Wednesday 27 January 2010
Saturday 23 January 2010
Property Investment for 2010
Property investment turnover in Central and Eastern Europe (CEE) surged more than 300 percent in the second half of 2009 from the first half, as pricing began to stabilise and confidence in local economies recovered, a report showed on Thursday.
The huge rise in commercial property sales volume brings total 2009 turnover in the region to 2.5 billion euros ($3.55 billion), broker CB Richard Ellis (CBRE) said, noting continued preference for "defensive properties in core locations".
Despite higher levels of activity in the second half of the year, CBRE described the 2009 market as "quiet" compared with recent years. Investment turnover in 2009 finished 75 percent lower than in 2008.
Central Europe accounted for 56 percent of CEE turnover in 2009, compared with 37 percent in 2008. Investors sought the relative security of assets in Central European capital city markets such as Prague, Warsaw and Budapest, which increased their share of total CEE turnover to 34 percent in 2009 from 21 percent in 2008.
Southeastern Europe's share of turnover fell more than half to 12 percent in 2009, while Eastern Europe's share dipped to 32 percent from 37 percent in 2009.Offices received the largest share of investor attention for most of 2009, grabbing 44 percent of the market versus 31 percent for retail and 12 percent for industrial property. Hotels accounted for 8 percent of transactions.
Both prime yields and prime capital values were relatively stable in CEE in the latter part of 2009, CBRE said, with more evidence of transactions closing at or near quoted prime yields in recent months.
"The fact that prime yields fell in certain Western European markets in H2 2009 has bolstered belief that prime yields have reached highs in most CEE markets," Pavel Schanka, Director of CEE Capital Markets said.
"Despite some promising signs at the prime end of the market, value declines are still a reality at this point in non-prime segments in most CEE property investment markets, and are likely to remain so in 2010."
London surged as the top destination for commercial real estate investment, beating out Washington D.C. and leaving New York in the dust, according to a recent survey by the Association of Foreign Investors in Real Estate (AFIRE).
London's score was 31 points higher than second-place Washington and 40 points ahead of third-place New York. Last year, London was in second place, four points behind Washington and only two ahead of New York.
Investors believe that commercial real estate prices in London already have bottomed out. However, prices in the U.S. have not because of differences in accounting practices.
"London currently offers investors the advantage of a "re-priced" market," James Fetgatter, AFIRE chief executive, said. "The re-pricing began sooner than it did in other cities."
The survey of the association's nearly 200 members was conducted in the fourth quarter 2009. Survey respondents own more than $842 billion of real estate globally including $304 billion in the U.S.
The United States remained the country selected as the "most stable and secure real estate investment environment," although only 44 percent of the respondents said so. It was the first time the United State fell below 50 percent in the survey. That's down from 53 percent in 2008 and 57 percent in 2007.Germany was second with 21 percent.
"The financial crisis of the past year has obviously affected investors' perceptions of U.S. real estate as 'stable and secure,'" Fetgatter said. "However, it is also apparent that opportunity lies within this instability since the U.S., along with the UK, show substantially higher scoring for expected capital appreciation."
Fifty-one percent of respondents said the United States provided the best opportunity for price appreciation. According to various research firms, prices have fallen from their 2007 peaks by more than 40 percent.
Respondents saw the UK as the second-best country for capital appreciation, and China came in third.Two-third of the respondents said they planned to raise their U.S. investment in 2010, increasing equity investment by 62 percent and debt investment by 83 percent over 2009 levels.
Meanwhile, The Real Estate Round Table, which represents U.S. commercial real estate property owners, investors and professionals has been lobbying Congress to change the rules that subject some foreign owners to double taxation.
As for global investment, respondents said this year's equity investment would be 46 percent higher than in 2009 but 20 percent lower for debt investment.Among U.S. cities respondents chose Washington and New York, with San Francisco running a distant third. Boston made significant headway into fourth place, with Los Angeles falling one spot into fifth place.
Survey respondents said they favored investing in multifamily real estate as their preferred property type followed by office, industrial, retail and hotel properties trailing significantly.
"More notably, the gap between the top preference and the least-favored product, hotels, has not been this wide since 2000," Fetgatter said.
Half the survey respondents said they expect the U.S. commercial real estate market recovery by or before the fourth quarter, six months later than they projected in AFIRE's mid-year 2009 survey.
About a third of those surveyed said they were more optimistic about the U.S. real estate market than they were in June; 63 percent say their perspective has not changed and 6 percent say they are more pessimistic.
Respondents said their top favorite emerging markets are China, Brazil, India, Mexico, and Turkey. Brazil and India, which were the first- and second-ranked emerging markets in the 2009 survey, each receive half the votes of China.
