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Regulation and tax set to impact property markets in Asia Pacific region

Monetary policy, tax, regulations and underlying fundamental drivers such as demographics and urbanisation will have a significant impact on property markets in the Asia Pacific region, according to the latest real estate analysis. The region’s economies are moving at multiple speeds with differing drivers and local dynamics, producing quite a wide range of housing market performance indicator, says the Asia Pacific residential review from international real estate firm Knight Frank. ‘Economic growth can certainly be a reasonable lead indicator as to which way housing markets will go,’ said Nicholas Holt, head of research for the Asia Pacific region. He also pointed out that despite facing many headwinds, the International Monetary Fund is forecasting stronger growth in 2015 for six out of the 11 major countries in the region. ‘While this should be a positive sign for home owners or investors, the reality is that in many cases there has been a divergence between short term economic growth and market performance,’ he added. The report reveals that since last November, the People’s Bank of China has cut interest rates three times, contributing to the first month on month increase in house prices in May this year, after falling for 12 consecutive months. Other countries such Australia, India and South Korea are also pursuing expansionary monetary policy. It points out that with further interest rate rises inevitable in the slow moving market of Singapore, cooling measures introduced previously could start to be reviewed by the government. China and New Zealand have already seen similar moves. And the likely extension of luxury tax and introduction of a super luxury tax have already started to impact market behaviours in Indonesia, as has the announcement of a new capital gains tax scheme in Taiwan. The report also points out that it is not just China that has seen the increasing influence of policy interventions in residential markets, whether fiscal, monetary or regulatory. In New Zealand, for example, authorities have stepped in over recent years. ‘Perhaps now more than ever, property market observers are looking to policy makers, whether Janet Yellen at the Federal Reserve, the Singapore government, the Reserve Bank of Australia, the People’s Bank of China or the Japanese government for clues about how markets will perform. We can expect more of this going forward,’ explained Holt. In Hong Kong the supply of land for development has affected the property market and the report says that until supply catches up with demand the upward pressure on prices will continue in what is already one of the costliest property markets in the world. Indeed, house prices in Hong Kong have continues to defy the ongoing cooling measures by rising 8.4% in the 12 months to the first quarter of 2015, the highest annual price growth in the overall market since the second quarter of 2013. The report suggests that the Reserve Bank of Australia’s recent decision to hold interest rates followed two 25 basis point cuts in the official… Continue reading

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Third of new homes in London in next five years set to be in the east

Almost a third of all new homes planned for London over the next five years will be concentrated east of the city’s financial district, a new analysis shows. A total of over 55,000 homes will be built in just four boroughs, according to the report from international property adviser, Savills, which identifies a shift in the capital’s centre of gravity towards the east. It says that the boroughs of Newham, Tower Hamlets, Greenwich and Barking and Dagenham will account for 29% of all new homes planned for London in the five years to the end of 2018. ‘The Olympics played a hugely important role in opening up the area to investment and transport improvements are now driving occupier, investor and developer demand in previously overlooked east London postcodes,’ said Susan Emmett, Savills residential research director. ‘This is changing the shape of London and its property market, with a discernible pattern of emerging development hugging the East London Line portion of the new London Overground. The network extension to Barking Riverside and the completion of Crossrail with give a further boost,’ she added. The analysis report points out that lower average capital values in the east of London have provided developers with the opportunity to build much needed homes that are affordable for those living and working in London. However, while central boroughs such as Westminster and Kensington and Chelsea remain the most expensive, the biggest increases in value have been seen away from London’s core over the past year, particularly in cheaper locations to the east. But, not only have prices increased ahead of the Greater London average, transaction volumes have also received a dramatic boost. In Tower Hamlets, the number of homes changing hands is now double the pre-peak norm, while deals in Newham are up almost 50% year on year. Key emerging residential areas include Stratford with 6,500 new homes, including 2,800 in East Village, Canning Town and Royal Docks with 8,000 homes, Canary Wharf with 4,500 homes at Wood Wharf and 850 at Asda Crossharbour and Greenwich Peninsula with 10,000 new homes. Average prices currently range from £500 to £700 per square foot in Canning Town and Royal Docks and £550 to £750 in Stratford, accessible to households with an average income of over £70,000. In Canary Wharf, popular with financial sector employees both as owners and tenants, values range from £700 to £1,200 per square foot. Greenwich Peninsula is expected to achieve values in the £550 to £850 range. ‘It is this dynamic of rapidly rising prices, albeit from a low base, and the strength of demand that will present developers with their biggest challenge. Market strength has pushed the value of new build in Canary Wharf, the most established East of City location, to £700 to £1,200 per square foot, out of the reach of the… Continue reading

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Dubai is third most dynamic city in the world

Dubai is third most dynamic city in the world Staff Reporter / 23 January 2014 The new City Momentum Index released by Jones Lang LaSalle names San Francisco, London and Dubai as the three most vibrant cities. Not just steady GDP growth but a soaring real estate industry and the halo of Expo 2020 have combined to catapult Dubai to third place in the list of the world’s most dynamic cities compiled by Jones Lang LaSalle. The new City Momentum Index released by the realtor names San Francisco, London and Dubai as the three most vibrant cities, displaying strong short-term socio-economic and commercial real estate momentum as well as longer-term foundations for success. Chinese cities Shanghai and Wuhan complete the group of the top five. Describing the yardsticks for the index, Jeremy Kelly, LaSalle’s director for global research, said highly dynamic cities are characterised by their speed of innovation and creation of cutting-edge businesses. New building construction, property price movement and investment in real estate from cross-border investors and corporations are the other factors. Dubai is also among the eight elite cities that together accounted for one-fourth of the world’s direct commercial real estate investment activity in 2012-2013 and wield “clear economic might on the global stage”. The other seven are San Francisco, London, New York, Hong Kong, Singapore, Los Angeles and Tokyo. The index also clubs Dubai, which will host World Expo 2020, with Tokyo, that will stage the Olympics the same year, calling them resurgent cities gearing up for their respective events with renewed vigour. However, there’s a note of caution as well. Investors and corporates should note that high momentum poses both opportunity and risk. The index assesses 111 cities, basing the score on 34 short-term and longer-term variables. The remaining cities in the Global Top 20 are New York, Austin, Hong Kong, San Jose, Singapore, Shenzhen, Jakarta, Beijing, Chengdu, Los Angeles, Tianjin, Boston, Seattle, Tokyo and Lima. news@khaleejtimes.com For more news from Khaleej Times, follow us on Facebook at facebook.com/khaleejtimes , and on Twitter at @khaleejtimes Continue reading

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