Slowing yield decompression may hint at improving sentiment, says JLL
The weighted average European prime office yield increased by +0.2% from 5.8% at the end of 2008 to 6%, a much smaller increase than the +0.5% movement seen between Q3 and Q4 2008, according to Jones Lang LaSalle’s (JLL) Q1 2009 European Office Yields Report.
The yield range across Europe continued to widen both between core and emerging markets and within core markets.
JLL believes that some markets, typically core markets which have already seen large price corrections, are now within touching distance of their prime yield ceilings in the current cycle, and expects many of those markets to reach that point by the end of the year, including London and Paris. Yields could even decrease marginally in some cases.
Looking ahead, Tony Horrell, head of European Capital Markets at JLL, said: “This view that some markets are close to their prime yield ceilings is largely based on improving buyer sentiment for the best quality product, where investors believe yields have reached a level where they feel confident to transact. It also represents investors seeking to secure the very best assets before the bottom of the market on the assumption that the best assets are typically traded before markets begin to pick up again.”
Hungary’s property market may have bottomed-out
The Budapest Property Market Index, a measure of supply and demand on the market as well as market players’ plans and expectations, dropped eight points from January to -29 in April and the home market index dropped two points to -46 in the same period.
The survey of 1,194 companies showed that Hungary’s property market may have bottomed out but, according to Laszlo Akar, head of market research company GKI which prepares the index, any pick-up in activity is not likely to be felt until 2011. Akar believes the biggest change on the market this year is the drop in plot prices.
GKI expects 27-29,000 homes to be built in 2009, but the number of homes put on the market will fall from quarter to quarter. The number of building permits is seen falling at a slower pace because companies planning home constructions in 2011 must apply for permits already this year.
Home prices for homes in condominiums in the capital will remain flat, though prices for homes in communist-era condominiums will fall slightly. Family houses will rise in price.In Eastern Hungary, home prices will drop drastically. Prices will also fall in Western Hungary, though at a smaller rate.
Denmark lowers its interest rate by -0.35%
Denmark’s central bank lowered its benchmark interest rate by -0.35% to a record low of 1.65%.
Nationalbanken, which uses monetary policy to keep the krone pegged to the euro, has narrowed the spread with the European Central Bank (ECB) to 0.65%. The ECB earlier cut its main rate by 0.25% to 1%.
Scandinavia’s smallest economy is struggling through its severest recession in six decades as the global crisis adds to pressure on consumers burdened with five consecutive quarters of declining property values.
According to the International Monetary Fund (IMF), Danish gross domestic product (GDP) will probably contract -4% in 2009 after shrinking -1.1% in 2008. IMF estimates the economy will return to growth of +0.4% in 2010.
Worldwide News
New infrastructure set for Vietnam
The Vietnamese Government has approved a master plan, drawn up by The Ministry of Transport, seeks to have 10 international airports across the nation by expanding existing airports and building new ones.
Under the plan, the capital’s Noi Bai International Airport will be upgraded into a major airport capable of handling larger aircraft and more passengers in coming years.
By 2020, it will have at least two runways that can be used by giant airplanes like the Boeing 747 and currently the largest passenger plane, Airbus A380. By that time, it will be able to receive 20-25 million passengers annually and handle more than 260,000 tonnes of cargo. The hangar area will be expanded to accommodate up to 88 aircraft.
Noi Bai currently handles seven million passengers a year. Cat Bi International Airport in the northern city of Hai Phong will be upgraded to receive two million passengers and 17,000 tonnes of cargo a year by 2015. In the central region, besides Da Nang and Phu Bai international airports, the Government has also approved expansion of Cam Ranh and Chu Lai.
Cam Ranh airport in Khanh Hoa Province will get a new terminal, air traffic control station, and modern runway lights. When upgraded by 2015, the airport will handle up to 16 aircrafts an hour and 1.5 million passengers a year. Tan Son Nhat International Airport in HCM City will be upgraded and enlarged to receive around 70 planes an hour by 2015. It will be able to handle 23.5 million passengers and 600,000 tonnes of cargo a year.
Phu Quoc International Airport is under construction and is expected to open in 2012, when it will be able to handle up to 7 million passengers and 27,600 tonnes of cargo a year.
The country’s largest airport, Long Thanh International Airport, will be built in Dong Nai Province, 50km northeast of HCM City. Covering of 50sq.km, it will have four runways and five terminals, and will be able to handle 100 million passengers and 5 million tonnes of cargo a year. The last of the 10 airports, Can Tho International Airport is building a terminal designed to serve three million passengers annually. It is expected to become operational next year.
Dubai’s property sector suffers a slowdown
Dubai’s property sector is suffering a sharp slowdown, with property prices tumbling -41% in Q1 2009, according to Colliers.
The slowdown has led to project cancellations worth billions of dollars and jobs being slashed. Colliers said in a report: ‘The drop in demand for commercial and rental space, following the decline in an expatriate workforce, will have a significant impact on the lease and occupancy rates in all areas of Dubai throughout 2009.’
Prime office rents fell by around -18% in the first quarter, compared with the same period last year, it said.
In a report, it said: ‘Many projects currently penned for completion during the course of the year are likely to be further delayed and pushed back into next year.’
Queensland residential prices drop by -6.1%
Latest figures from Australian Property Monitors’ (APM) March 2009 Quarter Housing Data Report reveal a -6.1% drop in median house prices in Queensland, Australia, in the year ending March 2009.
It is the second worst performance in the country, behind Perth. The median price is now $414,909 - almost $30,000 below that in Melbourne. The report shows unit median prices have fallen -2.8% over the year ending March 2009, to $334,015.
Unemployment and a weakening economy are the biggest risk to housing but large falls are not expected in the capital cities, according to APM.
