According to CB Richard Ellis (CBRE), rents in all commercial property sectors in Europe are affected by weak economic conditions across the Continent in the second quarter of this year, particularly the office sector.
In a survey of 49 office locations, some 26 saw prime rents fall, 23 were unchanged but none experiencing an increase. The steepest fall was in Kiev, down -25%, followed by Moscow which saw rents decline by -16%. Several other Central and Eastern European (CEE) markets also saw downward pressure.
Among the major western European office markets, notable quarterly falls occurred in London, Madrid, Dublin and Oslo, while rents remained relatively stable in Germany and the Netherlands.
Richard Holberton, director, EMEA research at CBRE, reported: ‘The downturn in real estate values across Europe has so far been predominantly driven by increases in yields. However, we have now clearly entered a period in which rents are the driving force behind the property value corrections.
‘This quarter’s European yield data is particularly interesting. It is too early to signal the end of the period of rising yields, but equally the scale and incidence of yield increases are now a lot patchier than they have been for awhile. While investment turnover remains relatively low, there appears to be growing interest in several areas of the market, supported by the re-pricing that has already taken place,’ he added.
Bulgarian house prices decrease by over a fifth in H1 2009
House prices in Bulgaria decreased by -23% in the first half of 2009 compared to the same period in 2008, according to real estate company Address, quoted by Bulgarian National Radio.
The company believes that prices will continue to drop until the end of the year. There are towns in which properties were dramatically overpriced and prices were going down by about -30%.
For instance, in quarters of Sofia such as Lyulin, Druzba and Obelya, it was already possible to buy a flat for about € 30,000, according to Address.
Two different sources of decreasing residential Spanish property prices
According to Tinsa, average residential property prices in Spain fell by -10.1% over 12 months to the end of June, whilst new figures from the Spanish Ministry of Housing indicated that prices fell by -8.3% over the same period, not including social housing.
Tinsa believes that residential property prices on the coast are down -12.3% over the last 12 months. Price declines on the coast eased ever so slightly compared to May, when they fell -12.8% year-on-year, thanks to a small summer sale bounce. Next came big cities and provincial capitals, including Barcelona and Madrid, where prices dropped by -10.5% on average. Spanish property prices in the suburbs fell by -9.9%, and by -9.3% in The Balearics and The Canaries respectively, where prices falls were steeper in June compared to the previous month.
Average prices are now -13% off the December 2007 peak, according to Tinsa, and prices on the coast are down almost -18% off the peak.
The Ministry of Housing has also published its price index for Q2 2009, showing that prices fell by -8.3% over 12 months to the end of June. Prices fell just under -2% on a quarter-to-quarter basis, and fell in all regions save the Spanish territories in North Africa of Ceuta and Melilla. According to the Ministry, prices are down the most in Cantabria (-10.1%), followed by Madrid (-9.8%), Asturias (-9.3%), The Valencian Community (-9%), The Balearics (-9%), Murcia (-8.8%), The Canaries (-7.8%), Andalucia (-7.6%), Galicia (-7.5%), Catalonia (-7.2%), and Extremadura (-1.1%).
Worldwide News
Property markets may strengthen in Latin America thanks to a strong economy
Property markets across Latin America and the Caribbean are expected to strengthen next year on the back of average economic growth of +3.1% in 2010, according to figures compiled by The United Nations Economic Commission for Latin American and Caribbean (Eclac).
The Brazil property sector could be one market in Latin America that records better than average growth for the region, with the country’s economy expected to increase by +3.5% next year.
Data compiled by Eclac shows that Brazil’s gross domestic product (GDP) will fall by around -0.8% this year, compared to -1.9% for the region at large, due to the global economic crisis, following six straight years of growth.
The region’s projected economic decline is far lower than Ernst & Young Item Club’s prediction that the UK economy will set shrink by -4.5% this year, the largest fall in a single year since 1945.
Eclac’s prediction compliments that of Brazil’s central bank, which also expects Brazil’s economy to grow by +3.5% in 2010.
India’s Government wants more foreign property investors
The Government in India wants to make it easier for foreign property investors and in particular for them to put their money into projects that relate to the hospitality sector and tourism.
It is looking at changing the rules to allow overseas investors to be part of smaller real estate projects. At present they are limited to investing in projects that cover a minimum of 25 acres.
It is hoped it will encourage foreign investment in property developments in places like Mumbia, Delhi, Bangalore, Chennai and Hyderbad where it is generally not possible to find 25 acres of land for development.
The Department of Industrial Policy & Promotion (DIPP), which sets out the guidelines for direct foreign is keen on attracting more investors. It is proposing to waive minimum capitalisation for development projects which have hospitality and tourism facilities such as hotels, restaurants or entertainment facilities for visitors.
The move comes as a relief at a time when the real estate industry is struggling with high levels of debts, strict lending conditions and a general slowdown in business.
Meanwhile there are signs that the hard hit commercial property sector is on the cusp of recovery. Values have fallen by up to -30% as many corporates have downsized and are not enthusiastic about paying high rents.
New Zealand residential property prices fall to their lowest level in two years
Residential property prices in New Zealand fell to their lowest level in more than two years in the first quarter of this year and are down -9.3% on a year before, according to Quotable Value New Zealand, the Government valuation agency.
Prices were down -1% and it is the fifth quarter in a row that prices have fallen. Prices in main urban areas fell by -0.3% and in Auckland, the most populous city, they were down by -0.2%, the index shows. But it is hoped that the increased lending limits on a loan scheme for first time buyers in New Zealand will help boost the country's property market.
Like many established property markets, first time buyers are regarded as the key to improving sales and bringing the sector out of the doldrums.
Officials are poised to announce that lending limits for ‘Welcome Home’ loans are to increase next month. The current loan limit of $280,000 is expected to be increased to between $320,000 and $350,000. The income limit to qualify for the loan will not be increased and will remain at $85,000 for one or two borrowers. The scheme has been regarded as a huge success.
