The average price of an apartment sold in Sweden has risen by 13% over the past 12 months and now experts are warning that the property market could be entering a ‘price bubble’.
Cecilia Hermansson, head of prognoses for Swedbank, one of Sweden’s biggest lenders, warned that the rising price of apartments was particularly worrying: “A price rise of 13% in 12 months is a lot. Now that the Riksbank has said that interest rates will remain as they are at relatively low levels for a long time, there is a great risk that the price rises will gather steam.”
Following the last interest rate rise in mid-February the Riksbank, Sweden’s central bank, said it expected not to raise rates significantly in the near future.
For houses, price growth was slower, at 5% over the past 12 months, something that Hermansson said was normal and not a matter for concern.
According to figures from Maklarstatistik, the sale price of an average apartment in central Stockholm is now 3m Kronor (£217,000), for a large one-bedroom apartment, and prices in the capital have risen by 10% in the past twelve months.
However, the average price of a house in Sweden is still only 1.7m Kronor (£125,000), and prices are expected to continue rising over the next few months. Apartment prices are also expected to keep going up.
Work on Danube Bridge to accelerate
Bulgarian Prime Minister Sergei Stanishev and his Romanian counterpart, Calin Popescu-Tariceanu, have confirmed their support for the speedy construction of a second Danube bridge connecting the two countries.
Their agreement on the construction of the bridge, linking Vidin in Bulgaria with Calafat in Romania, came during Tariceanu’s visit to Sofia on 19 September, according to local media.
Stanishev said the construction project was important not only for Bulgaria but also for the EU. Observers said the bridge matters more to Bulgaria than to Romania which showed reluctance for many years to go ahead with the project that provides an additional transport artery from Bulgaria to central and western Europe.
Construction work should be finished by the middle of 2010, according to the latest plans.
Office vacancy rates falling across most of Europe
Various new research reports on the office markets across Europe have discovered that vacancy rates are falling and rents starting to rise. In the past couple of years, there has been a drop in vacancies from about 12% to 9% on average across Europe, according to data from Cushman & Wakefield, and companies that bought offices around three years ago are believed to be benefiting most from the rising rental yields.
According to figures from Jones Lang LaSalle, average vacancies in European offices fell slightly to 7.7% during the second quarter of this year. While this is still some way from full occupancy it is an improvement nevertheless.
Agents tend to see occupier markets in the form of a cycle. Typically, rents rise, developers build too much property, vacancies increase, rents start to fall, developers stop building…then rents rise again.
European cities are all in different stages of this cycle. Most are now in the phase where rents are rising and vacancies falling. Even two of the worst occupier markets of recent years - Amsterdam and Frankfurt - have been improving. Not long ago, vacancies in both cities were close to 20% but they are now at 13% and 14.7% respectively.
This trend in falling vacancy levels for offices has also been reported by CB Richard Ellis, whose EU-27 Rent Index registered a 10% fall in voids and 3% rental growth in the last quarter.
The biggest rental rises have been in big capitals such as Paris, London, Madrid, Stockholm and Warsaw, according to CBRE.
Madrid and Barcelona are pinpointed by many experts as two cities most at risk. In Barcelona, for example, existing stock is set to increase by 15% over the next two years, according to CBRE.
Deadline approaches for unregistered landlords in Slovakia
Landlords renting out real estate in Slovakia must now be registered with the Tax Office or face a SKK 200,000 (€5,900) fine, according to a recent article in the Slovak Spectator. The reference to the law regarding rental of property is Section 6 (3) of the Income Tax Act of The Slovak Republic.
Jan Zila, head of the Tax Office in the city of Martin, Slovakia, reportedly said: “This affects mainly those citizens who rent a flat, non-residential or other real estate, not including plots of land.”
The person renting the property would have to register according to their permanent residence, not the location of the property. In the case of foreigners living abroad, this means registering at an office in Bratislava. An individual that has already been registered for another reason and then starts to receive rental income shall be obliged to just notify the tax authorities of this fact.
Until now, if the property was owned by a non-resident, like a foreign investor, the tenant paid this tax of 19% of the rental fee, before the rent ever reached the landlord. It was an automatic deduction from the rental fee. But now there is no such requirement; this advance-payment of tax only applies to non-EU citizens. EU landlords are now able to collect the full rent, make the necessary deductions (apartment purchase-related fees, value-increasing renovations, depreciation), and submit a tax return at the end of the year.
This service is usually provided by an accountant for an annual fee of around €250. The service includes applying for a tax ID, issuing the monthly invoices, and preparing and submitting the tax return at the end of the year.
After September 2007, any individual who is not yet registered for taxation and starts to rent out his/her property will be obliged to apply for registration within 60 days. The process takes less than a month and each owner receives a Tax ID (DIC number in Slovak), which must be used on all invoices.
Worldwide News
$7bn regeneration of riverbank in Vietnamese capital
Government officials in Hanoi, the capital of Vietnam, are aiming to attract international property investors to spend around $7bn on projects to develop prime land along the banks of the Red River that sweeps through the centre of the city. The ambitious project will be the largest property development ever in Vietnam.
