Foreigners have been gobbling up Chinese bricks and mortar this year. For example, 12,000 Hong Kong buyers purchased property there in the first half of 2009, up 23 per cent on the same time last year analysts say.
We may expect China's rich to return the favour when their government gives them the go-ahead to buy property abroad. The Middle Kingdom has 825,000 individuals with 10 million yuan to their name, enough to make each a Sterling millionaire in Britain. The Hurun Wealth Report reveals they spend half of their money on housing.
The Chinese like buying property, because they consider it a safe, long term investment. When the Chinese are given the green light to invest overseas, analysts say the HNWI's will focus on luxury homes in big cities like London, New York and Paris, university towns where their children study, and investment hotspots, including the Middle East.
(All The World's a Home : Global Property News)
Friday 28 August 2009
BETTING ON MACAU
Analysts are betting the slow recovery in Macau's housing market will gather pace soon. Property prices are rising, but at a much slower rate than in Hong Kong or mainland China, and remain 33 per cent below their late 2007 peak.Macau, a small, semi-autonomous region of China on the opposite side of the Pearl River delta from Hong Kong, relies on gaming for two-thirds of its income. Before the economic downturn this former Portuguese colony attracted many overseas property investors, especially ethnic Chinese.
With new casinos opening, visa restrictions relaxed, taxes and foreign exchange controls changed, and equity markets booming, analysts consider Macau ripe for investment again. Jones Lang LaSalle forecasts prices will rise between 10-20 per cent in the second half of this year.
A further boost to its economy will come if a planned bridge connecting Macau to Hong Kong and the neighbouring Chinese city of Zhuhai goes ahead, because it will speed up travelling time to the enclave. At the moment, travel between Macau and Hong Kong is by ferry, jetfoil or helicopter.
(All The World's a Home : Global Property News)
Thursday 27 August 2009
THE NEW TUNISIA
Tunisia wants overseas investors to buy property at Berge du Lac, a brand new, 150 hectare waterfront district, on the edge of the country's capital, Tunis, which will be fully completed by 2015.
A growing number of international firms opening offices in this government-backed development zone, include KPMG, Cap Gemini and British Airways. The British, Americans, Canadians and Malaysians have moved their embassies there.
Although, the district's western-style homes are very different to traditional Tunisian dwellings, with car parking spaces for example, they are attracting some younger, middle class residents. Prices for flats start at about GBP120,000.
Foreigners who buy properties as second homes can spend as much time as they want in the country. Tunisia is negotiating an open skies agreement to improve its air connections to other parts of the world.
(All The World's a Home : Global Property News)
BOURGEOIS FRANCE
The French property market is emerging from the global economic downturn as one of the world's strongest. House prices fell in 2008 and 2009, but they did not collapse, the country is out of recession and the euro is strong against other currencies, so the value of French property relative to the rest of the world has risen.
The luxury end of France's housing market is doing particularly well with Paris and the Cote d'Azur benefiting from their long established reputations for being safe havens for the fabulously rich and great places to live.
The Top Ten Most Expensive Streets in the World survey carried out by Wealth Bulletin features two French addresses – the only country to get a double mention on the list. Avenue Montaigne in Paris, where the Elysee Palace is located, has sales prices averaging USD54,000 per square metre. That was fifth on the list. Incredibly, prices are twice that much on Chemin de Saint-Hospice, Cap Ferrat, where they average a staggering USD100,000 per square metre. This street takes second place on the list, behind Avenue Princesse Grace, 30 miles down the road in Monaco. There, prices average USD120,000 per square metre.
(All The World's a Home : Global Property News)
US SLUMP ENDS
The US housing market is recovering from its worst slump since the Great Depression of the 1930s. Consultancy, Herrmann Forecasting, says "We're seeing multiple signs of a bottom in the housing market”.
Here's the evidence: Prices rose 1.4 per cent in the second quarter 2009, the first rise since they started falling three years ago. The number of new homes being built is rising, sales of existing homes is rising and the value of house-builders' shares is rising.
Why the upturn? The 32 per cent fall in prices from 2006 to the first quarter of 2009 is finally bringing buyers back into the market.
Some clouds remain on the horizon: unemployment is growing and a massive USD3.4 trillion worth of homes remain at risk of repossession, because their owner's mortgage debt exceeds the value of the property.
What's more, masses of new homes remain empty and a third of existing homes sold are repossessions. This prompts Capital Economics to caution “the housing market has turned the corner, but the recovery will be slow and long.”
(All The World's a Home : Global Property News)
Friday 21 August 2009
A TALE OF TWO SALES
Time for some home truths. Attempting to sell my flat and helping my mother sell her house has revealed some worrying aspects about the British property market.
Number one: My own sale. It took six weeks for my Home Information Pack (HIP) to be delivered, when it is supposed to take two weeks.
