The fundamentals remain positive for the property investment market despite the latest turmoil in the stock market, with investors especially keen on buying office and luxury residential units, consultant Savills said.

Managing director for Savills (Hong Kong) Raymond Lee Wai-man estimates transactions for the investment market in the private sector may hit HK$70 billion this year, up 8.86 percent from about HK$64.3 billion last year.

Senior director for investment Peter Yuen Chi-kwong pointed to favorable factors such as yuan appreciation, the reappearance of negative interest rates, continued capital inflow from overseas funds and attractiveness of returns.

As for interest rates, he said: “We can’t see interest rates increasing.”

Savills recently conducted the sale of Crocodile House and Crocodile House 2 in Central - indirectly owned by toy magnate Francis Choi Chi-ming - which was sold to an overseas fund for HK$1.07 billion. Savills also conducted the HK$1 billion sale of The Hacienda residential estate in Repulse Bay, also indirectly held by Choi, to Cheung Kong (Holdings) (0001).

So far this year, Savills accounted for HK$4.5 billion in investment deals out of the HK$7.5 billion market total.

Deputy senior director for investment Sam Mock Wai-ho said the HK$7.5 billion figure was double the figure for the same period last year, after stripping out the effect of the HK$6.2 billion sale of a 50 percent stake in Festival Walk mall in Kowloon Tong by CITIC Pacific (0267) to its joint-venture partner, Swire Pacific.

Still, some uncertainty remains, with Yuen pointing to the volatility in the equity market and the large supply of office space in 2008 and 2009 in areas such as Quarry Bay and Kowloon Bay.

Source: The Standard

The problems of first-time buyers have been extremely well documented so the results of a recent survey from the Bradford & Bingley Building Society come as no surprise.

In it, 2/5 potential first-time buyers are holding down two jobs, 42% are receiving help from their parents and 43% have even thought about giving up buying altogether.

In this current climate, buyers are having to come up with ever more innovative ways of getting on the first rung of the ladder, and an increasing number are buying their first property abroad. A recent survey from YouGov found that nearly half of 18 to 29-year-olds plan to buy abroad and that for two thirds of these it would be their first purchase.

There are two main strategies for buying abroad. Firstly, the so-called jet-to-let schemes in which buyers purchase a home abroad at prices far below the UK’s, and use the rental income to pay for a mortgage on a home-based property.

Another more recent phenomenon is ‘overseas and sell’. This is when first-time buyers purchase properties off plan, without viewing them, and sell on completion for high returns.

As in the UK, buying a property off plan can reap significant rewards. Often, particularly in property hot spots, prices can rise significantly between the foundations being laid and final completion of the house or apartment. If you sell promptly once the building work is finished, you only have to fork out a deposit, rather than the full amount. The returns made can be significant and sufficient to buy a house back here.

Read the rest of this entry »

Australian property investors spent over four times as much in overseas direct property investments last year, with growing interest in Western Europe, according to Jones Lang LaSalle.

According to their recent report, local investors poured $6.7 billion into overseas real estate in the first half of 2006, compared to $1.52 billion in the first half of 2005.

The US received almost half (46 per cent) of overseas investments, making Australians the third largest cross border investors in the US after global and Middle Eastern investors.

However, the fund flows are slowly shifting to European markets with Germany getting 19 per cent of the funds, or around $1.27 billion. The largest overseas acquisition was made by Record Realty, which bought seven office assets in Germany leased to Deutsche Telekom for a total $520 million.

Matthews said the rest of Western Europe enjoyed more than 14 per cent of inflows.

“Investments were also made in Belgium (6 per cent), the UK (3 per cent), Poland (2 per cent), the Netherlands (2 per cent) and France (1 per cent) over this time.”

In Asia, Hong Kong was the most popular choice accounting for 12 per cent of investor money. Macau, South Korea and New Zealand fund flows trailed behind at 4 per cent, 2 per cent and 2 per cent respectively.

