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10 Jan.,2010 - Global Real Estate Recovery
The latest RICS Global Property Survey published today (29th October 2009) is noticeably more upbeat than the second quarter report both in terms of the lettings environment and investment activity.
Confidence in the outlook for tenant demand over the next three months is either less negative or more positive than was previously the case in every region of the worlde.
This better tone has, significantly, also begun to filter through into rental expectations.
Latin American and Asian countries have the most favourable readings when it comes to the outlook for rents with Hong Kong enjoying a particularly big swing in sentiment.
In the second quarter of the year, a net balance of 67 percent of respondents from Hong Kong expected rents to fall further; by contrast in the latest survey, a net balance of 16 percent of respondents suggest rents are likely to rise over the next three months.
Peru, Columbia and Brazil also reported positive net balances on rental expectations while South Korea, China, Thailand and India were only moderately negative.
Australia, UAE and the UK also saw rental expectations become less negative over the quarter but the weak results from the US and Japan were not far from the lows touched in the second quarter report.
Interestingly, a number of European countries including Ireland, France and Spain have the worst readings on the rental outlook.
The mood amongst real estate investors also appears to have perked up according to the survey with capital values expected to increase in a number of countries including Brazil, Hong Kong, South Korea, China and India.
This more positive mood has also been reflected in activity indicators with number of investment bidders per property picking up sharply not just in Asia and Latin America but also in a number of European countries.
This is consistent with the latest data from Real Capital Analytics (see page 2 of the RICS survey) which shows either a steadying or a modest increase in transaction levels around the globe.
Sentiment towards capital values in the US is, however, still very negative with 53% more surveyors expecting further declines (rather than increases) in the run-up to Christmas.
In the UK, the net balance on capital values expectations is still in negative territory although only marginally so and there has been a noticeable increase in transaction activity.
RICS chief economist Simon Rubinsohn said: "The rebound in Asian economies is clearly being reflected in the more positive responses to both rental and capital value expectations throughout the region.
By way of contrast, the relatively sluggish economic revival though much of Europe and the US is consistent with the more downbeat results for these regions.''
"This contrast could become even more pronounced through 2010 as any unwinding of the monetary and fiscal stimulus presents a further challenge to the tentative recoveries being experienced in most western economies.''
Source: Propertywire.com
01 Jan.,2010 - Middle East Region Holds Promise
Countries in the Middle East and North Africa region are seeing an improvement in their real estate potential despite the economic downturn, according to a new report.
The United Arab Emirates has risen significantly from 31st to 18th place in the 2010 Real Estate Global Opportunity Index from consultants AT Kearney which focuses on emerging markets. Saudi Arabia is in fourth place and Egypt has moved from 39th to 22nd.
Designed to help property developers decide where to expand outside familiar markets, the index examines real estate development potential based on construction spending and growth, as well as risk potential and ease of doing business.
Asia remains the top global region with six countries in the top ten. China top the league followed by South Korea and India. In fourth place is Saudi Arabia followed by Brazil, Taiwan, Russia, Poland, Singapore and Hong Kong.
‘Recently, conditions in most emerging markets seem to be improving thanks to government stimulus, infrastructure investment and a resumption of lending. In large emerging markets such as India and China consumer needs not speculators will drive long term demand,’ the report says.
‘As interest rates fall mortgage markets are re-opening in support of new developments, particularly in Saudi Arabia. Real estate investors are also seeking structured and more liquid investment vehicles that have more transparent governance rules,’ it adds.
It is the Gulf region that holds most promise. ‘Low real estate prices could put the UAE back on track for attracting foreign investors, who are already interested in the region for its other advantages. Gulf oil reserves, amounting to more than $5 trillion, give the area ample financial strength, and the region's lifestyle, particularly in the UAE, is attractive to foreign companies. As development projects are tempo¬rarily or permanently halted, the oversupply will begin to diminish, the report says.
Dubai's experience, where prices have dropped up to 50% in the last year, should offer a cautionary tale for the other GCC countries to manage supply in accordance with demand, it says. ‘At the same time, though, Dubai's capacity to rebound fast should not be underestimated. Both Dubai and Abu Dhabi recorded their best real estate results in almost a year during and since the summer. For investors, the UAE real estate sector remains cheap in relation to its global peers,’ it adds.
On the positive side the report points out that the UAE's governments have shown a clear dedication to continuous infrastructure investment and in the long run oil revenues will support future rebounds as prices rise and supply tightens.
In Abu Dhabi tourism and airport traffic are up, bank lending criteria for residential sales have been relaxed, construction costs are down 30% since the end of 2008 and the country remains cash-rich, the consulting firm says.
Abu Dhabi also had a large number of large scale projects under way including Sa'adiyat Island, Al Sowwah, Reem Island and Masdar, the world's first carbon-neutral city. It has a $200 billion real estate plan and many high visibility projects, such as the suc¬cessful Formula 1 racing event on Yas Island, and is supported by a relative undersupply in both Grade A commercial and residential segments and an economic vision based on attracting a diverse set of industries.
Source: Propertywire.com
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