It has been illegal to put a home up for sale without a completed HIP since April, so theoretically my flat could not be marketed during that long wait. As it was, my estate agent was not too fussy and started marketing my flat without a HIP. Needless to say, not a single viewer asked to see a pack during those six weeks.
Such lax attitudes might be enough to worry some people, but there is a bigger issue which ought to concern everyone. HIPs were intended to speed up the sales process, but if it takes six weeks for a pack to be prepared, then the system is failing and actually slowing the process down.
This raises another question: If HIP providers are failing to produce reports on time now, when there are so few sellers in the market, how will they cope when the market gets busy again? Will this added bureaucracy make the housing market even more inert?
Number two: My mother's sale. Two buyers made offers on my mother's home and both asked surveyors to value the house for them. Only 17 days separated publication of these surveyors' reports and yet their valuations differed by 25 per cent. There were no sudden shocks to the market in the days between these valuations and no secrets about the house revealed that might affect its price. So what could explain such wide variation in these valuations?
The lower of the two valuations could be explained by good, old-fashioned backside protecting. Some surveyors have been criticised for giving low valuations in recent months so they can avoid being sued by mortgage lenders if prices fall further.
In both cases, the prospective buyers paid these surveyors in excess of £1000 for these reports. Was that money well spent? Did these highly qualified, independent professionals know their job? Are they really better than anyone else when it comes to property valuation? Bluntly, are they useless?
The wide variation in those valuations reveals an unwelcome home truth. It shows that pricing a property is a guessing game. Yes, investors will use yields as a scientific way to determine a home's value, but for a great many owner-occupiers, emotional factors dominate: “Will that home make me happy” they ask themselves, which is absolutely the right question.
Estate agents valuations which, we all know, vary widely and surveyors valuations which do too, apparently, are merely rough guides, and are useless when it comes to putting a value on individual domestic happiness.
Put another way, the value of a home depends entirely on what it is worth to the person buying it and to the person selling it, it is entirely an individual matter. That is why my mother will pay over the odds, in many peoples' opinion, for her new home, a mansion block flat, because its location, lightness, airiness, spaciousness and working fireplace are worth so much more to her than others it seems.
We won't bother to have a surveyor value it. She doesn't need a mortgage and the money will be better spent on putting right small things and making it look nice. We haven't seen a HIP for it either. Chances are, it's not published yet. In any case, sometimes, intuition can be more useful than thousands of pounds worth of professional advice and a vendor's half-truthful answers on a HIP's Property Information Questionnaire (PIQ), and it's free. It's less of a bureaucratic mouthful too.
(All The World's a Home : Global Property News)
Number one: My own sale. It took six weeks for my Home Information Pack (HIP) to be delivered, when it is supposed to take two weeks.
It has been illegal to put a home up for sale without a completed HIP since April, so theoretically my flat could not be marketed during that long wait. As it was, my estate agent was not too fussy and started marketing my flat without a HIP. Needless to say, not a single viewer asked to see a pack during those six weeks.
Such lax attitudes might be enough to worry some people, but there is a bigger issue which ought to concern everyone. HIPs were intended to speed up the sales process, but if it takes six weeks for a pack to be prepared, then the system is failing and actually slowing the process down.
This raises another question: If HIP providers are failing to produce reports on time now, when there are so few sellers in the market, how will they cope when the market gets busy again? Will this added bureaucracy make the housing market even more inert?
Number two: My mother's sale. Two buyers made offers on my mother's home and both asked surveyors to value the house for them. Only 17 days separated publication of these surveyors' reports and yet their valuations differed by 25 per cent. There were no sudden shocks to the market in the days between these valuations and no secrets about the house revealed that might affect its price. So what could explain such wide variation in these valuations?
The lower of the two valuations could be explained by good, old-fashioned backside protecting. Some surveyors have been criticised for giving low valuations in recent months so they can avoid being sued by mortgage lenders if prices fall further.
In both cases, the prospective buyers paid these surveyors in excess of £1000 for these reports. Was that money well spent? Did these highly qualified, independent professionals know their job? Are they really better than anyone else when it comes to property valuation? Bluntly, are they useless?
The wide variation in those valuations reveals an unwelcome home truth. It shows that pricing a property is a guessing game. Yes, investors will use yields as a scientific way to determine a home's value, but for a great many owner-occupiers, emotional factors dominate: “Will that home make me happy” they ask themselves, which is absolutely the right question.
Estate agents valuations which, we all know, vary widely and surveyors valuations which do too, apparently, are merely rough guides, and are useless when it comes to putting a value on individual domestic happiness.
Put another way, the value of a home depends entirely on what it is worth to the person buying it and to the person selling it, it is entirely an individual matter. That is why my mother will pay over the odds, in many peoples' opinion, for her new home, a mansion block flat, because its location, lightness, airiness, spaciousness and working fireplace are worth so much more to her than others it seems.