London’s West End regained its ranking as the world’s most expensive office market in dollar terms last year as rents stabilized in the district while falling elsewhere, according to DTZ Holdings Plc.
The West End overtook Tokyo, Paris, Dubai and Hong Kong to secure the top spot, which it will hold until at least 2013, the London-based property adviser said in a report published today. The West End had been the costliest business district since at least 2002 until 2008, when it was placed fifth. Last year it cost $21,420 in rent, charges and taxes to provide office space for one worker in the district.
The global financial crisis has cut office rents worldwide, with demand for space waning as companies fired workers to save cash. That has reduced total occupancy costs in cities such as Singapore, where the decline coincided with a surge of new office space.
“With falling rents and more supply to choose from, the office market will offer tenants real value for money in the current climate,” Karine Woodford, head of real estate strategy at DTZ, said in the report. “We may see multinational companies taking advantage of this shift and relocating their operations accordingly.”
The cost of renting office space in Tokyo fell 8 percent to $20,960 last year, while costs for Midtown New York, Paris, Dubai and Hong Kong all fell at least 20 percent in dollar terms, DTZ said.
Costs in the U.K. capital’s main financial district, known as the City of London, are expected to rise an annual 6.7 percent in the five years to 2013, second to Hong Kong, where spending will advance 8.8 percent a year.
The five most expensive office locations in the world last year were the West End, central Tokyo, Washington, Hong Kong and Geneva, according to the report. The pound’s strength against the dollar contributed to the West End’s return to the top of the ranking.
The huge rise in commercial property sales volume brings total 2009 turnover in the region to 2.5 billion euros ($3.55 billion), broker CB Richard Ellis (CBRE) said, noting continued preference for "defensive properties in core locations".
Despite higher levels of activity in the second half of the year, CBRE described the 2009 market as "quiet" compared with recent years. Investment turnover in 2009 finished 75 percent lower than in 2008.
Central Europe accounted for 56 percent of CEE turnover in 2009, compared with 37 percent in 2008. Investors sought the relative security of assets in Central European capital city markets such as Prague, Warsaw and Budapest, which increased their share of total CEE turnover to 34 percent in 2009 from 21 percent in 2008.
Southeastern Europe's share of turnover fell more than half to 12 percent in 2009, while Eastern Europe's share dipped to 32 percent from 37 percent in 2009.Offices received the largest share of investor attention for most of 2009, grabbing 44 percent of the market versus 31 percent for retail and 12 percent for industrial property. Hotels accounted for 8 percent of transactions.
Both prime yields and prime capital values were relatively stable in CEE in the latter part of 2009, CBRE said, with more evidence of transactions closing at or near quoted prime yields in recent months.
"The fact that prime yields fell in certain Western European markets in H2 2009 has bolstered belief that prime yields have reached highs in most CEE markets," Pavel Schanka, Director of CEE Capital Markets said.
"Despite some promising signs at the prime end of the market, value declines are still a reality at this point in non-prime segments in most CEE property investment markets, and are likely to remain so in 2010."
London surged as the top destination for commercial real estate investment, beating out Washington D.C. and leaving New York in the dust, according to a recent survey by the Association of Foreign Investors in Real Estate (AFIRE).
London's score was 31 points higher than second-place Washington and 40 points ahead of third-place New York. Last year, London was in second place, four points behind Washington and only two ahead of New York.
Investors believe that commercial real estate prices in London already have bottomed out. However, prices in the U.S. have not because of differences in accounting practices.
"London currently offers investors the advantage of a "re-priced" market," James Fetgatter, AFIRE chief executive, said. "The re-pricing began sooner than it did in other cities."
The survey of the association's nearly 200 members was conducted in the fourth quarter 2009. Survey respondents own more than $842 billion of real estate globally including $304 billion in the U.S.
The United States remained the country selected as the "most stable and secure real estate investment environment," although only 44 percent of the respondents said so. It was the first time the United State fell below 50 percent in the survey. That's down from 53 percent in 2008 and 57 percent in 2007.Germany was second with 21 percent.
"The financial crisis of the past year has obviously affected investors' perceptions of U.S. real estate as 'stable and secure,'" Fetgatter said. "However, it is also apparent that opportunity lies within this instability since the U.S., along with the UK, show substantially higher scoring for expected capital appreciation."
Fifty-one percent of respondents said the United States provided the best opportunity for price appreciation. According to various research firms, prices have fallen from their 2007 peaks by more than 40 percent.