John Talbot, the group’s head of capital markets, said that many investors are renewing their interest in the more established markets of Singapore and Japan. “While the US and Europe continue to represent the main focus for Aussie investors, increasingly Asia is coming onto the radar with core mature markets like Singapore and Japan of most interest.”

According to the report, property investors are buying more property overseas than they are selling with foreign purchases making up 60 per cent of total cross border transactions.

Source: Financial Standard

• CapitaLand, Southeast Asia’s largest property developer beat analyst fourth-quarter profit expectations. [International Herald Tribune]
• South America Braces for Influx of European Property Investors [DW World]
• The old Soviet elites cash in on high real-estate prices in Moscow [International Herald Tribune]
• ABN Amro warns against open-ended vehicles set up to take advantage of the huge inflows into property funds [Citywire]
• Citigroup’s property unit raises US$1.29 billion for its first fund to invest in real estate and related assets in Asia Pacific, with a focus on China and India. [The Standard]
• Bulgarian property attracting pension funds and corporate investors [First Rung]
• Beckhams might be Buying Madonna’s Mansion [The Daily Dish]

Before I begin the International Property News Beat, please note that there is a poll on the side panel of this page (underneath the MyBlogLog widget) asking if you would like regular posts showcasing exciting new property developments all over the globe. Please participate by choosing an option. It will be interesting to know your opinion as I have had some email requests asking for this. Have a great week ahead:

• Dubai real estate professionals bullish on long term prospects of the Dubai property market according to survey by MONEYworks [Trade Arabia]
• Morgan Stanley raising $8 billion ‘mega-international real estate fund’ through acquisitions worldwide [TheStreet.com]
• Room for developing super luxury apartment properties in Singapore at US$1,960 per sq ft [Channel NewsAsia]
• European hotel investment grew by 37.9 % in 2006 at €21.6b (£14.4b) [Reed Business Information]
• Prupim and LaSalle Investment Management partner to launch “the first pan-Asia Pacific REITs fund” [MoneyManagement.com.au]
• Abu Dhabi’s construction and real estate investments are expected to add Dh40b (US$11b) to United Arab Emirate’s GDP [Gulf New]
• HK-listed Cheung Kong & Hutchison Whampoa to jointly develop a mixed residential and commercial property in Shanghai [Forbes]
• Foreigners fuel Spanish property sector marred by corruption [EUX]
• Foreign Investors Flood Into Berlin’s Property Market [DPA]

The largest developers of luxury condominiums in the United States; The Related Group is to invest more than $1 billion in Mexico’s real estate sector over the next two years through a newly formed subsidiary called, Related International.

Related International is to start developing upscale sea facing luxury condominiums on Puerto Vallarta, Mexico and then follow up with other upscale condos and hotel developments in Mexican tourist hotspot such as Acapulco, Cabo San Lucas, Playa del Carmen and Zihuatanejo.

Construction of the development in Puerto Vallarta (ICON Vallarta) is to begin in mid-2007 with an estimated construction cost of $200 million which will include 343 condominiums ranging from $200,000 to $1 million.

Read their Press release here

Do you follow the Mexican real estate market?

If yes, do you think there is demand for luxury condominiums in Puerto Vallarta and Mexico as a whole?

Something funny is going on in Pattaya, a Thai beach resort where funny things tend to happen.
Previously best known in the tourism industry for its sleazy nightlife, Pattaya is enjoying South-East Asia’s first second-homes property boom, and the buyers are primarily wealthy Europeans and Americans.

Last year, the resort sold more than 230 million dollars of beachside condominiums, mostly to foreign buyers.

Although modest by international standards, the construction boom - there are about 300 condominium and residential projects under way in the Pattaya neighbourhood - has already raised concerns about exacerbated water shortages and rising crime against foreigners.

And the boom is pricing locals out of the market.

