TSI
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
Land reform proposals in Scotland criticised by RICS
Proposals put forward in Scotland for agricultural land reform have been heavily criticised by the Royal Institution of Chartered Surveyors which say they could increase disputes between landlords and tenants. Responding to the recently published proposals, RICS says it is concerned that the proposed measures will not lead to a revitalised tenanted sector and may also result in fewer farms made available to let in the future. It adds that this is clearly not in the public interest or in the interests of a vibrant tenanted farming sector in Scotland and could trigger unintended consequences that would serve no benefit to rural areas. ‘We are committed to building consensus across the rural sector and ridding it of poor practice. We encourage anybody operating in the rural sector to engage the services of professionally trained and regulated land management specialists,’ says the response paper from RICS. It explains that more efficient and sustainable food production must be a leading objective in any restructuring of the sector. ‘Our view is that these proposals appear to overlook this, seeking instead to focus on land tenure and the small number of land agents who may not be professionally regulated, rather than focussing on how to stimulate and assist new entrants to the tenanted farming sector,’ it explains. ‘Freedom of contract is important, and some recommendations in the Review will pave the way for more flexibility and choice crucial to revitalising the sector, but the extension of assignation could also remove opportunities for new entrants,’ it adds. ‘RICS does not tolerate bad practice. Our members are already properly and strictly regulated, and we have a robust code of conduct to which our members must adhere. RICS welcomes the proposal for a Tenant Farming Commission, as this may improve the landlord tenant relationship,’ it continues. ‘However, we have to raise the issue that land agents who are members of RICS already operate under the Institution’s strict guidelines and codes of practice. Any new code of practice from the commission would have to take note of that fact,’ it says. It also points out that any land reform policy change will impact significantly on the public and RICS members. ‘We are firmly of the view that land reform should be approached as a long term, sustainable and workable programme where all parties continue to invest human and financial capital to make land, places and communities successful,’ the response says. ‘Land reform should not be focussed purely on who owns the land but how it is effectively managed and used for the benefit of communities, the environment, and public and private interests. Best practice land management is key to ensuring sustainability,’ it points out. It also says that while legislation provides a legal framework on land reform matters, its implementation is dependent on addressing three critical elements. Firstly, defining designations and processes so that all parties understand what, why and how matters can be exercised; secondly, providing support for all parties so… 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
