gabrielle's Blog

Why Asia missed the global house price boom: an in-depth analysis

gabrielle duke (Global Property Guide) — Sat, 24 Mar 2007 08:41:47 -0500

Globally, we are witnessing the biggest and most extensive house price boom in recorded history, both in terms of the number of countries experiencing real house price gains, and the number of successive years that house prices have been rising.

However, while property in much of the developed world is at historic peaks, property prices in most Asian countries are well below peak levels. Here, the Global Property Guide explores why.

Essentially property prices in Asia have lagged for three reasons: 

The Asian Crisis caused a long period of high interest rates, and an economic slowdown, which slowed the growth of the mortgage and real estate markets.

Post-crisis loan portfolios were full of defaulted property loans. It took a long time before banks regained the capacity to lend at pre-crisis rates.

Poor credit information, weak legal systems, lack of transparency, high revenue extraction by governments in the form transfer taxes and of registration fees, all raise the costs of housing, and discourage lending and housing investment in some countries.

The Asian crisis caused an interruption in banks making mortgage loans available to borrowers at anything near acceptable interest rates – and a reduction in the willingness of the banks to lend. When this period came to an end, at different times in different countries, the fizz returned to Asian housing markets.

Demand is now growing strongly, and developers are racing to meet supply, though rising global interest rates have recently somewhat dampened the euphoria.

Moscow on top: A quick global property guide report on Russia's real estate boom

gabrielle duke (Global Property Guide) — Sat, 24 Mar 2007 08:31:53 -0500

If you thought Moscow property prices couldn’t go any higher – well, they just have! Apartments in the centre of the city are being sold and rented at prices which would appear to defy all reason - except that Moscow is a city, now, of extraordinary wealth.

The average price of an apartment rose to US$16,363 per sq. m. in prime Moscow districts in Q3 2006, according to Knight Frank, Moscow. Re-sale apartment prices rose 62.8% in the three quarters to Q3 2006. Newly built apartment prices rose by 79% in the three quarters to Q3 2006. A small three-room apartment (60 sq. m.) in central Moscow is now worth US$1 million. First-class apartments can command twice that or more – US$30,000 per sq. m. and up is not unknown.

Property is not all that’s booming. The Russian economy grew by 6.5% per annum in 2006, though that is down on previous years. Shopfront after shopfront in Moscow glitters with Western brand names. Huge limousines ferry wives and mistresses to their destinations.

All this wealth is being fuelled by the oil and gas boom. Russia now pumps more oil than...

the update continues here:

http://www.globalpropertyguide.com/country.php?id=161

Philippines: High Yields on Metro Manila Condominiums

gabrielle duke (Global Property Guide) — Thu, 15 Mar 2007 01:47:02 -0500

The rental returns from letting residential condominiums in central areas of Metro Manila range from 8% to 15% yearly, according to a survey just released by the Global Property Guide.

The smallest apartments in each segment earn the highest yields. For instance, studio apartments in the prime areas of Metro Manila can earn around 13%-15%. But the highest returns are available on the smallest studios (30 sq. m.), which earn rental returns of an average of 15.1%. Larger studio condos (40 sq. m.) earn slightly lower returns (12.9%).

The same pattern holds in other condominium segments. One to two bedroom units (measuring 50 – 90 sq. m.) earn around 12%-15%, but the highest returns can be earned on the smaller (60 sq. m.) condos, which earn rental returns of 15%. Larger 1 – 2 bedroom condos (80 sq. m.) earn rather lower returns (11.5%).

“The pattern is unusual,” says Matthew Pollock, publisher of the Global Property Guide. “Instead of a smooth progression from high yielding units to low, we have high to low with high-yielding 'ridges' or 'lumps' at particular apartment sizes - which correspond to the smallest case of a particular number of bedrooms.”

Investment plus
Interest rates in the Philippines are at historic lows, making such condominium unit returns highly attractive. At present 364-day T-bills yield less than 3.82%, while interest rates...

full article:

http://www.globalpropertyguide.com/articleread.php?article_id=86&cid=

How does the average UK home cost?

gabrielle duke (Global Property Guide) — Wed, 28 Feb 2007 23:17:05 -0600

via Thisismoney UK

In the UK, there are at least three top companies which spew out in-depth reports and forecasts on real estate and housing trends. These are Halifax, Nationwide, and Hometrack. Halifax said that the average home in the UK “rose by 9.9% last year to reach £186,035. They have also predicted a further rise in 2007 of 4%.” Nationwide stated that it “rose by 10.5%, in 2006, to £173,746, and they have forecast a rise of 7% in 2007.” Whereas Hometrack declared that UK homes‘ cost rose by 5.7% last year to £170,100.

Elswhere, the National Association of Estate Agents chief executive Peter Bolton-King predicts that there will be a 5% growth for 2007.

However, The Royal Institution of Chartered Surveyor determine that the prices rose by 8% last year and predicts a further 7% increase for 2007.

This may at some point coincide with reports that UK and the rest of Northern Europe will continue to experience real estate boom. Note, however, that the RICS says that last year housing affordability deteriorated by 14% and a first-time buyer couple would now need to save £32,800 to buy a home.

The bottom line is that experts do not see a double-digit increase on house prices.

Did you find this article useful? Discuss it at Global Property Guide forums!