We won't bother to have a surveyor value it. She doesn't need a mortgage and the money will be better spent on putting right small things and making it look nice. We haven't seen a HIP for it either. Chances are, it's not published yet. In any case, sometimes, intuition can be more useful than thousands of pounds worth of professional advice and a vendor's half-truthful answers on a HIP's Property Information Questionnaire (PIQ), and it's free. It's less of a bureaucratic mouthful too.
(All The World's a Home : Global Property News)
Monday 10 August 2009
MADEIRA, THE "NEW ALGARVE"
In Madeira, developers have completed the island's first set of purpose-built holiday homes, and two more projects are on the way.
Making these schemes possible has been huge investment in the Portuguese island's air, road and sea connections over the past decade which have made visiting the island a good deal easier and raised its profile in the world.
Located in the Atlantic 350 miles off the west coast of Morocco, Madeira is a tourist island that has traditionally appealed to older holidaymakers from northern Europe, particularly Britain, because of its warm climate and easy pace of life. Famous visitors have included Sir Winston Churchill and Baroness Thatcher.
Tourism was given a boost earlier this decade when TAP, the Portuguese national airline, lost its monopoly on flights to the island. With the arrival of easyJet, British Airways and other operators, the number of destinations served by the airport has grown to 50. The airport has been rebuilt to cater for this increased traffic, and new motorways, bridges and tunnels created to make getting about this mountainous island a good deal easier.
Yachts sailing between Europe and the Caribbean have been restocking at a marina built at the Quinto do Lorde estate in 2002, and rumours are circulating that a new liner terminal will be created, so the harbour at Madeira's capital, Funchal, can accommodate super-yachts.
In addition to Madeira's two existing golf courses, two more will be created on the main island and a third on the smaller, outlying island of Porto Santo.
Tight planning laws aimed at avoiding overcrowding mean the maximum height of new buildings in Funchal's historic city centre is seven floors, although this is stretched to twelve in exceptional cases. In the countryside it is three floors.
New hotels must have at least four stars. Among those opening are Madeira's first designer hotels, The Vine Hotel and the Choupana Hills Resort and Spa.
These moves have encouraged developers to construct purpose-built holiday homes. At newly completed Palheiro Village, high in the hills above Funchal, are 48 villas and 37 apartments painted in warm reds, pinks, yellows and oranges.
Half of Palheiro Village's homes have been sold, 70 per cent to British and Irish buyers, most of the rest to other Europeans. Prices for freehold homes range from euro325,000 to euro1.8 million, and fractional ownership options start at euro120,000 for a quarter share of a one bed-apartment. Most properties have terraces and some have pools. Village facilities include a communal swimming pool.
The village is located on the lower slopes of the Palheiro Estate where residents have access to a modern spa at hotel, Casa Velha do Palheiro, and an 18-hole golf course.
Two more upmarket, holiday home developments are on the way. Sixty contemporary-looking villas and 112 apartments are scheduled for completion at Azulara, west of Funchal, in late 2012. Prices for apartments start at Euro281,000. Early buyers have come from as far afield as Barbados and the Middle East. At Quinta do Lorde, 127 traditional-style dwellings are under construction.
The completion of the Palheiro Village is significant for Madeira's tourism industry and property market, Anne Marchington, sales manager at Palheiro Village, believes.
"Madeira can be seen as "a late starter" for this type of resort development compared to the Algarve in mainland Portugal, and islands such as Mallorca," she says, "but with necessary conditions all now in place, the development of residential tourism on a small scale and aiming for the high-quality end of the market, is likely to become well-established."
The global economic downturn has been cruel to Madeira. No sooner had its spanking new roads, hotels and holiday homes been built, then tourist numbers were decimated by the credit crunch – the British have found Madeira, which is part of the Eurozone, a little expensive since Sterling plummeted on international currency exchanges last year. Combined with an oversupply of homes in some parts of Funchal, this has been bad news for property prices.
Tony de Nobrega, proprietor of Funchal estate agency, Nobrega Realty, said prices had dropped 30 per cent for ordinary residential property over the past 12 months and demand for holiday homes had "decreased substantially".
He considers it unlikely an upturn will happen any time soon.
"I think 12 months is too soon to forecast even if any positive improvement in the world economy takes place," he says, "it will still take time to filter into the local market."
Even so, despite these cyclical problems, Madeira's structural improvements bode well for its property market in the longer term. Now, could be exactly the right time to buy on the island.
BUYERS GUIDE
Madeira is an archipelago in the mid-Atlantic, west of Morocco and north of the Canary Islands, owned by Portugal. The main island of Madeira is 57 kilometres wide and 22km long.
