Rapidly rising salaries and stronger Zloty leads to Poles returning home
The number of Polish workers returning to Poland from the UK and Ireland is on the increase thanks to fast rising salaries and a strengthening Polish Zloty. Some qualified positions in Poland are paying three times as much as just two years ago, while the Zloty has gained over 30% against the UK pound during the same period.
Overall wages in Poland are rising strongly also as the economy expands and last year wages grew by 6.5%, by comparison pay in France and Germany grew 2%. And as living standards in Poland improve, life in the UK has become less attractive.
As Poland’s economy grows, its currency, the zloty, has strengthened against the pound and when Poland joined the EU, the pound was worth almost 7 zloty, but this has now fallen to just 4.4 zloty, making UK wages less alluring.
Meanwhile, data published recently by the Polish Statistical Office about the number of apartments completed in 2007 showed a record number of units delivered since joining the EU with over 130,000 completed. Even more spectacular was the increase of the number of building permits issued for apartments and single-family houses and it is estimated that the number of residential units started reached 190,000.
In Lódź, 2,200 new apartments will be built in 2008, compared to 1,300 units completed in 2007. In Krakow, investors announced their plans to construct over 8,600 new apartments in 2008, while in 2007 there were around 6,000, and in 2006 - little over 5,000 units completed.
In Wrocław the level of construction in 2007 was 30% higher than in 2006. The same scale of increase may be expected also in 2008, when developers plan to complete over 5,700 apartments. In January 2008, 12,685 apartments were completed in Poland, up 24.5% more than in the in January 2007.
Plans for Western Europe’s tallest mixed-use tower in Paris
Plans for the Hermitage Towers Project in Paris have been revealed and at 309m in height, the structure would be the tallest mixed-use building in Western Europe.
Hermitage has presented its plans for the 250,000sqm development as part of its entry into the architect contest launched by EPAD, the authority managing the La Défense region of Paris. The towers would comprise two buildings of differing heights, with Tower A standing at 309m and Tower B at 264m. These would be linked by a nine-floor structure situated 75m above the ground.
In each tower, the bottom three floors would comprise retail space, with 10 floors of office accommodation above. Floors 14 to 26 will house a luxury 300 room hotel, followed above by private residential accommodation. The top four floors of Tower B would house reception rooms and a spa and fitness areas with Tower A boasting bars and reception rooms and a gourmet restaurant with panoramic views, overlooking the Seine River.
The development site is located next to the historical Paris axis in alignment with the Louvre Museum and the Arc de Triomphe. Set in the pioneer business district created nearly fifty years ago, this development would be a symbol of its revival, creating a gateway to Paris and 24-hour destination.
“With this development we are proposing a new way of living in Paris”, said Emin Iskenderov, president and managing director at Hermitage. “This project represents a unique opportunity to develop, for the first time in France, a high rise, multi-purpose building, mainly intended for accommodation.
“The concept of Hermitage Towers aims to provide a luxurious showcase for the business district of Paris and would represent a milestone in the history of La Défense standing out as a major metropolitan icon, heralding the entry of greater Paris into the 21st Century.”
The proposed scheme would also offer major public facilities, located in a vast glass base, a 1,300 seat concert hall, a skating rink and a 1,500sqm contemporary art centre are all planned.
Europe to be more resilient to slowdown than UK says Experian
With the negative trend in UK property prices set to continue, the focus is shifting towards the continental European markets and their response to the global financial slowdown, says Experian, the property forecasting group. According to the company’s latest analysis, the UK will be the only market to see negative returns this year.
“That’s not to say there won’t be a sharp correction in these countries”, commented Simon Marx, head of real estate forecasting at Experian. “Prices for German and Italian offices will readjust this year to match fading hopes of economic recovery, although any other negative price growth in Europe will be negligible. This is significantly more positive than Experian’s predictions for UK property prices, which include a number of major retail and industrial markets falling by as much as 10% in 2008.”
According to Experian, the European office market will see total annual returns of 6% over the next five years, down by a third on returns since 2004. Among those markets with the strongest potential going forward are Oslo and Madrid, both of which have been growth areas in recent years. Marx adds: “But even the top markets are forecast to slow, with total returns in these two markets ranging between 9% and 10% this year compared with 14-16% last year and 18-19% the year before.”
Among those markets to see an improvement in their European ranking is the Netherlands. Experian’s forecasts for office properties in Amsterdam and Utrecht, and retail assets in Rotterdam and The Hague, have been upgraded since mid-2007. The driver of office returns will be the high levels of income, despite only modest expectations for rental growth. Retail will be boosted by expected increases in capital values.
He concludes: “It is important to remember that it was not long ago that the Netherlands was one of the weaker markets in Europe for investment performance. Economic recovery in some European countries is now looking fragile and investors will exercise more caution. Investment activity is slowing and economic forecasts are pointing to a slowdown similar to those seen in Germany and Italy.”
