Investment
Residential sales in Hong Kong up 45% month on month, prices down
Residential sales in Hong Kong increased by 45% month on month in March from their lowest level in 25 years, reaching 17,106, according to the latest data from the Land Registry. The rise was attributable to a number of primary project launches after Chinese New Year and a reviving resales market, with some flat owners willing to cut prices, says the latest market analysis from international real estate firm Knight Frank. As a result, prices fell further, with official figures showing that home prices had decreased for five consecutive months, for a cumulative decline of 11%. But the market continued to polarise, with the luxury sector remaining relatively resilient, it explains. Reported landmark deals of the month included an en-bloc transaction at South Bay Close in Repulse Bay for HK$668 million, or about HK$30,000 per square foot and a unit in Cluny Park in Mid-Levels West, which sold for over HK$53,000 per square foot, the highest price in the development. With potential buyers expecting increasing supply and a further drop in home prices, residential sales are expected to fall to around 50,000 units this year. ‘Although luxury home prices overall are expected to drop 5% this year, prices of super luxury houses and apartments should remain firm. Mass market prices could drop up to 10% in 2016,’ the report says. In the prime office market a lack of available space continued to limit Grade A leasing activity, the report also shows. To avoid high rents in Central, some firms with a long presence in the area relocated to non-core areas as they became increasingly cost conscious, the report explains. It also points out that high office rents in Central have been supported by a lack of supply rather than strong demand as office leasing demand from both domestic and overseas firms has weakened in recent months. The Kowloon Grade A office leasing market saw a number of relocation deals involving insurance sourcing companies in March. Office rents in Kowloon East, however, have been under increasing pressure from the increasing supply coming on line, the report says. ‘Despite the economic uncertainties in Hong Kong and the mainland, office rents in decentralised areas could drop 5% in 2016 due to abundant supply in the pipeline. This polarisation trend is expected to continue until the new supply is absorbed and the market regains balance,’ the report adds. It also says that notable declines in retail sales and visitor arrivals continued to put pressure on retail property rents and adds that the retail property landscape will continue to evolve to cope with the downturn. Continue reading
House prices fall in Scotland for first time in eight months
Scotland has seen its first dip in house prices for eight months with the latest index showing a fall of 1% month on month despite a surge in sales. Prices are also down 2.1% year on year, taking the average price of a home to £168,020, according to the latest Your Move monthly index. It is the first monthly fall since June 2015 and comes at the same time that homes sales registered their strongest February since 2008 with growth of 19% year on year. It suggest that the growth in sales is down to added demand from buy to let investors ahead of the April stamp duty change and adds the hesitation at the higher end of market ahead of the upcoming elections could be having an effect. Edinburgh has been knocked off the top spot for price growth and Midlothian was the only area to break a record for property values in February, surpassing its pre-crisis peak. According to Christine Campbell, Your Move managing director in Scotland, the sudden dip in prices will be a welcome reprieve for those attempting to get their foot on the property ladder. ‘House prices are also down compared to the same time last year, but this tells us more about the turbulence caused by the introduction of the Land and Building Transaction Tax (LBTT) at the beginning of 2015, than anything happening in the market right now,’ she explained. She pointed out that another key barometer is pointing to a lot of positivity in the market and that is that property sales in Scotland have flouted seasonal trends to jump 10% month on month. ‘This impetus also meant that purchase activity was concentrated at the lower end of the market with aspiring landlords snapping up affordable options. We can see evidence of this in Edinburgh and Glasgow, where sales of flats, a popular investment choice, have soared in the three months to February 2016,’ said Campbell. ‘But at the same time, there has been a slowdown at the top end of the market due to uncertainty surrounding the upcoming Scottish Parliament election and European Union referendum, particularly among foreign buyers. This imbalance between the volume of cheaper and more expensive property sales is skewing the overall measure of price growth, and tipping it downwards,’ she added. Campbell also pointed out that a hesitation at the prime levels of the market has hit average house prices in Edinburgh, knocking Scotland’s capital off the top spot and into second place in the ranking of areas by property value. The index shows that Edinburgh’s house prices have declined 3.2% month on month due to a drop off in high value home sales, with foreign buyers possibly delaying purchases until after the EU referendum. Meanwhile, East Lothian has seen home values up 9.1% or £19,548 from January and in Midlothian house prices have set a new record. The typical home in the area is now worth £198,977,… Continue reading
Airbnb popularity is a growing threat to residential landlords
The Airbnb phenomenon that is soaring in popularity is a growing issue for private sector landlords as tenants embrace the trend without checking if their tenancy allows them to do so. According to the UK’s tenant eviction firm Landlord Action the number of cases where tenants have sub-let properties without their landlord’s permission has trebled. It point out that aside from breach of tenancy agreement and additional wear and tear to the property, landlords are left exposed to being in breach of their mortgage terms and buildings insurance. The share economy is a growing phenomenon, with models such as Airbnb giving people a platform to view themselves as a business. But according to Landlord Action founder Paul Shamplina it is also enabling those who do not have the right to do so, from profiting from someone else’s asset. An example is Joy Philips, a landlord who decided to let out her West London home so she could afford to take time out to volunteer at an orphanage in Africa. She thought she had found the perfect tenant in a young doctor who wanted her home for a three year lease. It all seemed very promising until she started receiving emails and calls from her neighbours complaining about the volume of people coming and going at her house. Joy was shocked to discover that her house was not being used as a home for the young doctor, but being rented out room by room as a boutique hotel on the Airbnb website. Making thousands over the rent being paid to Joy, her tenant was breaking the no sub-letting clause in her contract. By having so many people in the house, Joy’s home insurance was also at risk of being void. She was forced to give up her volunteer work in Africa to return to the UK and got in touch with Landlord Action in the hope of getting her property back. ‘We have had concerns for some time now regarding the protection of properties which are being uploaded and offered as holiday lets via Airbnb. We continue to receive a growing number of instructions from landlords who want us to start possession proceedings against tenants who have sublet their property via Airbnb without consent,’ said Shamplina. ‘Whilst Airbnb do provide a level of protection for hosts, naturally certain conditions and limitations do apply. My concern is that there is not enough safeguarding with regards to obtaining proof from the individual who is advertising the property that they are the legitimate owner. Or, if they are a tenant, that they have consent from their landlord to rent out the property in this way,’ he pointed out. ‘We have seen cases where, quite clearly, tenants are making thousands of pounds from exploiting the service to a high volume of holiday makers on a weekly basis. In a recent case, it… Continue reading
