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Apartment and villa prices fall in Dubai at beginning of 2015
Residential property prices in Dubai fell by almost 4% in the first six weeks of this year with both apartments and villas seeing declines, the latest research shows. Prices for apartments fell by 3.7% and villas by 3% respectively, the latest report from Phidar Advisory shows. Sales increased by 1.7% in January, the data also shows. Price falls are outpacing rent declines, pushing yields up to 7% for apartments, the report shows, with the report pointing out that residential investment potential is at a five year low. However, the report notes that within this overall figure, apartment volumes were up almost 8% in January, while single family home volumes halved in January compared to the same period in 2014. Apartment lease rates remained stable with a nominal decrease of 0.5% while lease rates for single family homes decreased by 2.4%. ‘Our index indicates that the propensity for investing in Dubai real estate is at a five year low point. This is a first draft and we are developing more complex iterations integrating additional variables that influence capital flows,’ said Jesse Downs, managing director of Phidar Advisory. The report downgrades rent projections to softening and says that sale price declines will continue to outpace rent declines, allowing yields to gradually expand through 2015. ‘As long as general price deflation is averted, rent stability or softening can help control labour costs, which can facilitate business and economic growth. Ideally, this is paired with countercyclical monetary and fiscal policies to the real estate industry that facilitate economic diversification,’ explained Downs. The report also points out that, while the US dollar remains strong, demand for Dubai real estate will likely remain low and yields should continue to guide market trends. ‘Recent transaction volume contraction was caused by dwindling domestic and foreign demand,’ added Downs. Meanwhile, figures from the Dubai Land Department shows that Indians continue to top the list of expat property buyers in Dubai. Total investment by Indians in the realty market increased marginally to Dh18.123 billion from Dh18 billion in 2013. Br British expat buyers were next but the amount investment fell from Dh10.4 billion in 2013 to Dh9.318 billion in 2014. Pakistanis coming third on the list with property purchases worth Dh7.588 billion, down from Dh8.6 billion in 2013. Citizens of Gulf Cooperation Council (GCC) states bought property worth Dh32 billion through 7,186 investors in 2014. Overall there are more than 140 nationalities investing in the property market in Dubai with total real estate transactions amounting to Dh218 billion in 2014. Continue reading
Prime rental London market sees values continue to rise
Rental values in the prime central London property market continued their recovery in February, recording their twelfth consecutive month without a decline, the latest research shows. An increase of 0.2% matched the rise in January and took annual growth to 4%, which was the highest level in more than three years, according to the report from Knight Frank. It points out that as May’s general election approaches, there is a degree of uncertainty in the sales market that has dampened activity due to the potential of a ‘mansion tax’ on properties worth more than £2 million. ‘This has benefitted the lettings market to some extent as a small but growing number of buyers and vendors hedge their bets on the outcome of the election and move into the rentals market. However, the dominant mood in the prime central London lettings market in February was also one of caution as election campaigning gathered pace, which resulted in low stock levels in some areas,’ said Tom Bill, head of London residential research at Knight Frank. He pointed out that in higher value price brackets, the mood of caution has led some landlords and tenants to explore option to buy agreements where it is mutually beneficial. ‘Though not prevalent, there is anecdotal evidence to suggest tenants have explored the try before you buy option in order to hedge against short term political uncertainty, enabling them to initially rent and buy once there is greater clarity surrounding the outcome of the election,’ he added. A breakdown of the data shows that there is some variation in rental values. In Mayfair they have declined by 1.6% and in Islington by 1.2% in the year to February 2015. Chelsea has seen a 0.2% rise and Knightsbridge a 0.5% rise while in Notting Hill they increased by 1.5%. In Belgravia rental values were up 2.7%, in South Kensington by 6.1%, in Kensington7.8%, and in Hyde Park there was growth of 8%. While St Johns Wood and Marylebone saw the highest rises at 10.8% and 12.4% respectively. The report also says that despite the hesitancy, there are grounds for optimism, including the fact new tenant registrations, viewings and the number of tenancies agreed remain strong. The buoyancy of world stock markets in February is also likely to underpin demand. The performance of the prime central London rental index has broadly tracked global stock markets in recent years and the current record levels being set, including by the FTSE100, suggest the positive upwards momentum will continue. The recent strong performance is linked to indications from the Federal Reserve that it will not rush to raise interest rates, the low oil price and the agreement between Greece and the euro zone, among other factors. Continue reading
House prices rise in Portugal for first time in five years
House prices in Portugal increased in January as the country’s economy expands and the unemployment rate falls, according to the latest monthly market survey from the Royal Institution of Chartered Surveyors. It is the first time that prices have increased since the RICS/Ci survey was launched in 2010 and comes at a time when buyers demand is increasing. RICS says that improving employment is being reflected in rising new buyer demand and for over 12 months now, new buyer enquiries have been in positive territory and national confidence has reached a series high of +32. It also says that the outlook for sales volumes is strengthening and sales expectations are more elevated than at any other point in the survey’s four year history. The Portuguese economy expanded for the first time since 2010, albeit modestly, with average annual GDP growth of 0.9%. After a three year period in which GDP contracted by nearly 6%, a recovery does now appear to be emerging. The rate of unemployment has fallen by nearly 2% over the past 12 months and now stands at 13.4% having reached a peak of 17.7% in early 2013. The report describes the emergence of a recovery in house prices, supported by a consistent rise in confidence but also points out that in the lettings market, rents are still falling for now, although survey respondents’ expectations point to a more stable trend on the horizon. In the sales market, buyer demand continued to increase, with the pace of improvement accelerating slightly over the month. Meanwhile, sales continued to rise, extending an uninterrupted positive run dating back to February 2014. Moreover, respondents’ sales expectations are more elevated than at any other point over the past four years. Looking ahead, prices are expected to continue to rise over the next three months but RICS explains that a sustained run of positive data will be needed before it is in a position to talk about a genuine recovery. At the regional level, prices are now rising in both Lisbon and the Algarve, but remain more or less stable in the Porto market. In the lettings sector, tenant demand continues to rise gradually and the number of new landlord instructions is diminishing. However, rents are still falling for the time being, although respondents do expect a flatter trend to emerge in the coming months. ‘Even though the volume of new credit is still low, it has been reported by several real estate agents that banks are now more positive about the market,’ said Ci spokesman, Ricardo Guimaraes. ‘Some already have commercial campaigns, announcing lower spreads. This might be the element that was missing to broaden out the recovery that was primarily located in Lisbon,’ he added. According to RICS senior economist, Josh Miller, the Portuguese housing market reached an important milestone in January with prices rising for the first time since the country’s bailout programme. ‘Whether this trend can be sustained depends on the broader economic recovery…. Continue reading
