Ireland Sees Second Consecutive Monthly Rise In Property Prices

The slowing of property price falls in Ireland is continuing with the latest data showing they increased by 0.5% last month.

This means that in the year to August residential property prices have fall by 11.8%, down from the 13.6% annual fall in July and the 13.9% recorded in the twelve months to August 2011.

The 0.5% rise adds to the increase of 0.2% recorded in July and is good news for the Irish property market. It was the first consecutive property price rise since the crash over five years ago.

But it still has a long way to climb back with overall the national index from the Central Statistical Office 50% lower than its highest level in 2007.

Also the Dublin housing market is still struggling. Property prices fell 0.5% last month and are 13.8% lower. Within that house prices decreased by 0.7% in the month and were 14.4% lower compared to a year earlier while apartment prices were 13.4% lower when compared with the same month of 2011.

The price of residential properties in the rest of Ireland rose by 1.3% in August compared with a decline of 0.3% in August last year. Prices were 10.7% lower than in August 2011.

 

It now means that house prices in Dublin are 56% lower than at their highest level in early 2007 and apartments prices 63% lower than they were in February 2007.

Overall property prices in Dublin are 57% lower than at their highest level in February 2007. The fall in the price of residential properties in the rest of Ireland is somewhat lower at 46%.

The CSO's monthly survey has become the official measure of Irish residential price trends and is based on data of housing market purchases funded by residential home loans starting in 2005.

A low level of transactions mean the index is still is catching up with declines in market prices, and residential prices already may have dropped by 60% from their peak, according to analysts.

RIBA Launches New Chapter in Hong Kong

The Royal Institute of British Architects (RIBA) has launched a Chapter in Hong Kong where it has hundreds of members to provide a platform to connect with colleagues in mainland China and throughout the Asia Pacific region.

At an event held at the British Consulate Hong Kong, guests from the Hong Kong government, the local built environment industry and RIBA members heard speeches from RIBA president Angela Brady and Andrew Seaton, the British Consul-General to Hong Kong and Macao.

The heard that the new chapter will enable the institute to offer increased support and provide networking opportunities, a forum for local activities and CPD.

Coinciding with the launch the RIBA has also announced that it aims to introduce the RIBA Part 3 in Hong Kong next year. This will strengthen the existing professional skills and knowledge both locally and regionally.

‘The Chapter will support the strong contribution that RIBA architects from Hong Kong and mainland China are making to the improvement of the built environment in the region. Its launch is another sign of the continued strong growth in business and professional links between the UK and Hong Kong,’ said Seaton.

Brady said that as Hong Kong is home to some of the world's best architecture it is a perfect base for the RIBA to build upon our existing relationships, explore new ones and promote the important role of architecture throughout the wider region.

‘This initiative from the RIBA presents the opportunity for local members to collectively participate in architectural issues and champion high quality design, technical excellence, environmental and social policies and innovation,’ said John Campbell, interim chair of the RIBA Hong Kong Chapter.

The RIBA Chapter is launched with the support of the Hong Kong Institute of Architects (HKIA) and their activities will complement each other. HKIA President Dominic Lam welcomed the move, and the spirit of collaboration between architects who share the goal of excellence in their profession.

North East Brazil Developer Waives Interest On Staged Payments

Overseas buyers in Brazil can get an unexpected shock when they find they are paying interest on staged payments, experts point out.

The country’s National Civil Construction Index (National da Construcao Civi) adds interest onto staged payments and was brought in some years ago to protect developers from inflation when selling off plan.

With a lack of available finance, developers were effectively banks offering loans to people to purchase their product. This led to several company collapses and half finished buildings. Developers now have the right to add this inflationary charge to the outstanding balance which takes into account the changing costs of labour, building materials and so on.

According to Samantha Gore, sales manager for local Brazil estate agent uv10.com, explained that many people enter into the Brazilian property market completely unaware of the INCC.

‘If you buy an off plan apartment from a Brazilian developer and pay 20% at outset, the remaining 80% will go up by the INCC each month until it is paid. The charge is added to each instalment amount and is cumulative,’ she said.

‘And, as the INCC fluctuates month to month, this leaves buyers in a position where they have no idea how much their apartment will end up costing. At uv10.com we prefer to work with developers who specify prices from the outset,’ she added.

Natal based developer behind Golden Fields has chosen to ignore this inflationary measure and instead fix prices at private contract.

‘Buying through a developer that does not link to the INCC is becoming more important as labour costs in particular are now rising especially in the north east region. According to the Brazilian Chamber of Construction Industry, average per square metre labour costs now exceed material costs as employers are spending their resources on increased wages and employee training to combat the lack of qualified labour force,’ Gore pointed out.