Half of Madeira's 250,000 population live in the capital, Funchal, on Madeira island. This is where most homes for sale are found, including new build schemes on the edge of the city.
Madeira is a self-governing region of Portugal with property purchase rules slightly different to that of the mainland.
Foreigners can buy property anywhere on Madeira and its outlying islands, except for the uninhabited Desertas Islands which are nature reserves where nobody is allowed to live.
Purchase costs will add around 7 per cent on top of the sales price. These costs include IMT, a property tax, which ranges from 0 to 6 per cent of the value of the property. A legal official known as a notary charges a 2 per cent fee for arranging the public deed.
The Land Registry charges a few hundred euros for registering the sale, and a similar amount is paid if the buyer has a mortgage which they must declare. Lawyers may charge about Euro3,000, possibly less.
Properties are purchased through an escritura system, similar to that which exists in Spain and Portugal. In the presence of a notary, the buyer and seller sign the public deed, and then exchange cheque for house keys. Since these formalities are carried out in Portuguese, foreign buyers will need an interpreter. This may be their lawyer if they are bi-lingual.
Properties can be let to holidaymakers. Madeira's warm, dry climate attracts visitors throughout the year with golfers mainly coming in the winter. The tourist board hopes more golfers will visit the archipelago when its three new golf courses open. Fully furnished, three bedroom villas at Palheiro Village let for Euro1,450 per week.
Although most Madeirans are Portuguese, English is widely spoken, and some estate agents speak Spanish and Russian to cater for a large number of buyers from Venezuela, where many Madeirans emigrated to in the past, and the CIS. Many South Africans of Madeiran heritage buy second homes in the archipelago. It is popular with British buyers some of whom live there in retirement.
Madeira has a small Chinese community, mainly from Macau, most of whom work in the restaurant trade. Madeira is part of the European Union and uses the euro as its currency. Most flights between Hong Kong and Madeira involve making two stops, and none of them are direct.
Madeira is volcanic, but the last eruption is estimated to have occurred 6,500 years ago.
(All The World's a Home : Global Property News)
Making these schemes possible has been huge investment in the Portuguese island's air, road and sea connections over the past decade which have made visiting the island a good deal easier and raised its profile in the world.
Located in the Atlantic 350 miles off the west coast of Morocco, Madeira is a tourist island that has traditionally appealed to older holidaymakers from northern Europe, particularly Britain, because of its warm climate and easy pace of life. Famous visitors have included Sir Winston Churchill and Baroness Thatcher.
Tourism was given a boost earlier this decade when TAP, the Portuguese national airline, lost its monopoly on flights to the island. With the arrival of easyJet, British Airways and other operators, the number of destinations served by the airport has grown to 50. The airport has been rebuilt to cater for this increased traffic, and new motorways, bridges and tunnels created to make getting about this mountainous island a good deal easier.
Yachts sailing between Europe and the Caribbean have been restocking at a marina built at the Quinto do Lorde estate in 2002, and rumours are circulating that a new liner terminal will be created, so the harbour at Madeira's capital, Funchal, can accommodate super-yachts.
In addition to Madeira's two existing golf courses, two more will be created on the main island and a third on the smaller, outlying island of Porto Santo.
Tight planning laws aimed at avoiding overcrowding mean the maximum height of new buildings in Funchal's historic city centre is seven floors, although this is stretched to twelve in exceptional cases. In the countryside it is three floors.
New hotels must have at least four stars. Among those opening are Madeira's first designer hotels, The Vine Hotel and the Choupana Hills Resort and Spa.
These moves have encouraged developers to construct purpose-built holiday homes. At newly completed Palheiro Village, high in the hills above Funchal, are 48 villas and 37 apartments painted in warm reds, pinks, yellows and oranges.
Half of Palheiro Village's homes have been sold, 70 per cent to British and Irish buyers, most of the rest to other Europeans. Prices for freehold homes range from euro325,000 to euro1.8 million, and fractional ownership options start at euro120,000 for a quarter share of a one bed-apartment. Most properties have terraces and some have pools. Village facilities include a communal swimming pool.
The village is located on the lower slopes of the Palheiro Estate where residents have access to a modern spa at hotel, Casa Velha do Palheiro, and an 18-hole golf course.
Two more upmarket, holiday home developments are on the way. Sixty contemporary-looking villas and 112 apartments are scheduled for completion at Azulara, west of Funchal, in late 2012. Prices for apartments start at Euro281,000. Early buyers have come from as far afield as Barbados and the Middle East. At Quinta do Lorde, 127 traditional-style dwellings are under construction.
The completion of the Palheiro Village is significant for Madeira's tourism industry and property market, Anne Marchington, sales manager at Palheiro Village, believes.
"Madeira can be seen as "a late starter" for this type of resort development compared to the Algarve in mainland Portugal, and islands such as Mallorca," she says, "but with necessary conditions all now in place, the development of residential tourism on a small scale and aiming for the high-quality end of the market, is likely to become well-established."