Respondents saw the UK as the second-best country for capital appreciation, and China came in third.Two-third of the respondents said they planned to raise their U.S. investment in 2010, increasing equity investment by 62 percent and debt investment by 83 percent over 2009 levels.
Meanwhile, The Real Estate Round Table, which represents U.S. commercial real estate property owners, investors and professionals has been lobbying Congress to change the rules that subject some foreign owners to double taxation.
As for global investment, respondents said this year's equity investment would be 46 percent higher than in 2009 but 20 percent lower for debt investment.Among U.S. cities respondents chose Washington and New York, with San Francisco running a distant third. Boston made significant headway into fourth place, with Los Angeles falling one spot into fifth place.
Survey respondents said they favored investing in multifamily real estate as their preferred property type followed by office, industrial, retail and hotel properties trailing significantly.
"More notably, the gap between the top preference and the least-favored product, hotels, has not been this wide since 2000," Fetgatter said.
Half the survey respondents said they expect the U.S. commercial real estate market recovery by or before the fourth quarter, six months later than they projected in AFIRE's mid-year 2009 survey.
About a third of those surveyed said they were more optimistic about the U.S. real estate market than they were in June; 63 percent say their perspective has not changed and 6 percent say they are more pessimistic.
Respondents said their top favorite emerging markets are China, Brazil, India, Mexico, and Turkey. Brazil and India, which were the first- and second-ranked emerging markets in the 2009 survey, each receive half the votes of China.
London’s West End regained its ranking as the world’s most expensive office market in dollar terms last year as rents stabilized in the district while falling elsewhere, according to DTZ Holdings Plc.
The West End overtook Tokyo, Paris, Dubai and Hong Kong to secure the top spot, which it will hold until at least 2013, the London-based property adviser said in a report published today. The West End had been the costliest business district since at least 2002 until 2008, when it was placed fifth. Last year it cost $21,420 in rent, charges and taxes to provide office space for one worker in the district.
The global financial crisis has cut office rents worldwide, with demand for space waning as companies fired workers to save cash. That has reduced total occupancy costs in cities such as Singapore, where the decline coincided with a surge of new office space.
“With falling rents and more supply to choose from, the office market will offer tenants real value for money in the current climate,” Karine Woodford, head of real estate strategy at DTZ, said in the report. “We may see multinational companies taking advantage of this shift and relocating their operations accordingly.”
The cost of renting office space in Tokyo fell 8 percent to $20,960 last year, while costs for Midtown New York, Paris, Dubai and Hong Kong all fell at least 20 percent in dollar terms, DTZ said.
Costs in the U.K. capital’s main financial district, known as the City of London, are expected to rise an annual 6.7 percent in the five years to 2013, second to Hong Kong, where spending will advance 8.8 percent a year.
The five most expensive office locations in the world last year were the West End, central Tokyo, Washington, Hong Kong and Geneva, according to the report. The pound’s strength against the dollar contributed to the West End’s return to the top of the ranking.
Friday 22 January 2010
Demand for City Offices Rises
An increase in commercial letting activity at the end of last year led to a decline in empty London office space for the first time in two years. Rents in the region were boosted as a result and on Wednesday the Royal Institution of Chartered Surveyors reported that rents had stabilised. Additionally, the forecasts of a number of leading property consultancies support the view that the London market is at the forefront of the property recovery.
Sunday 17 January 2010
UK Houses are Less Affordable Now than in 1950's
Houses are less affordable than 50 years ago although the quality of homes has improved, according to the Halifax.The lender, now owned by Lloyds Banking Group, said that over the last five decades UK house prices have risen by 2.7% a year, allowing for inflation.This was above the 2% annual increase in real earnings over the same period.
Prices increased the most in the last decade, and separately lenders warned that lending to first-time buyers would be constrained for "some time to come".
Own or rentThe Halifax study considered the state of the market in the half-century from 1959 to 2009."The last 50 years have witnessed some remarkable developments in the UK housing market," said Martin Ellis, chief economist at the Halifax.
Margaret Thatcher was voted in as MP for Finchley in 1959, and it was her government's Right to Buy policy when she was prime minister in the 1980s that brought about one of the most significant shifts in the market.
Owner-occupation in the UK accelerated the most in the 1980s. The Halifax figures show that 43% of homes were owned by their residents in 1961, compared with 68% in 2008.
Privately rented homes fell from 33% to 14% over the same period, although it has crept up in the last 20 years or so, probably owing to the increase in student numbers.
Boom time
Four big house price booms have occurred in the last 50 years, the research concluded. They were: 1971-73, 1977-80, 1985-89, and 1998-2007.Over the last 50 years, the biggest rise in prices was in greater London, whereas the smallest increase was in Scotland. This might have been mitigated, to a degree, by an increase in homes with two incomes rather than just one.
