IPIN Live

Stick With it Warns Jiabao Signalling More Pain for Chinese Housing

Tue, 22 May 2012 00:00:00 GMT

As local Chinese authorities continue to back-off from the country's property market restrictions, premier Wen Jiabao reiterates that the controls on the market are necessary and are here to stay.

"Property market controls are still at a crucial stage, the task of adjustment is arduous and we must keep policy stable. Localities must pay attention to this point," said Wen Jiabao, in comments reported on Chinese state radio.

"We must strictly implement differentiated housing credit and tax policies, as well as restrictions on home purchases. We must never allow property controls to suffer a setback, or else our achievements through many years of hard work will come to nothing," he added.

Chinese house prices fell 1.2% year on year in April. This was the second consecutive month that prices had fallen year on year after prices fell 0.7% in March.

Local authorities, who have maturing debts and could badly use the proceeds from land sales see the restrictions in a different light. Many have begun tweaking the rules to increase sales, while being careful to maintain the restrictions on multiple home purchases, which are at the centre of the campaign aimed at clamping down on speculation.

A few months ago local authorities were being slammed back into place, but some have recently begun to push their amendments through the central authority, while efforts in Shanghai and a third-tier city of Wuhu were revoked within days.

The restrictions started at the end of 2009 and intensified throughout 2010 as prices continued to surge. With continued growth in 2011 the restrictions were continually deepened until finally starting to take effect towards the back end of last year. Since then prices have continually been pulled down, leading to many protests at developers' sales offices by buyers watching the developers pull down the value of the homes they have just purchased.

Ironically the government's 4 billion Yuan stimulus during the financial crisis is blamed for starting the housing bubble, or certainly not helping the situation. But since 2009 Jiabao has continually voiced his commitment to driving house prices down to a reasonable level.

UK House Prices Up 8000% Since Queen Was Crowned

Tue, 22 May 2012 00:00:00 GMT

UK house prices are 105 times higher than they were when the Queen was crowned in 1952, when it cost £1524 to get onto the housing ladder according to a new report by Hamptons International. The report also says that prices are 16 times higher than they were during the silver Jubilee in 1977, when it cost £9737 to buy the average house. The same report shows that London house prices are 134 times higher than in 1952 and 21 times higher than in 1977.

The prices given by Hamptons are almost the same as those found in the historical data from Nationwide's house price index. According to Nationwide the average UK house price was £1,891 in Q1 of 1952, compared to £162,722 in Q1 of this year. This is a growth of 8505% over the 60 years this is averaging growth of 141% per year.

It is easy to use that to support the argument that such growth is always going to lead to a bubble and to a crash. But investors can also use it to support their argument that UK property has proven itself as a good long term investment that continually grows over the long term despite the odd crash.

However, a chart of the Nationwide price index since 1952 shows that most of the growth has taken place since 1995, after the last crash. This would seem to indicate that we have inflated a huge bubble during this period, one which will likely take a lot more correcting than the price falls we have had so far. According to the index the average UK house cost £51,084 in Q1 1995. That means the average UK house price has grown by 218.5% since 1995.

Homeowners Confident of Property Values

Tue, 22 May 2012 00:00:00 GMT

The majority of homeowners are positive about future house price growth in the UK. Knight Frank's latest survey revealed confidence in the state of the country's residential real estate market is at a near 20-month high, with the company's May House Price Sentiment Index - compiled in conjunction with Markit - showing capital appreciation is anticipated by people in seven of the 11 regions questioned.

Head of UK residential research at Knight Frank Grainne Gilmore stated property owners in the country appear to have "shrugged off the negative economic news about the UK's double-dip recession and the new problems facing the eurozone". Tim Moore, senior analyst at Markit, agreed, describing sentiment as "surprisingly resilient in May". However, he noted there has been no indication the gap between the north and south of the country has started to close, commenting that "if anything [it] widened slightly since April". London, the south-east and east of England were the most positive regions in terms of house price growth expectations for the year ahead, with households in the north-west and West Midlands the least optimistic about the prospects for residential property.

Ms Gilmore stated: "As perhaps is to be expected after the recent price performances in the capital, those living in London expect the biggest house price growth over the next year. At the same time, optimism in the south-west of England slipped for the first time since January, underlining the increasingly regional nature of the UK housing market." Although London may be a major target for investors due to its robust nature, there are regional locations that can be equally attractive for a real estate investment, especially where rental income is concerned.

A report published recently by Savills that assessed the UK's residential property investment market highlighted some clear hotspots outside the capital, such as Oxford and Brighton and Hove, where demand for rental homes significantly outpaces supply. The firm also pointed to the changing dynamics of the country's rental market, explaining that while investors previously bought residential assets for their capital appreciation, income growth has improved significantly, thereby attracting a higher number of institutional investors to the sector. According to Savills' figures, average rents climbed by 5.2 per cent across the UK in 2011, with this figure standing at 7.2 per cent for London. The organisation added demand for this type of accommodation is likely to remain higher than supply over the next five years, "keeping rents under upward pressure".

A Round-Up of Q1 2012 in the UK Property Investment Market

Mon, 21 May 2012 00:00:00 GMT

As the global economic crisis rumbles on, it was a slow start to the year in property investment markets around the world - and the UK was no exception. According to figures from Jones Lang LaSalle, the global volume of direct commercial property transactions in the first quarter of 2012 was 23 per cent lower than a year earlier, with uncertainty over the outcome of the eurozone's problems still affecting markets in Europe. Research from BNP Paribas Real Estate revealed property investment in Western European markets was down 19 per cent in the three months from January to March, compared to the same period in 2011.

The organisation described the UK as following a "downward trend", with total investment volumes for the quarter standing at EUR 7.6 billion (GBP 6.1 billion) - a decline of 30 per cent on Q1 2011. However, the firm pointed out the UK's investment market remains the most liquid on the continent, adding the level of activity had remained high, despite the downturn. "Even though central London stayed stable on a rolling year basis compared to last year, the regions experienced a lack of large transactions that boosted volumes in Q1 2011," BNP Paribas Real Estate asserted. Jones Lang LaSalle made a similar observation, citing the sale of the Trafford Centre Shopping Centre in Manchester at the start of last year as an example of the type of deal that was absent at the beginning of 2012.

Indeed, it is the UK's retail market that has taken the biggest hit, with the BNP Paribas Real Estate data showing investment levels in the sector fell by 55 per cent year-on-year. In its Shopping Centre and High Street Bulletin, Savills pointed out just 12 shopping centre transactions were completed in the first quarter, with a total capital value of GBP 461.55 million. Among the biggest deals were the sales of Ocean Terminal, Edinburgh, for GBP 90 million and St Johns Shopping Centre, Liverpool, for GBP 76.5 million.

Looking at the high street, Savills pointed out "portfolio rationalisation" among big names such as Thorntons, Arcadia and River Island continued in Q1, while businesses including Mothercare, Argos and Starbucks all sought to dispose of outlets on a large scale. However, it is not all doom and gloom, with Savills commenting: "Retailers are still selectively acquiring and due to the lack of quality stock in strong market towns (predominantly south-east biased), competition for space is seeing a rare return to straight ten-year leases, minimum rent frees and strong rentals (although this is town and unit specific)."

In contrast to the retail sector, investment volumes in office properties were more stable in the first quarter of the year, with BNP Paribas Real Estate recording a 19 per cent decline for the UK as a whole. However, when the focus was turned on the central London office sector, the firm highlighted a "slightly upward trend" in real estate investment, although the West End and Docklands registered fewer transactions than a year earlier. A lack of new stock has benefited the London office market, helping to push vacancy rates lower. The organisation predicted this will continue throughout 2012, as few new completions are anticipated.

Research published by CB Richard Ellis (CBRE) pointed to the increasing investment volumes in the central London office sector in the three months from January to March, which hit GBP 3.7 billion - up from the GBP 1.7 billion recorded in the final quarter of 2011. The organisation noted this figure was enhanced due to "a large backlog of deals in the City that went under offer towards the end of 2011". According to Cluttons, the largest deal in the West End office sector was Crosstree's purchase of 1-3 Berkeley Street from Aviva for GBP 155.1 million. Other notable transactions elsewhere in London included the sale of 90 High Holborn and One Exchange Square by KanAm for an undisclosed sum. However, Property EU pointed out the two buildings were part of a four-asset portfolio valued in the region of EUR 1 billion. Meanwhile, PNB paid Beacon Capital more than EUR 400 million for 1 Silk Street.

Global Commercial Property Values Grow in Q1

Mon, 21 May 2012 00:00:00 GMT

Commercial property values have continued to stay strong in the first quarter of the year, according to results from CB Richard Ellis (CBRE). The firm released the Q1 2012 CBRE Capital Value Index earlier this week, showing there was a 5.7 per cent growth rate in commercial real estate values at the end of the first three months of 2012 compared with the year before.

The region that performed best, according to the figures, was the Americas, with real estate investment prices increasing significantly in this area year-on-year. Over the 12 months from Q1 of 2011, the capital value indices annual growth rate rose by 9.6 per cent. This follows an increase of 9.9 per cent from the first quarter of 2010 to the same period the following year.

Dr Raymond Torto, global chief economist for CBRE, said: "There has been a marked increase in investor interest in the Americas' prime properties over the last year and this is reflected in the CBRE Americas Capital Value Index." The Americas' performance was followed by the Asia-Pacific region, which saw an increase in capital values of eight per cent year-on-year between Q1 2011 and 2012. While this growth is still notable, it is far below the 19 per cent rise in capital values experienced the year before.

Similarly, global capital value growth during this period was lower than figures from between the first quarter of 2010 and 2011, when commercial property climbed in value by 12.2 per cent. This slowdown in growth of real estate prices was reflected by Jones Lang LaSalle, which recently released capital market research on commercial property transaction volumes. It reported that, while volumes totalled USD 75 billion (GBP 47.4 billion) at the end of 2012's first quarter, this is a decline of 23 per cent on figures from the first three months the previous year.

Can the Australian Real Estate Market Rebound?

Fri, 18 May 2012 00:00:00 GMT

The Reserve Bank of Australia recently cut interest rates by 0.5% and further cuts are undeniably on the horizon. Property owners and private investors are understandably concerned about what this means for the value of Australian homes.

The Devil is in the Detail

Several months ago the RBA decided interest rates should be held steady. Economists assumed the mining boom would have a positive effect on the economy. The stimulus provided, they assured themselves, would surely lead to inflation and the inflation would lead to a need for higher interest rates.

