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England needs to build 250,000 houses a year to meet need

[ Posted September 30th, 2009 ]

 David Pretty and Paul Hackett for the Smith Institute and PricewaterhouseCoopers launched a Discussion Paper on Tues Sept 29 at the Labour Party conference in Brighton in which they claimed that there will be a shortage of a million homes in England by the end of 2010.  They predict that if this is the case, there will be serious social and economic consequences, including property booms and busts.

According to the report, house building is at its lowest level in 80 years.  

The report states that "at least 250,000 new homes need to be built every year to match annual population growth, and even higher to replace ageing housing stock and the accumulated backlog."
 
The report predicts that England could be approaching a one million housing shortfall by the end of 2010, and urges that this problem not be ignored. They predict record housing waiting lists, as well as higher home prices.

What’s needed, they say, is more land release, support for new entrants in the market and expansion of the private rented sector.

If the building of new housing is not started immediatley, this lack of new homes will cast a damper on economic prosperity, increase wealth inequality, and of course, block home ownership, in particular for first time buyers.

Status of Real Estate Markets in Middle East and North Africa

[ Posted September 29th, 2009 ]

In a report published today by international property consultants Jones Lang LaSalle, the cities of Abu Dhabi, Dubai, Cairo and Casablanca are tapped to be the most likely to attract long term capital to their real estate markets.

For some time, long term investors have been reluctant to invest in the Mena (Middle East and North Africa) region, because of the short term speculative mentality of both investors and develop ers there.

‘Creating the right environment to attract long term investment into Mena real estate markets remains a work in progress. While few of the necessary requirements have yet to be fully met, significant progress has certainly been made in many critical areas,’ said the Jones Lang LaSalle report.

Rental prices in the area  have fallen between 25 and 50%, and many short-term speculators have stopped investing there.

The analysts predict that the rest of the year will see more falls and prices corrections.

The key to investing in this area is for  private family groups, conglomorates, government entities and institutional investors such as insurance companies, pension funds and listed real estate companies to bear the brunt of the burden – bringing in stability and long term capital.

Some property taxes to rise in the UK

[ Posted September 25th, 2009 ]

In property tax news from the UK, the Liberal Democrat party announced yesterday that a new property tax will be imposed on residential real estate worth over £1 million.

The new “Mansion tax” would be 0.5% of the property’s value. Owners of a £1.5 million home would pay an extra £2,500 a year in tax. For a £4 million property, the figure rises to £15,000.

Treasury spokesman Vince Cable said that this tax would raise more than £1 billion that would be used to raise the income tax threshold in the country to £10,000.

On the other hand, many in the property industry believe that real estate taxes should be based on ability to pay, not on how much your property is valued at.

They point out that the tax will be heavier on those living in London and the south east of the country where property prices are higher.

The Royal Institution of Chartered Surveyors warned that it is not a very practical way to raise revenue from property ownership.

‘Although taxes on properties over £1 million may be an effective way to raise additional funds, RICS sees a number of practical problems.’

‘These include the need to ensure that valuations are fair and accurate, given that the last valuations were done 18 years ago; the cost of administration given the likely number of appeals; the ability to pay, since the proposed tax is based on the value of the property and not the owner’s income; and the potential market distortion such a tax would create.

Brazil the Next Big Property Investment Location

[ Posted September 25th, 2009 ]

In property news from Brazil, Sam Zell, a “world property guru ” intends to open a real estate financing company in Brazil. Record-low interest rates there are increasing the demand for such invenstments.

Zell owns the Equity International real estate investment company. Its chief strategic officer Thomas McDonald, confirmed that the plan is in the works. He added that it may open its own company to provide financing to real estate developers.

Zell has spoken long and eloquently about the benefits of investing in real estate in Brazil. It is a country with a shortage of affordable housing and infrastructures that support foreign investment.

Brazil is self-sufficient, Zell pointed out, and has a strong pool of skilled professionals and otherwise unlimited resources.

‘If you look at all of the facts, I don’t think there is a better environment in all the world than Brazil.’ Indeed, he expects Brazil could surpass China in economic might in 30 years.

A 5% cut in Brazil’s Selic interest rate this year to 8.75% and a $18 billion housing stimulus plan announced by the government in March have boosted demand for residential and commercial real estate investments.

‘Real estate financing in Brazil is tenant-based, depending on the quality of the tenant, rather than the quality of the property. The banks have to get an understanding of real estate and look beyond the tenant. We’d love to help jumpstart that,’ said McDonald.

Government set to increase property tax in Trinidad

[ Posted September 25th, 2009 ]

Property investors in Trinidad have dwindled in the last year. This has not prevented the government of Trinidad from implementing new taxes that will cause these investors to dwindle even more.

Finance Minister Karen Nunez-Tesheira announced that a new four-tiered property tax regime will be introduced on January 1, 2010.  This will be based on the present market values of properties.

‘In the case of residential, commercial and agricultural properties, the tax will be three per cent, five per cent and one per cent, respectively,’ she explained.

Criticcs of the scheme believe  this could have a harmful effect on both the rental and buying markets.  Some real estate owners face increases of 600%.

Opposition MP Kamla Persad-Bissessar pointed out: ‘These plans to restructure the property tax regime will bring a significant increase in property taxes which would have a devastating ripple effect on the population.’
 
