Mediterranean countries becoming popular again for property buyers

Germany to recover first in the Euro-zone

Turkish property yields appear to have peaked

New property law in Abu Dhabi to help landlords

Singapore’s economy to grow +6.5% in 2010

US lenders offered $1.5bn fund for mortgage aid

Mediterranean countries becoming popular again for property buyers

Countries in the Mediterranean area became more popular in February 2010 for overseas property buyers, according to Rightmove.

There was an increase in searches of 60% for locations in the area, with Alentejo in Portugal moving up 22 places as searches increased by +27.3%. Tuscany is still the most favoured region in Italy with a +12.5% search increase, whilst Italy saw an overall increase of +0.9% as Greece went up +8.2%, Malta by +11.3% and Spain +2.5%.

Robin Wilson, head of overseas at Rightmove, said: 'After adjusting for this being the shortest month, February actually saw an increase on January searches, in stark contrast to last year's drop off after the January peak. Year-on-year February searches are up +54% on 2009 which is really encouraging for the market.

'We're also starting to see signs of increased confidence from advertisers. This month, the number of new advertisers choosing longer contract periods doubled on January's new joiners, indicating an much improved long term outlook on the state of the market.'

Meanwhile the recent climb in Germany has stopped as Berlin is the biggest faller by -44.6% on January 2010. However, the gains made during the summer months of 2009 appear to be permanent and it may only be a matter of time before Germany joins the Top ten the report stated.

Germany to recover first in the Euro-zone

Germany is expected to lead the recovery in the Euro-zone as its economy is well-positioned to benefit from improving global demand, according to Aberdeen Property Investors.

Recent tax cuts and a steady labour market have supported consumer spending and although the recovery did stall toward the end of 2009, there are signs that it will resume this year, aided by an increase in exports.

The report stated that after an unsustainably high investment volume recorded during the boom years of 2006 and 2007, the reduction seen in 2008 continued into 2009 with a serious collapse in the investment markets during the first half of 2009 of -77%, the second half saw a clear revival however as approximately €11.5bn of commercial property investments (including residential portfolios) changing hands. Consequently, a reduction of just -56% was recorded in 2009 compared to the previous year.

Prime yields rose for commercial property in 2009 by just +0.1% both in central as well as adjoining established locations, with minor reductions already being recorded in some cities in Q4. In decentralised submarkets, prime initial yields increased by about +0.3% during the course of the year.

It said: ‘Based on a change in the mood of the market and improved financing terms, we anticipate a further increase in transactions in 2010, resulting in some yield compression. It is to be expected that the largest investor group in 2010 will again be domestic investors who will seek assets that provide a high degree of secured income and are expected to invest with moderate gearing.’

Turkish property yields appear to have peaked

Turkish property yields appear to have peaked having stabilised for three consecutive quarters at 9.2%, according to Capital Economics.

Turkish all-property yields are some of the highest in Europe, with only Romania and Russia ahead of them and, according to Jones Lang LaSalle (JLL), property owners and developers in Turkey are relatively un-leveraged compared to elsewhere in Europe, which has helped to limit the volume of distressed sales and to prevent capital values from falling as far as elsewhere in the region.

James Purvis, Capital Economics’ property economist, said: ‘As market conditions begin to improve this year and foreign investors regain interest in the country, commercial property investment volumes could recover and we think it is likely that all-property yields could fall by around 20bps during 2010.’

Rental values have started to grow and have increased by +4.5% since their low in Q1 2009.

Gross domestic product (GDP) is predicted to grow by an average of 4%pa between 2010 and 2012 which is above the 1-3% average growth predicted in other Emerging Europe countries.

New property law in Abu Dhabi to help landlords

A new property law has been introduced in Abu Dhabi which makes it easier for landlords to evict tenants and raise rents.

The legislation enables judges to settle rent disputes under the umbrella of the Ministry of Justice, and it removes the automatic right of tenants to renew leases for five years with a maximum +5% rent increase each year.

The new law will be active by November 2010, but the current 5% rent cap will remain, however landlords will now be able to evict tenants at the end of the lease period, after giving two months notice for residential property and three months for commercial property, and take on new tenants at a renegotiated rent.

Property analysts were divided on the effect on rents of the new law with some stating it would benefit landlords and property investors by effectively establishing a “floor” for rents, however others believe that downward pressure on rents in Abu Dhabi would continue as more units came on to the market and the rents in Dubai remain more competitive.

Rents more than doubled in the capital between 2006 and 2008, and barely decreased during the economic downturn because of a lack of accommodation on the market. With many landlords unable to remove tenants or, because of the mandatory 5% cap, raise rents in line with the market.

Singapore’s economy to grow +6.5% in 2010

The economy in Singapore is expected to rebound from 2009 recession with a +6.5% increase in gross domestic product (GDP) in 2010, according to the Monetary Authority of Singapore.

The previous survey in December 2009 had predicted that the economy would grow +5.5% in 2010, however the manufacturing and construction industries have fuelled growth. Singapore's economy relies on trade, finance and tourism and will likely see a +9.7% expansion in the manufacturing sector and a +8.9% jump in construction, according to the report.

The Government expects the economy to grow between +4.5-6.5% in 2010 after a -2% contraction in 2009. Analysts meanwhile predict the economy is likely to grow 9.5% in Q1 from a year earlier and 6.3% in Q2 as the inflation rate will probably rise to 2.7% this year, the unemployment rate will be 2%.

Lenders in five states in the US have been offered the opportunity to apply for relief on troubled mortgages from a fund of $1.5bn set up by the US Government.

The goal of the fund is to enable struggling homeowners via lenders, to have part of their debt removed in states where home prices have fallen more than -20% from their peak. The five states are Michigan, Nevada, California, Arizona and Florida.

US President Barack Obama, said: "Government can't solve this problem alone. It can't stop every foreclosure, and tax dollars shouldn't be used to reward the very irresponsible lenders and borrowers who helped bring about the housing crisis. But what we can do is help families who've done everything right stay in their homes whenever possible."

The Treasury department has released guidelines to lenders on how to apply for funding to modify mortgages, reduce the size of principal and help the unemployed to prevent foreclosures. The deadline to submit proposals is 16 th April 2010 and the Treasury will review each proposal and begin distributing the money within six weeks.

The five states were chosen because of dire housing and unemployment problems with home prices having fallen -50% in Nevada, -39% in California, -37% in Florida and Arizona, and -24% in Michigan. At the end of 2009, delinquent home loans totalled 62,622 in Nevada, 494,640 in California, 309,022 in Florida, 105,853 in Arizona and 120,030 in Michigan.