The mining boom took shape as promised. The mining companies have made out like bandits, skilled labourers are raking in the profits and the Australian infrastructure is reaping the rewards. However, the "trickle down effect" hasn't gone quite according to plan.

The RBA effectively predicted the mining boom. However, they severely underestimated the amount of time needed for the economy to see the necessary stimulus. On one hand, the Australian resources department is making record profits. On the other, most other economic sections are struggling to awaken from their long slumber.

Interest Rates vs. Property Value

Although the full rate cut is almost certainly not going to be passed on to consumers, every 0.5% cut slices deep. The recent cut means that the average mortgage holder saves about $120 a month.

Nothing stimulates the Australian economy like money in hand. An extra $120 in a layman's pocket will instil a greater consumer confidence. Cheaper interest rates will eventually lead to higher home prices; however, the results will not be instantaneous.

Historically, property markets improve when interest rates fall, especially if the rates have steadily declined over a period of time. Home sales go up, new construction is started and property value begins to climb. It doesn't happen immediately but it does happen eventually.

This historic connection between better markets and less expensive money seems to be a thing of the past. Interest rates have been lowered several times in the past year but real estate markets have yet to see the marked improvement that generally comes with a rate cut.

Why Has the Connection Been Broken?

The answer is simple. Consumer confidence is at an all-time low. Australians are not feeling good about where the market has been and they are not making major purchases. The falling interest rates are sure to instil confidence; however, that rebound hasn't happened quite yet.

Many things lower consumer confidence but in the current economical situation there are three major attributing factors:

- The economic problems in the US and Europe
- Australian political influence
- Uncertainty about local markets

No one can agree on just where the Australian property market stands. Is it rebounding? Has it flat lined? Is the end in sight or is it going to get worse? When the four leading economists have four different theories, buyer confidence suffers.

World economic issues can also impact Australian confidence. For the average Australian, the home is their biggest asset. They have invested time and money making improvements in order to increase the property value. With one eye on the news, they see the financial crisis in the US and the uncertainty in Europe and wonder what this means for them.

- Could the breakdown of the US financial markets happen in Australia?
- If it does, will the economy ever be able to rebound?
- How does China factor into the equation? What if the bottom falls out of their manufacturing boom?
- Will unemployment rates continue to hold steady? Will I still have a job next month?

Consumers need confidence in order to make the decision to buy or sell a home. They need to be sure that the timing is right and the financial benefits outweigh the risk. With confidence lacking and uncertainty making an appearance, market improvement is impossible.

Decades ago, this perfect storm of low rates, a strong job market and a stable economy would have driven the real estate market straight through the proverbial glass ceiling. Today, however, we have the mainstream media and the internet delivering real time updates about foreign markets. Australians, like the rest of the world, are uncertain.

Can the Market Ever Be Fixed?

The market can and will rebound; however, it won't happen overnight. One or two more rate cuts will put even more extra money in Australia's pockets. By then, the stimulus effects of the mining boom will be felt.

Some good news coming out of foreign markets would also help.

Europe has (mostly) solved its own problems and the US appears to be rebounding. Right now, that is not enough to instil confidence. However, further improvement coupled with market stability is sure to have a positive effect on Australia.

Online currency converter shows the Australian dollar is holding steady against the Euro; this is a sign of good things to come.

The Truth about the Australian Market

It seems as though every new report released says something different. Contradictory information coming out of nearly every research house can only worsen confidence. No one can clearly predict where the market is headed and their conflicting theories can confuse even the most knowledgeable investor.

Mixed messages are common when the market exits one stage and enters another. We are entering a stabilization phase. Buyers are coming back to the market; not in droves but slowly, one at a time. Home prices are neither increasing nor decreasing and will remain stable while the balance between those buying homes and those selling homes settles itself.

Property Investor Outlook

This is a great time for an investor to get in on the ground floor of the next boom. No risk is without reward.

Market confidence will return; the cycle will keep cycling. The successful investor will surely benefit from reviewing their current portfolio and preparing for the eventual upswing.

Those who take action in a weakened market often reap the biggest rewards when the market rebounds. There is no iron clad guarantee that the rebound will come soon; however, historical data suggests the next real estate boom is on the horizon.

Costa del Sol Property Market Remains Robust Despite Spain’s Economic Crisis

Fri, 18 May 2012 00:00:00 GMT

Amid the gloomy news headlines of plummeting real estate prices, multiple bank repossessions and as the Spanish government presses ahead with its austerity plans in a bid to get its house back in order; it appears that the sun has begun to shine once more on the prime Costa del Sol real estate market.

Figures released on May 7^th by the Bank of Spain revealed that foreign investment in residential property amounted to some 4,748 million euros in 2011, representing a 27% year-on-year increase, a second consecutive yearly rise, and the highest recorded level of investment by this group since the property bubble burst in 2008.

40% of total foreign investment in Spanish real estate spent in Costa del Sol

Leading Malaga newspaper, Diario El Sur (May 8^th) quotes Jose Prados, president of the Malaga Association of Developers and Constructors (ACPM), as confirming that the Costa del Sol received the lion's share of this bonanza; some 1,900 million euros, representing an impressive 40% of all foreign investment in the country's real estate sector last year.

Six out of every 10 sales were completed by British buyers followed by Germans, Scandinavians and other northern Europeans, all of whom have a long-standing predilection for the area, with an emerging interest shown by investors from Russia, the Middle-East and more recently, China.

He indicated that that figures reported to him by local agents for the first quarter of 2012 remained promisingly robust, listing the great bargains to be had as a result of the generalised price drop (between 10% - 40% dependent on area) the stricter property purchase legal frameworks now in place and the introduction of incentives to boost the market; such as the government's 50% reduction on value added tax (IVA) from 8% to 4 % on the purchase of new properties; as key factors behind this resurgence in investment.

Costa del Sol market remains resilient

Industry professionals in the area concur that the Costa del Sol residential market remains resilient after a notable pick-up in sales witnessed last year as sellers began to drop their expectations and prices accordingly; and buyers who had been waiting in the wings for the market to bottom out, realised that now was the time to buy as they were unlikely to drop much further.

As Lynn Clark from Personal Property Finder confirms: "2012 has started very strong with many agents reporting the best Q1 sales figures for 3 years and there is a confidence in the market that has been missing since the bubble burst. The banks are working with developers to make attractive funding options available to buyers and the high street banks are once again approving mortgages to non-residents albeit with much more sensible criteria. Now is an excellent time to buy, with properties at a 10-year low but healthy tourist figures making holiday rental property a desirable and affordable investment. Investors are back and buying."

Luxury real estate sector healthy, thanks to property price drop

At the luxury end of the market, primarily in the Marbella/Golden Mile area, business has also been picking up. According to a recent article by Spanish news agency EFE, the luxury property market in this area saw more activity last year, again, thanks to the drop in prices.

It quotes Christopher Clover, Director of Panorama, Marbella's longest operating real estate agency as affirming that 2011 saw a 20% year-on-year increase in sales due to property owners readjusting their asking prices. There were some great bargains to be had as a result, with properties in prime areas priced in 2007 between €500,000 to €800,000 now selling for somewhere between €300,000 to €500,000. The very high end properties however, those over 2 million euros had experienced a 10-20% price reduction while those located in sought-after addresses with limited properties for sale continued to maintain their original price.

Kristina Szekely, an established real estate agent in Puerto Banus, pointed out that there had been a shift away from the investor in multiple properties who used to make a "bulk" purchase of 8-10 apartments to sell on, towards those clients who had dreamt of owning a holiday or retirement home for years in Marbella and could now afford to do so.

The majority of buyers in this sector hail from northern Europe; Scandinavians, Belgians or Dutch with "a lot of wealthy Russians" and clients from the Middle-East, the article concluded.

Worthy of mention when assessing the future of the Marbella market is the projected investment of some 400 million Euros by Qatari Sheikh Abdullah Bin Nasir Al-Thani, which will transform the town's current La Bajadilla fishing port into the state-of-the-art "Port Al-Thani" luxury marina complex. On completion, the new port will have almost trebled its current mooring capacity and will boast a special docking pier for mid-size luxury cruise ships, a 5-star hotel and a string of upmarket shops, restaurants and bars contained within a dedicated 64,495 m2 commercial and leisure space. Construction is said to be due to commence after the summer season and the first phase is scheduled for completion in 2015.

With the inevitable property price rises and boost to the local economy that this is set to bring about, it's all the more reason for those who are in the position to do so, to make their move now and buy while the prices remain at such an all-time low.

Most experts agree that prices for prime properties on the Costa del Sol won't be falling further, with some predicting that they will even experience a slight rise as soon as 2013 thanks to the growing demand from returning foreign investors. As Personal Property Finder's Lynn Clark sums up "I do believe that those who are waiting for the Costa del Sol market to implode and start giving beachfront apartments away for a handful of dollars are going to miss the boat and find their home in the sun once again slipping out of reach."

Global Real Estate: Is It Getting Worse Again?

Fri, 18 May 2012 00:00:00 GMT

For the second time now it seems that we are going from a little bit better to a lot worse in terms of the global real estate recovery. The world joined America and the UK in the crash at the end of 2008 and 2009 was the real year of the global crash. Since then we have had a recovery, a second round of declines, another period of improvement and now it is getting worse again, what's going on here?

Well, the first time we fell backwards was easy to explain; the recovery was artificial as it was brought about by governments flooding their markets with capital. It was inevitable that they couldn't spend at that level forever and when the money ran out the markets deflated again. But now it seems to be happening again – why?

The answer: the same thing that caused the first crash, credit and confidence only instead of it being US of A that is mainly to blame, this time it is the EU.

The biggest problem is definitely credit...

Financing is the single biggest obstacle faced by property investors, even some of the biggest property companies in the world are having trouble refinancing, and most of the big deals done in the past few months have been carried out by consortiums of multiple investors and firms.

During the first crash the banks tightened their lending criteria around the world and it has hardly slackened anywhere since.

On top of that you have the new EU regulations, under Basel III banks have to increase their Tier 1 capital ratios by around 9% by June 2012. Banks can do this in one or both of two ways. They can go to the market and raise additional equity finance, or they can reduce their loan portfolios, since the amount of capital they need is proportionate to the amount of risk on their books. Property lending carries a substantial capital reserve requirement so it makes eminent sense for banks to pull out of commercial property lending, or to make dramatic cuts in the amount that they are prepared to lend. And they are doing this.

This is obviously having the biggest effect on the European property markets. Investment in European retail property fell 64% in Q1 2012. And the most recent report comes from PropertyEU, stating that just 3.5 billion Euros worth of commercial real estate investment was transacted in Europe in April, compared to 5 million Euros in March and 7 billion Euros in April 2011.