The global economic downturn has been cruel to Madeira. No sooner had its spanking new roads, hotels and holiday homes been built, then tourist numbers were decimated by the credit crunch – the British have found Madeira, which is part of the Eurozone, a little expensive since Sterling plummeted on international currency exchanges last year. Combined with an oversupply of homes in some parts of Funchal, this has been bad news for property prices.
Tony de Nobrega, proprietor of Funchal estate agency, Nobrega Realty, said prices had dropped 30 per cent for ordinary residential property over the past 12 months and demand for holiday homes had "decreased substantially".
He considers it unlikely an upturn will happen any time soon.
"I think 12 months is too soon to forecast even if any positive improvement in the world economy takes place," he says, "it will still take time to filter into the local market."
Even so, despite these cyclical problems, Madeira's structural improvements bode well for its property market in the longer term. Now, could be exactly the right time to buy on the island.
BUYERS GUIDE
Madeira is an archipelago in the mid-Atlantic, west of Morocco and north of the Canary Islands, owned by Portugal. The main island of Madeira is 57 kilometres wide and 22km long.
Half of Madeira's 250,000 population live in the capital, Funchal, on Madeira island. This is where most homes for sale are found, including new build schemes on the edge of the city.
Madeira is a self-governing region of Portugal with property purchase rules slightly different to that of the mainland.
Foreigners can buy property anywhere on Madeira and its outlying islands, except for the uninhabited Desertas Islands which are nature reserves where nobody is allowed to live.
Purchase costs will add around 7 per cent on top of the sales price. These costs include IMT, a property tax, which ranges from 0 to 6 per cent of the value of the property. A legal official known as a notary charges a 2 per cent fee for arranging the public deed.
The Land Registry charges a few hundred euros for registering the sale, and a similar amount is paid if the buyer has a mortgage which they must declare. Lawyers may charge about Euro3,000, possibly less.
Properties are purchased through an escritura system, similar to that which exists in Spain and Portugal. In the presence of a notary, the buyer and seller sign the public deed, and then exchange cheque for house keys. Since these formalities are carried out in Portuguese, foreign buyers will need an interpreter. This may be their lawyer if they are bi-lingual.
Properties can be let to holidaymakers. Madeira's warm, dry climate attracts visitors throughout the year with golfers mainly coming in the winter. The tourist board hopes more golfers will visit the archipelago when its three new golf courses open. Fully furnished, three bedroom villas at Palheiro Village let for Euro1,450 per week.
Although most Madeirans are Portuguese, English is widely spoken, and some estate agents speak Spanish and Russian to cater for a large number of buyers from Venezuela, where many Madeirans emigrated to in the past, and the CIS. Many South Africans of Madeiran heritage buy second homes in the archipelago. It is popular with British buyers some of whom live there in retirement.
Madeira has a small Chinese community, mainly from Macau, most of whom work in the restaurant trade. Madeira is part of the European Union and uses the euro as its currency. Most flights between Hong Kong and Madeira involve making two stops, and none of them are direct.
Madeira is volcanic, but the last eruption is estimated to have occurred 6,500 years ago.
(All The World's a Home : Global Property News)
Wednesday 5 August 2009
GERMANY'S GETTING SMALLER
While residential property values have slumped in many countries across the world over the past twelve months they have hardly budged for brand new homes in Germany. What's more, some analysts say prices for these and second-hand German homes will rise soon.
According to the most recent Hedonic House Price Index published by financial services group, Hypoport, prices for brand new homes fell fractionally, by 0.17 per cent, over the twelve months to May 2009, to an average price of euro225,396.
Prices for second-hand apartments slipped back 1.88 per cent to an average of euro130,441 over the same period. As for second-hand houses, prices for these were hardest hit, dipping 5.54 per cent, to an average of euro167,678 each.
According to Hypoport, prices for brand new homes have stayed steady, because construction costs are growing. With wages and commodities prices expected to rise further, prices for these types of property will increase the company forecasts.
“Prices for new homes will most probably rise because they are highly driven by the costs of construction,” said Professor Thomas Kretschmar, co-chief executive officer of Hypoport.
He said prices for second-hand housing would rise too, because of the growing demand for all property from Germany's aging population. Germans usually buy homes later in life, preferring to rent in their younger years, so with the population growing older, the number of buyers would increase, he forecast
Although unwilling to give exact timings, he expected the value of second-hand homes to stabilise in the short term and rise “smoothly” in the medium term especially in sought after locations.
According to Barbara Walter, proprietor of London-based buying agency, German Property Finder, Germany's residential market was relatively strong.
“I consider buying in Germany a safe long term investment,” she said.