‘As Brazil looks forward to the 2014 World Cup, it is hoped that manpower costs do not impact the business opportunities afforded to the construction industry,’ she added.

In July, Brazil’s INCC dropped to 0.85% after a record high of 1.31% for June and this gives an accumulated variation of 5.87% for the year to July 2012 and 7.31% across the last 12 months.  In July 2011, the index was just 0.59%.  The next price adjustment is expected on 23 August. 

 

Golden Fields, located in Capim Macio, one of Natal’s top four income per capita suburbs, it is described as an ideal hands free investment for foreigners as it cannot fail to deliver returns based on simple supply and demand principles in a local market that is being fuelled by increased wages and domestic mortgage lending.  The 50 unit gated development is in a chic city beach hotspot and has 24 hour security alongside a deluxe swimming pool and leisure area.

  

Golden Fields offers early investors the chance to gain maximum ROI when their unit is resold to the local market upon completion and conservative estimates put this at 40% between now and completion in the middle of 2014 or rented out with a 6% four year renewable rental guarantee. 

Prices start from 162,908 Brazilian Reals, around €65,814 or £51,598 and staged payments are not linked to the INCC.  The developer has a limited period special offer of a further 10% off asking price for those who can pay more quickly, bringing the price down to 31% below the nearest market comparable.

In addition, those who reserve a property before 20 August 2012 will be given a free one week trip to Natal including flight and accommodation. Conditions apply.

Top 5 Best Performing Real Estate Mutual Funds Year to Date

Mutual funds investing the real estate sector should be a necessary addition to portfolios with a long term horizon even though the sector has traversed rough waters in the recent past. Real estate mutual funds have delivered significantly high returns in the past and offer a convenient method for investing in this sector. With their low initial investment requirements, well diversified portfolios and professional management they can go a long way in lowering the risk involved. They also bring stability and steady returns to portfolios over the long term.

Below we will share with you the 5 best performing real estate mutual funds year to date.  To view the Zacks Rank and past performance of all real estate funds, investors can click here to see the complete list of funds.

Mutual Fund	Zacks Rank	Total Return YTD
Forward International Real Estate A HHaHh	#1 Strong Buy	39.5%
ProFunds Real Estate UltraSector	#1 Strong Buy	24.6%
Principal Global Real Estate Securities A	#1 Strong Buy	19.0%
Dreyfus Global Real Estate Securities A	#1 Strong Buy	18.4%
DWS RREEF Global Real Estate Securities A	#1 Strong Buy	18.3%

 

Forward International Real Estate A (KIRAX) invests the majority of its assets in foreign equity securities issued by companies from the real estate sector and those engaged in related activities. The fund may purchase emerging market securities and purchase ADRs. The real-estate mutual fund has a three year annualized return of 15.67%.

Ian S. Goltra is the Fund Manager and he has been managing this real estate mutual fund since 2010.

ProFunds Real Estate UltraSector (REPSX) seeks to provide returns which are equivalent to one and a half times the daily performance of the Dow Jones U.S. Real Estate Index. The fund’s portfolio consists of equity securities and derivatives which have the ability to deliver such returns. The real-estate mutual fund has a three year annualized return of 35.64%.

The real estate mutual fund has an expense ratio of 2.73% compared to a category average of 1.37%.

Principal Global Real Estate Securities A (POSAX) invests heavily in real estate equity securities of domestic and foreign companies. The fund may invest without limit in a single country or securities denominated in one particular currency. The real-estate mutual fund has a three year annualized return of 16.52%.

As of July 2012, this real-estate mutual fund held 87 issues, with 6.89% of its total assets invested in Simon Property Group, Inc.

Dreyfus Global Real Estate Securities A (DRLAX) seeks current income and capital growth. The fund invests heavily in publicly traded equity securities of real estate companies. These firms must derive at least half their revenues from the real estate sector. The real estate mutual fund has a three year annualized return of 15.38%.

Peter Zabierek is the Fund Manager and he has been managing this real estate mutual fund since 2006.

DWS RREEF Global Real Estate Securities A (RRGAX) invests a large share of its assets in real estate companies. The fund purchases both equity and debt securities issued by firms such as real estate investment trusts or real estate operating companies. The real-estate mutual fund has a three year annualized return of 14.36%.

The real estate mutual fund has an expense ratio of 1.38% compared to a category average of 1.46%.

REITs Look Attractive – But Volatile

Listed property companies offer private investors a potentially high income stream and portfolio diversification – but performances can vary significantly, advisers warn.

Real estate investment trusts, or Reits, are listed companies that invest in physical commercial property, such as offices, shopping malls, retail warehouses and industrial units.

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“Reits offer retail investors access to an asset class that should provide an income, some diversification from equities and an element of inflation protection over the longer term,” notes Mick Gilligan of broker Killik & Co.