But the European banks have also effectively taken themselves out of the refinancing cycle, which is having an effect on the global property market as well.

Closely Followed by Confidence

Confidence is also becoming a huge problem. Investors won't invest if they don't feel confident in the market and confidence is an extremely rare commodity.

Investors in Europe can barely get finance from banks, but those that can are thinking twice because they have doubts about refinancing when the terms come up.

Then you have the sovereign debt crisis in Europe. It has been over 2 years since the first Greek bailout, since then Portugal and Ireland have both also had bailouts and Greece has had a handful more, but only in Ireland is there any real sign that the situation is turning around. Portugal is in better shape than Greece, but we still can't escape the possibility that Spain, Italy or both will yet succumb to the need for a bailout.

If Spain or Italy need a bailout the EU is likely to collapse, if they both do it is almost certain to. All in all it is an uncertain time for Europe, combine that with the lack of financing and we can see that 2012 is going to be a bad year for European property investment.

But that is Just Europe

Thank fully not everywhere is as bad as Europe, but there are few bastions of hope.

Asia is no longer the golden boy it once was, as many markets allowed themselves to bubble even as the rest of the world had clearly popped. China is currently fighting to gently deflate its bubble rather than let it pop, and the same goes for Singapore. Thailand and Malaysia are also having to think about cooling things down. Cooling things down largely means reducing speculation, which mostly means reducing investment.

Eastern Europe has been a bright star in many a negative index over the last few years, but now eve it is succumbing to the lack of credit.

However, Germany is doing incredibly well, Scandinavia is yet to suffer any real damage and Turkey is a diamond in the rough with investment volumes soaring. In fact, Turkey is attracting more and more institutional investors to its shores as it becomes one of the only places in Europe that looks like growing, of course, its banking sector is incredibly strong and it isn't hit by the EU regulations.

America is an unlikely saviour. America was a hot commercial real estate market in 2010, and is much cooler now. However, the multi-family sector is hot as big investors buy and build apartment blocks to serve the rental boom that has ensued from the foreclosure crisis and tight lending.

Brazil in Latin America is a good investment bet, but it also suffers from a lack of financing. In fact, there are many hot markets in Latin America, Ecuador, Mexico etc, but these are high risk markets not for the faint hearted.

Likewise there are many hot markets in Africa that are experiencing good yields and capital growth, Nigeria, Kenya, but again these are high risk markets.

All in All...

All in all, even though we are now heading for five years since this crisis began, 2012 looks like a year where many of us will be strapping in for another bumpy ride.

London Alone in Growth As UK Commercial Sector Slides

Fri, 18 May 2012 00:00:00 GMT

Many reports in the last 2 years have indicated that the UK commercial property scene was among the brightest in Europe, but as with most things it was mainly the performance of properties in the capital that was driving the overall performance up. So, now when we hear an IPD report on how London continues to grow as the rest of the UK falters, we might read into it that the performance of London is weakening as it is no longer sufficient to prop up the rest of the market.

According to the IPD index London is now the only place where capital values of offices, retail and industrial properties are rising. Even with London's continued growth, values for the UK market have been falling for the past 6 months, declining 0.3% compared to the previous month. Prices have now fallen 1.1% since November last year, although total returns remained positive in April at 0.2% according to IPD.

Regional shopping centres are the worst offenders in the decline, with their values falling 6.5% on average since November, while offices in the south west aren't far behind with a 4.5% decline over the last 6 months.

Phil Tily, Managing Director of IPD UK and Ireland said, “Without the impact of London on returns, which remains the power house of the UK property market, the declines across the UK would be even more apparent. However, confidence in the Capital, and its ability to keep growing, should lend some assurance to the industry. Despite concerns regarding the sustainability of pricing, notably in the City office market, the capital remains buoyant. Values for City offices actually increased by 0.4%, their strongest growth since September 2011”

US Housing Market ''Starting to Recover''

Fri, 18 May 2012 00:00:00 GMT

A recovery is underway in the US residential real estate market, with The Demand Institute predicting property prices in the nation will rise by one per cent before 2012 draws to a close. This growth is expected to continue over the coming years, with annual increases of between three and four per cent anticipated between 2015 and 2017. However, the organisation stressed the upturn will "not be uniform", with some markets performing better than others as the US gains ground following the economic crisis.

Chief research officer at the institute Louise Keely commented: "In these initial years, the prime driver of recovery won't be new home construction, but rather demand for rental properties." According to the new report - The Shifting Nature of US Housing Demand - published by The Demand Institute, there has been a significant rise in the number of people prepared to rent a home. Of those surveyed who are intending to move house in the next two years, more than half stated they will rent rather than buy. This demand presents opportunities for real estate investors, especially if they are in a position to purchase foreclosed properties at discounted rates, which can then be rented.

Earlier this month, Federal Reserve board governor Elizabeth Duke explained the key to a housing market recovery in the US will be balancing the availability of finance with responsible lending practices. She was speaking at a forum organised by the National Association of Realtors and stressed there will be "tough decisions" ahead for the winner of the forthcoming US presidential elections. Ms Duke acknowledged there will be disagreements over which route to take, but she added: "Nevertheless, until these tough decisions are made, uncertainties will continue to hinder access to credit, the evolution of the mortgage finance system and the ultimate recovery in the housing market."

Chinese Commercial Property Rallies Says Report into Beijing Offices

Thu, 17 May 2012 00:00:00 GMT

The crowd goes crazy..... That is the reaction that some of the current property news threatens to bring in people; it is so erratic.

Chinese house prices have been falling for several months now and registered their first annual decline in April according to official data. But according to the latest data the commercial sector is rallying.

According to the report office building rentals in Beijing rose 48 percent year-on-year in the first quarter, while average monthly rents rose 12.64 percent quarter-on-quarter to 277.57 Yuan per square meter, reports China Securities Journal, citing DTZ. Meanwhile some of the top office buildings saw rents hit as high as 1200 Yuan per square meter putting them on a par with buildings in Hong Kong.

China Securities cited the government curbs on the residential sector as fuelling commercial investment, especially as there is seemingly to be no let up in the restrictions any time soon. Investment in commercial property hit one trillion Yuan in China last year, and the report says that capital has consistently flowed into the sector this year.

Pan Shiyi, the CEO of SOHO China (0410.HK), said the surge in office rentals is the most rapid he has seen during his involvement with the real estate market, which spans more than a decade.

According to the report, for the next two years, Beijing will supply only 2.1 million square meters of office buildings.

The Beijing office sector is but a small section of the commercial market in China, and unfortunately we have no data on any other sectors, cities or areas, that is apart from the residential sector. It is still in a drastic tailspin according to the latest report from Knight Frank and China-based consultancy Holdways new home prices are now down 6% from the 2011 peak and that is conservative average considering that previous buyers on new developments have rioted over cuts of 20%.

London Commercial Property ''Supporting UK Market''

Thu, 17 May 2012 00:00:00 GMT

The UK's commercial real estate market is being supported by the returns generated by investment properties in London. According to figures published by IPD, capital values for retail, industrial and office assets declined by 0.3 per cent across Great Britain last month. By contrast, these three sectors in London were the only ones to record positive growth in the same period. Managing director of IPD UK and Ireland Phil Tily stated: "Without the impact of London on returns, which remains the powerhouse of the UK property market, the declines across the UK would be even more apparent."

His assertion appears to be backed up by data released by CB Richard Ellis (CBRE) earlier this month, which also highlighted the strength of London's commercial real estate sector compared to the rest of the country. However, the CBRE figures found that, overall, returns for all UK property were in positive territory at 0.2 per cent. The organisation pointed to central London offices as one of the most robust sectors, noting rental growth of 0.7 per cent in April helped boost the performance of this asset class. Senior analyst of economics and forecasting at CBRE Nick Parker commented: "London remains a clear focal point for active investors, with GBP 3.7 billion exchanged in the first quarter, driving continued competition and positive capital growth in April."

Mr Tily expects London's buoyant performance to help enhance the appeal of UK commercial property investment. "Confidence in the capital, and its ability to keep growing, should lend some assurance to the industry," he asserted. This is despite some concerns pricing, particularly in the City office market, is not sustainable, he added. Another factor working in the UK's favour is the ongoing debt crisis in the eurozone, which may push more investors towards London and other property markets in the country. Mr Tily noted the nation's capital has a reputation as a safe haven, which may become more important if uncertainty takes hold elsewhere. He also stressed that even though the value of commercial real estate has declined, income returns have been stable at 0.5 per cent.

Shock and Awe at Performance of Prime City Real Estate

Wed, 16 May 2012 00:00:00 GMT

Since the global financial crisis crippled the world it has been hard to be shocked by anything the property indices have thrown at us, but many people have been surprised by the latest release of the Knight Frank prime global cities index for Q1 2012.

Since 2009 and especially last year the world's prime cities have been a bastion of good fortunes and climbing house prices. But the latest release showed a 0.4% decline in prices across prime cities, the first negative performance since the crisis struck says Knight Frank. But while the first negative performance since the crisis hits hard to laymen, the index has shown growth of below 2% per quarter since Q1 2010 and averaged just 0.6% last year according to Knight Frank.

What is shocking though, and it is a pleasant surprise for many is the top 5 markets. Nairobi comes in first with growth of over 24% in the last year. The Indonesian capital Jakarta came in second with 14% price growth in the 12 months to end Q1, which will of course please those who have shown the faith to invest in the new CIVETS and MINT groupings (Columbia, Indonesia, Vietnam, Ecuador, Turkey and South Africa + Mexico, Indonesia, Nigeria and Turkey).

From there the index goes on to show a clear sign of just how strong the American recovery is becoming in parts, with Miami coming in third at 13.9% growth. London then takes fourth with 11.3% before we return to North America with Manhattan's 9.2% growth giving it fifth place. Apart from that only Moscow, Zurich, Beijing Cape Town and Dubai managed growth over the year, with Los Angeles and Dubai at less than 0.5%.

Words of caution on America though. Of the top 5 markets, all have growth in the past 6 months and quarter on quarter as well, with the exception of 2 – you guessed it Miami and Manhattan. Miami prices grew 3.1% in the 6 months ending Q1, but fell 1.9% on the quarter, while Manhattan was flat over 6 months but fell 4.3% on the quarter.

