Romanian economy grew by 8.2% in Q1 2008

Bulgaria’s largest office development to date

Spain’s economy slows faster than expected

Largest Romanian real estate deal

PNB announces interest rate hikes on Foreign Currency Non-Resident deposits

Median house price in South Africa falls by -13.2%

First-tradable Asian property index

Job losses rife in the US thanks to the credit crunch

Spain’s economy slows faster than expected

Spain’s economy is slowing faster than anticipated but is unlikely to fall into recession, according to Pedro Solbes, finance minister for Spain.

Spain’s growth slowed sharply in the first quarter as a decade-long construction boom came to a halt, but Solbes said that Spain would not dip into negative growth at any foreseeable stage.

Recently released Government data showed that Spanish gross domestic product (GDP) slowed to a quarterly rate of 0.3% in the first quarter from 0.8% in last year’s fourth quarter.

Spain’s Government in April lowered its economic growth forecast for this year to 2.3% and reported a sharp rise in unemployment when Solbes revised the economy’s growth rate from the previous forecast of 3.1%.

Largest Romanian real estate deal

RREEF, the alternative investment arm of Deutsche Bank, recently said it was buying several Romanian developments for €341m ($536.2m) in a real estate deal it claims is the country’s largest.

RREEF said the transaction has been structured as a forward purchase and the residential and office buildings currently under construction in the Pipera area of north Bucharest would be acquired on completion, without specifying when. Developer Ioannis Papalekas will hold a 22% stake in the project following RREEF’s acquisition.

Bulgaria’s largest office development to date

The European Trade Centre (ETC) in Bulgaria is set to be the largest office centre in the country when it opens its doors in 2010, with a built-up area of 70,000sqsm.

The ETC, worth €70m, includes five office buildings and is part of the mega complex Hermes Park. In addition to the office buildings, Hermes Park will also have a shopping mall with Carrefour Tzarigradsko which claims to be French chain Carrefour’s biggest hypermarket in Bulgaria. The mall is set to open in autumn 2009.

Romanian economy grew by 8.2% in Q1 2008

According to the Romanian National Institute of Statistics, the Romanian economy had its most significant growth in 18 years, as it grew by 8.2% in Q1 2008, which outstripped market forecasts of 6.4% growth as consumption and real estate spending showed no signs of slowing.

In addition, gross domestic product (GDP) grew by 6.4% in the last quarter of 2007 and by 6.1% in the first quarter of this year. Evidence of continued strong demand is likely to add to pressure on the central bank, which is already struggling to contain resurgent inflation, analysts said.

“The economy shows no signs of slowing down ... excess demand continues to exist ... We need restrictive economic policies”, said Ionut Dumitru, head of research at Raiffeisen Bank in Bucharest.

The Romanian economy has grown robustly in recent years, propelled by foreign investment and strong consumption as local companies modernise and Romanians seek to improve their living standards. But the consumption-driven expansion, accompanied by fast credit growth, has increased worries about economic trouble.

In particular, analysts warn about Romania’s double-digit current account deficit, which could raise the spectre of financing problems if global capital flows were to dry up.

First-tradable Asian property index

Index provider Standard & Poor’s has launched the S&P Asia Property 40 Index which will provide liquid exposure to the leading publicly-listed companies in the Asian property and real estate markets.

The index is comprised of 40 leading listed Asian property companies that meet size, liquidity and local listing requirements, with no single market having more than 15 stocks in the index or representing more than 40% of the index. It will be used by banks and asset management companies to create retail investment products.

Tim Eisenhauer, vice president of Standard & Poor’s Index Services, said: “We have observed a growing trend in Asia in the securitisation of real estate assets through the public equity markets, as well as the public listing of property management firms. This presents an opportunity for the region’s investors to diversify their own holdings beyond conventional stocks and bonds, and for foreign investors to gain exposure to the long-term growth of the Asian property markets. Standard & Poor’s has launched the S&P Asia Property 40 index because there is currently no tradable index that provides investors efficient access to this Asian asset class.”

Job losses rife in the US thanks to the credit crunch

According to Bloomberg News, 60,000 jobs are projected to have been lost in the US throughout May.

Credit conditions triggered by foreclosures, along with soaring food and fuel prices have caused spending to slow, prompting banks, construction companies and manufacturers to fire workers. Rising joblessness heightens the risk that consumers will keep retrenching, further hurting growth.

The projected decrease in May payrolls would follow a decline of 20,000 in April that brought the total number of jobs lost so far this year to 260,000 in the US.

Median house price in South Africa falls by -13.2%

Median house prices in South Africa have dropped by -13.2% in year-on-year growth in May, according to Standard Bank.

The bank’s median house price fell to 520,000 rand in May from 530,000 rand in April, compared to a median house price of around 599,000 rand in May 2007.

As a result the year-on-year growth in the median house price for May saw a significant decline of -13.2%.

According to Standard Bank, in the months leading up to the implementation of the National Credit Act (NCA), a strong upward movement in the median house price occurred. It said the weaker demand conditions in the residential property market are in turn primarily a function of the deteriorating health of consumer balance sheets.

The bank cautioned that conditions in the residential property market are likely to deteriorate further in the coming months. However, what is of greatest concern with respect to the outlook for interest rates is the persistent rise in consumer price index (CPI X) over the last six months which has finally led to a sharp deterioration in inflation expectations.

A further interest rate increase will merely cause more deterioration in the affordability of residential property, and will lead to a further reduction in the volume of new mortgages granted and registered which in turn will cause even softer house price growth.

PNB announces interest rate hikes on Foreign Currency Non-Resident deposits

Punjab National Bank (PNB) has announced interest rate hikes on Foreign Currency Non-Resident deposit schemes for the dollar, the British pound and the euro which came into effect on 1 st June.

The interest rate on US dollar deposits has increased from 2.33% to 2.41% for a maturity of one year, and for the maturity of 2-3 years, the rate has been revised to 2.71% from 2.43%. For it to mature for 3-4 years, the interest rate has been increased to 3.06% from 2.7% and on 4-5 year deposits the new rate is now 3.3% and the fixed rate term for five years is now 3.47%.

On NRE Term deposits (rupee deposits of fixed tenure), the applicable rate of interest for June is 3.16% for maturities of one year to less than two years compared to last month’s rate of 3.08% and to mature for 2-3 years, the rate is 3.46%. The interest rate is pegged at 3.81% for the maturity of 3-5 years against the earlier rate of 3.45%.