The fortunes of Germany's housing market was influenced by its changing demographics she added. Germany has a population of 82 million people, the European Union's largest, but it has been declining since 2003. In 2007, Germany's population was estimated to have contracted by 0.12 per cent.
This depopulation has undermined Germany's housing market. Figures from consultancy, BulweinGesa, show German residential property prices fell marginally in all but one of the 15 years to the end of 2008 in real terms (after inflation is factored in).
Demographic decline started in eastern Germany during the 1990s and is spreading to western districts Deutsche Bank research shows. Most German regions will have fewer people living in them by 2020 compared to today the bank forecasts.
There will be some pockets of population growth however. The number of people living in Berlin and south-west Germany will continue to increase over the next decade the bank projects.
A trend towards an ageing population living in larger towns rather than the countryside, and an increase in single person households, would provide opportunities for investors, Ms Walter said.
“Demographics is the weak point,” she said, “but right now there is hardly enough new build to meet the demand, so prices have hardly budged in the good areas or are even rising in places like central Munich.
“Buy where demographics are good, such as south west Germany and around Berlin, although this one (Berlin) has been hyped up in the last year, so buyers can afford to be patient.”
After 15 years of falling prices, the longest sales slump in Europe, German homes have become less expensive to buy compared to many other places in the world.
According to the Global Property Guide, Berlin is 62nd on its list of Most Expensive Property Markets. The average price of a 120 square meter apartment in the city is $3,030 per square meter which is marginally more expensive than for the same sized property on the Greek island of Crete.
Munich, in south west Germany, has the country's priciest property market and is 25th on the Global Property Guide's list of 112 Most Expensive Property Markets in the world to buy a home. A 120 square meter abode in the city costs $5,255 per square meter to purchase on average.
In the posh west Berlin district of Schoeneberg, a refurbished, two bedroom apartment is on the market for £187,000 through property portal property-abroad.com. The 74 square meter abode has a balcony.
In the less salubrious central Berlin district of Kreuzberg a one bedroom studio flat with balcony can be purchased for £31,424 through property–abroad.com. The property portal's sales blurb says the rental income from the 38 square meter property is euro1560 per year, equivalent to a 4.2 per cent gross return.
In central Munich, a second floor, 130 square meter apartment with three rooms and modernised bathroom, in a high-rise block, is on offer for euro130,000 through estate agency Blue Homes.
Entire blocks of flats are sometimes traded between investors in Germany. A six storey, 100-year old block of 33 apartments in salubrious Charlottenburg, central Berlin, is on the market through estate agency, FrontlineBerlin, for euro4,150,000. Renting out all the apartments produces a gross return of 5.4 per cent the Berlin-based company says.
GERMANY HOME BUYER'S GUIDE
There are no restrictions on foreigners buying property in Germany. Following in the footsteps of large foreign reits, which purchased entire housing estates in the 1990s, individual overseas property investors, especially British and Irish, have become big buyers of German property. Berlin attracts most private investors.
Buyers have several taxes and charges to pay, including a share of the estate agent's fee which is spilt equally between seller and buyer. Purchasers must pay a Property Transfer tax at 3.5 per cent, notary fees of 0.5 to 1.5 per cent, registration fees of 0.2 to 0.5 per cent and estate agents fees of up to 3.5 per cent. For properties selling for euro1 million or more estate agents fees are negotiable.
Buying agency fees vary. German Property Finder charges a £500 registration fee and 2.5 per cent of the purchase price.
When an investor comes to sell, they must pay estate agents fees of up to 3.5 per cent. Income tax on rental income is levied at 25 per cent. Expenses like mortgage interest payments, maintenance costs and management fees can be deducted from that. A Solidarity Surcharge increases the overall income tax level to 26.4 per cent.
There is no capital gains tax to pay on sale of a property which is held for more than ten years. Profits on re-sales made within ten years have income tax and the Solidarity Surcharge deducted from them.
According to the Global Property Guide, “Germany is depressingly pro-tenant”, because tenants can get security of tenure which makes them hard to move out. Rents are freely negotiable, but rarely rise by more than 20 per cent over a three year period, because of government restrictions, the website reports.
However, the attractions of renting mean that 60 per cent of Germans are tenants, so the market is large. Nationally, gross yields are 5.12 per cent on average the Global Property Guide reports.
Above average yields are available in cities like Berlin and Nuremberg Barbara Walter, proprietor of buying agency, Germany Property Finder, revealed. Munich attracted investors looking for capital growth she added.
“I would advise to buy centrally located, old, but well maintained residential properties in major cities which are sold at less than the cost of rebuilding – in some cities under euro1000 to 2000 per square meter, and which will also offer a decent rental yield at 6 to 9 per cent gross,” she said.
German banks lend to foreigners but rarely for more than 70 per cent of a property's value she said.
She advised buyers to have a German speaker help them through the sales process.