Core UK Property Markets Targeted by Investors

Wed, 16 May 2012 00:00:00 GMT

Many real estate investors are looking to core markets in the UK, with office and residential properties in London and the south-east among the most popular. This is according to head of property multi-manager at Aberdeen Asset Management Richard Gale, who explained the strong demand for these asset classes has pushed values higher. In addition, Mark Routledge, executive director of business space capital markets at CB Richard Ellis (CBRE), recently highlighted the investment opportunities available in England's south-east office market.

He pointed to a marginal increase in activity in the region where this type of commercial property is concerned, adding prime yields in the sector "remain stable". However, Mr Routledge stressed it is not only prime assets that should be on investors' radars. "With secondary yields drifting out to ten per cent plus, there has never been a better opportunity to buy stock that needs active asset management, which can be purchased at less than replacement cost," he asserted.

Other commercial property classes attracting investors include retail warehouses and supermarkets, Mr Gale noted. He explained supermarkets, along with residential care and hotels, offer something that can be hard to find - growth linked to the retail prices index (RPI). "The most important thing is security of income, preferably with some inflation protection. This means that if you can get hold of RPI-linked growth with secure covenants, then it is happy days," Mr Gale concluded.

However, he acknowledged there are barriers to investors seeking commercial property investments, such as a lack of debt finance and low development starts, which means there will be fewer new buildings coming on to the market moving forward. The latest Savills Commercial Development Activity report revealed this may change though, as growth in the level of activity was posted by the construction industry in April for the second successive month. In addition, a generally positive outlook for the three months ahead was recorded among professionals working in the sector.

German Property Portfolio Transactions Set for a Big Year

Tue, 15 May 2012 00:00:00 GMT

Experts are predicting that German property investment volumes are set to return to pre-crash levels this year after a surge in first-quarter portfolio-transactions signalled buzzing investor-sentiment and appetite.

Some 3 billion Euros worth of portfolio-transactions went down in the first quarter, which is more than triple the amount of transactions in Q1 2011, showing that the current difficulties with financing are not enough to dim investor appetite for German property.

"This is definitely going to be the most active year since the crisis in terms of transaction volume," said Konstantin Lüttger, head of residential investment at CBRE in Frankfurt.

With such high demand it is expected that many portfolio owners will see now as the time to off load some of their assets. More than expected in fact, Gagfah the biggest listed residential landlord in Germany has confirmed that it is considering selling 38,000 flats in Dresden, while Barclays and BayernLB are thought to be considering offloading tens of thousands of flats across Germany.

Those with knowledge of the market report bidders like Goldman Sachs, Blackstone and Whitehall looking to snap up these portfolios, and those with knowledge of Barclays sales plans have lined up Whitehall as bidding for 20,000 of its properties.

Deals already done include 21,000 flats bought from Stuttgart bank LBBW by a consortium of pension funds and insurers and the purchase of 25,000 flats from BayernLB's DKB unit to listed property company's TAG for around 1 billion Euros.

The latter left bailed-out bank BayernLB with a further 32,000 flats in Bavaria to sell in order that it complies with EU competition rules, and the German government has 11,500 flats to sell also.

"There is a lot on the market but the big question for opportunistic investors is whether there is adequate financing. There are not many banks out there that are willing to lend big sums and consortium deals are more complex," Mr Lüttger said.

Miami Hotel Market ''A Target for Investors''

Tue, 15 May 2012 00:00:00 GMT

Hotels in Miami are becoming an increasingly popular real estate investment option, new figures have revealed. According to Jones Lang LaSalle Hotels, transaction volumes are expected to reach USD 650 million (GBP 403.65 million) this year - up from USD 557 million in 2011. Gregory Rumpel, managing director of the organisation in Miami, believes this surge of activity in the hotel market is being driven by a number of different factors. "Owners with non-performing assets who are unable to invest equity or restructure debt will look to the transaction market as an outlet to shed properties," he commented. Mr Rumpel said transaction volumes are also being driven by "real estate owned properties from lenders who have taken ownership of defaulted properties".

He noted that healthy rate premiums and strong levels of demand for accommodation should also help make Miami's hotel market attractive to property investors. Indeed, Jones Lang LaSalle believes the short-term outlook for the sector remains extremely positive, due to record visitor numbers and continuing infrastructure investment in the region. The organisation stated Miami is on course to consolidate its status as one of the US's top investment and hospitality markets, while its economy is flourishing.

Figures from Jones Lang LaSalle Hotels show that, in the first three months of 2012, rates of revenue per available room in the city went up by one of the highest amounts in the whole country. Mr Rumpel is therefore confident the Miami hotel sector is likely to appeal to private equity funds and real estate investment trusts in particular over the next few months. This comes after figures from STR revealed that during March 2012, hotel occupancy rates in the US went up to 63.6 per cent - a trend it attributed partly to unseasonably warm weather during this period.

Buy to Let Lending Declines but Sector Continues to Outperform

Mon, 14 May 2012 00:00:00 GMT

Buy to let lending in the UK has fallen in the first quarter according to new data from the Council of Mortgage Lenders. According to the report buy to let investors borrowed £3.7 billion in Q1, representing a fall of 5% over Q4 2011.

The likely cause is that "investor demand has not proved immune to the renewed recession, tightening credit conditions and declining sentiment about the potential for further sharp gains in rents", said analysts at Capital Economics.

The drop is surprising, because the UK rental market continues to look incredibly strong, especially in London. Having said that the LSL Property Services Buy to Let index showed rents declining month on month in February and March by 0.6% and 0.3% respectively. As a result, while rents continued to rise on an annual basis the growth is slowing, with year on year growth at 3.5% in February and 2.7% in March.

Returns are growing though. According to the LSL index landlords made average returns of 3.5% in the year to end February 2012, but in March the average return had grown to 5% – the highest since December 2010.

Representative of the continued strength in the sector is the fact that its market share of loans increased in Q1, with buy to let loans accounting for 12.8pc of the total value of outstanding mortgages at the end of the first quarter, up from 12.6pc at the end of 2011 and 12.2pc the same time a year earlier, a trend which is expected to continue.

"The lettings market is the only area of the property market that is growing and this doesn't look set to change in the immediate future," said Tracy Kellett of buying agents BDI Home Finders. "There's still a shortage of stock, and until this is rectified rents will remain high."

Retail ''One to Watch'' for Commercial Property Investors

Mon, 14 May 2012 00:00:00 GMT

The retail sector is beginning to rebound in certain parts of the world, according to one real estate expert. Speaking during a Property Week webinar, group research director at the Grosvenor Group Richard Barkham explained there are indications the market is beginning to register on investors' radars. "Over the last two or three years, it has been the office market that has led; however, as we move through the crisis and consumers around the world complete their deleveraging, we begin to see some prospects for a consumer upturn," he asserted.

His statement is backed up by research published earlier this month by Jones Lang LaSalle. In the firm's most recent Global Market Perspective, it noted there are signs the retail industry is recovering in the Asia-Pacific, the US and even Europe. The organisation described Europe's prime retail and warehousing assets as "resilient", highlighting cities including Moscow, Paris, Lisbon, Brussels and Amsterdam for their rental growth during the first quarter of the year. Meanwhile "solid consumer activity" is helping drive the sector in the Asia-Pacific, the report stated, with China standing out as the most robust market. Demand from international brands has contributed significantly to the strength of its retail leasing sector.

Jones Lang LaSalle added the US's main retail destinations have yet to see a real recovery get underway, but the research points to the markets reaching their bottom. According to the survey, vacancy rates and rents held steady in the first three months of 2012, with Boston, Los Angeles, Washington DC, Chicago, San Francisco and New York City all categorised as markets where "rental values [are] bottoming out". A report published by CB Richard Ellis (CBRE) last month revealed London is still the number one destination for international retailers, with Dubai and New York in second and third places respectively. The top five is rounded out by Paris and Moscow in fourth and Hong Kong in the fifth spot. Peter Gold, head of Europe, the Middle East and Africa cross-border retail at CBRE, stated: "In the face of ongoing economic uncertainty, which looks set to remain throughout 2012, retailers have responded by seeking to de-risk their expansion activities."

Poland a Diamond in the European Real Estate Rough Says CBRE

Fri, 11 May 2012 00:00:00 GMT

Both Savills International and CB Richard Ellis have issued positive reports this week on the Polish property market. CBRE has just reported on the major slowdown of commercial real estate investment in Europe, which fell 18% in the year to end Q1 2012, and 31% on the quarter. Within the same quarterly market view CBRE reported declines everywhere in Europe except the Nordic region and Benelux, even in the CEE region which had previously been doing well volumes fell 65%.

But CBRE has not lost its faith in Poland despite the poor first quarter. The firm predicts that investment in Poland this year will match that of last year. This forecast is based on the number of on-going investment transactions, which amounted to €250 million in Q1 2012, and on the number of new inquiries received by CBRE. Colin Waddell, Managing Director of CBRE for Poland said:

“The new infrastructure improvements in Poland, such as ring-roads, highways, the railway and the new Warsaw metro line stimulate property market growth by creating new locations desired by developers in all market segments: office, retail and warehouse.

“Poland’s economic fundamentals remain strong with impressive GDP, high level of industrial output, strong export and outstanding level of retail sales. In 2012, the major concern for the Polish economy and the country’s property market is the turbulent Eurozone environment fuelled by the budgetary instabilities of many EU economies.”

Meanwhile another property giant, Savills International has issued an even more positive report on Poland. According to the firm investment in Polish property grew 21% year on year in Q1 to 728 million Euros, with foreigners accounting for 98% of the sales.

It is always interesting to compare the findings of real estate investment companies, but they rarely come up so close together in time and so far apart in their findings. Not that the data can be questioned coming from two such reputable sources, just that it will be interesting to compare their data again later in the year.

''Numerous Opportunities'' in Student Accommodation Market

Fri, 11 May 2012 00:00:00 GMT

There are many opportunities for investors looking to enter the student accommodation market, with smaller schemes aimed at people in their second or third years, as well as housing in twin university cities, among the top options. This is according to director of student investment and development at Savills Marcus Roberts, who stressed investors need to judge each scheme on its merits.

He highlighted Glasgow, Edinburgh, Newcastle, London, Manchester and Liverpool as the obvious targets, because these cities have more than one higher education institute each and therefore "you get a double hit of fulltime students". According to the Knight Frank Student Property 2012 report published earlier this year, London, Kingston, Brighton, Edinburgh and Durham had the highest number of fulltime scholars in the 2010-11 academic year. Returns on this type of real estate asset in London stood at 15.1 per cent in September 2011, while for the regions this figure reached 10.5 per cent. Head of student property at Knight Frank James Pullan commented this sector "has outperformed every other commercial property class".

