Tag Archives: asia
Rental growth in prime central London down 3% in year to June 2106
Annual rental value growth in London’s prime property market fell by 3% in June, continuing a decline experienced in recent months that has been driven by higher stock levels and uncertainty in financial markets. The index report from real estate firm Knight Frank relates to before the UK’s decision to leave the European Union, but Tom Bill, head of London residential research said that the current sense of uncertainty following the vote is likely to boost rental demand in the short term. ‘However, any upwards pressure on rents is likely to be countered to some extent by rising stock levels, which will tick up in line with the ongoing uncertainty in the sales market and there is early anecdotal evidence that some vendors are deciding to let their property until more clarity emerges,’ he explained. Bill pointed out that underlying demand remains strong and the number of new prospective tenants that registered in June was the highest it has been since September 2015 and the number of viewings was the third highest on record. Meanwhile, the number of new tenancies agreed in June 2016 was almost identical to the same month in the previous two years. ‘For investors able to see through the current political bout of political uncertainty, there are also grounds for longer term positivity,’ Bill added. The prime gross yield in June was 3.1%, which is markedly in excess of the current record-low yield on a 10 year government bond of about 0.8%, or the so-called risk-free rate and Bill pointed out that a mood of indecision in financial markets is also more accentuated than it was before the Brexit vote, which will also cause some tenants, particularly in financial services, to rent for longer. ‘More broadly, uncertainty over the result of the referendum has been replaced by uncertainty over the more nuanced question of the UK’s relationship with Europe and demand will strengthen further as clarity emerges surrounding key negotiating positions,’ Bill said. He also pointed out that as the Brexit negotiation process unfolds, it should be remembered that no candidate for Prime Minister has indicated any willingness to relinquish London’s role as Europe’s leading financial centre. Indeed, Chancellor George Osborne has signalled he may cut corporation tax in a sign that London will strive to remain competitive versus other European cities, both as the key financial and tech market in the continent. The prospect of an interest rate cut in the UK is also likely to stimulate a degree of activity and the likelihood of further cuts by central banks in other countries, particularly in Asia, will cause global investors to seek the type of higher returns on offer in property, according to Bill. ‘This search for yield will be allied to a favourable currency play due to the current weakness of Sterling. Meanwhile, other fundamentals that remain unchanged after the referendum include the supply shortfall and projected population growth over the next decade in London, factors that will… Continue reading
Chinese emerge as enthusiastic buyers of property in the US
The volume of property sold to overseas buyers in the United States has declined slightly but Chinese people are buying more real estate, exceeding the amount of other top international buyers. Research from the National Association of Realtors suggest that waning economic growth in many countries and higher home prices along with a strengthening US dollar was responsible for the slight overall fall. However, the data, covering sales to overseas buyers between April 2015 and March 2016, reveals a significant fall in buying from non-resident foreigners. Sales to overseas buyers amounted to $102.6 billion of residential property, a 1.3% decline from the $103.9 billion of property purchased in the previous year’s survey. Overall, a total of 214,885 residential properties were bought by foreign buyers, up 2.8%, and properties were typically valued higher at $277,380 compared to the median price of all US existing home sales at $223,058. Lawrence Yun, NAR chief economist, said the figures highlight the tremendous appeal US real estate still has on many foreign nationals despite the price of property becoming less affordable. ‘Weaker economic growth throughout the world, devalued foreign currencies and financial market turbulence combined to present significant challenges for foreign buyers over the past year,’ he explained. ‘While these obstacles led to a cool down in sales from non-resident foreign buyers, the purchases by recent immigrant foreigners rose, resulting in the overall sales dollar volume still being the second highest since 2009,’ he pointed out. He also pointed out that overall foreigners, especially those from China, continue to see the US real estate as a solid investment opportunity and the country as an attractive place to visit and live. According to the survey, sales to non-resident foreign buyers pulled back by approximately $10 billion to the lowest dollar volume since 2013 when it was $35 billion. The decline was largely caused by the decrease in the share of non-resident foreign buyers to foreign residential buyers to 41%, down from the almost even split between the two in previous years. ‘Both the increase in US home prices, up 6% in March 2016 compared to one year ago, and the depreciating value of foreign currencies against the US dollar made buying property a lot pricier last year,’ said Yun. The research shows that at least eight countries, including China and Canada, saw double digit percent increases in the median sales price of a US existing home when measured in their country’s currency, led by Venezuela at 45% and Brazil at 24%. For the fourth year in a row, buyers from China exceeded all countries by dollar volume of sales at $27.3 billion, which was a slight decrease from last year’s survey at $28.6 billion, but over triple the total dollar volume of sales from Canadian buyers who were ranked second at $8.9 billion. Indeed, Chinese buyers purchased the most housing units for the second consecutive year at 29,195 but this was down from 34,327 in 2015, and also typically bought… Continue reading
Signs that currency volatility could boost UK market, especially in London
Currency volatility sparked by the decision in the UK to leave the European Union could create a scenario where overseas investors make major profits by continuing to invest and store their wealth in prime property in London, it is suggested. Market conditions are ripe for opportunistic foreign investors, which could create a welcome increase in the level of sales enquiries received by London developers and give a lift to the British property sector, according to a report from Arcadis. Since the result of the EU referendum was announced, sterling has fallen relative to the euro and the US dollar with further falls forecast before the end of the year. The report suggests that buyers from Europe, Asia, and the Middle East are now well placed to secure bargains in the London prime housing market by exploiting both a softening of property values and a favourable currency situation. Furthermore, with some Banks forecasting a recovery of sterling during 2017 and agents predicting some recovery of prime London house prices during 2018, those investing £2 million now may see their investments rise by as much as £250,000 in value, according to Mark Cleverly, head of commercial development at Arcadis. Although the appetite for opportunistic investment will depend on forecasts of further depreciation of sterling in the short term, the London prime market could soon see another influx of foreign investment. This would provide a timely boost for the UK construction sector in the long term, particularly if increased competitiveness is also matched by government funding for infrastructure, helping to underpin confidence in the new build sector. ‘The market volatility we’ve seen as a result of the Brexit vote is, perhaps ironically, going to re-open the luxury property market to overseas investors, as several of our clients have already reported a bounce in enquiries following the referendum. This influx of investment coming into the UK could boost British construction again in the future as well as giving shot in the arm to the Treasury through increasing stamp duty receipts,’ Cleverly explained. ‘For a market that, in some areas, has been stuttering for some time due to ongoing stamp duty hikes taking the steam out of buyer demand, the buying opportunity presented by recent events could be a big plus. More buyers means a more buoyant market which can only be good news for the industry,’ he added. Already there has been a surge in interest from overseas buyers, according to Benoit Properties International due to the plunge in the value of sterling. The firm says buyers could make a saving of around 12%. Matthew Lavin of Benoit Properties International said there has been a surge in interest in buy to let property from investors in the Middle East, Hong Kong and other countries with currencies pegged to the dollar. Within days of the referendum result the firm sold… Continue reading