(All The World's a Home : Global Property News)
According to the most recent Hedonic House Price Index published by financial services group, Hypoport, prices for brand new homes fell fractionally, by 0.17 per cent, over the twelve months to May 2009, to an average price of euro225,396.
Prices for second-hand apartments slipped back 1.88 per cent to an average of euro130,441 over the same period. As for second-hand houses, prices for these were hardest hit, dipping 5.54 per cent, to an average of euro167,678 each.
According to Hypoport, prices for brand new homes have stayed steady, because construction costs are growing. With wages and commodities prices expected to rise further, prices for these types of property will increase the company forecasts.
“Prices for new homes will most probably rise because they are highly driven by the costs of construction,” said Professor Thomas Kretschmar, co-chief executive officer of Hypoport.
He said prices for second-hand housing would rise too, because of the growing demand for all property from Germany's aging population. Germans usually buy homes later in life, preferring to rent in their younger years, so with the population growing older, the number of buyers would increase, he forecast
Although unwilling to give exact timings, he expected the value of second-hand homes to stabilise in the short term and rise “smoothly” in the medium term especially in sought after locations.
According to Barbara Walter, proprietor of London-based buying agency, German Property Finder, Germany's residential market was relatively strong.
“I consider buying in Germany a safe long term investment,” she said.
The fortunes of Germany's housing market was influenced by its changing demographics she added. Germany has a population of 82 million people, the European Union's largest, but it has been declining since 2003. In 2007, Germany's population was estimated to have contracted by 0.12 per cent.
This depopulation has undermined Germany's housing market. Figures from consultancy, BulweinGesa, show German residential property prices fell marginally in all but one of the 15 years to the end of 2008 in real terms (after inflation is factored in).
Demographic decline started in eastern Germany during the 1990s and is spreading to western districts Deutsche Bank research shows. Most German regions will have fewer people living in them by 2020 compared to today the bank forecasts.
There will be some pockets of population growth however. The number of people living in Berlin and south-west Germany will continue to increase over the next decade the bank projects.
A trend towards an ageing population living in larger towns rather than the countryside, and an increase in single person households, would provide opportunities for investors, Ms Walter said.
“Demographics is the weak point,” she said, “but right now there is hardly enough new build to meet the demand, so prices have hardly budged in the good areas or are even rising in places like central Munich.
“Buy where demographics are good, such as south west Germany and around Berlin, although this one (Berlin) has been hyped up in the last year, so buyers can afford to be patient.”
After 15 years of falling prices, the longest sales slump in Europe, German homes have become less expensive to buy compared to many other places in the world.
According to the Global Property Guide, Berlin is 62nd on its list of Most Expensive Property Markets. The average price of a 120 square meter apartment in the city is $3,030 per square meter which is marginally more expensive than for the same sized property on the Greek island of Crete.
Munich, in south west Germany, has the country's priciest property market and is 25th on the Global Property Guide's list of 112 Most Expensive Property Markets in the world to buy a home. A 120 square meter abode in the city costs $5,255 per square meter to purchase on average.
In the posh west Berlin district of Schoeneberg, a refurbished, two bedroom apartment is on the market for £187,000 through property portal property-abroad.com. The 74 square meter abode has a balcony.
In the less salubrious central Berlin district of Kreuzberg a one bedroom studio flat with balcony can be purchased for £31,424 through property–abroad.com. The property portal's sales blurb says the rental income from the 38 square meter property is euro1560 per year, equivalent to a 4.2 per cent gross return.
In central Munich, a second floor, 130 square meter apartment with three rooms and modernised bathroom, in a high-rise block, is on offer for euro130,000 through estate agency Blue Homes.
Entire blocks of flats are sometimes traded between investors in Germany. A six storey, 100-year old block of 33 apartments in salubrious Charlottenburg, central Berlin, is on the market through estate agency, FrontlineBerlin, for euro4,150,000. Renting out all the apartments produces a gross return of 5.4 per cent the Berlin-based company says.
GERMANY HOME BUYER'S GUIDE
There are no restrictions on foreigners buying property in Germany. Following in the footsteps of large foreign reits, which purchased entire housing estates in the 1990s, individual overseas property investors, especially British and Irish, have become big buyers of German property. Berlin attracts most private investors.
Buyers have several taxes and charges to pay, including a share of the estate agent's fee which is spilt equally between seller and buyer. Purchasers must pay a Property Transfer tax at 3.5 per cent, notary fees of 0.5 to 1.5 per cent, registration fees of 0.2 to 0.5 per cent and estate agents fees of up to 3.5 per cent. For properties selling for euro1 million or more estate agents fees are negotiable.
Buying agency fees vary. German Property Finder charges a £500 registration fee and 2.5 per cent of the purchase price.