Meanwhile, Mr Roberts explained that, in locations where the student accommodation market is considered to be "mature and saturated", there are often real estate investment opportunities on a smaller scale. He suggested a development of 50 to 150 beds near a main campus could be a good choice. Such a scheme "would work very well because of the proximity to the campus and the type of accommodation that you could provide", he asserted, adding: "You would be aiming at the second and third-year market, taking them out of the houses in multiple occupation market into a better quality service."

Investors new to the student accommodation industry have several options when it comes to how to gain a foothold in the sector, Mr Roberts noted. Those who want to be directly involved with the management of their assets can purchase a terraced house or a block of properties, while a "more passive investor" is likely to prefer investing in a student fund.

International Property: Battle of the Capitals - Asia

Thu, 10 May 2012 00:00:00 GMT

Right now around the world, many capital cities are markets-apart from the countries they represent, and even distanced from the world as a whole; like they have created a new world just for them. Ever since the US sub-prime crisis morphed into the international financial crisis and became the worst global economic time since World War II, cash has been a dangerous commodity to hold.

The wealthy have sought to solidify their assets. This first triggered the gold rush, but as gold prices soared, property became the next target. Not just any property; property that can hold its value during this financial volatility.

This basically equates to prime properties in prime locations. This is because such properties are always bought by the wealthy, and because they do not need to drop prices for a quick sale when things go bad prices rarely fall, and because the property is sought after it tends to grow in price much more quickly when times are good.

And times are certainly good in many capital cities right now, as wealthy buyers from emerging markets and around the world drive up prices even as the markets around them wither and stagnate. We thought it would be good to compare some of the hottest capital city property markets by continent.

Asia

If the Asian property boom were a man, it would be one of those guys you see on the televised body building competitions, ripped, rippled and pumped but just a little bit grrr at the same time. If it were a novel it would be the good, the bad and the ugly, with some cities managing the boom well and others completely overheating. Out of the carnage we will try to pick a winner.

Shanghai

Hot Stats:

Recovery Began: n/a it never crashed (ironically it is now)
Prime Property Prices above pre-crash peak: n/a
Prime Property Price Growth since Recovery: Prices have more than doubled since 2008

We have all heard of the Chinese property boom, and how the government put the brakes on it to prevent a bubble. But Chinese house prices were only growing at 7% per year on average. However, the government acted because of runaway growth on apartments in Shanghai and Beijing.

While the rest of the world was falling into housing market depression, Shanghai's high end housing market was really starting to take off. According to this article in the China Daily July 2008, accelerating house sales were causing massive price inflation, with the Oriental Post putting the average sale price at 17,400 Yuan ($2,547) per sqm, which is close to the record set just the month before in June according to the paper.

The article also quotes figures from real estate information provider Youwin LST system, showing sales of high end apartments in Shanghai hit a record 163,000 sqm in June, an increase of 15.6 percent from a year earlier, up 30.4 percent over the previous month, and at an average price of 44,161 Yuan per sqm, which represented a 3.5% price jump over the previous month. The Knight Frank Wealth Report 2009 tells us that Shanghai property prices grew by 5.2% over the year, although this is all property and not just the high end market.

The next release of the Knight Frank Wealthy Report for 2010 shows us that Shanghai property prices grew 52% in 2009, making it the fastest growing city in the world, immediately followed by Beijing and Hong. Kong. Unfortunately the Wealth Report doesn't contain a price index as such in the 2011 edition, so we can't follow the trail on the same data. However, we have this article from January 2011, this time in the People's Daily and quoting the Mayor and the Shanghai office of the central bank, and price growth of 21.5% in Shanghai in the year ending December 2010.

We can then go back to Knight Frank, and its prime global cities index for 2011 data, where we find that after a strong start to the year the government measures crippled Shanghai price growth in the second half. In the year ending March 2011 Shanghai property prices grew 11%, in the year ending June 2011 growth slowed to 7.7%, then to 3.8% in the year ending September and finally to -3.4% in the year ending December 2011.

Unfortunately the picture has continually worsened this year for the Shanghai property market. According to the Shanghai Daily the latest existing home index shows prices down for the 7th straight month in April, with a 0.09% drop on the month and a 0.59% drop on the year. However, reports earlier in the year told of new home prices falling 41% in the space of a week at the end of January.

Singapore

Hot Stats:

Recovery Began: 2009
Prime Property Prices above pre-crash peak: yes
Prime Property Price Growth since Recovery: over 100%

Well, at last we have a hot Asian capital that has had a crash and then a recovery. Singapore property prices fell 14.4% in 2008 after growing 31% in 2007, according to the Knight Frank Wealth Report 2009 and 2008 respectively. But the recovery was rapid in 2009, with the Knight Frank Wealth report 2010 putting growth at 17%. We then look to the Global Property Guide for data to learn that property prices grew 13% in Singapore in 2010 as a whole, but that is after inflation.

In Singapore, like in Shanghai we also have the government acting to quell the growth, and this took annual growth for last year down to 4.4% according to the Knight Frank global house price index. The government strategy to curb growth was a dual-pronged strategy - increasing land supply, and imposing market curbs. The market curbs included reducing the maximum LTV to 70% on second home purchases, lowering the wider maximum LTV from 90% to 80%, and a new seller’s stamp duty on residential properties sold within one-year.

The government measures have not had anywhere near the effects seen in China, as according to analysts’ sales remain healthy this year. Having said that, the governments’ Urban Redevelopment Authority residential price index fell 0.1% in the first quarter of this year, making it the first fall since June 2009. However, apartment prices outside the central region grew 1.9% on the quarter and sales remain healthy according to analysts.

Others

Bangkok and Kuala Lumpur property markets are performing well at the moment, but they do not come under the category of super-prime markets where wealthy buyers are fuelling exceptional growth levels.

Picking a Winner

Truth be told on this occasion there is no real winner in terms of where we should buy now, because both have pretty uncertain futures as the governments continually wrestle to curb speculation. However, we have to remember, that the data we get is usually on the mainstream market, not on the prime market. Taking this into consideration the winner is Shanghai, because reports still tell of super-wealthy individuals paying super-prime prices for top properties in the city.

Global Investors Seizing Commercial Opportunities in China

Thu, 10 May 2012 00:00:00 GMT

Global funds have been quick to seize on the new increase in opportunities to invest in commercial property deals in China, as cash-strapped developers sell-off assets to survive the current slowdown. Beijing Business Today reported.

Pramerica Financial Group from the US paid 2 billion Yuan for a Guangzhou shopping centre on Monday through a subsidiary, although that deal had been in the pipeline for a year.

On Monday, US-based acquired a large shopping centre development in Guangzhou for 2 billion Yuan through a subsidiary after a year of negotiations.

Last month Capitaland from Singapore paid 2.3 billion to the Poly Real Estate Group for a commercial development in Beijing.

"China is going through the fast-paced progress of urbanization," said Michael Zhang, a DTZ's executive. "There are many opportunities, so the developers are looking at various projects and planning their strategies accordingly."

"The Government's home-purchasing restrictions caused problem of slow cash flow for Chinese developers," he added. "They have to sell commercial projects to get the cash, so that's why foreign funds have gotten in recently."

Jones Lang la Salle recently reported that trade deals involving Chinese mainland retail properties reached a new peak of 26.5 billion Yuan.

"Foreign funds such as The Carlyle Group and Blackstone Group are all looking to find properties to invest in, and Chinese developers in second and third tier cities like Zhengzhou and Changchun want to sell [their properties] for cash," Zhang said.

Investment in European Commercial Property Drops

Thu, 10 May 2012 00:00:00 GMT

There has been a significant reduction in the level of investment in European commercial real estate in the first quarter of the year, compared to the final three months of 2011. According to the latest research from Cushman & Wakefield, investment volumes were down by 31 per cent quarter-on-quarter to stand at EUR 25.3 billion (GBP 20.3 billion). However, this only represented an annual fall of 1.5 per cent, with the cost of transactions in the year to March standing at EUR 121.5 billion.

Head of capital markets for Europe, the Middle East and Africa at the firm Michael Rhydderch stressed there is still plenty of interest in the sector, noting foreign investors are currently much more active than those operating in their domestic markets. There are reasons to be concerned though, he explained: "A shortage of stock, of debt finance and of confidence is holding the market back by perhaps more than we expected given the level of equity demand and the momentum at the start of the year."

The Cushman & Wakefield research revealed the three core European investment destinations of Germany, France and the UK had lost market share during the first quarter of the year; however, the UK still has the largest office and industrial investment sectors, while it is now second in terms of retail assets to Germany. A recent CB Richard Ellis (CBRE) report found the UK's commercial property market improved in April, with headline returns climbing from the 0.1 per cent recorded in March to 0.2 per cent.

London offices are still the main area of focus for many financiers seeking real estate investment opportunities in the UK, although data for the retail sector was more positive. Nick Parker, senior analyst of economics and forecasting at CBRE, commented: "Buyers continue to take a cautious stance in 2012, influenced by prevailing economic uncertainty. That said, London remains a clear focal point for active investors, with a strong GBP 3.7 billion exchanged in the first quarter, driving continued competition and positive capital growth in April."

Sentiment Improves in Global Property Markets

Wed, 09 May 2012 00:00:00 GMT

Sentiment among real estate professionals around the world improved in the first quarter of 2012. According to the Global Commercial Property Survey from the Royal Institution of Chartered Surveyors (Rics), countries including Brazil, Canada and Russia all saw an improvement in rental expectations, with strong occupier demand recorded in their commercial real estate sectors. However, a similar upturn was not apparent in Europe, with a lower take up of space in nations such as Spain, Greece and France, as well as falling capital values in many continental markets.

Chief economist at Rics Simon Rubinsohn commented: "The better tone to sentiment in the report is encouraging and consistent with the improvement in macro news flow during the first quarter." An increasing number of enquiries about real estate investment opportunities in Canada, Brazil, the US, Germany and Bulgaria was noted in the three months from January to March, indicating it is not all doom and gloom for European commercial property. "The key area of concern remains Europe with much of the continent either in or flirting with recession. The resilience of Germany should, however, provide a measure of support and gradually help bolster growth elsewhere in the continent," Mr Rubinsohn asserted.

Focusing in more detail on the performance of European commercial markets, Rics pointed out capital value expectations were in negative territory for the majority of countries surveyed, with the exception of Switzerland, Poland, Russia and Germany. Unsurprisingly, the nations where confidence in growth is lowest are those that have been particularly badly affected by the sovereign debt crisis, such as Greece, Portugal, Spain and Italy. There are signs investors are re-entering European markets, though, with nine countries recording positive net balances for property investment in the first quarter, compared to just four in the final three months of last year. Interest was greatest in Russian, German and Irish markets, but Italy and the UK are among the destinations also attracting attention.