The sector launched in the UK five years ago and, despite attractive tax benefits – companies are exempt from corporate tax on income and capital gains – has struggled to take off following the economic downturn.

Advisers warn that investing in property via a Reit can be significantly more volatile than direct property investment or managed property funds.

“They are effectively equities and can therefore be just as volatile,” explains Darius McDermott, managing director at Chelsea Financial Services, a financial adviser.

But experts argue that Reits can be a cost-effective way of gaining exposure to physical property. Shares in Reits can be bought through a stockbroker or a share trading platform and are more liquid than bricks and mortar funds.

Over the longer term, they can also offer diversification benefits. However, Henry Lancaster, senior investment analyst at Coutts, says investors need to hold investments for up to three years for their correlation to the property market to become evident.

Investors are advised to consider carefully the nature of the investment because there can be broad differences between companies – and, as a result, their performance.

“Ultimately they are dependent on the performance of their portfolios and this, in turn, is tied into the fortunes of the economy,” says Tim Cockerill, head of collectives research at broker Rowan Dartington.

Price returns vary: Standard Life Investment Property Income and F&C Commercial Property have returned 5.08 per cent and 5 per cent, respectively, over the past year, while British Land and Land Securities have returned -7.68 per cent and -8.13 per cent respectively. Many UK Reits continue to trade at a discount to net asset value (NAV).

Yields also differ significantly between companies. Standard Life Investment Property Income currently yields 7 per cent, while British Land yields 4 per cent. Most typically yield between 2 and 6 per cent, with some as high as 10 per cent.

“While Reits continue to trade at a discount to their NAV their fundamentals remain solid, and many UK Reits have an extensive development pipeline in areas of strong demand and constrained supply like the City of London,” explains Peter Cosmetatos, director of finance at the British Property Federation.

Cockerill says Standard Life Investment Property Income and F&C Commercial Property Trust are high quality long-term income generating investments. However, he cautions that he would not buy them now as both are trading at premiums of about 6 per cent.

Gilligan recommends London & Stamford Property, which has recently bought more properties in London and the south east, and Hansteen Holdings.

Reits can also offer private investors a way to gain exposure to international property. “In the UK we will buy both bricks and mortar funds and Reits, but the latter are the preferred option for investing globally,” explains Lancaster.

Tom Becket of PSigma Investment Management says private investors could look at investing in Reits that provide some inflation protection. “Germany and Japan are two markets where we have been looking at commercial property for inflation protection,” he notes.

However, some advisers caution against committing money to Reits in the

current environment. “Broadly, we are still avoiding commercial property globally, as we do not believe the yields on offer compensate you both for the liquidity of the underlying investments in the Reits or the Reits themselves,” says Becket.

“Unless we were to become genuinely convinced of a re-acceleration of global economic activity, we are unlikely to soften that stance, particularly as in the UK and Europe many of the financial institutions are yet to address the property issues they collected in the boom years of the last decade.”

The woes of the eurozone have impacted many European Reits. “Many were launched a few years back and were highly geared going into the credit crisis, which created major difficulties,” says Cockerill. He points out that Invista European Real Estate Trust has fallen in value by over 90 per cent since launch.

Number Of New Property Completions Rising In Abu Dhabi, Stats Show

The number of residential properties completed in Abu Dhabi in the second quarter of 2012 increased by 17.3%, according to the latest figures from the emirate’s Statistics Centre

A total of 3,302 residential units in 1,516 buildings were completed in the emirate of which 68% were in Abu Dhabi region, 9% in Al Ain and 23% in Al Gharbia. The SCAD research found the estimated average construction cost per square meter during the second quarter ranged between AED3013 and AED3382, depending on the total floor area, the interior finishes and intended type of use. The data showed that owners generally spent more on the units when they planned to use them for their own residence. Buildings with a total construction area of between 300 to 599 square meters had the highest construction cost of AED3382 per metre and were mostly dedicated for residential use by the landlord. The residential rental sector is likely to get a boost in the later quarters of 2012 after news at the weekend that Abu Dhabi is pressing its public sector employees who reside outside the emirate to relocate within its borders. Employees residing outside the emirate will not be eligible for the housing allowance provided to workers in state institutions, the government said in a statement. The policy takes aim at people, believed to number many thousands, who commute to work in oil rich Abu Dhabi while living in the neighbouring emirate of Dubai because of lower rents there or a lifestyle which they see as more comfortable. The new rule, which will take effect next year, will apply to citizens of the UAE as well as foreigners who are working in Abu Dhabi for the government and all its wholly owned entities and companies, the statement said. Analysts believe that the policy is designed to help absorb a large supply of new high end homes that is set to enter the market in Abu Dhabi this year. Property prices in the emirate have tumbled about 50% since the global financial crisis hit the market several years ago, analysts estimate, and the new supply threatens to undermine them further. Many new units have come up in Abu Dhabi, reaching the peak of its development cycle. The move is to create new demand and make sure the vacancy rates don't reach high levels,ђ Matthew Green, research head at consultants CBRE, told Arabian Business.