‘Not only property owners, but renters, too, will be affected as rents will increase everywhere. Property owners will be forced to raise their rates to pay the higher taxes,.

Persad-Bissessar also pointed out  that small business owners, tenants in shopping malls and other commercial properties, would suffer further from increases in their rent as landlords try to cope with the higher taxes on commercial properties.

Foreign investors fade out of Chinese market

[ Posted September 24th, 2009 ]

Between 2005 and 2007, foreign investors purchased almost 60% of prime real estate assets in China. Now, however, that may be all over. In addition to the expected drop in purchases because of the global real-estate downturn, the Chinese government has also implemented new, tighter regulations on prospective buyers.

The research firm Jones Lang LaSalle concludes that state firms, insurers, national and provincial pension funds, the country’s sovereign wealth fund and the State Administration of Foreign Exchange will take up the slack from the loss of foreign investors by making purchases themselves.

The Jones Lang LaSalle report shows that the domestic share of total property investment grew to 70% in the first half of 2009, up from 36% in 2008.

China is deregulatibg its insurance industry. A new law will allow insurers to invest in the real estate market. It’s expected that this could pour 236 billion yuan ($35 billion) into the real estate market.

Recently, China Investment Corporation, the country’s $300 billion sovereign wealth fund, has indicated its intention to increase its investment in real estate.

The Corporation has already put money into Morgan Stanley’s new global property fund which will invest in China.

In addition, this report concludes that the global commercial real estate market will recover in about nine months.

Dubai Cityscape Property Event Coming Together

[ Posted September 24th, 2009 ]

In <a href="http://www.mortgagerates123.co.uk">property news</a> from the Middle East, an annual event known as Cityscape is about to be held in Dubai. It takes place every October. Cityscape attracts the biggest developers in the region, for it is at this event that projects are launched and sold and mulit-million dollar deals are closed.

The organizers of the event report that they believe there will be a 30% drop in both the number of exhibitors and the number of attendees .

So important is the Cityscape property event that this anticipated lack of attendees has increased doubts about the viability of the real estate market.

In recent days a number of key developers in the region have publicly stated that they will not be attending. However, a  few days later they change their minds.

The companies Emaar and Nakheel, for example,  said last week that they would not be taking part in the event and instead would be working on the completion and handover of projects.

But now, Nakheel, which is state-owned, and Emaar Properties have changed t heir minds.

Other large companies, such as Limitless, will still not be attending. At least that is the word for now.

French Villas in Hanoi Are Saved

[ Posted September 23rd, 2009 ]

At the height of the colonial period in Vietnam, hundreds of French-style villas were built. Now, decades later, those homes are judged to have historic value. Up until recently, they were to be sold, but now the authorities in Hanoi have instead to preserve them.

 

There are 600 villas in old Hanoi. Preservations had long wanted to preserve them, and there had been fears that if they were allowed to be purchased by developers, the homes would be razed and new properties built on the sites.

Architects requested that these 600 historic homes be classified into those that ought to be maintained, those that need to be updated and those that will have to be re-built.

Hoang Dao Kinh, Deputy President of the Viet Nam Architecture Association, said French colonial villas were original architecture that brought beauty to areas where they were built.

"We fear the former French colonial quarter will disappear and with it part of the capital city’s special character,’ he said."

Now, at least 260 of the villas are expected to be protected.

Some of the homes are rather dilapidated, however, and will probably be demolished.

 

Of the 206 villas already identified for preservation, 45 are rented by companies and 105 are state offices.

There were 2,000 French style villas left in Hanoi in the late 1980s; by 2008 there were only 1,000 left.

Property prices in Scandinavia recovering

[ Posted September 22nd, 2009 ]

In property price news from Scandinavia, reports state that prices in Norway and Denmark have begun to stabilize, Analysts point out, however, that prices have not yet bottomed out in Sweden, Finland and the Baltic countries.

It was also reported that the rental market throughout the region is weak, although again, some countries are stronger than others.

Marie Bucht, Head of Advice at Newsec , points out that Denmark is leading the recovering, with stable trend in rents in Copenhagen.

Falling rent levels in Sweden and Finland , depite low interest rates, show that there is no rebound there yet, but the rates are falling at a slower extent than previously.
 
Rents in Oslo are expected to stabilize towards the end of 2009, while in Stockholm the largest falls have porbably already occurred.

There is a long way to go to return to normal, however. In the first half of 2009 transaction volume on the Nordic and Baltic property markets declined 80% to a record low. Numbers are similar in other Scandinavian countries.

Property prices in Australia unstable

[ Posted September 22nd, 2009 ]

Sydney, Australia — A controversial new report just released by researchers at Flinders University states that the number of home owners in Australia has fallen dramatically over a decade, in no small part because the average house price has trebled since 1996.

Although Australia has had strong economic growth and relatively low interest rates between 1996 and 2006, ownership of homes grew by only 0.8% and fell by 15% for both low income earners over the age of 45 and medium to higher income earners under 45.

Australia has the most expensive housing in the world amid very tight housing and land markets and little prospect of restoring the balance,’ said Flinders adjunct professor Joe Flood in the report.
 
Flood points out that the only solution is through a US style price collapse, or a complete re-evaluation of the situation and a coordinated effort by the government and the financial institutions to restore the balance between housing supply and demand .

In a contrary view, David Airey, president of the Real Estate Institute of Australia, said there was still a secure supply of housing.

 
 
 
 
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