Architecture
News and information on the latest architectural delight to enter the real estate market worldwide. Read our latest news and articles on what is happening with odd and strange looking architecture from around the world.

London once again defied the skeptics and remained on target for a 17% increase in value in 2007 despite falling prices in much of the rest of the country.

The Royal Institute of Chartered Surveyors reported that “house price growth remained negative for the second month in succession,” and “new instructions declined for the fourth consecutive month at the fastest pace since June.”

Having said that, London was the only region in their monthly survey to experience a rise in instructions, and according to the Financial Times House Price Index, “prices in London rose 1.1 per cent in August compared with July and the annual rate of growth accelerated to 17.6 per cent, from 17 per cent in July. This was almost double the pace of growth of the south-east, the area with the second-highest increases, where prices were up by 9.4 per cent over the year. The cost of the average home in the capital is £363,364, compared with the national average of £225,826.”

The FT index suggests that overseas demand, rising immigration and City bonuses are fueling the London price increases.

Some areas around the country were less fortunate with price drops reported in the North, East Midlands and Yorkshire & Humberside and stagnant prices in the North West, South West and East Anglia.

Whether or not London can maintain this continued growth in the face of credit squeezes, reduced mortgage lending and dropping prices in much of the rest of the country remains to be seen and many analysts are predicting a slow down or reversal before the end of the year. For the moment though, it looks as though London is shoring up the whole market.

Links:

The Financial Times

The Royal Institute of Chartered Surveyors

The Halifax House Price Index

The Land Registry House Price Index

A Million Dollars. It certainly sounds like a lot of money. Just say it out loud: “A Million Dollars,” now say it slowly, “A Million Dollars.” It still sounds like a lot of money, but what will a million dollars buy in London, Europe or Africa or South America? As I began researching this article, the phrase, “One man”s meat is another man’s poison,” came to mind. Obviously, some countries vary widely from area to area, but here are some interesting properties for sale from around the world that all have the same price tag ” A Million Bucks.

London. In London, one million bucks will secure a 3 bedroom flat in W6, a short walk from Hammersmith Broadway. This particular flat is offered by Foxtons and comprises one reception room, kitchen, three beds and one bath over 87 m sq. Leasehold with a share of the freehold.

Houses in Brussels
Houses in Brussels [Photo credits to Eric Wilcox on Flickr]

Writing the day after the biggest fall in the stock market since the outbreak of the Second Gulf War, a fall that’s related to property investment problems in the US, it’s reassuring to be looking at one real estate market that’s heavily influenced by the pay packets of civil servants.

For some time there has been speculation that the big enlargement of the EU in 2004 and the addition of Bulgaria and Romania at the beginning of 2007 will lead firstly to a big increase in EU bureaucrats and lobbyists from the new member states of Eastern Europe and that this influx would impart new vigour to the Brussels residential market, particularly in the European Union quarter.

Neuseeland New-Zealand
Auckland Harbour and Sky Tower – New Zealand [Photo credits to Travelling Pooh on Flickr]

From the standpoint of someone living in the UK, New Zealand’s housing market exhibits some familiar trends. Overall the situation seems benign for the middle aged and much less so for younger people who have yet t0o get a foothold on the property ladder. New Zealand mortgages tend overwhelmingly to be fixed (85% of the total) and this skews the impact of the Reserve Bank of New Zealand’s interest rate (Official Cash rate – OCR) rises in a similar way to the Bank of England’s; causing a marked time lag between a rise and the looked-for effect. In fact, New Zealand’s interest rates are the second highest in the developed world (after Iceland’s).

At the moment house prices seem to be rising at an impressive rate. Quotable Value New Zealand, the property valuation arm of Statistics New Zealand recorded an average rise of 12.2% in the 12 months to June, the highest increase recorded since (the 12 months to) May 2006. Despite the steady rise in interest rates so far this year and the estimated 26% of fixed rate mortgages that are up for renewal in the next two months, commentators seem unsure as to whether there is going to be a housing downturn.

UlaanBaatar-Mongolia

Sandwiched between Russia and China, there lies a gold mine of resources, profit and growth known as the country of Mongolia. With a healthy economy and expanding wealth inside the country, Mongolia is rapidly becoming an investor’s ‘hot spot’ in the global arena. Much of this potential wealth arises from an ideal mixture of supply and demand. An incredibly high demand for city housing  primarily in the capital of Ulaan Baatar – combined with a shortage of land supply in the prime city areas creates the ideal investment return. Most importantly in this gigantic economic reaction lies the catalyst mining.

The mineral resources in Mongolia are enormous, providing rich supplies of copper, coal, gold, and possibly even oil. The country became the most prolific copper provider on the globe with the discovery of the world’s largest copper mine, which is expected to provide over $100 billion of ore over the next forty years. With China just to the south, exports of these natural resources are boosting the economy, creating a rising GDP (Gross Domestic Product) each year.

