Investment
Sales rise in Hong Kong residential market
Residential property sales in Hong Kong have increased, up 9.4% from August to September but officials are keeping tax policies in place to try to keep price growth under control. First hand transactions jumped 110%, while secondary sales declined 15%, month on month, according to the latest data from the Land Registry. Both demand and supply remained robust in the primary market, with around 360 units launched during the mid-autumn festival holiday, says the latest monthly Hong Kong property market report from international real estate firm Knight Frank. For example, 110 units in Century Link in Tung Chung and over 200 flats in Upper East in Hung Hom were snapped up within just a few hours. In contrast, the secondary market remained subdued last month, amid the recent stock market volatility, a potential interest rate rise in the United States and fierce competition from primary developments, the report points out. It also points out that the Chief Executive has announced that the stamp duty policies will remain in place in the near term. ‘We do not expect home prices to drop significantly,’ the report adds. Calculations by Knight Frank indicate that a 100-bps increase in mortgage rates will only result in a HK$500 increment in monthly instalment for every HK$1 million of mortgage loan, based on a 20 year repayment period. ‘Therefore, a minor interest rate hike is not expected to lead to a significant default risk. On the other hand, market views do not expect a drastic interest rate hike this year,’ it adds. Despite strong leasing demand, the Grade-A office market was stable last month amid limited available space, particularly in core business areas, the report also says. Most firms opted for renewing their leases rather than relocation due to a lack of alternatives. The key demand drivers remained Mainland Chinese firms, which continued to favour Central for setting up offices. As a result, Central’s vacancy rate dropped a further 0.2% point to an extremely low level of 1.4% in September, close to the historical low in 2008. An increasing trend of operation split was witnessed in the office market due to a lack of vacant space. Many firms have to split their operations into smaller offices located in different buildings. Previously, only major firms requiring large premises needed to split their offices, but now even firms requiring units of below 10,000 square feet are going for such arrangement. ‘With the tight supply and many offices under multiple offers, landlords have become more aggressive in asking rents. If the trend continues, it could be possible to see a reversed premium situation next year, firms requiring large office space have to pay an even higher per square foot rental,’ the report explains. ‘Looking ahead, given sustained demand and low vacancy rates, we remain positive towards the long term outlook for Grade-A offices in Hong Kong. We expect rents in Central to increase 10% this year and another 5% in 2016. In Kowloon… Continue reading
England and Wales property prices up again, with average in London reaching half a million
Property prices in England and Wales increased by 1% in September, taking the average house price to £186,553, according to the latest Land Registry data. Year on year prices have increased by 5.3% but in London it is much higher at 9.6% year on year and 1.8% month on month and the average price in the capital city is now a record £499,997. The North East saw the only annual price decrease of 0.3% and also saw the only monthly price decrease with a fall of 0.3% as well. But sales are down. From April 2014 to July 2014 there was an average of 78,330 sales per month but in the same months a year later, the figure was 71,766. The data also shows that the number of properties sold in England and Wales for over £1 million in July 2015 was down 9% year on year and in London it was down 16%. Jonathan Hopper, managing director of the buying agents Garrington Property Finders, said it was inevitable that the average property price in London would reach half a million pounds. ‘Prices in the capital have been marching relentlessly upward in all but the top tiers of the market, as strong demand collides with a sustained shortage of supply. But the average London property price won't stay at £500,000 for long. Bullish sentiment has driven annual price inflation in the capital close to double digits again, and the half million mark could soon be forgotten,’ he explained. He pointed out that the price gains are steadily rippling outwards from London, with both the South East and East of England posting annual rates of growth of over 8%, but England's North-South divide remains as strong as ever. ‘Even though the North West has reversed the sudden month on month drop in prices it saw in August, prices in the North East of England have slipped back into negative territory. By contrast much of the South and East looks like one giant hotspot, as the national picture returns firmly to type,’ he said, But he believes that rising prices should not be confused with sound health in the property market. ‘The shortage of supply is endemic in several areas, and the current rate of demand can never be completely met. Yet for all the competition among buyers, most remain astute in their offering behaviour and sellers shouldn't be tempted into thinking it's an exclusively sellers' market,’ he added. A sense of balance is appearing in the market, according to Nicholas Leeming, chairman of high end national estate agents Jackson-Stops & Staff. ‘London continues to drive forward but we’re now seeing emerging boroughs such as Newham and Hounslow enjoy strong growth, while traditional performers such as Hammersmith and Fulham begin to wane,’ he said. ‘There still remains a stand-off between buyers and sellers at the top end of the market, with neither party prepared to accept the higher cost of stamp duty. Outside of the capital, it… Continue reading
UK sees record investment in student housing market
Total investment volumes in the UK student housing market reached record levels in the first three quarters of 2015, exceeding US investment volumes for the first time, new data shows. In terms of larger deals of $7.5 million plus, excluding land sales, the UK saw investment of $6.5 billion, compared to just over $3 billion in the US, according to research from international real estate advisors Savills. The firm’s World Student Housing Report states that the UK’s record levels have been driven by foreign investment, led by North America which was the source of 80% of all cross border deals in the 12 months to September 2015. All the top global student investment deals in 2015 have been into the UK, led by the Canada Pension Plan Investment Board’s $1.7 billion purchase of the Liberty Living Portfolio and Greystar/PSP’s purchase of the Nido London Portfolio for $920 million. ‘Reflecting the maturity of the UK market, the major transactions have all been portfolio deals. Increased investment activity has brought with it yield compression, particularly for investments in prime London where net initial yields on direct let properties are now around 5%,’ said Paul Tostevin, associate director of Savills World Research. After the UK, Savills cites The Netherlands, with its English language education offer, emerging as a highly investible proposition. The Netherlands has seen average annual investment of $200 million in the last three years, the majority of which has come from private, domestic capital, but foreign investment is growing. In Germany early investors have successfully launched a premium product, filling a gap in the market next to the not for profit Studentenwerk offer, while France’s student housing market is characterised by growing investor interest but limited available supply. This has put downward pressure on French prime student yields, which stand at 5.4%. Beyond Europe, Australia is a key emerging market given its high quality of life and proximity to two of the top five source markets for international students in 2015 which are China and South Korea. ‘This is the first time the UK has outpaced the US in student housing investment which is quite remarkable given their disparate sizes. North American, Middle Eastern and Russian investors have led the charge into the UK,’ said Marcus Roberts, the firm’s director of Student Investment and Development. ‘We expect continued global competition for stock, combined with limited opportunities, to lead to further yield compression in the near term, but with the UK remaining the second most popular destination for international students, top tier university cities with low supply, such as London, Bristol and Edinburgh, still offer potential,’ he added. Continue reading