When an investor comes to sell, they must pay estate agents fees of up to 3.5 per cent. Income tax on rental income is levied at 25 per cent. Expenses like mortgage interest payments, maintenance costs and management fees can be deducted from that. A Solidarity Surcharge increases the overall income tax level to 26.4 per cent.
There is no capital gains tax to pay on sale of a property which is held for more than ten years. Profits on re-sales made within ten years have income tax and the Solidarity Surcharge deducted from them.
According to the Global Property Guide, “Germany is depressingly pro-tenant”, because tenants can get security of tenure which makes them hard to move out. Rents are freely negotiable, but rarely rise by more than 20 per cent over a three year period, because of government restrictions, the website reports.
However, the attractions of renting mean that 60 per cent of Germans are tenants, so the market is large. Nationally, gross yields are 5.12 per cent on average the Global Property Guide reports.
Above average yields are available in cities like Berlin and Nuremberg Barbara Walter, proprietor of buying agency, Germany Property Finder, revealed. Munich attracted investors looking for capital growth she added.
“I would advise to buy centrally located, old, but well maintained residential properties in major cities which are sold at less than the cost of rebuilding – in some cities under euro1000 to 2000 per square meter, and which will also offer a decent rental yield at 6 to 9 per cent gross,” she said.
German banks lend to foreigners but rarely for more than 70 per cent of a property's value she said.
She advised buyers to have a German speaker help them through the sales process.
(All The World's a Home : Global Property News)
Monday 3 August 2009
BOOM OR BUST?
Well, it's time to take stock. Prices are rising rapidly in a number of locations – they are up 20 per cent in Shanghai and Hong Kong since the start of this year. Up by half for some homes in Seoul, South Korea. They are up by a relatively modest 4 per cent in Switzerland, where the top end of the market is doing most well. In Britain, prices have been rising for several months, also mostly for multi-million pound luxury homes.
Is this the start of a sustained recovery in housing markets or just a mirage? Well, China and South Korea do seem to be enjoying something of an economic resurgence courtesy of their respective governments' financial stimulus packages. There is a danger they may overdo it and the resulting spirals of speculation, inflation and oversupply turn recently turned busts-to-booms back into busts again.
Hong Kong's economy is still in a dire state, so its property market upturn may be premature. However, when those Chinese exports start pouring through its port again, the economy may bounce back, and quickly. But first, the rest of the world must want China to make its cars, clothes and other stuff in vast quantities again.
In London, financiers are on course to make £4 million in bonuses this year. Traditionally, a large chunk of this bonus money goes into luxury houses, penthouses and manor houses. This year will be no exception. Indeed, property may be more popular than ever, because of its reputation for being a secure investment. Looming public sector cuts and tax rises after the next year's general election will suppress the mass market and may dampen the luxury market in the longer term.
Switzerland is a safe haven for the rich, so it shall continue to attract the wealthy from Britain and other countries where governments are looking for bankers, stockbrokers and others like them to pay a fairer share of tax. Possibly, Switzerland's boom is the most sustainable, because there are still plenty of rich in the world despite the economic downturn. All the Alpine state has to do is lure them in with the promise of shelter, a policy it has pursued with great success for decades. Markets may come and go, but there will always be people in the world who are rich.
You can read more about what is happening in the property markets mentioned here by reading recent entries on this blog.
(All The World's a Home : Global Property News)
Is this the start of a sustained recovery in housing markets or just a mirage? Well, China and South Korea do seem to be enjoying something of an economic resurgence courtesy of their respective governments' financial stimulus packages. There is a danger they may overdo it and the resulting spirals of speculation, inflation and oversupply turn recently turned busts-to-booms back into busts again.
Hong Kong's economy is still in a dire state, so its property market upturn may be premature. However, when those Chinese exports start pouring through its port again, the economy may bounce back, and quickly. But first, the rest of the world must want China to make its cars, clothes and other stuff in vast quantities again.
In London, financiers are on course to make £4 million in bonuses this year. Traditionally, a large chunk of this bonus money goes into luxury houses, penthouses and manor houses. This year will be no exception. Indeed, property may be more popular than ever, because of its reputation for being a secure investment. Looming public sector cuts and tax rises after the next year's general election will suppress the mass market and may dampen the luxury market in the longer term.
Switzerland is a safe haven for the rich, so it shall continue to attract the wealthy from Britain and other countries where governments are looking for bankers, stockbrokers and others like them to pay a fairer share of tax. Possibly, Switzerland's boom is the most sustainable, because there are still plenty of rich in the world despite the economic downturn. All the Alpine state has to do is lure them in with the promise of shelter, a policy it has pursued with great success for decades. Markets may come and go, but there will always be people in the world who are rich.
You can read more about what is happening in the property markets mentioned here by reading recent entries on this blog.
(All The World's a Home : Global Property News)
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