Costa Rica real estate is poised for investor gains

gabrielle duke (Global Property Guide) — Wed, 28 Feb 2007 02:09:26 -0600

by global property guide team

Costa Rica’s exploding Guanacaste Province (North Pacific Coast), which boasts resorts like the Four Seasons and the future home of a JW Marriott, along with numerous high-end communities, has returned wonderful profits for its land owners. Unlike the central pacific region of Puntarenas, land values in Guanacaste are continuing to grow, and new opportunities still exist. The proof of Guanacaste’s dominance is in the out performance of all other areas of the country when it comes to investment returns, especially in its southern area.

Why Guanacaste is hot

(PRWeb) February 23, 2007 — There aretwo primary reasons why Guanacaste is doing so well for investors, in comparison to other regions of Costa Rica. The first reason is that the real estate is so gorgeous. Magnificent beaches of soft sand, with colors ranging from bright white to pink, and turquoise, green and blue waters are a major draw to the region.

Additionally, in the region of Guanacaste, the mountains virtually drop right into the sea, which creates magnificent ocean view lots, even when miles from the beach. The second reason that Guanacaste is doing so well is that the development of the area has been done responsibly, with much respect paid to the environment. The communities are upscale with many private communities of million dollar homes.

Real estate opportunities

Skyrocketing values in Guanacaste are nowhere near the ceiling. Many times, when a region goes through the type of growth that Costa Rica is enjoying, the appreciation caps out before many investors can get involved. Luckily for today’s property investors, Guanacaste has a plethora of beachfront land that remains relatively undeveloped. This means one very important thing… Ground Floor Opportunities! Investors love them if they are lucky enough to find them, and Guanacaste still has some in its southern region. One particularly well-poised town in southern Guanacaste is Nosara Beach.

Nosara: A gold mine for real estate investors?

If you’re not in the know yet regarding Nosara Beach, you might want to hurry up and get involved there. Nosara, while primarily undeveloped, does have a fun town with plenty of restaurants and shops, plus an airstrip served by two daily flights from San Jose on Nature Air and Sansa Airlines. These amenities alone leapfrog Nosara in front of other potential investment areas. In addition to the airstrip and town are gorgeous white sand beaches, and a giant nature preserve which is home to many rare species. Two rivers keep the area green year-round, while the rivers’ estuary (where fishing is famous), and giant tree-covered mountains which overlook the ocean. The current climate in Southern Guanacaste makes a home site or community an attractive investment.

For the masses of investors who want to jump into owning a property in Nosara, or anywhere in Guanacaste for that matter, it may seem pretty complicated. For this reason, the majority of property investors tend to want pieces of land that are inside of planned communities being developed by companies who can remove most of the difficulties for them. Whether an investor wants to take on the challenges of carving out his own piece of paradise, or wants to go with a developer’s project, Guanacaste is a winner, and at this time, especially in it’s southern region.

via eMediawire

discuss: GLOBAL PROPERTY GUIDE FORUMS

Is Australian real estate going down the drain?

gabrielle duke (Global Property Guide) — Mon, 26 Feb 2007 23:05:39 -0600

by Global Property Guide team

The Daily Telegraph in Australia reports that “rents will jump due to a dramatic fall in the number of apartments built this financial year” (courtesy of BIS Shrapnel) and that because of the superannuation law that is due to change in the second half of this year, most properties are being bought by owner-occupiers.

(What is superannuation? Superannuation is a form of savings where money is set aside by you and/or your employer and invested for your retirement. It is generally an ideal way to invest money for your retirement. Many funds also pay benefits if you die, or if an illness or accident makes you unable to work. See Superannuation)

How does this affect Australia’s rental market in general? You can check out the following links to relevant news about the critical situation in Australia’s real estate today:

Australia: Rents to jump for years

Rental crisis deepens

Australia’s rental crisis to get worse, say agents

Peter Ryan reports on Australia’s worsening rental property outlook

Be fair and fix a price for rental properties

More buy into rental market

Would you like to discuss my blog on the GLOBAL PROPERTY GUIDE FORUMS?

March auction in Phoenix kicks off. Will you be there?

gabrielle duke (Global Property Guide) — Sun, 25 Feb 2007 21:42:29 -0600

via East Valley Tribune

There’s news that the National Real Estate Auction Corp. will host a massive real estate auction in downtown Phoenix next month — offering everything from starter homes to multimillion-dollar estates. This is according to East Valley Tribune.

Although auctions can be a good tool, buyers and sellers need to do their homework, said Brad Wood, an agent with Realty Executives in Scottsdale.

“It’s all about pricing,” Wood said. “Just because you’re buying from an auction doesn’t necessarily mean you’re getting a good deal.”

I totally agree to this. I mean, even when buying property overseas, you need to take your time, listen to different people, and do your homework.

But it’s interesting that competition drives a lot of real estate agents to the heights of creativity — in this case, auctions, which are a bit unconventional. Or are they?

Real estate term of the day: carry trade

gabrielle duke (Global Property Guide) — Thu, 22 Feb 2007 00:13:32 -0600

Carry trade is defined as The speculation strategy that borrows an asset at one interest rate, sells the asset, then invests those funds into a different asset that generates a higher interest rate yield. Profit is acquired by the difference between the cost of the borrowed asset and the yield on the purchased asset.

There’s an echo among real estate forums lately that Japanese increasing rate versus the declining value of Japanese Yen may greatly affect the yen-carry trade. According to the latest Reuters report, however, “high risk yen carry trades exploiting Japan’s low interest rates are in no danger of losing their appeal as long as Japanese monetary policy remains predictable and financial market volatility stays low.”

So what is your opinion on this? Do check out the Global Property Guide forum and start a new thread!

via: Reuters