According to CB Richard Ellis, the commercial property market in Italy is showing signs of stabilisation and recovery with high levels of investor interest and activity.
Even the summer period which is traditionally quieter from an investment perspective saw levels of activity reach $1.3bn, over +40% up on the same quarter in 2008. The interest is concentrated on prime property, with the retail sector attracting the highest levels of investor attention. The upturn in both sentiment and activity is backed by increasing investment volumes and in prime yields.
It also points out that secondary markets have been facing more challenging situations such as asset liquidity and sharp increase in yields.
The majority of interest has been coming from equity investors who operate with a low-level of leverage such as Italian pension funds, German open-ended funds and institutional funds.
Sales of Cypriot property decreases
According to Land Registry, sales of Cypriot real estate to foreigners has declined by -76%.
Sales to Cypriots are also down by -28% in the first ten months of this year. Overall, all sales have decreased by -52% compared with last year. Only 1,480 properties on the Mediterranean islands were sold to non-Cypriots in 2009 compared with 6,118 during the first ten months of 2008. In October there were just 117 properties sold to foreigners across the whole island.
There is concern that traditional buyers such as the British, who make up around 50% of foreign buyers, have been put off by publicity about the title deed scandal which has left an estimated 130,000 investors without legal documents proving that they own their properties.
Criticism is mounting that the government is not doing enough. Cypriot lawyers are the latest group to condemn proposals from the government aimed at sorting it out. The Cyprus Property Action Group believes that the main cause of the problem – developers taking out mortgages on properties they have already sold – is not addressed.
The Cyprus Property and Landowners Association said it agrees that the amendments do not address the root of the problem but it praised the Government for trying to sort out the mess.
Another quarter of negative capital growth for the Dutch commercial market
Dutch commercial property markets have completed four consecutive quarters of negative capital growth although the latest third quarter figure, at -0.8%, is the shallowest decline since the downturn, according to the ROZ/IPD Netherlands Quarterly Property Index.
The 12-month change in capital values is now -7.8%, driven by continued yield pressure, with initial yields at new highs in the office and industrial sectors at 7.6% and 8.2%, respectively. The overall re-pricing in the Netherlands has been far shallower than in the UK and Ireland. This, in part, is the result of an unbroken positive rental value cycle since global property markets first started to re-price in the summer of 2007. Rental value growth has edged up by 0.1% over the third quarter to 0.4%.
Overall, stable income returns, at 1.3%, together with the improved capital growth produced the first quarterly positive total return for 12 months, at 0.6%. At sector level, offices and industrials continue to suffer the greatest capital depreciation, at -1.1% and -1%, respectively. This is followed by residential and retail sectors, with respective falls of -0.7% and -0.6%.
Worldwide News
Chinese property prices pick up
Residential property prices in major Chinese cities picked up in October, according to Government data, as people scrambled to buy amid fears that tax breaks and other favourable policies may soon be withdrawn.
Prices of real estate in 70 medium and large cities in China increased by +3.9% last month from a year earlier and +0.7% from September, according to the National Bureau of Statistics.
October marked the fifth successive year-on-year increase after the index slumped in the six months from December due to Government attempts to rein in runaway prices and as the global economic crisis kicked in. Beijing has introduced a series of measures in the past year, including tax breaks, to support the real estate sector, which accounts for more than 20% of urban fixed investments, a key driver of China’s economic recovery.
National residential NZ values beat last year’s
According to QV figures, in New Zealand, Auckland values for October have climbed +2.5% from the same time last year, while national values for October are +0.2% above last year’s, up from the -1.1% recorded the previous month.
Last month the national average sale price for the country was $389,198, up from $387,567 in September, while in Auckland City the average sale price had dropped slightly by -0.2% from $507,617 to $506,642. QV believes that a shortage of properties, especially in urban areas, had led to more buyers than available properties, meaning many sold for well above expected values. The company said that market activity remained below normal spring levels and sales numbers had remained relatively static in the past few months, and there was little evidence of a rise in new listings in most areas
Values in the main centres have recovered since earlier this year and most are now above the same time last year. Values in the Auckland region are up +2.5% on last year, Wellington is up +1.6%, Christchurch +1.3% and Dunedin by +4.3%. Only Hamilton and Tauranga failed to improve on last year’s values, down -0.1% and -1.4%.
Concern over lower rents in Bahrain
A high number of luxury apartments entering the market in Bahrain is bringing down rents and prompting some landlords to convert middle quality units into office space, according to CB Richard Ellis.
This is causing concern as they are not laid out for commercial use and do not have enough parking. The country’s zoning laws need to be overhauled or whole areas could become ‘one dimensional’, leading to greater need for car transportation on the island, the CBRE report warned.
Overall CBRE reported that Q3 2009 was fairly static in the residential sector with little movement in prices, rental rates or transaction activity. But a significant number of new apartments could affect the market unless new jobs are created.
The report said: ‘In Dubai for example, many thousands of units remained unoccupied after completion and this may be the case in Bahrain, particularly with the luxury apartments soon to be completed in Juffair and the north coast of Bahrain.’
If that happens, a large proportion of new apartments may never actually enter the supply chain, and a housing shortage could quickly revive the sales market if the cost of mortgages comes down, it adds. The Bahraini Government has pledged to build 14,000 low cost housing units by the end of 2010. Out of those, 4,000 are scheduled to be delivered by the end of this year.
The report also showed that the commercial sector is experiencing tough times. Office rents in Bahrain have declined by around -20% this year, according to the report.