This rising GDP is primarily the result of high copper prices, which rose a whopping 250% since 2002, and the production of gold. Mining is responsible for nearly one fourth of the GDP, three fourths of the country’s exports, and 67% of the industrial outputs. Not surprisingly, some of the world’s largest mining companies such as BHP, Rio Tinto, Ivanhoe, and Centerra Gold are taking advantage of resources by moving in and planting their shovels into Mongolia’s rich soil.

This influx of mining organizations, combined with the already-high amount of international trade with countries such as China, is inviting countless expatriates, ambassadors and executives to the city causing much of the demand in high-end city housing.

When turning to the need for top quality housing, current figures show prices to be within the $900 to $1,300/sqm range. High-grade living rental profit is upwards of $17/sqm per month, causing average rental returns of about 21%. Profit yields from residential accommodation are the highest in all of Asia, coupled with a tremendously high 30% yearly real estate appreciation growth rate.

In addition to the constant flow of foreign business executives, half of the country’s population is dispersed throughout rural areas of the country causing a constant flow of real estate buyers from outside the city creating an unequal displacement of land ownership in the city. This, in turn, has increased demand and limited supply.

Conservative economy predictions based on previous trends can be used to demonstrate the enormous cash return possible five years in the future. Assuming that there is a 5% salary increase per annum, interest rates drop 0,5% per annum, and a conservative 20% yearly capital appreciation, a $100,000 investment would yield $362,762 five years from now a total profit of $262,762.

One concern for foreign property owners, taxes, is discounted by the surprisingly low taxes placed on property owners in Mongolia. There are no property capital gains tax and no withholding tax. Real estate purchase costs are hardly noticeable. Freehold ownership is practised in Mongolia, meaning the purchaser owns not only the property, but also the land it stands upon. This results in making an investor’s ownership rights not only the highest, but also the most secure. With no restrictions on foreign property owners, an investor is free to do nearly anything, whether it be pledging, selling, or leasing the property.

The economic future of Mongolia appears bright as more of Mongolia’s natural resources continue to be discovered, collected, and sold, and the country’s economic growth continues to rise. As the demand for high-end accommodations in the city increase, and supply decreases, investment returns will continue to climb bringing untold amounts of wealth both to the country, and to those prepared to take advantage of the growing economy.

For more information on buy-to-let real estate developments in Mongolia’s capital, Ulaan Baatar contact UK-based Property Frontiers.

Malaysia’s housing property market is taking a breather due to the current excess supply and cautious consumer sentiment, analysts say, citing hikes in fuel prices and interest rates last year as dampening the enthusiasm of property buyers.

According to government data, the overhang in the residential market increased to 22,185 units in the first half of 2006 from 15,083 units in the same period a year earlier.
Housing developers said the soft market has continued right up to the end of 2006. The Malaysian Developers Council says it expects the industry to show negative growth in the fourth quarter of 2006, continuing the weak trend of the last eight quarters.

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.

The winners: Singapore, South Korea and the Philippines

Singapore experienced Asia’s highest residential property price increases during 2006, with 9.5% real (inflation-adjusted) house price rises.

There were also 9.3% real house price increases in South Korea, and 9.1% real house price increases in the Philippines. These were seen in the Global Property Guide House Price Indices, the biggest collection of residential property price indices.

Singapore’s strong 2006 GDP growth rate, at 7.9%, pushed up demand for Singapore property. The Urban Redevelopment Authority (URA) private residential property price index rose by 10% (9.5% in real terms) in 2006.

 

 

ANNUAL HOUSE PRICE CHANGE (%)

South Korea also saw a strong rebound in property prices, despite continued efforts by the government to depress the market. The Kookmin Bank’s house price index rose 11.6% in Dec. 2006 (9.3% in real terms) from a year earlier.

In the Philippines, strong economic growth and reduced inflation contributed to the continued recovery of the real estate sector. In addition, demand from Overseas Filipino Workers (OFWs) and dual citizens has been strong, pushing prices up. Luxury condominium prices in the Philippines rose 15% (9% in real terms) in 2006, following an 11% nominal price rise in 2005, according to Colliers International.

Poland has jumped to the top of the European house price growth league table after property values there soared 33% last year, according to a study published yesterday. Locals and foreign investors who were smart enough to buy property in Krakow, Poland’s ancient royal capital, are toasting a 58% rise. That makes the medieval city Europe’s top-performing location.

The Royal Institution of Chartered Surveyors looked at the rates of house price growth in 26 European countries, and named other star performers as Denmark, Bulgaria and Estonia. Most countries saw solid house price inflation in 2006, with European markets failing to follow the lead from across the Atlantic, where the US property market ground to a halt.