“Four or five years ago, you could buy any condominium unit for about 30,000 to 35,000 dollars,” said Clayton Wade, managing director of the Premier Homes Real Estate Co and a longtime Pattaya resident. “They have all at least tripled. “

The prices are being ramped up by the dearth of reasonably priced vacation homes in the United States and Europe, a growing global market for beachside property and a lot of speculation, including some money- laundering activity.

“We’ve got plenty of monkey business in this town,” Wade conceded.

Similar housing booms are taking place at Thailand’s other beach resorts - Hua Hin, Samui and Phuket - and to a lesser degree in other South-East Asian destinations, notably on Indonesia’s Bali.

And the take-off in second-homes sales is not limited to South-East Asia.

Europeans are flocking to Croatia and Bulgaria to snap up Mediterranean villas that are cheaper than what’s on offer in Spain. Americans are going south to Mexico, Costa Rica, Panama, Nicaragua and Honduras in search of affordable getaways.

The global migration from the developed world has been unleashed by a number of factors. For starters, there are a lot more wealthy people in the wealthy countries, and much of this new wealth has been generated off property.

According to estimates by The Economist magazine, the value of residential property in developed countries increased by more than 30 trillion dollars from 2001 to 2005, an increase equivalent to 100 per cent of those countries’ gross domestic products.

The Economist’s dire prediction in 2005 that this property boom is the world’s biggest bubble that is about to kaboom has yet to be actualized. Instead, the bubble has spread to more remote shores.

“Globally, what’s happened now is there are a lot of people not just buying a second home but finding that investing in real estate makes money,” said David Simister, chairman of the real-estate company CBRE?Richard Ellis in Bangkok.

Read the rest of this entry »

SHANGHAI and Beijing office properties are on top of the world - and that’s official.

The two cities led the way with an average eight percent return on investment ratio among the world’s top 12 real estate markets last year, according to a definitive report by a respected international property adviser.

In its inaugural edition of Global Investment View, CB Richard Ellis also said investment in office buildings continued to surge, with Asia and Europe recording the most significant increases in activity.

In particular, Beijing attracted 29.8 billion yuan (US$3.8 billion) in office investment in 2006, as compared to 16.7 billion yuan in 2005.

Shanghai secured 22.6 billion yuan (US$2.8 billion), an increase of 3.2 percent from a year earlier.

A substantial rise in cross-border investment activity was also recorded, as competition among investors, yield compression, and a limited pool of desirable assets have led investors to broaden their geographic search for opportunities.

According to the report, Shanghai led the Asian market with nearly 6.4 billion yuan last year, more than twice the three billion yuan recorded in 2005. American investors were responsible for 2.5 billion yuan, up from two billion yuan a year earlier.

“The increasing volume of global office investment activity over the past five years reflects the abundant institutional and private-investor capital that has been allocated to real estate and the migration of this capital across borders in pursuit of opportunity,” Gregory S. Vorwaller, president of CBRE’s investment properties group, said in the report.

“Diversification across both geography and property types will continue to drive investment portfolio decisions around the world.”

Generally, China’s mainland real estate market, which includes residential, office, hotel, retail and industrial properties, continued to be in the global investment spotlight last year.

Market Office investment Return on volume in 2006 investment rate

Beijing                  US$3.7b      8%

Shanghai              US$2.8b      8%

Toronto                US$1.4b      6.5%

New York              US$23.3b     6.3%

Chicago                US$8.1b       6.3%

Los Angeles          US$8.3b       6%

Sydney                 US$1.8b       5.5%

Singapore             US$2.7b        4.9%

Hong Kong*          US$1.9b        4.5%

Madrid                  US$2.7b        4.25%

Paris                    US$21.2b       4%

London                US$27.6b       3.75%

*Hong Kong investment totals are for the 12-month period December 1, 2005 through November 30, 2006.

Source: Shanghai Daily

Source: Evening Times

Also read: Australian firm Stockland makes first move into Europe