News
Dubai sees property sales plummet compared to a year ago
The sales market in Dubai is slowing with the latest figures from the Land Department showing that they halved last month compared with a year earlier. Transactions fell 51.8% in April compared with the same month in 2014 and the total value was DH35.3 billion, down 37.1% year on year. According to the industry sales have been falling steadily since the end of last year after the Dubai government introduced tough new mortgage caps and higher transaction fees in an attempt to slow what had been one of the fastest rising housing markets in the world. Real estate consultants JLL and the ratings agency Standard & Poor’s are predicting that average house prices in the emirate could fall by between 10% and 20% this year while Deloitte has estimated that they will fall by 1% and 5% in the first half of this year. Indeed, according to CBRE average house prices fell 2% during the first three months of 2015. ‘These figures come as no surprise although from the face of it they look quite dramatic. A fall in volumes is a good leading indicator that prices will fall and we expect that to continue for the rest of this year. Last April the market was still booming, so any year on year figures will reflect that fact,’ said Craig Plumb, the head of research at JLL’s Dubai office. And the latest quarterly report from Phidar Advisory shows that residential prices in the first quarter of 2015 continue to decline, compared to the previous quarter. However, it is not all bad news according to Jesse Downs, managing director of Phidar Advisory as the market downturn is attracting selective opportunistic investment. The report also shows that overall prices fell by 3.9% in the first quarter of the year while apartment lease rates were down 0.3% and for villas they were down 2.4%. But apartment sales were up 0.6% year on year while villas fell 57%. Continue reading
New analysis identifies rising commercial opportunities in smaller UK cities
Rising capital values and strong competition are now driving investors to look beyond the major UK cities for quality office stock and potential value, a new report shows. The analysis from global property consultancy JLL looks at the economic and office market performance of 37 smaller towns and cities giving an insight in to which locations will offer the biggest opportunity over the next five years. The report shows some smaller cities are found to have a stronger outlook than the major cities such as London, Manchester and Birmingham. It explains that the success of these smaller cities will be closely associated with their ability to develop and grow clusters of businesses, along with strong university links and the provision of integrated transport and infrastructure. Growth leaders, including Brighton, Solihull and Reading have seen capital value increases of over 25% since the end of 2012 and are expected to see a stronger than average economic performance over the next five years. With the outlook remaining solid for these cities, most of which have firmly established business clusters, JLL says it may be prudent for investors to focus on opportunities where they can reposition their assets to benefit from any price growth. The report also reveals locations such as Oxford, Warrington, Southampton and Nottingham, with a similarly strong economic outlook but where recent capital value growth has not been as strong as the growth leaders and opportunities may actually be greater going forward. These potential performers include a broad range of property markets that JLL anticipates could benefit from further capital growth as the property market continues to respond to the improving economic climate. ‘The outlook for the UK’s smaller cities is now more optimistic than it has been for some time. Our research shows potential performers, including the likes of Oxford and Warrington, should benefit from further capital growth over the coming years as the property market continues to improve,’ said Chris Ireland, chairman and lead director for UK Capital Markets at JLL. ‘Indeed, the potential for growth in some of the smaller cities may be greater than in the big six regional centres which have already seen substantial uplift,’ he added. ‘From an occupational perspective, we think there will be a gradual shift towards office rental growth in a number of these centres which should ensure continuing investor and developer interest,’ explained Ireland. According to Ben Burston, head of UK offices research at JLL, strong business clusters are a key determinant of future growth prospects. ‘For instance, Oxford’s strong life science cluster is contributing to a robust employment growth outlook, while Warrington is benefitting from a strong nuclear research and technology cluster,’ he said. ‘The devolution agenda provides an opportunity for more decision making to be taken at local level, which could help drive improvements to transport, infrastructure and public realm that will help attract people and businesses, and thereby drive future growth,’ he pointed out. Cities identified in the report as… Continue reading
Majority of US metro areas experiencing falling home ownership rates, new research shows
Rising home prices in many metro areas in the United States have helped home owners build housing wealth in recent years, according to new research from the National Association of Realtors. But the continued decline in home ownership means the gains are going to fewer people and likely leading to worsening inequality in the nation. The NAR reviewed data on home ownership rates, changes in single family median home prices and a measure of inequality between 2010 and 2013 to estimate wealth and income inequality in 100 of the largest metropolitan statistical areas across the US. The findings reveal that over 90% of metro areas have experienced declining home ownership rates at a time when home values have risen and incomes have remained flat. According to the study, wealth distribution is seen as most unequal in metro areas with the lowest homeownership rates, including high cost areas such as Los Angeles, New York and San Diego. According to Lawrence Yun, NAR chief economist, home prices have steadily recovered in most metro areas in the past five years, providing a boost of $5 trillion in housing wealth from the downturn’s cyclical low for home owners during this time. ‘Home ownership plays a pivotal role in the US economy and has historically been one of the primary sources of wealth accumulation for middle class families,’ he said. ‘Unfortunately, due to an underperforming labour market, insufficient housing supply and overly-stringent underwriting standards since the recession, home ownership has plunged to a rate not seen in over two decades. As a result, the country has become more unequal as the number of homeowners has fallen while the number of renters has significantly risen,’ he added. Yun explained that the inability for renter households to become home owners is leaving them behind financially. A typical homeowner’s net worth climbs because of upticks in home values and declining mortgage balances. On the other hand, renters have likely seen increased rental housing costs and are less likely to have been active investors in the stock market’s strong growth in recent years. NAR’s study examined intensifying or lessoning inequality by measuring the change in the number of owners and renters during the recent period of rising home values. The findings show that an overwhelming 93 out of 100 analysed markets experienced a declining home ownership rate from 2010 to 2013. Because renters typically have much lower net worth than home owners, a metro area’s low homeownership rate is associated with greater wealth inequality. As a result, Los Angeles, New York, Las Vegas, Fresno in California and San Diego were found to have the most unequal wealth distribution. ‘Changes in wealth during this period are especially profound in high cost metro areas that have seen robust price growth. For instance, a typical home owner in San Jose, California, enjoyed an increase of $210,671 in housing wealth while renters were left behind and likely exposed to annual rent increases,’ said… Continue reading
