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Paris could be the next city to attract more overseas property investment, it is suggested
Much has been said about London’s prime property market attracting foreign buyers but now Paris is being discussed as being just as interesting for overseas investors. Overseas investors are regarding Paris as having highly competitive real estate prices due to the weaker Euro, according to the latest report from property agents VINGT Paris. For example, using current exchange rates a UK investor could save up to 40% on the average Paris property, as the pound’s strength would see a €700,000 home cost £510,000. According to figures from the report, Paris is second only to London as Europe’s most attractive destination for Foreign Direct Investment (FDI), with 66.7% of Paris property currently owned by overseas investors. The firm believes that this is likely to increase further as UK property prices continue to rise and investment returns fall, coupled with a weakening Euro, which is currently at a seven year low against the pound and 12 year low against the dollar. The report suggests that Paris has always had an unmistakable allure, with its rich history, neoclassical architecture and Haussmannian style apartments retaining a global appeal. Susie Hollands, chief executive officer of VINGT Paris, believes that it is a good time to invest in property in the city. ‘Its culture, cuisine, reputation for intellectualism and abundance of beautiful homes make Paris a world class city, plus it has excellent international schools, a solid infrastructure and excellent transport network,’ she said. ‘The talk in the market over the past two to three years has been dominated by London, however, people forget that France is the world’s fifth largest economy and investors will always be attracted by the Paris property market’s incredible resilience,’ she pointed out. ‘Overseas investors have hedged against inflation by investing their liquid resources in tangible, prime Paris properties, so as London becomes increasingly unaffordable, Paris will be the winner. The potential returns in five to six years’ time will be worth it,’ she added. Since the global recession, overall property prices in Paris and London have consistently increased but growth in some part of London has been regarded as unsustainable and indeed prices in some locations are static or even falling. Comparing prices of London and Paris districts of similar stature, between 2007 and 2014, VINGT Paris found that prices in Paris’ 8th arrondissement rose by 21%, while in Knightsbridge they were up by 84% over the same period. Similarly, South Kensington saw a 67% price increase in the same seven year period, compared to 26% in Paris’ 6th arrondissement. The only area of comparatively similar growth in the period is Notting Hill with growth of 33% and Paris’ 3rd arrondissement at 35%. Comparing the per square foot prices of the same London and Paris districts, the report found that despite similar price growth, Notting Hill apartments were almost twice as expensive as those in the 3rd arrondissement. Similarly, prices in South Kensington were nearly two and a half times greater than the… Continue reading
Existing home sales up again in the US, but number of first time buyers falls
Existing home sales in the United States steadily increased for the third consecutive month in July, according to the latest data from the National Association of Realtors (NAR). However, stubbornly low inventory levels and rising prices have resulted in sales to first time buyers falling to their lowest share since January. The data shows that total existing home sales increased 2% to a seasonally adjusted annual rate of 5.59 million in July from a downwardly revised 5.48 million in June. Sales in July remained at the highest pace since February 2007 when they were 5.79 million and have now increased year on year for 10 months in a row and are 10.3% above a year ago when they were 5.07 million. Lawrence Yun, NAR chief economist, explained that the increase in sales in July solidifies what has been an impressive growth in activity during this year's peak buying season. ‘The creation of jobs added at a steady clip and the prospect of higher mortgage rates and home prices down the road is encouraging more households to buy now,’ he said. ‘As a result, current home owners are using their increasing housing equity towards the down payment on their next purchase,’ he added. The data also shows that the median existing home price for all housing types in July was $234,000, which is 5.6% above July 2014. July's price increase marks the 41st consecutive month of year on year gains. ‘Despite the strong growth in sales since this spring, declining affordability could begin to slowly dampen demand. Agents in some markets reported slower foot traffic in July in part because of low inventory and concerns about the continued rise in home prices without commensurate income gains,’ Yun pointed out. Total housing inventory at the end of July declined 0.4% to 2.24 million existing homes available for sale, and is now 4.7% lower than a year ago when it was 2.35 million. Unsold inventory is at a 4.8 month supply at the current sales pace, down from 4.9 months in June. The percent share of first time buyers declined in July for the second consecutive month, falling from 30% in June to 28%, the lowest share since January of this year when it was also 28%. A year ago, first time buyers represented 29% of all buyers. ‘The fact that first time buyers represented a lower share of the market compared to a year ago even though sales are considerably higher is indicative of the challenges many young adults continue to face,’ said Yun. ‘Rising rents and flat wage growth make it difficult for many to save for a down payment, and the dearth of supply in affordable price ranges is limiting their options,’ he added. Properties typically stayed on the market for 42 days in July, an increase from 34 days in June but below the 48 days in July 2014. Short sales were on the market the longest at a median of 135 days in… Continue reading
Prime residential development land prices in Asia slowing
The price of prime residential development land in Asia slowed to 1.1% in the first half of 2015, down from 3% in the previous six months, but prime office land increased to 3.6%, up from 2.5%. The latest prime Asia development land index from international real estate firm Knight Frank also shows that Phnom Penh in Vietnam recorded the strongest increase in both prime residential and office land price. Prime residential and commercial land prices surging by 14.1% and 9.7% respectively. The report says that foreign investment continued to fuel strong performance in the residential sector but growth decelerated in the second quarter, suggesting that prices are peaking and the momentum will likely moderate in the second half of the year. Land sales in China plummeted by 54.8% year on year at a time when local governments in the country reduced land supply and maintained aggressive pricing as this is their main source of revenue. ‘As a result, developers in China face a double whammy of high land prices and weak sales. With the recent stock market crash, their ability to raise capital is further restricted. Anecdotally, more developers are partnering other firms to pool financial resources and pursue an asset light strategy,’ the report explains. ‘However, there is a silver lining as a recent survey conducted by China Household Finance and the Survey Centre registered signs of capital leaving the stock markets for the housing sector in the second quarter of 2015,’ it says. ‘Against this backdrop, along with a nascent recovery in the residential markets, land prices rose moderately in Beijing, Shanghai and, to a lesser extent, Guangzhou. Moving forward, land prices will continue to be supported by these factors,’ the report adds. Both residential and commercial land enjoyed robust capital appreciation in Hong Kong. The report explains that in addition to the existing healthy demand extra cooling measures, such as a lower maximum loan to value ratio and debt servicing ratio introduced in February 2015 targeting the mass residential market appeared to have channelled demand to the luxury sector. Office space continued to see strong leasing demand from financial institutions amid limited supply. Demand for land is set to increase when the ASEAN Economic Community (AEC) gets underway at the end of this year. The report explains that as a result of a freer flow of goods, services and skilled labour could encourage the movement of industries, driving demand for both commercial and residential space. In Bangkok, the price index for office land stalled in the first half of 2015 as developers turned their attention to the luxury condominium market, where continued capital appreciation afforded them higher profit margins. Even so, the prices of residential land grew at a slower but more sustainable pace. Jakarta saw a similar deceleration in price index movements. The economic slowdown has hurt both business and consumer confidence in the country, according to the report. ‘In addition, the government lacks the room to manoeuvre,… Continue reading