European Retail Investment Down 64% in Q1 says CBRE

Tue, 08 May 2012 00:00:00 GMT

Investment in European retail properties fell sharply in the first quarter according to the latest data from CBRE. The report just 4.6 billion Euros worth of transactions were completed in Q1 2012, representing a 64% drop on Q4 2011, and even more worryingly about a 50% drop on the running quarterly average of 9.4 billion Euros. Thank fully the firm is predicting a turnaround in fortunes for the market with investment increasing throughout the rest of the year.

Retail property investment now accounts for 20% of total commercial property investment in Europe, after a first quarter drop in all locations. Even in Germany, where investor sentiment remains incredibly strong, CBRE records just 1.35 billion Euros worth of investment, well down on the 2 year running average of 2.4 billion.

The Central and Eastern region (CEE), which has come to the rescue in many a negative report of late failed to step in this time. According to CBRE just 200 million Euros was transacted in the region in Q1, with access to funding and supply being cited as contributing to the weak performance.

The prediction is that increasing supply will fuel a recovery in the rest of the year, as banks become more actively engaged in lessening their ties to commercial property, though it is expected that we will see more “encouraged by the bank” sales than out and out short sales or repossessions. Of course that will depend just how bad things get.

This is now the third seriously negative report on commercial real estate investment in Europe in as many weeks. While this is hardly surprising given the apparent lack of viable solutions to the debt crisis, one does wonder just how bad things will get before they start to get better.

Tight Lending Hampering US Commercial Property Recovery

Mon, 07 May 2012 00:00:00 GMT

According to the latest survey of the US commercial real estate market by the National Association of Realtors, while the commercial investment market showed signs of recovery in 2011 it was hampered by tight lending in the lower end of the market.

"This is very much a tale of two markets. There have been notable improvements in capital for large commercial transactions valued at $2.5 million or higher, but there remain significant challenges for small business," said NAR chief economist Lawrence Yun.

"Our Realtor members typically are involved in helping commercial clients with purchases under $2 million, where a lack of capital has caused two out of three respondents to report deals have fallen through. Given that most jobs are created through small business, the lack of capital is hurting small businesses and the overall economic recovery,” he said.

A separate report by Real Capital Analytics showed a strong increase in sales at the higher end of the market, with 13,000 properties worth over $2.5 million sold to a total value of $205.8 billion, which is a 51% increase over 2010. Most of the lending on the big deals came from big banks, while small businesses are still reliant on regional lenders, and even private investors for funding.

Making it hardly surprising the RCA also report 30% of transactions below $2.5 million were cash-transactions.

According to the NAR report over half of respondents believe lending is just as tight as it was last year, while 23 percent believe it is even tighter. Twenty per cent believe the criteria are less stringent than a year ago, but still nowhere near where it needs to be for a healthy market. Realtors also report a huge backlog of unsold properties or properties needing to be refinanced, which is putting a strain on the recovery that won't ease until lending does.

West End ''Strongest London Property Market''

Mon, 07 May 2012 00:00:00 GMT

The West End was the best performing office market in central London during the first quarter of this year. The recent DTZ Central London Q1 Report revealed take up of commercial space in this district climbed by seven per cent, compared to the final three months of 2011, and increased by 33 per cent year-on-year. By contrast, take up in central London and the City fell by 17 per cent and seven per cent respectively on a quarterly basis. DTZ expects the situation in the City to improve this year, while the prospects for the central district are flat and a decline is anticipated in the West End. The organisation noted the West End market was boosted at the start of the year by activity among retailers and a lack of available prime stock that has resulted in pre-leasing deals in some locations.

Looking at the property investment side of the market, there are reasons to be optimistic. According to DTZ's research, transaction volumes for offices hit GBP 3.3 billion in the first quarter of 2011 - almost 25 per cent higher than the quarterly average and the biggest total since the final three months of 2010. The Docklands area experienced a significant increase in activity, with the amount of money ploughed into its commercial real estate sector jumping from GBP 12 million at the end of last year to GBP 500 million between January and March.

Knight Frank recently asserted the office markets in London and the wider south-eastern region will be boosted over the coming years by companies looking to trade up from Grade B premises to those with a Grade A rating. The firm stated take up of offices in the M25 area has been dominated by demand for Grade A space since the beginning of last year, with Emma Goodford, head of south-east offices at the company, commenting: "Churn by occupiers wanting to upgrade their space will drive the market and we predict this will account for more than 80 per cent [of] take up." Overseas financiers have been the biggest investors in the south-east office sector over the past year, with a market share of around 55 per cent.

European Real Estate Investment Decline Continues

Fri, 04 May 2012 00:00:00 GMT

European real estate investment is continuing to fall on reduced debt funding and concerns about slowing growth, according to new data from Real Capital Analytics. In a report released today the New York based researcher said that real estate investment in Q1 2012 fell to the lowest level in 18 months. According to the report sales of commercial real estate, hotels, development sites and apartment blocks fell to 28.4 billion Euros, down 28 percent from a year earlier and the lowest since Q3 2010.

"Continued sensitivity to risk among active investors and a severely constrained debt market have hampered investment activity across almost every market," Joseph Kelly, RCA’s director of market analysis in Europe, said in an interview.

While transactions fell in both Germany and the UK, by 33% and 23% respectively in Europe's two biggest investment markets, investment volumes in France actually increased by 9%. On a sector by sector basis only land sales and multi-family housing broke the depression, with the latter helped by the 1.4 billion-Euro purchase of 21,000 apartments by a group including Patrizia AG. Offices, retail properties, industrial properties and hotels all saw declining sales according to RCA.

It is a decline that looks unlikely to end any time soon as banks are coming under more and more pressure to tidy up their balance sheets, and face increasing regulation to prevent future shocks, including rules specifically aimed at commercial real estate lending.

Morgan Stanley predicts European bank lending on commercial real estate will fall by as much as 700 billion Euros over the next 3-5 years as a result of increasing regulation, limited growth and reduced appetite for risk.

''Best Returns'' in UK Offices

Fri, 04 May 2012 00:00:00 GMT

The office sector in the UK was the best performing commercial property market in the first quarter of 2012, recording an average return of 0.9 per cent during this period. Industrial real estate delivered 0.8 per cent, while retail provided investors with 0.3 per cent over the three months. In its UK Property Index, Jones Lang LaSalle noted overall commercial property returns were down to 0.7 per cent between January and March, significantly lower than the 1.4 per cent recorded in the final quarter of 2011.

According to the organisation, a reduction in capital values was partly responsible for the lower returns, with income the primary driver of growth for investors. Rents were up by 0.2 per cent for commercial real estate assets over the quarter, with the office sector once again leading the way, experiencing rental growth of 0.9 per cent during this period. However, research conducted by Jones Lang LaSalle into the state of the office market has revealed investors need to be wary of old buildings that cannot keep up with new legislation relating to sustainability.

Bill Page, head of Europe, the Middle East and Africa offices research, explained a significant proportion of office stock on the continent is more than two decades old. He pointed out 22 per cent of all office buildings in the UK were constructed before the 1960s, which means it is important for potential investors to consider whether refurbishment is necessary and how much this is likely to cost before putting any money into a deal. In some cases, this expense may be included in the pricing of an office complex. Mr Page added the rate at which offices are being replaced is very low, which means a "greater strain is placed on investors and occupiers to future-proof current assets and safeguard rental income, reduce voids and attract companies willing to take space in the building".

Legal and General Now a Commercial Property Lender

Thu, 03 May 2012 00:00:00 GMT

Last year we mused as to whether or not insurers would step in to close the gap left by banks in commercial real estate lending, and this year we are getting our answer in the positive. Legal and General has become the third large UK insurer to start a commercial property lending business, with a loan of £121m to Unite, the UK's largest developer and manager of student housing.

L&G first considered property lending last year, but pulled back as market conditions worsened. According to the insurer it had held negotiations with 150 prospective borrowers before finally closing the deal with Unite, which is to be followed in quick succession by another deal in the coming weeks if L&G gets its way.

Ashley Goldblatt, head of commercial lending at L&G Investment Management, said the company had looked at applications that could not get lending from the banks. "We looked at a lot, but you have to wait for the right one to come along and then grab it. It is a bit like marriage."

For its part in the marriage L&G is looking for borrowers looking to take on loans over medium-long term agreements and who are willing to negotiate a fixed-rate agreement as oppose to a floating one, which will allow L&G to match its long-term liabilities according to Goldblatt.

The Unite load represents 60% loan to value at a fixed 5.05% (well below the 5.7% average cost of Unite debt) over 10 years and is secured against Unites portfolio of student dormitories in London, Manchester and Bristol.

According to Joe Lister, Unite's chief financial officer, securing the loan was a testament to the strength of the company and marked an important step for it, but it is also likely a testament to the strength of student property in the UK.

Banks lost their appetite for commercial property lending during the financial crisis, but subsequent changes in lending regulations have made them pull back further, and new planned changes will force them even further back, especially Basel III, which is the third accord in a sequential updating of global banking regulation, and will require banks to hold higher capital against commercial property loans.

The Knock-on Impact of the Property Bubble Bursting in China

Thu, 03 May 2012 00:00:00 GMT

With much debate over whether or not the property bubble has burst in China, IPIN Global investigates recent developments and discusses the impact it will have on the country as a whole, its economy and assesses what the future holds in terms of property investment.

Slowdown in European Retail Property Investment

Thu, 03 May 2012 00:00:00 GMT

The level of activity in the European retail real estate investment market slowed in the first quarter of 2012, with just EUR 4.6 billion (GBP 3.7 billion) in transactions completed during the first three months of this year. According to CB Richard Ellis (CBRE), this represents a 64 per cent drop compared to the final quarter of 2011. However, the organisation is not overly concerned about the sector, noting investor sentiment is still positive and an upturn is expected by the end of 2012.

Associate director of Europe, the Middle East and Africa research at CBRE Iryna Pylypchuk explained there are many factors that have led to a reduction in the volume of investment in retail properties across the continent. "[A] lack of core product, tight lending market and persistent gap in buyer and seller expectations when pricing secondary assets were fundamental reasons behind weak first-quarter results," she stated.

A recent Savills report revealed the trends experienced in Europe were mirrored in the UK's shopping centre investment market. The organisation described it as a "slow start" to the year, with the total capital value of all the deals at the beginning of 2012 amounting to GBP 461.55 million - down from the GBP 609 million in the final three months of 2011. However, Savills agrees with the CBRE assessment that the situation will improve as the year wears on. "We expect the second half of 2012 to see greater activity with an increase in volume of quality stock coming to the market, both direct and via stakes in major shopping centres," the report asserted.

