European Commercial property values

Austrian banks are the fifth most profitable in the euro zone

The German economy shrunk by 5% in 2009

Dubai mortgage market falls 73% in 2009

Australian rents set to soar in 2010

New tax law in Trinidad and Tobago likely to put off international buyers

European Commercial property values

According to a report by Capital Economics the French and Polish commercial property markets are now undervalued by as much as 10-20%.

The Finnish, Hungarian, Italian, Spanish and Swedish markets meanwhile, all appear to be overvalued between 5% and 25%, with the German and Belgian markets correctly valued. This is in start contrast to the middle of 2008 when all European commercial property markets appeared to be overvalued.

Fergus Hicks, Capital Economics Property Economist, stated in the report: ‘ The Hungarian, Polish and UK commercial property markets all look undervalued. France also seems slightly undervalued, pushed up the ranking by stronger rental growth prospects. The Belgian and Spanish markets look around fair value, as does Finland, which slips down the ranking due to weaker rental growth prospects.’

Capital Economics predict that in the ten years to 2020 there will be strong rental value growth in Poland and France as their economies are forecasted to show reasonable recovery with GDP to grow by an average of 2.5% in Poland and 1.5% in France during 2010-11. Finland and Italy will be hindered by recession in 2010 which will result in weak rental value growth.

Austrian banks are the fifth most profitable in the euro zone

A study by Macro Consult on behalf of Erste Bank has revealed that the Austrian banking sector is set to continue its recovery in 2010.

The study has predicted that there will be an increase in credit volumes of 3% over the next 5 years to 2015 and a growth rate for deposits of 5%pa, with inflation expected to stay unchanged for the long term at a low level.

Josef Christl, director on the board of the Austrian central bank, said: “One reason why Austrian banks are able to run their businesses so profitably is their high level of cost awareness.”

Austrian banks are the fifth most profitable in the Eurozone while operating the lowest consumer and SME banking margins in Europe.

The German economy shrunk by 5% in 2009

The National Statistics office of Germany has revealed that the country’s economy shrank by 5% in 2009 having grown by 1.3% in 2008.

Germany had emerged from its deepest recession in a generation to post a 0.4% economic expansion rate in the three months to the end of June 2009, amid predictions that the nation would start to recover in 2010.

The pickup in economic growth partially reflects the success of the €85bn emergency fiscal stimulus plan in shielding the German economy from recession.

The government office in Berlin has been predicted by some analysts to raise its 1.2% economic growth rate projection for 2010, when it unveils its next economic forecast.

A more positive forecast came from the country's wholesale and export association (BGA) who said recently that the economy could grow between 2.5% and 3% in 2010 driven primarily by an increase in exports.

Dubai mortgage market falls 73% in 2009

The residential mortgage market in Dubai dropped by 73% in volume terms in 2009 as transaction levels in the Emirates real estate market collapsed. September 2009 saw the biggest fall in new mortgage approvals, down 96% having previously fallen by 93% in May, according to official figures from the Dubai Land Department.

There were increases in some months, as July and August saw a 35% and 31% improvement respectively. Overall in 2009, there were only a total of 3,059 new mortgages granted worth a total value of $7.56bn.

However, according to Jesse Downs of Landmark Advisory, whilst the mortgage market had shrunk, its percentage of the markets as a whole had remained constant.

Downs, Director of research and advisory services, said: ‘Based on our transactional data, approximately 20% of transactions in 2008 were purchased with a mortgage. Interestingly, in 2009 this remained steady at 20%. While transaction volumes have decreased in 2009, the relative portion of mortgage activity has remained unchanged,’

Australian rents set to soar in 2010

Rents on residential property in Australia are likely to soar as much as 11% in 2010 as landlords look to pass on increasing costs to tenants as a result of rising interest rates and land taxes according to a new report by Australian Property Monitors (APM).

Australia saw rental growth of 2% in 2009, the lowest increase since 2002 as job losses and economic uncertainty kept many landlords from raising rents.

Matthew Bell, APM Economist, said: “There simply aren’t enough new properties being built for investment purposes to meet the increased demand, and it is clear that in 2009 rents were generally kept in a holding pattern as landlords and the market waited to see the end of the global financial crisis,”

The brighter economic outlook and an ongoing lack of supply in the housing market will see rents increase between 8-11% in Perth and Brisbane, whose property markets are expected to see the largest increases. APM expect Sydney will see rents up by 4-5% and in Melbourne by 5-7%.

The report also stated that new build property was unable to keep up with the rampant growth in population, with not enough new properties being built to meet demand.

Australia’s eight capital cities had an average rental residential vacancy rate of 2.1% in the third quarter of 2009, according to the Real Estate Institute of Australia, compared with a record 7.8% apartment vacancy rate in the U.S.

Foreign buyers of property in Trinidad and Tobago have been restricted from purchasing property by a law passed in 2007 and may now be less inclined to do so after a revised property tax was introduced at the start of 2010.

The Property Tax Bill, due to come into effect on 1^st January 2010, has completely changed the basis on which taxes are levied on real estate, as they have gone from an annual rateable value to an annual rental value and this could result in owning a property on the islands more expensive.

Nicholas Marr, CEO of Homesgofast.com, said: “Trinidad and Tobago was very popular with buyers from the UK, Canada and the US. It seems the combination of the global slow down; reports in violent crime and new laws have dampened the appetite from international buyers. T & T has so much to offer foreign buyers and the government would benefit from their money. I fear the new property tax may further damage the demand from overseas buyers”    

“Many overseas buyers who have been sitting on their hands in 2009 are looking for places to buy in 2010. I am afraid that the new laws will put Trinidad and Tobago off the investment list if things are not sorted out soon. Investors have a huge choice of places to put their money and it does not take much for them to be put off a particular region.” 

The average price of three bedroom property on the islands has fallen from $151,515 to $136,523, according to figures from the Central Bank, and luxury real estate has dropped by 18-23%.