Eastern Europe leading shopping centre construction boom
A new report on European shopping centre development by Jones Lang LaSalle (JLL) has reported that over 6m sqm of shopping centre space was completed in Europe in 2007, up from 5m sqm in 2006, and that Russia will account for around 25% of all new space over the next two years.
Russia was the most active market in 2007 with 1m sqm of space opened in 40 schemes. Italy was just behind with 0.8m, followed by Poland with 0.7m. Germany, Turkey and Spain remained highly active, although completion levels in Spain have moderated from the previous year.
The focus for new development in 2007 was the emerging markets of Eastern Europe, but Central Europe remains a development hotspot with southern Europe not far behind. As expected, Western Europe was relatively muted, although new development is taking place with the emphasis on redevelopment and extensions.
According to JLL, Russia has over 6m sqm in the pipeline for 2008 and 2009, with Italy, Turkey and Poland all having over 2m sqm of new space forecast over the same period. More than 1.5m is due in the UK, Germany and Spain, and over 1m is due in Portugal and the fast developing Ukraine, with France and Romania not far behind.
Romania has the largest pipeline relative to its existing stock. Over 200,000sqm was completed last year bringing the total stock to almost 600,000sqm with over 900,000sqm scheduled for completion before 2010.
Worldwide News
Phase two of Residential City in Dubai sold out
Phase two of Dubai World Central’s Residential City has sold out for Dhs6bn (£822m). There are 255 plots in the mid-priced city, and all were sold to developers by invitation. Construction of the city, which is close to the new Al Maktoum International Airport and Dubai Logistics City, has just started and Residential City will eventually house around 53,000 people and have 18,000 units. Another three phases will be launched over the coming three years.
FDI in Vietnam up 31% in Q1 2008
Vietnam has attracted $5.44bn in foreign direct investment (FDI) so far this year, which is 31% more than the same period last year, according to a report by the Foreign Investment Agency under the Ministry of Planning and Investment.
Seventy-five foreign-invested projects worth a cumulative $2.63bn received licences in March 2008, bringing the total number of licensed projects in Vietnam so far this year to 147.
The surge in FDI is due to a series of large-scale projects: a $1.3bn five-star hotel and entertainment complex being built by the US Good Choice Group; a $930m Financial Centre being developed by Berjaya Leisure (Cayman) Ltd, a subsidiary of the Malaysian group Berjaya Land Bhd; and a $610m human resource, software development and office rental project by three Japanese investors.
Over $4.6bn in FDI continues to pour into the service sector, accounting for 90% of total FDI in the first quarter of the year, the remainder going into industry and agro-forestry-fisheries sectors.
Of all the countries and territories investing in Vietnam, the US was the biggest with eight projects worth $1.3bn, making up 26% of the total. Malaysia followed with four projects valued at $1.26bn, accounting for 25% of the total.
So far this year, the total of number of workers employed by foreign-invested firms has increased by 13% since Q1 2007 to 1.17m people.
Manila not feeling effects of global credit crunch
The Philippine capital Manila is experiencing rapid growth in home purchases despite the fall-out from the global credit crunch, according to David Stanley Redfern. The company says that a number of major newspapers in the Philippines are reporting that the country’s Thrift bank has announced a massive increase in mortgage lending for 2007, up by 11% to 84.4 billion Philippine Pesos, (just over £1bn).
Among the developments offering units in Manila is the twin-tower Lancaster Atrium development, prices for which start at £28,000 for an unfurnished studio. Liam Bailey, DSR’s Head of International Research says: “Based on other Asian capitals that began their growth cycles before Manila, like Bangkok and Phnom Penh, 25% annual capital appreciation is easily achievable for Manila.”
Colombia may follow Irish example and cut tax rates
Colombia wants to emulate Ireland by cutting its corporate tax rate to 12.5% from its current rate of 38%.
Ireland slashed its headline rate from 40% to 12.5% five years ago and successfully secured billions in foreign direct investment (FDI).
Colombia ’s trade minister told the Wall Street Journal recently that the country could attract more FDI by cutting its corporate tax rate. He said that Ireland had managed to attract investment, lowered tax evasion and increased tax collection.
But the minister said successful tax cuts are dependent on the US Congress approving the pending free trade agreement (FTA) between the two countries. This is important as companies investing in Colombia are looking to sell their products internationally, not just in the domestic market. The Democrats, he explained, are not eager to approve the FTA.
Colombia already has some of the necessary policy adjustments in place for corporate tax cuts such as a reduction of regulatory burden and introduction of a single-enterprise free-trade zone. But the tax rate remains 38%, though companies in a free trade zone are already paying just 15%.