The study highlighted the widening gap between yields for prime and super-prime assets and those in secondary and tertiary markets, noting unrealistic pricing is an issue among assets in less desirable locations. As a result of the growing disparity in the retail property sector, Savills is anticipating a hardening of yields in the secondary markets, while prime yields are expected to remain broadly stable over the coming months.

UK House Prices Rise

Thu, 03 May 2012 00:00:00 GMT

House prices in the UK increased for the second consecutive month in April, posting gains of 0.1 per cent. London saw the biggest climb at 0.3 per cent, while other regions in the south of England experienced rises of 0.1 per cent. However, the data from Hometrack revealed property values in the Midlands and north of the country were either static or declined last month. The organisation highlighted stronger demand as one of the main drivers behind the price rises, although pointed out this was fuelled in part by the end of the stamp duty holiday for first-time buyers earlier this year.

Richard Donnell, director of research at Hometrack, commented: "Looking at recent years, confidence in the housing market has led to a boost in supply and this is what we are experiencing now. However, the short to medium-term outlook for prices hinges on the outlook for demand." He added the ongoing issues in the eurozone, as well as concerns over the performance of the UK's economy, could lead to more subdued confidence in the market going forward.

The most recent Halifax Housing Market Confidence Tracker published at the end of April revealed homeowners are feeling more upbeat about the prospects for the country's residential real estate sector, with 39 per cent of those questioned expecting property prices to rise rather than fall. People living in the south of the country are more positive than those in northern regions, though, with the organisation noting the gap in sentiment between the north and south of the UK has widened since the beginning of 2012.

Martin Ellis, housing economist at Halifax, commented: "There is [...] a substantial north-south divide to the improvement in housing confidence, which is reflective of property prices in the south currently [being] more resilient than in the north." He concluded that, unless the UK's economy experiences a "pronounced weakening", house prices are likely to remain largely unchanged throughout the remainder of 2012.

Sales of £1m Homes Drop for First Time in 2 Years

Wed, 02 May 2012 00:00:00 GMT

A new report has shown that the number of homes costing over £1million has fallen for the first time in 2 years. The report released this week by Lloyds TSB shows the sales of such homes fell 5% to 6,911 last year, having risen by 55% in 2010. This triggered price falls on such properties in 11 regions according to the report.

Lloyds TSB said the fall reflected "the general weakness in activity across most of the housing market", which has been hit by the weak economy and relatively low levels of bank lending. Sales of houses overall fell 4pc last year to 698,200.

However, the report has been interpreted as reflecting problems with home-owners climbing the ladder, rather than a change in sentiment among the super-rich, not least because sales of houses worth at least £2m rose 5pc to 1,518 in 2011, more than at any time since records began in 1995, although as you'd expect such sales were concentrated mainly in London.

"The rise in the number of multi-million pound property sales compares with the weakening picture across the rest of the market," said Suren Thiru, Lloyds TSB economist. "Continued demand from wealthy cash rich buyers, both from the UK and overseas, as well as limited supply has meant that this segment of the market remains largely immune from the headwinds facing the vast majority of home buyers."

According to the report, the biggest drop in £1m home sales was a 35% fall in the West Midlands. Ironically the north east and east Midlands were the only places to see home sales in the bracket rise, but of course, as the report points out, this is from a very low starting point.

UK Housing Market Slowing Again Says Hometrack

Wed, 02 May 2012 00:00:00 GMT

The highly regarded Hometrack index on the UK housing market has been released, showing a second consecutive monthly rise in house prices, and a lot of other seemingly positive data. Seemingly, because according to Hometrack's interpretation of the data, not only does it show that the market is once again slowing after the high caused by the rush to beat the deadline for the stamp duty holiday, but that the market could be heading for price falls in the not too distant future. That is of course, with the exception of London.

According to the index house prices rose 0.1% on the month in April, down from the previous month's 0.2% increase. But it is in the other data that we get a picture of the current state of the market, and especially when we look back to January.

Particularly insightful is the number of new buyers registering vs the number of new properties being listed, and the percentage of postcodes with price increases vs those price decreases. According to the data the number of new buyers registering increased by 2.1% in April, but the volume of new listings increased 4.8%. We can see the stamp duty rush in this data. In December new buyers fell 6.3% while listings fell 3.6%, and in January the figures worsen to -10.5 and -5.4 respectively, but then in January we see a remarkable turnaround with an 18% growth in new buyers and a 15% growth in supply. Last month new buyers increased by 4.4% while property listings increased by 3.6%. Hometrack says:

"In the last three months supply has grown by almost 19%. This follows a similar pattern to previous years when an improvement in demand and sales led to more properties coming to the market. If April's slowdown in demand and rising supply continues over the coming months, we will begin to see an impact on price changes."

Meanwhile the percentage of postcodes seeing an increase in price increased from 3.4% in January to 7.7% in February, then up to 14.7% in March, before falling back to 13.7% in April. The percentage of postcode districts seeing a decrease in price falls from 33% - 19% between December and January, where is stays in February before falling to 9.2% in March, but then it also goes backwards in April, with a rise to 12.4% says the index.

GDP Data ''Unlikely to Influence Investors''

Wed, 02 May 2012 00:00:00 GMT

Overseas property investors are not expected to be deterred from entering the UK real estate market by the latest gross domestic product (GDP) figures. A preliminary estimate from the Office for National Statistics for the first three months of this year indicated GDP fell by 0.2 per cent, making this the second consecutive quarter of decline. However, head of residential research at Knight Frank Liam Bailey does not believe this will have a negative impact on property investment, explaining purchasers are more concerned with the long-term prospects of real estate assets than short-term fluctuations in the country's economic growth.

London, in particular, is unlikely to be affected by the announcement the UK has fallen back into recession, he asserted. "Demand from foreign buyers has been strong for the last two to three years. Even though the pound has recovered some ground against the euro, that has still not stopped foreign buyers from coming into the market," Mr Bailey stated. He added "the fundamentals that have drawn them into London haven't changed", so the latest news of weakening in the UK's economy is not something that will overly concern property investors.

A report published by Cluttons earlier this month backs up Mr Bailey's assertions, noting investors are looking at the long-term performance of London's property market against other international cities, instead of concentrating on short-term challenges. Head of research at the firm Sue Foxley said yields in the UK's capital are still "attractive", while "the underlying drivers of growth in values and rents will persist over the medium term". Both institutional and private investors recognise these factors, she concluded, which is why activity in London's market has remained strong despite the worsening economic climate both in the UK and the eurozone.

During a webinar for Property Week, Richard Barkham, group research director at Grosvenor Group, suggested investors are accounting for key tail risks - such as the possibility of a new global recession led by the eurozone - when pricing property investments. He added "core real estate is probably where you want to park your money" in the event that the world does see its economic growth hit by a new recession.

Irish Property Still Falling but Slower

Mon, 30 Apr 2012 00:00:00 GMT

The latest data on Irish house prices shows that the market is still falling, but it also shows that the rate of decline is slowing and possibly even shows that we may be seeing a bottom.

In the year ending March Irish house prices fell by a further 16.3%, which is less than the 17.8% decline in the year ending February. Before this the rate of decline had been increasing, last March the rate of year on year decline was just over 11%. The rate of acceleration at the end of the year was remarkable, with prices down 15.6% y-o-y in November, 16.7% in December and 17.4% in January.

This slowdown in the rate of decline is also reflected in the month on month data. This time last year it rose from a 1.1% m-o-m decline in January to 1.7% in February and March, by this January the month on month decline hit 1.9% and then 2.2% in February. In March prices were flat, which is a solid slowdown.

Even more positive is the performance of Dublin. During Ireland's house price crash Dublin has bore the brunt, and suffered often much larger declines than the rest of the country. For example last March prices in Dublin fell 13%, while the rest of Ireland excluding Dublin fell 11%, but the gap has widened of late.

This January residential property prices in Dublin were down 21.1% year on year, while in the rest of Ireland prices were down just 15.1%. It is in February that we see the first tip in this scale, when the decline in Dublin prices slowed to 20.3%, while the decline went up to 16.4% in the rest of Ireland excluding Dublin. In March the rate of decline in Dublin slowed again to 18.3% compared to 15.5% in the rest of Ireland excluding Dublin. The better performance in Dublin is also reflected in the monthly data for Dublin house prices, in which we have the first month on month rise of 0.7% in March, following the rate of decline slowing markedly from -4.1% in January to -0.7% in February.

International Property: Battle of the Capitals - North America

Mon, 30 Apr 2012 00:00:00 GMT

Times are certainly good in many capital cities right now, as wealthy buyers from emerging markets and around the world drive up prices even as the markets around them wither and stagnate. We thought it would be good to compare some of the hottest capital city property markets by continent. This is the second report in the series, this time covering North America.

North America

Washington D.C.

Hot Stats:

Recovery Began: 2009
Prime Property Prices above pre-crash peak: Yes
Prime Property Price Growth since Recovery: 20% (approx)

While the US has good house price indices, there is surprisingly little information allowing one to differentiate prime property from city to city, whereas in the UK Knight Frank and others run specific indices dedicated to exactly that; prime property in the capital London. Thank fully, Knight Frank's global wealth report in conjunction with Citi Private Bank comes to the rescue somewhat, because it gives an annual snapshot of property prices in the world's leading cities.

The Knight Frank wealth report tells us that Washington DC property prices grew by 5.6% in the year ending December 2009. We then look to the Case-Shiller year in review report for 2010, where we learn that the composite house price index shows a 12.7% growth in Washington DC prices in 2010. A subsequent Case-Shiller index announcement tells us that the composite index shows a 1.6% contraction in Washington house prices in 2011, and that prices were down 2.3% in the year ending February 2012.

However, every indication is that prime property in Washington DC, like elsewhere is on a different plane to the rest of the market, and has been growing strongly since 2009, but we have no data specifically on the prime property market to support these theories.

Ottawa

Recovery Began: No Crash
Prime Property Prices above pre-crash peak: Yes
Prime Property Price Growth since Recovery: 10% (approx)

Again, we are hampered here by the fact that Ottawa is not one of the "in" cities, meaning we have no coverage of the prime property market by the likes of Knight Frank, which is currently covering a whole host of cities where wealthy people are creating a sort of global village of prime property markets the world over.

