Tag Archives: asia
Currency fluctuations adding to slowdown in Dubai property market
Residential property prices in Dubai fell again during the second half of 2016 and the slowdown is projected to continue. Data from two sets of figures covering the second quarter show that the real estate market is slowing although sales are holding up. However, currency fluctuations are adversely affecting demand from foreign buyers. The data from CBRE shows that it was the sixth consecutive quarter of declines with the average sales rate down 2% quarter on quarter and 12% year on year, with the most significant fall recorded in the upper segment of the market. ‘Prices within the mid-market segment have proven to be far more resilient to this downward rate trend, reflecting the current demand for affordable accommodation in freehold communities,’ the report says. Although sales have held up relatively well, rental values in the mid-market segment of the market in areas like Al Barsha, Oud Metha and Bur Dubai have fallen, reflecting the higher availability of homes on the market. It suggests that the devaluation of major currencies, global economic uncertainty, redundancies and lower accommodation budgets mean that there is likely to be a further softening of demand levels and sales rates in the short term, especially for higher end and larger units. Indeed, the firm predicts that property sales rates are set to fall further by an additional 3% to 5% in the coming quarters although some locations may vary. ‘It is estimated that around 48,000 new residential units, apartments and villas, could enter the Dubai market during the period 2016 to 2018, provided that construction delays are at a minimal,’ said Mat Green, head of research and consulting UAE at CBRE Middle East. Meanwhile, the latest Phidar Advisory Dubai residential research note for the end of the second quarter of 2016 shows that residential prices dropped in the first half of the year and projects further declines. ‘Some claim this is a supply story, but supply has expanded slowly over the past thirty months. The current declines reflect soft demand,’ said Jesse Downs, managing director of Phidar Advisory. The Phidar house price index data shows that apartment lease rates declined 2.2%, while sale prices declined 3.7%, pushing gross yields up to 7.9%, a three month gain of 12 basis points while lease rates for villas decreased 3.6% and sale prices declined 1.1%, which pushed yields down to 4.7%, a loss of 12 basis point in the first half of the current quarter. ‘The compression of villa yields is unsustainable and should slowly reverse in the coming year. Sale prices and rent declines for both villas and apartments will likely continue for the next 12 months, possibly up to 18 months,’ added Downs. She also pointed out that as there are a high number of foreign buyers in Dubai currency fluctuations are affecting the real estate market. ‘The strong US dollar is one of the biggest barriers to a Dubai real estate recovery now. Unfortunately, a strong dollar also is usually associated… Continue reading
Office rents in Europe saw strongest growth of last five years in second quarter of 2016
Rents on prime office assets across Europe grew by 1.5% quarter on quarter in the second quarter of 2016 compared to 0.7% in the previous quarter, the strongest increase in the past five years. Rents in Europe outpaced the Americas and Asia Pacific regions with Stockholm recording the strongest growth in region of 9.4% followed by Berlin with growth of 6.3%. The data from real estate firm JLL also shows that Paris saw growth of 3.4% as limited new supply and more robust take-up pushed up prime rents for the fourth consecutive quarter while in Southern Europe, the momentum in the market recovery has continued in Milan with rents up 2% and in Barcelona up 3.7% and Madrid up 0.9%. Following the UK’s decision to leave the European Union headline rents have so far remained unchanged in London compared to the first quarter of 2016. The report says that rent free periods may soften as occupiers look to negotiate more flexible terms with greater lease flexibility. But the Brexit vote has so far had little effect on rental growth outside the UK. ‘Office demand is proving resilient in many of the world's dominant commercial real estate markets despite increased political and economic uncertainty which is leading to corporate occupiers striking a more cautious tone,’ said Jeremy Kelly, director in global research programmes at JLL. ‘Underlying market fundamentals are sound and corporate demand is holding up well, notably in continental Europe,’ he pointed out and added that looking to the second half of the year, a period of steady rental increases for prime European offices is anticipated. Indeed JLL is predicting rental growth of 2.5% to 3% in Western Europe which will outperform the 10 year average over the next few years. Stockholm and Madrid are expected to be the region's high performers over 2016. ‘In London, rents and incentives may come under pressure in certain sections of the market, although low vacancy rates coupled with an increasingly diverse occupier base will act to cushion the impact of weaker sentiment,’ said Jon Neale, head of UK research at JLL. ‘Our priority over the second half of the year will be to monitor occupier activity and other developments, although it is unlikely that any real conclusions over longer term market implications can be made until the nature of Brexit becomes more apparent as we move into 2017,’ he explained. ‘For the time being, however, our research indicates that the vast majority of occupier deals in progress at the time of the referendum are still continuing as planned,’ he added. Continue reading
Canadian housing market sees largest year on year fall in sales since 2013
National home sales fell 1.3% from June to July in Canada, the third month in a row that transactions have fallen, and fell by 2.9% year on year, the largest since 2013. The data from the Canadian Real Estate Association (CREA) also shows that the national average sale price was up 9.9% in July year on year but when Greater Toronto and Greater Vancouver are excluded from the figure this dropped to 7%. Sales activity was down from the previous month in slightly more than half of all markets in July, led by Greater Vancouver and the Fraser Valley. Transactions in these two markets peaked in February of this year, and have since then dropped by 21.5% and 28.8% respectively. According to CREA president Cliff Iverson much of the national sales decline in recent months reflects slowing activity in B.C.’s Lower Mainland area. ‘National sales and price trends continue to be heavily influenced by a handful of places in Ontario and British Columbia and mask significant variations in local housing market trends and conditions across Canada,’ he explained. Gregory Klump, CREA’s chief economist, said that the figures suggest that sales are being reined in by a lack of inventory and a further deterioration in affordability. He pointed out that the new 15% property transfer tax on Metro Vancouver home purchases by foreign buyers took effect on 02 August so it will take some time before the effect of the new tax on sales and prices can be observed. A breakdown of the figures shows that actual, not seasonally adjusted, sales activity was down 2.9% year on year July 2016, the first annual decline since January 2015 and the largest since April 2013. In line with softening activity in the Lower Mainland, year on year increases have been losing momentum since February 2016. Sales were down from levels one year earlier in about 60% of all Canadian markets, led by Greater Vancouver, the Fraser Valley, Calgary and Edmonton. The number of newly listed homes rose by 1.2 percent in July 2016 compared to June. While new supply climbed in fewer than half of all local markets, increases in Greater Vancouver and the Fraser Valley, Greater Toronto, Calgary and Edmonton outweighed declines in smaller markets. With sales down and new listings up, the national sales to new listings ratio eased to 61.6% in July 2016, its second monthly decline following its peak of 65.3% in May. A sales to new listings ratio between 40% and 60% is generally consistent with balanced housing market conditions, with readings below and above this range indicating buyers’ and sellers’ markets respectively. The ratio was above 60% in about half of all local housing markets in July, virtually all of which continue to be located in British Columbia, in and around the Greater Toronto Area and across Southwestern Ontario. The CREA report points out that the number of months of inventory is another important measure of the balance… Continue reading