In a sign that buyers might be getting more for their money now, the proportion of households without an inside toilet fell from 14% in 1960 to 0.2% in 1996.A basic hot water supply features in all homes, unlike 22% of them in 1967, and central heating has also become the norm.
Although getting on the property ladder might have become more difficult, the rise in prices would prove that homes have been a good long-term investment for some people.
The average home has almost quadrupled in value, having risen by 273% since 1959 in real terms, the Halifax found. In today's money, a typical home would have cost about £43,000 in 1959.
Bill McClintock, chairman of the Property Ombudsman, has been in the housing business for 50 years and said he bought his first home - a four-bedroom house in Winchester - for £3,400 in 1965."Even back in the 60s people aspired to own their own home," he said.
First-time buyers
House building levels have fallen, but the proportion of households that were occupied by just one person rose from 19% in 1971 to 33% in 2009, the Halifax said.
Modern houses are different to styles 50 years ago.This is likely to have added to pressure on affordability of smaller homes for first-time buyers.
The Council of Mortgage Lenders (CML) has said that the proportion of the average first-time borrower's income spent on mortgage interest payments dropped in November 2009 to its lowest level for six years, at 14.4%.However, the deposit demanded by lenders remained high - typically at 25%."The requirement for large deposits is likely to continue to constrain the market - particularly first-time buyers - for some time to come," the CML said.
Meanwhile, the National Association of Estate Agents said that there had been a seasonal slowdown in sales in December but a recovery over the last 12 months. However, it still wanted more assistance from the government to help prop up the housing market."Thousands of potential buyers are still in need of help and further, more robust, action is needed to make mortgages more available," said NAEA president Gary Smith.
Prices increased the most in the last decade, and separately lenders warned that lending to first-time buyers would be constrained for "some time to come".
Own or rentThe Halifax study considered the state of the market in the half-century from 1959 to 2009."The last 50 years have witnessed some remarkable developments in the UK housing market," said Martin Ellis, chief economist at the Halifax.
Margaret Thatcher was voted in as MP for Finchley in 1959, and it was her government's Right to Buy policy when she was prime minister in the 1980s that brought about one of the most significant shifts in the market.
Owner-occupation in the UK accelerated the most in the 1980s. The Halifax figures show that 43% of homes were owned by their residents in 1961, compared with 68% in 2008.
Privately rented homes fell from 33% to 14% over the same period, although it has crept up in the last 20 years or so, probably owing to the increase in student numbers.
Boom time
Four big house price booms have occurred in the last 50 years, the research concluded. They were: 1971-73, 1977-80, 1985-89, and 1998-2007.Over the last 50 years, the biggest rise in prices was in greater London, whereas the smallest increase was in Scotland. This might have been mitigated, to a degree, by an increase in homes with two incomes rather than just one.
In a sign that buyers might be getting more for their money now, the proportion of households without an inside toilet fell from 14% in 1960 to 0.2% in 1996.A basic hot water supply features in all homes, unlike 22% of them in 1967, and central heating has also become the norm.
Although getting on the property ladder might have become more difficult, the rise in prices would prove that homes have been a good long-term investment for some people.
The average home has almost quadrupled in value, having risen by 273% since 1959 in real terms, the Halifax found. In today's money, a typical home would have cost about £43,000 in 1959.
Bill McClintock, chairman of the Property Ombudsman, has been in the housing business for 50 years and said he bought his first home - a four-bedroom house in Winchester - for £3,400 in 1965."Even back in the 60s people aspired to own their own home," he said.
First-time buyers
House building levels have fallen, but the proportion of households that were occupied by just one person rose from 19% in 1971 to 33% in 2009, the Halifax said.
Modern houses are different to styles 50 years ago.This is likely to have added to pressure on affordability of smaller homes for first-time buyers.
The Council of Mortgage Lenders (CML) has said that the proportion of the average first-time borrower's income spent on mortgage interest payments dropped in November 2009 to its lowest level for six years, at 14.4%.However, the deposit demanded by lenders remained high - typically at 25%."The requirement for large deposits is likely to continue to constrain the market - particularly first-time buyers - for some time to come," the CML said.
Meanwhile, the National Association of Estate Agents said that there had been a seasonal slowdown in sales in December but a recovery over the last 12 months. However, it still wanted more assistance from the government to help prop up the housing market."Thousands of potential buyers are still in need of help and further, more robust, action is needed to make mortgages more available," said NAEA president Gary Smith.
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