Whether this is a weakness or a strength depends upon your viewpoint. Yes, it makes it more difficult for us to compare for the purposes of this article, but on the other hand it also means price growth is slower, perhaps more sustainable, and property more accessible to those not in the super-rich club.

And Ottawa property prices certainly have shown some strong and stable growth during the last 3 years. According to Statistics Canada prices grew 1.8% in 2009. Then, in the year ending December 2009 prices grew a further 4.5%. In the year ending November 2011 another 1.7% growth, and a further 2.6% growth in the year ending February 2012. So, we probably have about 10% growth.

But what we have to remember is that house prices in Canada never crashed. In fact, according to the historical index of Terranet, the Ottawa index sees only a 4 basis points blip from 118.680 in October 2008 to 114.070 in April 2009, before growing strongly and surpassing its previous level by July 2009.

And the Winner Is:

When it comes to which of these is the best place to invest in prime property it is a pretty close run fight, between the high growth of Washington DC and the long term sustainability of Ottawa. But in the theme of this article, the super growth of super-prime property In super-prime cities we have to pick Washington, simply because it is one of those super-prime cities, whereas Ottawa isn't. Canada is represented in the super-cities list by Vancouver and Toronto.

Property Investors ''Must Evaluate and Adapt''

Mon, 30 Apr 2012 00:00:00 GMT

The changing face of the property market means investors need to continually alter their approach to their investment strategies. Speaking as part of a Property Week webinar, director of real estate and finance at CB Richard Ellis (CBRE) Rod Lockhart explained it is important to constantly assess risk, as well as to bear in mind new legislation that could affect the way in which the real estate investment sector operates.

He cited examples such as Basel III, the Alternative Investment Fund Managers (AIFM) directive and European Market Infrastructure Regulation (EMIR), commenting: "Rightly or wrongly, this legislation will change the way that real estate funds and portfolios are owned, financed and structured." Head of property multi-manager at Aberdeen Asset Management Richard Gale also participated in the webinar and agreed there are many changes investors need to be aware of. He highlighted pension funds as one sector that is altering its approach to investment, in part due to the reduced income currently being generated by real estate portfolios.

Mr Gale added there has been a flight to quality, not only in the property investment sector, but across all asset classes. In the UK's real estate market, this risk aversion has been characterised by the increasing polarisation between the performance of property in London and stock in the country's regions. A recent report from Lambert Smith Hampton (LSH) revealed the capital accounted for 61 per cent of the value of all transactions in the first quarter of 2012. LSH chief executive officer Ezra Nahome pointed out this is well above the ten-year average for activity in London, which has previously taken a 35 per cent share of the UK's real estate investment transactions.

Looking ahead, Mr Nahome predicted investors will not return to the country's regional markets until the economy stabilises and the outlook becomes more positive, noting this is unlikely to occur before 2013. He concluded until the availability of debt financing improves, equity buyers will dominate the market and prime property will continue to be the main focus for the majority of investors.

Double-Dip: UK Slides Back into Recession

Mon, 30 Apr 2012 00:00:00 GMT

On Wednesday (April 25th), the Office for National Statistics (ONS) published its preliminary data about the UK's gross domestic product (GDP) for the first quarter of the year - and it didn't make for pleasant reading. According to initial estimates, GDP growth slowed by 0.2 per cent in the three months from January to March, making this the second consecutive quarter of decline and plunging the UK back into recession.

The construction industry experienced the biggest fall in activity, down by three per cent, while production slipped by 0.4 per cent. The service sector was the only one to remain in positive territory, posting 0.1 per cent growth. Azad Zangana, European economist at Schroders, asserted the data for the service industry is the biggest disappointment, as analysts anticipated growth of around 0.5 per cent during the first quarter of 2012. By contrast, he pointed out the numbers posted by the construction sector were "much more reasonable than had been feared by economists".

While many commentators have been keen to point out this is only preliminary data - which is likely to be adjusted - there is no doubt the UK's economy is far from a picture of health. Chief economist at Lloyds TSB Patrick Foley summed up the situation, stating: "No matter what the data will eventually show for Q1, the unavoidable fact remains the underlying trend in the economy is flat."

While Mr Foley believes there will be an improvement during the second half of 2012, he acknowledged this will be dependant, in part, on bigger steps towards resolution of the eurozone crisis. This is necessary in order to prevent the UK and other European nations experiencing "a deep recession", he concluded. It is not only the issues on continental Europe that are weighing on the country's economy, though. Charles Luke, manager at Murray Income Trust, cited the wide-reaching austerity measures and debt problems in many developed nations as other factors that will mean "the economic environment is likely to be challenging for some time to come".

The property market has already been hit by the uncertain economic climate, with Colliers International pointing out earlier this month that real estate investment transactions have been restricted as many investors take a step back, assess the situation and focus on core assets. A lack of debt finance is also affecting the level of acquisitions, the firm added. Research published recently by IPD revealed unlisted property assets in the UK generated returns of 0.7 per cent in the first three months of 2012, their lowest level since the third quarter of 2009, when the sector showed the first signs of recovery.

It is not only investors who are going to be affected by the return to a recession. Following the release of the ONS data, market analyst at Quick Move Now Donna Houguez stated the worsening of the UK's economic situation is likely to result in fewer lenders offering mortgages to home buyers. She also predicted property values will fall further this year due to the pessimistic outlook.

However, the recent Halifax Housing Market Tracker found more Brits believe house prices will rise, rather than fall, during 2012. The organisation noted the March figures were the most positive it had recorded since it began measuring sentiment towards the UK's residential property market a year ago. However, almost half (45 per cent) of those surveyed cited the large deposits required for house purchases as one of the biggest obstacles on the market, while 25 per cent stated a lack of suitable finance is a further problem. The greatest concern was job security - with 61 per cent of those questioned stating this is a worry. The news that the UK's economy has entered a double-dip recession is unlikely to alleviate these fears in the short term.

40pc of UK Home-Buyers Prepare for Prolonged Renting

Fri, 27 Apr 2012 00:00:00 GMT

A new survey by Money Supermarket has found that 8 million people in the UK are currently priced out of the housing market, with most first time buyers accepting the reality that they will be long-term renters while saving up a sufficient deposit.

The survey found that 40% of potential UK home-buyers are prepared to rent for a considerable amount of time while saving up to buy. With research now indicating that 37 is the average age we will buy our first property, this could be quite some time.

But this is hardly surprising, while the number of 10% deposit mortgages has increased by 20% over last year to 209 products, this is still much lower than is needed. In fact, the average LTV of mortgages available to first time buyers is 78%, which leaves first time buyers having to find £33,000 on a home worth £150,000. which is totally out of reach for most first time buyers. Heck, with the average house price at £161,000 according to the Land Registry even a 10% deposit of around £16,000 is a big ask in today's economy.

"Home ownership is a really big thing here in the UK. For years it has been something millions of people aspire to and therefore it's surprising to see that this may be changing and that some people are giving up on the hope of ever owning their own home,’ said Clare Francis, mortgage spokesperson at Moneysupermarket."

"To a certain degree it is perhaps understandable. Despite a stagnant housing market in many areas of the country, property prices remain exceptionally high. Coupled with this, mortgages remain hard to come by with the number of loans available to those with a small deposit well down on the pre credit crunch days. Rising living costs are also making it harder for aspiring first time buyers to save that all important deposit," she added.

Investment Volumes in UK Property Fall

Fri, 27 Apr 2012 00:00:00 GMT

Less money was ploughed into the UK's property market in 2011 than in the previous year, with a new DTZ report revealing investment volumes were down by ten per cent. The firm cited a lack of debt finance as one of the main causes for the fall, as well as a "mismatch" between the pricing expectations of sellers and buyers. The number of investors entering the British market from continental Europe dropped, but this was largely balanced out by an influx of Asian financiers and those from elsewhere in the world. Global head of research at the organisation Hans Vrensen commented: "Overseas investor activity was once again focused on the central London markets. As a result, the UK remains one of the most actively-traded markets in Europe, with a six per cent liquidity ratio."

This assertion that London is the most important British location for overseas buyers making a real estate investment is borne out by figures published this week by Lambert Smith Hampton (LSH). According to the firm, 61 per cent of the total amount transacted in the UK's property sector during the first quarter of this year was generated by deals in the city, which equates to GBP4.15 billion. Ezra Nahome, chief executive officer at LSH, stated: "Activity in the capital was almost double the ten-year average in Q1 2012 as the economic outlook remained subdued, leading investors to remain cautious when assessing secondary property in the regions."

However, head of UK research at DTZ Martin Davis revealed there are enticing opportunities for real estate investment in the country's regional markets, noting that non-prime assets are not as risky as many investors believe. He explained the British market is still outperforming many of its European counterparts, adding to the appeal of locations outside London. Mr Nahome agrees, although he stressed despite the attractive pricing, there will not be a big influx of money into this asset class until more debt finance is available and there is an improvement in occupier confidence.

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All in All...

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London Commercial Property ''Supporting UK Market''

Shock and Awe at Performance of Prime City Real Estate

Core UK Property Markets Targeted by Investors

German Property Portfolio Transactions Set for a Big Year

Miami Hotel Market ''A Target for Investors''

Buy to Let Lending Declines but Sector Continues to Outperform

Retail ''One to Watch'' for Commercial Property Investors

Poland a Diamond in the European Real Estate Rough Says CBRE

''Numerous Opportunities'' in Student Accommodation Market

International Property: Battle of the Capitals - Asia

Asia

Shanghai

Hot Stats:

Singapore

Hot Stats:

Others

Picking a Winner

Global Investors Seizing Commercial Opportunities in China

Investment in European Commercial Property Drops

More Protests as Chinese Prices Continue Slide

Sentiment Improves in Global Property Markets

European Retail Investment Down 64% in Q1 says CBRE

Tight Lending Hampering US Commercial Property Recovery

West End ''Strongest London Property Market''

European Real Estate Investment Decline Continues

''Best Returns'' in UK Offices

Legal and General Now a Commercial Property Lender

The Knock-on Impact of the Property Bubble Bursting in China

Slowdown in European Retail Property Investment

UK House Prices Rise

Sales of £1m Homes Drop for First Time in 2 Years

UK Housing Market Slowing Again Says Hometrack

GDP Data ''Unlikely to Influence Investors''

Irish Property Still Falling but Slower

International Property: Battle of the Capitals - North America

North America

Washington D.C.

Hot Stats:

Ottawa

And the Winner Is:

Property Investors ''Must Evaluate and Adapt''

Double-Dip: UK Slides Back into Recession

40pc of UK Home-Buyers Prepare for Prolonged Renting

Investment Volumes in UK Property Fall