistic. According to the Financial Services Authority 2.5 million people will end up in negative equity by the end of this year.
Source: www.propertywire.com
Buyer interest in the UK’s property market is increasing across the country with London and the south of England leading the way, according to the Royal Institution of Chartered Surveyors’ (RICS) UK housing market survey.
Buyer enthusiasm which began growing in January continued to grow in February with interest in London at a high not seen for more than two years. This means that interest in the property market has now increased for four consecutive months and reflects both the drop in asking prices and continued interest rate cuts, according to RICS.
As house prices fall, those with finance are looking to pick up bargains. However, this pent up demand has not yet translated into sales. The average number of transactions per agency over the last three months is now at 9.5, a slight drop from 9.8 in November, and the lowest figure since the survey began in 1978.
The balance of surveyors reporting house price falls increased slightly in February with 78.3% more chartered surveyors indicating a fall than rise in house prices, from 76.6% in January.
Family homes remain in demand but flats are proving harder to sell in many areas as first-time buyers are struggling to gain a foothold on the property ladder. Despite depressing repossessions data, the net balance of surveyors reporting new instructions to sell remains in negative territory indicating that supply is very tight. In the current market, a lack of mortgage finance and weak economic conditions are restricting the ability of many to consider the option of entering the market.
However, surveyors remain optimistic that sales will pick up in the coming months as 11% more chartered surveyors expect sales to increase in the coming three months than in January.
Source: www.property-investor-news.com
