Void periods in Germany close to three months a year
New research by Birmingham Midshires, which is a division of Halifax Plc, has discovered that UK landlords experienced an average void period of 15 days over the last 12 months. This contrasts sharply with German landlords experiencing voids of 88.9 days over the last 12 months meaning 3 months of lost revenu. This is followed by a still substantial 62.6 day void in Poland and 56.6 days in Portugal.
German tenant responses show their average length of time in one rented property is 18.5 months, followed by Portugal tenants at 16.3 months, while Polish tenants had the shortest duration in one property at 11.9 months on average.
German landlords experience the lowest profit after costs with 30% stating that they make a loss annually after covering costs, whilst 36% break even and 34% manage to make a profit after covering costs. This is in contrast with Poland where only 4% of landlords make a loss, 15% break even and the vast majority (81%) make a profit after covering annual costs.
In the UK the majority of landlords (75%) make an annual profit after costs whilst 18% break even and 5% experience a loss. In Portugal 42% make a profit, 38% break even and 20% make a loss.
Encouragingly all landlords in the four country survey were clear that they view letting property as a long term commitment. For landlords in Germany, the average anticipated involvement is 18.7 years, with UK landlords at 17.5 years, Portuguese investors at 16.4 years and Polish involvement averaging 13.9 years.
The average portfolio size in the UK of five properties is higher than all other countries researched. The average portfolio is 2.6 properties in Poland, 2.5 properties in Germany and 1.9 properties Portugal.
Polish government elected with 41.5% of votes
With votes in from all precincts, the Civic Platform (PO) won 41.51% of the vote in the Polish national elections on 21 October, while the ruling Law & Justice (PiS) won 32.11% of the vote.
The National Election Commission (PKW) announced it would certify the result on 23 October.
The only other parties which made it into Parliament are the leftist coalition, LiD, with 13.15% of the vote and the Polish Peasants Party (PSL) with 8.91% of the vote.
Former junior coalition partners Samoobrona and LPR faced catastrophic election defeats and garnered only 1.53% and 1.30% of the vote, respectively. Since they did not meet the 5% threshold for entering Parliament, neither party will be represented in the Sejm.
In this scenario, PO would take 209 seats in the 460-seat lower house of Parliament, the Sejm, and would be able to form a majority with PSL (31 seats).
PO would also have 60 senators in the 100-seat upper house, the Senate, which plays mainly an advisory role.
PiS won the vote amongst Poles in the United States: 67% of Poles living in the US who voted chose PiS and only 28% voted for PO.
In Europe, the result was strikingly different. In the UK, PO won 62% of the vote and PiS won only 11%. In Ireland, PO won 70% of the vote and in Germany PO won 66% of Poles’ votes.
Approximately two million mostly young Poles have emigrated to other EU countries since 2004 and they overwhelmingly favored the PO. In the US, Polish immigrants tend to be older and have spent more time in the US and as a result are somewhat further from Polish realities, according to The Warsaw Voice.
FDI into Bosnia up almost 20%
Foreign Direct Investment (FDI) in Bosnia increased by nearly one-fifth last year, the country’s Central Bank said in a statement. According to the latest figures, FDI in Bosnia and Herzegovina (BiH) in 2006 amounted to €564m, an 18% increase over the previous year and matching the post-war record inflow for 2004.
The figures relate only to completed transactions, and do not include large privatization contracts agreed in 2006 and implemented in 2006 and 2007. FDI in 2007 is expected to be even higher.
“Data on the inflow of foreign investments are showing that during recent years the BiH economy has been constantly attracting significant foreign investment, and that this trend will speed up as we approach closer to the EU, along with an accelerated transition process”, the press release said.
As in previous years, the largest share of investment in 2006 came from Austria (45%), followed by Croatia (15%) and Slovenia (14%).
The largest inflow was recorded in the financial sector and a significant part of investments (17.7%) is related to reinvested profit, as investments from previous years become profitable and companies decide to build up their presence in Bosnia.
Total accumulated FDI at the end of 2006 stood at just over €3bn, which means that the level of the foreign investments has more than doubled compared to three years ago.
The Central Bank press release quoted Governor Kemal Kozaric as stressing that foreign investments were important as they created new jobs, increased the technological level in industry and improved Bosnia’s balance of payments.
Claim for damages after failure to build Terminal 2 at Warsaw Airport
Przedsiebiorstwo Panstwowe Porty Lotnicze (PPL) is considering filing a claim for damages against a consortium comprising Ferrovial, Budimex and Estudio Lamela for its failure to build Terminal 2 at Warsaw airport. According to PPL, a legal analysis of the case is currently being prepared.
PPL is seeking compensation from the consortium for its failure to complete the contract. Independently of this fact, since 30 April this year, PPL has also been charging the contractor contractual penalties for exceeding the agreed-upon deadline for finishing the departures lounge.
PPL withdrew from the contract after the Fire Service rejected safety solutions proposed by the contractor, as without such approval the departures lounge cannot be opened and used. According to the Fire Service, the warning alarm system does not comply with Polish norms and an alternative solution proposed by the consortium likewise fails to guarantee passenger safety.
However, according to PPL representatives, the completion of the terminal will not require appointing a new general contractor as there is little work left to do. PPL claims that Terminal 2 should be in operation by the end of 2007, but has not divulged any cost estimate for completing the upgrade.