The South Korean government will advise on the project that is expected to demolish thousands of mostly low-income housing in Hanoi with shopping malls, convention centres, residential property and offices.
Next year, the city will start re-housing 170,000 people, at an estimated cost of $1.6bn, to clear land for infrastructure construction, according to the Hanoi Architecture and Urban Planning Department. The clearance will make for 40 km of riverfront land totalling over 3,000 acres.
Officials said that over $500m will be needed to upgrade flood prevention dykes, and $3.6bn to build the retail, office and residential space. Once cleared, the land plots will be tendered to developers.
South Korean developers are believed to be especially interested and are chasing property projects worth a total $4bn including a $2.5bn investment into what would become the country’s largest convention centre.
Property prices in most big cities in Vietnam have increased by around 50% over the past 12 months to around $2,000sqm and most projects are sold out before construction begins, according to local reports. The government has promised to ease restrictions this year, dealers said, to allow resident foreigners and Vietnamese with foreign passports to own property, a move expected to boost prices further.
Silverjet announces new business-class only flights to Dubai
British business-class airline Silverjet has announced it will begin flying from London to Dubai from November this year. The company will provide a private terminal experience at both ends of the journey.
Britain is Dubai’s leading in-bound market in Europe attracting almost 750,000 UK visitors last year - more than 10% of the total global market to the emirate. Also, annual exports to the UAE from Britain have doubled over the past year to reach almost £6bn.
Lawrence Hunt, Silverjet CEO, said: “With premium air traffic to the emirate growing at 20% year-on-year, this new route represents an exciting opportunity for Silverjet. We are delighted to be able to offer passengers a private jet experience to one of the world’s leading global destinations from just £1,099 return.”
Silverjet will be the first commercial airline in the world to use the 5,000 sq ft Executive Terminal at Dubai International Airport (DXB) for customer arrivals and departures. As with the airline’s private terminal at London-Luton (LTN), passengers can enjoy a 30 minute check-in and, whilst on board, 100 premium 6’3” flat beds, a ‘sleeper service’ for overnight flights, specially designed menus and a separate ladies toilet.
Passengers can check-in via the web, choose their seat online and pre-order a range of made-to-order meals. A private chauffeur service and valet parking service is also available at both airports.
A daily flight will depart London-Luton Airport at 21:00 and arrive in Dubai at 08:30. Return flights depart Dubai at 10.30 and arrive in London-Luton at 14.45.
Knight Frank launches $350m African property fund
Knight Frank is launching a $350m Central and East African commercial property fund, the first of its kind, to buy into offices and shops across the continent. The Rutley Capital East African Property fund could float on the London, Nairobi and Johannesburg stock exchanges to help to attract African pension fund investors.
Rutley Capital, the private equity unit of the Knight Frank property agency and the manager of the fund, wants to buy into some of Africa’s rapidly growing economies, which for years have been left ravaged by war and corruption.
Initially, the fund will invest in Botswana, the Democratic Republic of Congo, Kenya, Malawi, Mauritius, Mozambique, Namibia, South Africa, Tanzania, Uganda and Zambia. All of these countries have experienced swift economic growth over the past few years, often where regime change has triggered inward investment that has accelerated the expansion of a new middle class.
The Kenyan economy enjoyed GDP growth of 6.1% last year and large, western-style shopping centres have been springing up in Nairobi, the Kenyan capital, starting with The Junction in 2004, the Crossroads Centre last year and the Westgate Centre this year. Rents in the city have reached the equivalent of almost £18sqm/month.
Rutley Capital expects to raise between $100m and $200m of equity and with borrowings, the fund will buy up to $350m of property.
A report out this week from Knight Frank on the whole of the African property market reveals that Zimbabwe – despite its troubled economy – is experiencing a shortage of office, retail and industrial space, as hyperinflation has prevented new developments.
Senior partners said that the new fund could yet invest in Zimbabwe, depending on radical political and economic changes being made there. Peter Welborn, the managing director of Knight Frank’s African business, said: “We are keeping a very watchful eye on Zimbabwe and the development fund will not be precluded from making an investment at some point if we feel it is appropriate.”
Property website expands to India with 99acres.com
Properazzi, the property search engine, has announced its expansion into India through an agreement with Indian real estate portal 99acres.com. The expansion enables Properazzi to make over 30,000 property listings from Indian real estate agents available to European consumers, while giving Indian Internet users access to millions of property listings throughout Europe and North Africa.
Commenting on the expansion, Properazzi CEO Yannick Laclau said: “ India is an important growth market in the world today and European buyers of real estate are increasingly turning towards it. We’re pleased to be able to make Indian real estate more easily accessible to European consumers.”
Searching for property online is quickly gaining popularity in India. There are an estimated 40 million Internet users in India today, a figure that is expected to double by 2008.
Head of Business for 99acres.com, Deepali Singh, commented: “99acres.com extend its reach to 49 countries through this partnership. It’s a landmark for us as we will now be able to provide our users access to a house not only on our Indian shores but also anywhere in the world that they may be interested in.”
The expansion represents Properazzi’s first step outside Europe and North Africa. Properazzi recently re-launched its website with over 4m properties in 50 countries, making it the world’s largest property search engine.
