Transactions of Germany’s retail properties increase by +75%

ECB starts to withdraw measures

Business sentiment in Malta ‘will turn positive for 2010’

Those investors without foreign currency mortgages benefit

Record no of Canadian house re-sales

China restricts speculative real estate purchases

Transactions of Germany’s retail properties increase by +75%

According to Jones Lang LaSalle, the transaction volume for direct investments into Germany retail properties increased by +75% to €1.054bn in Q 3 2009, compared to total volumes of €603m in Q2 2009.

Nearly half of the total revenue of €2.21bn transacted in Germany in the first nine months of 2009 was completed in the third quarter.

Shopping centres and high street retail properties remain the most favoured product amongst investors in the German market. With more than €785m transacted in the first three quarters of 2009, this represented one third of the total investment volumes in that period.

Around 30% of the transaction volumes were accounted for by high street retail properties with about €660m completed in the first three quarters of the year. Investors are attracted to the stable cash flows offered by high street leases. Within this asset category, Berlin was the clear market leader with a transaction volume of almost €150m during the first three quarters of the year, followed by Mannheim and Mainz with volumes of about €65m and €58m respectively and then Hannover and Munich with €38m and €34m respectively.

Investment volumes for retail warehousing properties such as retail parks, retail warehousing solus units and supermarkets/discounters totalled €580m during the first three quarters of the year, equivalent to 26% of the total retail volumes transacted in this period. Following a considerably strong first quarter, transactions in retail warehousing solus units slowed in quarters two and three and €72m was transacted in the first three quarters of 2009, accounting for just 3.3 % of the total volume.

After a strong first half of the year, sales of department stores decreased in Q3. Transactional activity in this asset category totalled €185m by the end of September 2009 which is equivalent to some 8.5 % of the total transaction volume.

ECB starts to withdraw measures

The European Central Bank (ECB) is to start withdrawing some of its special measures to support the economy including some of its cheap short-term loans designed to boost the amount of money available in the markets and encourage bank lending.

Jean-Claude Trichet, the ECB president, said the 12-month loan offering in December would be the last one and the six-month offering will end in March. He said: “The improved conditions in financial markets have indicated that not all our liquidity measures are needed to the same extent as in the past.”

The comments came as the bank left interest rates on hold at 1% - the lowest level in its 10-year history. Trichet said that the current interest rate was “appropriate”.

The forecast for growth in the Euro-zone in 2010 was also raised to between +0.1-1.5%, up from a previous prediction of between -0.5% and +0.9%. However, Trichet warned that the recovery process would be “uneven and subject to risks”.

Business sentiment in Malta ‘will turn positive for 2010’

According to the Association of European Chambers of Commerce and Industry (Eurochambres), although business sentiment in Malta in 2009 took a deep dive because of the global economic situation, the mood for 2010 is ‘more sober’ and although the mood in nowhere near that recorded in recent years ‘the business sentiment will turn positive for next year’.

The report said: ‘Turnover, sales locally and abroad, employment and investment are seen growing on balance. They are comparatively modest in terms of those projected last year, but in the circumstances this fact is encouraging. It means that business is taking stock, re-considered its expectations, but seems prepared to resume moving forward.

‘Given that the mood at present is very much contained, it could well be that businesses are ‘sober’ in reviewing their plans for 2010, and therefore, their envisages value for turnover, sales, employment and capital growth in 2010 are shorn of enthusiastic euphoria that is usually boosted by buoyant entrepreneurial spirits.’

Arnaldo Abruzzini, secretary general of Eurochambres, said: “Businesses are afraid to invest. They don’t seen domestic sales growing, they suffer from unfavourable exchange rates which hamper their exports and, as a result, they are unwilling to invest and to employ. It is premature to say in light of these facts that the worse is already behind us.”

Those investors without foreign currency mortgages benefit

New research by the FX team at Close Brothers Limited Close Treasury revealed that British people who bought overseas properties in second home and investment hotspots without a foreign currency mortgage four years ago will, on the whole, have made significant financial gains, despite the recent volatility in global property prices.

According to Close Treasury, those who bought an Italian property in Euros in June 2005 would have seen the Sterling value of this increase by around 65%, four years later, aided by a +30% rise in property prices over that period. This increase was supported by the increase in value of the Euro by 27% compared to Sterling over the same period. In the last year alone, a UK investor in the Italian property market could have made a return of over 10%, despite just a +3% increase in local property prices, due to the strength of the Euro.

Likewise, those Brits who invested in property in Spain in June 2005 would have seen the Sterling value of their investments increase by +59% four years later, due to a combination of rising property prices and a fall in the value of Sterling against the Euro.

Taking these two factors into account, Close Treasury, said that the Sterling value of properties bought in Portugal, France, Switzerland and Spain for example in June 2009, were up 24%, 47%, 54% and 59% respectively on the corresponding figure of this year.

Mark Taylor, head of foreign exchange at Close Treasury, said: “When British investors calculate the value of an overseas property they bought a few years ago, they not only need to look at how real estate prices have changed, but also what has happened to the exchange rate between Sterling and the local currency. 

“Even though overseas property prices tend to have fallen in the last year, in many cases the fall in the value of Sterling will have offset this, and many people may still have seen the value of their homes increase in Sterling terms.”

Record no of Canadian house re-sales

According to the Canadian Real Estate Association (CREA), Canadian home re-sales rose to a record 46,450 units in November, as the housing market helped to pull the economy out of recession.

Seasonally adjusted sales in November climbed +67% from a year earlier, said the CREA. The average nationwide property price rose +19% from last year to C$337,231 ($317,700), the association said in a statement.

The Bank of Canada has predicted growth in housing investment will stay “brisk until early 2010”, and then slow as pent-up demand is satisfied and affordability declines. The bank lowered its benchmark lending rate to a record 0.25% in April to spur domestic demand and pledged to leave it there through June unless the inflation outlook changes.

China restricts speculative real estate purchases

China ’s State Council recently decided to put in place measures aimed at restricting speculative real estate purchases in order to address soaring property prices, while downplaying fears that surging prices may herald a jump in inflation.

While it did not provide specific details, the council alluded to such measures as stricter oversight of banks to limit lending for speculative real estate investments. Other steps are likely to include financial and tax measures, as well as tougher scrutiny of the real estate market.

A statement issued by the National Development and Reform Commission said: ‘ We believe that consumer prices will remain at a stable level for the near term and that there is only a slight possibility for serious inflation.’

As a result of China´s loose monetary policy, a flood of money has poured into the real estate market, resulting in sharply rising home prices in some major cities.