Worldwide News
Sydney considers Aus$7bn mega motorway
The local government in Sydney is considering a plan to use up to $3bn from the sale of retail electricity to help fund an immense, inner city motorway network with a staggering price tag of $7bn, according to a report by The Daily Telegraph.
The proposal is now believed to be with Treasury, with officials number crunching various toll options for a ‘3-in-1’ motorway being dubbed ‘the Gateway’.
The final decision on a fixed toll price would determine the size of the Government’s contribution which would be between $2bn and $5bn.
At a cost of $7bn, it dwarfs any previous plans put before Government for extensions to the M4 East or city link proposals. But unlike other public private partnerships such as the Cross City and Lane Cove tunnels, the State Government is believed to be considering a new PPP model for this project, providing ‘significant’ seed money to keep the toll to a minimum. This would allow the tolls to be distance based, limiting the toll costs for motorists only needing to travel short distances.
However, such a project would also have to undergo an extensive environmental impact assessment process, which could possibly take years to complete.
A truck only toll tunnel is also seriously being considered, with a model linking the M4 to Port Botany, which would help take trucks off inner city arterial roads.
The motorway could involve up to 12km of tunneling under Sydney’s suburbs.
Philippine property rates as ‘overweight’ by Credit Suisse
Credit Suisse has rated the Philippine property sector with an ‘overweight’ rating, which signifies that it is expected to outperform either its industry, sector or, even, the market altogether. This is because ‘low interest rates and strong demand should sustain the robust growth of real estate companies’.
“We find that the sector is ideally positioned for strong growth, with the country’s positive macro indicators heavily stacked in its favor”, Credit Suisse analyst Gilbert Lopez said in a research note released last week.
“Over the past year, the biggest change in the Philippine economy was interest rates falling to record lows. This has to be a major positive for property companies, especially with a great potential credit growth in an underserved market”, added Lopez.
The Philippines has one of the lowest mortgages to GDP ratios in the world at just 2% and Lopez said the property sector was being boosted by the reliable US dollar remittances of overseas Filipino workers who buy residential properties.
Credit Suisse assigned an 'outperform' rating on Ayala Land Inc., with a 17% expected rise in net asset value for 2008, and a 24% potential increase this year for Megaworld Corp.
Lopez said: “We forecast Megaworld to have one of the fastest EPS growth rates in the sector at 28% in 2008 and 33% in 2009."
‘Scientific formula’ says South Africa most stressful country to move to
A new ‘scientific formula’ developed by HiFX, in conjunction with emigration experts, has discovered that South Africa is the most stressful country to emigrate to.
Analysis of the top ten most popular emigration destinations found that the most stressful countries to move to are not necessarily those most alien to Brits in terms of language and culture. According to independent analysis from currency firm HiFX and psychologists, it is the hidden hurdles that psychologically cause the most stress and catapult South Africa to the top of the stress barometer.
Germany ranks as the least stressful place to move to, followed by France and New Zealand. However, the research also shows, that with a small amount of preparation, it is possible to significantly reduce the potential stress emigrating can create for the 385,000 people who leave the UK each year.
According to the study, emigrating to an English speaking country does not mean the process will automatically be easier. Factors such as currency fluctuation, alien legalities and different taxation systems mean that the USA and Australia followed hot on the heels of South Africa when tested against a number of ‘stress inducing factors’.
Mark Bodega, director at HiFX, comments: “Moving abroad isn’t just about moving your belongings and pursuing a new lifestyle. Decamping to a different country means getting to grips with a whole new way of living – from the language you’ll be speaking, to the money you’ll be spending. Many of us don’t fully understand the tax and legal systems in this country; however the same lack of knowledge as a foreign national abroad could lead to problems. With so much to think about when packing up and setting off, people should make the most of all the assistance available from specialists such as tax advisers, and removal experts.”
A scientific formula, devised in consultation with HiFX, was used to assess the top ten emigration destinations against ten factors that contribute to the stress of moving. Leading psychologists assessed the causes of stress and weighted the factors, which ranked in the following order; civil stability, legalities, currency, quality of life, social services, distance from the UK, language, ease of visa application process, tax system and cultural idiosyncrasies.
Indian prices will only fall if supply increases, says DLF
Tight monetary policy and subsequent high mortgage rates have affected Indian real estate demand temporarily, the head of India’s most valuable property developer, DLF Ltd said this week. However, KP Singh said that house prices would only begin to fall in a fast-growing economy if there is a significant increase in supply.
“Real estate prices can come down only by increasing supply and not mere monetary policy”, he told reporters at a conference.
The central bank raised interest rates five times between mid-2006 and March this year, and has also lifted banks’ reserve requirements to rein in inflation and credit growth. This prompted commercial banks to raise lending rates including those on home loans by more than 2%.
“Because of high mortgage rates and monetary policy, the real estate market is subdued temporarily”, Singh said.
‘Growth in home loans may slow to 17-20% in the financial year 2007/08’, the Associated Chambers of Commerce and Industry said in a report, which stated that mortgage loans grew by 26.6% in 2006/07, down from the 29.1% in 2005/06.
However, it also reported that residential sales volumes dropped by over 70% in May-June this year.
