European offices expected to see rental growth of 3%

Bulgaria’s residential construction industry increases by 46%

Affordable housing market in South Africa sees a 14% increase

European offices expected to see rental growth of 3%

European office property is expected to deliver rental growth of between 2.5-3% pa over the next five years, particularly in key financial centres across northern and western Europe, according to Fidelity.

The company report claims there are increasing fears of a double dip recession, with gloomy predictions about the outlook for rental growth from other forecasters, as prime headline office rates have fallen over 10% in the last two years and rental growth remains negative across the overall market.

Matthew Richardson, director of research at Fidelity, said: “Our own analysis indicates there is scope for positive surprise in many prime European office markets, with particularly punchy rental growth in some key financial centres.

“The market’s pessimism on rental growth expectations over the next 12 months is well founded, but we believe market consensus over the medium term prospects is being overly bearish. Just as people over-estimate how long growth will continue in an upturn, so we think people are over-estimating how long zero or falling rental growth will continue.

“The loss of jobs in the financial sector was not as severe as many analysts expected at the outset of the recession. We have recently seen employment growth in the financial and business service sectors of London, Paris CBD and Stockholm CBD as businesses re-gear.

“Another key reason for our positive outlook on western European markets is the supply side. The supply picture is constrained by historical standards. In 2011, completions are projected to be just 1.1% of existing stock, at their lowest since 1980.”

Fidelity have forecasted that there will be a growth of 4% pa in the ParisCBD market, with Paris La Defense seeing 5% pa, StockholmCBD 5% pa and MunichCBD 3% pa.

Bulgaria’s residential construction industry increases by 46%

There was a significant rise of 46% during Q2 2010 for Bulgaria’s residential construction industry, when compared with the previous quarter, according to the National Statistics Institute.

The report stated that construction permits increased by 46%, while actual construction soared by 69.9%, although this is a noticeable increase, it still represents a 21% decline on an annual basis compared to Q2 2009.

Sofia, Varna, Plovdiv and Bourgas are the four cities with the most active ongoing construction projects at the moment with 438, 675, 413 and 460 dwellings being constructed respectively.

Office buildings also showed a marked increase in Q2 2010, with 58 new sites constructed, embracing 36 697sqm. Representing an increase of 18.4% for the quarter and a decline of 26.6% on annual basis.

Affordable housing market in South Africa sees a 14% increase

Prices in the affordable housing market in South Africa have grown by 14% year on year, whilst other segments have grown by 7-9%, according to Lightstone.

Speaking at the recent Rode Property Conference in Stellenbosch, Anthony Miller, MD of Lightstone, said: "The market has improved substantially over the last 12 months, but the market is still good for bargain hunters. Things are starting to turn and I believe we have seen the worst of it."

The main reason according to Miller is that many investors and homeowners are selling their more expensive bonded homes, with some excess equity, and buying cheaper houses for cash or substantially reduced bonds. And although there is still a great deal of distress in the market, opportunities abound for investors.

He noted that Sales in Execution (SIE) are reaching record highs for the last ten years, although banks are trying hard to assist distressed homeowners, with any other mechanism being preferable to SIE. 30% of SIE notices result in a forced sale, this number was at 9% in the year 2000 and 23% in 2005. Properties in possession (pips) are below historical highs and auction clearance sales are reaching record levels.

Miller said: "There is a lot of creative work being done by banks to avoid SIE, preferring to weather the storm and who trying to keep people in their homes."