Tag Archives: real-estate
London and Paris still dominate wish list of European real estate investors
European real estate investors are increasingly looking beyond London and Europe’s gateway cities such as London and Paris as they seek to meet their return objectives, new research suggests. But not every regional city is suitable for investors and returns can disappoint in the medium term if one does not factor-in local market fundamentals such as local growth trends, demographic changes and human capital, it points out. According to the latest LaSalle Investment Management’s European Regional Growth Index (E-REGI), which ranks Europe’s top 100 cities, the region’s economy is driven by dynamic urban centres with London and Paris once again in first and second position in the ranking. The index report explains that the extraordinary resilience of such cities, combined with their deep investment markets, justifies targeting them for a wide range of investment strategies. Other cities increasingly coming to the fore include Manchester at 17 and Bristol at 25 which have both climbed three spots in the European ranking, while Birmingham at 37 is up two spots. ‘Having published this index for 16 years, we now have an unrivalled understanding of the different economic patterns in Europe’s leading cities,’ said Mahdi Mokrane, LaSalle Investment Management’s head of research and strategy for Europe. ‘The index not only determines which real estate markets are likely to out or underperform in the medium term, but combined with our on the ground expertise we also use the index as a strategic framework to match cities with the most relevant investment styles,’ he explained. In order to help investors navigate the complexity of the different strategies which best match different cities, LaSalle has categorised them into four distinct groups: consistent, affluent, mover and aspiring. Consistent is the largest group in the E-REGI analysis. Cities in this group are generally sizeable and combine deep investment markets with long term economic strengths related to demographics, technology and urbanisation (DTU), creating the right conditions for growth focused strategies. London and Paris top this group of consistent performers, but balanced E-REGI scores and consistent performance over time are not limited to the top of the ranking. Munich, Frankfurt, Hamburg, Stuttgart and Amsterdam also seem suited for value-add or opportunistic strategies. Düsseldorf, Mannheim-Karlsruhe, Cologne-Bonn, Rotterdam-The Hague, Utrecht, Edinburgh and Leeds are also included in the group but the report says core investment would be more suited given their smaller market size. Affluent is a small group of cities that also support long term strategies but are more difficult to transact-in due to their smaller size and stronger domestic investor base. Consumer related strategies are most attractive in these cities as their strong E-REGI scores are predominantly driven by their wealth and research and development spending components. This group includes Stockholm, Luxemburg, Oslo, Copenhagen-Malmo and Zürich. Movers are more ‘cynical’ market where timing is of the essence for investment in these more cyclical markets. For example Spanish cities have seen moves at both the top and the bottom of the… Continue reading
US pending home sales fall slightly but still well above a year ago
Pending home sales in the United States retreated in August but remained at a healthy level of activity and have now risen year on year for 12 consecutive months, the latest real estate data shows. A modest increase in the West was offset by declines in all other regions but demand continues to outpace supply, according to the index report from the National Association of Realtors. The Pending Home Sales Index, a forward looking indicator based on contract signings, decreased 1.4% to 109.4 in August from 110.9 in July but is still 6.1% above August 2014 when it was 103.1. Lawrence Yun, NAR chief economist, said that even with the modest decline in contract signings, demand continues to outpace housing supply and elevate price growth in numerous markets. ‘Pending sales have levelled off since the middle of summer, with buyers being bounded by rising prices and few available and affordable properties within their budget. Even with existing housing supply barely budging all summer and no relief coming from new construction, contract activity is still higher than earlier this year and a year ago,’ he explained. According to Yun, sales in the coming months should be able to roughly maintain their current pace. However, he warns that there are looming speed bumps that have the potential to impact housing. ‘The possibility of a government shutdown and any ongoing instability in the equity markets could cause some households to put off buying for the time being. Furthermore, adapting to the changes being implemented next month in the mortgage closing process could delay some sales,’ Yun added. The national median existing home price is expected to increase 5.8% in 2015 to $220,300. Yun forecasts total existing home sales this year to increase 7% to around 5.28 million, about 25% below the prior peak set in 2005 when they were 7.08 million. A breakdown of the figures shows that the PHSI in the Northeast fell 5.6% to 93.3 in August, but is still 8.9% above a year ago. In the Midwest the index inched down 0.4% to 107.4 in August and is now 6.5% above August 2014. Pending home sales in the South declined 2.2% to an index of 121.5 in August but are still 4.1% above last August. The index in the West rose 1.8% in August to 104.9 and is now 7.6% above a year ago. Continue reading
Gap between property prices in London and rest of UK widens
The gap between London house prices and the rest of the UK has continued to reach new highs with the latest index showing the regional divergence is growing. Overall UK house prices increased by 0.5% in September and annual house price growth increased to 3.8% in September, the data from leading lender the Nationwide shows. But on a quarterly basis London house price growth increased to 10.6% in the third quarter of the year, up from 7.3% in the second quarter of 2015. This compares to an average house price rise in England of 1.8% in the third quarter. There was a mixed picture across the regions. The rate of annual house price growth accelerated in Southern England, particularly in London, but continued to slow in the Midlands and most Northern areas. London was the strongest performing region and annual price growth also accelerated in the neighbouring Outer Metropolitan region from 6.8% to 9.5%. The price of a typical home in London at £443,399 is more than double the UK aggregate and more than three and a half times the price of the typical property in the cheapest UK region which is the North of England. The North West was the weakest performing English region, with prices down 0.6% year on year. House prices continued to recover in Northern Ireland, with annual growth of 6.5% in the third quarter although average prices are still 44% below their pre-crisis peak. Wales saw a 1.9% year on year increase in average prices, a slight improvement compared with recent quarters. Scotland was the weakest performing region for the second quarter in a row, with a 1.3% year on year fall, similar to the 1% annual decline recorded in the second quarter. Price growth in the South exceeded that in the North for the 26th consecutive quarter. Prices in Southern England were up 8% year on year, whilst in Northern England prices rose by just 1%. In cash terms, the gap in average prices between the South and the North of England is at a record high, exceeding £150,000 for the first time, with average prices in the South now twice as high as those in the North. ‘The data in recent months provides some encouragement that the pace of house price increases may be stabilising close to the pace of earnings growth. However, the risk remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability,’ said Robert Gardner, Nationwide's chief economist. ‘Indeed, in recent months surveyors have reported historically low levels of properties for sale and increased new buyer enquiries. Therefore it is unsurprising that most surveyors expect a pickup in house price growth in the months ahead,’ he pointed out. ‘The slowdown in house price growth since the middle of 2014 has not been confined to, nor has it been driven primarily by, developments in London. The capital has continued to see price growth at or above… Continue reading
