Swedish investment market outperforms Q1 2009

Development of Europe’s new shopping space slows considerably

Fastest annual Australian price increase in 25 months

“A ground-breaking year for the Abu Dhabi real estate market”

Chinese property prices increase +11.7% in March

Swedish investment market outperforms Q1 2009

According to Savills Research, the transaction volume to date in 2010 for the Swedish investment market currently stands at approximately €1.4bn which is already in excess of +55% higher than that recorded for Q1 2009.

Savills expects this trend to continue throughout the year with increased investor appetite in particular emerging from Swedish institutions, national property funds, German property funds and national and international pension funds.

Peter Wiman, head of research in Sweden, comments: “The ability to secure debt has become easier in Sweden, which has been a driving force behind this significant increase in transactional volumes. Furthermore, the property allocation element of many pension funds is low due to the recovery of the stock market, which has therefore created an opportunity for these investors to increase their property portfolios.”

Development of Europe’s new shopping space slows considerably

The rate of new shopping centre space development in Europe slowed considerably in 2009, according to Cushman & Wakefield’s (C&W) latest European Shopping Centre Development report, and it is unlikely that development levels will pick up before 2012 at the earliest.

Last year saw the sharpest decline in the amount of new space that opened in 15 years, with around 7.4m sqm of new shopping centre space completed, a -19% fall on 2008. However, should the European economy bounce back quicker than expected, C&W said that a large number of shelved shopping centre projects could be revived relatively quickly, boosting the development pipeline.

Russia with some 2.5m sqm of space in development and scheduled to open by the end of 2011 overtook Turkey to top the European ranking of shopping centres under construction.

Italy , France and the Netherlands are currently the most positive markets in Western Europe. The Italian market has been specifically resilient with just around 20% of its 2010-2015 pipeline so far being put on hold and it currently has just over 1m sqm of new space under construction. Development activity has also increased significantly in France with around 880,000sqm of space currently under construction.

During 2009, France also moved into the top five of the new shopping centre completions table, with around 530,000sqm delivered. The Netherlands also experienced a high level of completions during the year with more than double the ten-year average completed over the year.

Stratford City, London, is Europe’s largest shopping centre under construction at 186,500sqm and is due to open in 2011.

Fastest annual Australian price increase in 25 months

The Data-Rismark Australian Home Value Index increased by +1.4% in February on top of an upwardly revised +2% in January, meaning Australian home prices are up +12.7% compared to February 2009, the fastest pace in 25 months.

RP Data-Rismark calculated the median capital city house price across Australia at an all-time peak of A$548,413 ($502,000), with the median apartment valued at A$450,619.

The revival in prices is one reason the central bank lifted interest rates by +1% 100 since October and why some think it could hike again at its April board meeting.

Rents for apartments in Abu Dhabi have dropped by an average of -5-15% during Q1 2010 and are expected to continue to fall, according to property company Asteco.

There are also significant quantities of new supply under construction, with a substantial quantity of the new stock due to be completed over the next three to six months on Al Reem Island. Asteco estimates that as many as 15,000 apartments will be delivered to the market by the end of 2010, with over 9,000 of these units being built specifically to lease.

Elaine Jones, CEO of Asteco Property Management, said: “This year will be a ground-breaking year for the Abu Dhabi real estate market with the first phases of ‘Investment Area’ stock being delivered. This new ‘freehold’ supply, along with many sizeable build to lease projects on and off the main island, will bring a significant quantity of new supply, with a total close to 20,000 new homes by the end of the year. This will bring movement to the market and, for the first time in Abu Dhabi, some truly high-end residential developments.”

One bedroom apartment rents fell by -5% with sale prices falling by -4%, whilst both two and three-bed rents fell by -15% and their sale prices decreased by -7%. Two bedroom villas’ rents dropped by -10%, as three-beds dropped -5%, four-beds -15% and five-beds by -20%. Sale prices fell -4% across all villas.

All-property prices across 70 cities in China increased by +11.7% in March 2010 from a year ago, which is the biggest increase since the index began in 2005, according to the National Bureau of Statistics.

China has increased mortgage rates and re-imposed a sales tax on homes in the first two months of the year to reduce the risk of asset bubbles. They have also increased the minimum down-payment for purchases of second homes from 40% to 50% in an attempt to curb speculative buying.

Brian Jackson, emerging-market strategist at the Royal Bank of Canada, said: “To convince homebuyers that it is fully committed to curbing overheating and reducing bubble risks, Beijing will need to use all of its policy tools, and that most obviously includes higher interest rates.”

The Government announced in March 2010 that developers would have to pay higher deposits for land purchases and banned banks from lending to builders found to be hoarding land or holding back home sales in anticipation of higher prices.