Arab Developers Enticed By London Prime Property Prospects

Over £130 A Month Cheaper To Buy Than Rent In The UK

The cost of buying a home in the UK is now almost a fifth lower than renting, according to research by leading lender the Halifax.

The average monthly costs associated with buying a three bedroom house stood at £600 in June 2012, some £132 lower than the typical monthly rent of £732 paid on the same property type. In 2011, the monthly cost associated with home buying was £78 lower than renting. Over the past year, buying costs have dropped by 3%, while the cost of renting has increased by 5%. In contrast, in 2008 average home buying costs of £1,048 were 45%, or £324, more than the average monthly rent paid of £724. The substantial improvement in the affordability of buying relative to renting largely reflects a 43% drop in home buying costs since 2008, caused by a marked fall in both house prices and mortgage rates, says the Halifax. The average mortgage rate for a new borrower has declined by more than two percentage points over the last four years from an average of 5.91% in June 2008 to 3.82% in June 2012. Over the same period, the typical UK house price has decreased by a tenth. In contrast, the typical rent paid has risen by 11% or £72 since 2010. Monthly home buying costs currently account for less 29% of average UK disposable income, down from 54% in 2008. Home buying costs in 2012 also account for a smaller proportion of average UK disposable income than rental payments at 29% against 35%. Despite the improvement in affordability, the number of buyers in the UK housing market has fallen significantly over the last four years. There were 535,200 buyers with a mortgage in the twelve months to June 2012, some 33% lower than the same period in 2008 which was 793,600. The recent Halifax housing confidence survey showed that 58% said raising a deposit was the main barrier to buying a home while 56% said it was concerns about job security. ‘It is clearly encouraging that there has been a significant decline in the cost of buying a home for those able to enter the housing market since 2008. The improvement is due to a combination of lower mortgage rates and declining house prices. In contrast, market conditions for renters have deteriorated as rents have risen in the past two years,’ said Martin Ellis, housing economist at the Halifax. ‘Despite the improvement in buyer affordability, the housing market nationally continues to tread water. Those getting on the housing ladder still face challenges, most notably in getting a deposit, and this challenge, along with the considerable uncertainty regarding the economic outlook, is still contributing to subdued housing demand. However, it is worth noting that once homebuyers are on the first rung, their monthly costs are notably lower,’ he added. The research also found that in June 2012, buying a house was more affordable than renting in all 12 UK regions. In contrast, buying was more expensive than renting in all regions in June 2008. Buying is most affordable compared to renting in London with the typical homebuyer paying £177 a month less than the average renter, some £1,108 against £1,284. The disparity between buying and renting costs is smallest in the East Midlands with average monthly buying costs of £497 2% lower than average monthly rental costs of £505.

Pattaya Seeing Increased Interest From Foreign Property Buyers, Forum Is Told

Pattaya in Thailand has seen a strong growth in its real estate markets since 2008 and is now considered the second city in Thailand, according to industry experts.

The recent inaugural Pattaya Property Outlook Forum organised by the Agency for Real Estate Affairs (AREA) and the Eastern Seaboard chapter of the Real Estate Broker Association heard that a number of long term environment improvements are helping to make it a more attractive prospect for development.

AREA president Sopon Pornchokchai presented new research indicating that Pattaya has a stronger and more valuable property industry that another other city in the country.

Kingdom Property chief executive officer Nigel Cornick, who was invited to share his expertise having been involved in real estate development in Pattaya for the last decade, said that there is a real buzz about the destination again with Jomtien and Pratumnak the most popular real estate locations.

He told the forum that the Baht three million to seven million prices range is showing particularly strong and tourism numbers are increasing coupled with the Eastern Seaboard attracting new property buyers from abroad including India and Japan.

"There are great opportunities here but for me it is important to focus on quality. And that's not about gold taps but construction materials that last and that are low maintenance," said Cornick.

‘This is what we did with Northshore and Northpoint and it is what we continue to believe in. Combine this with good design and location, ideally with views, and Pattaya still offers great value for buyers,’ he added.

Kingdom Property is poised to launch its Southpoint project, a two tower 650 unit development on a site on Pratunmak Hill, a prestigious, private, quiet and green location near the Royal Varuna Yacht Club, having recently secured a loan from Krung Thai Bank. The project is valued at THB2 billion.

Europe’s tallest residential tower in London gets planning go ahead

Europe’s tallest residential tower is set to be built in Vauxhall central London with a decision that is regarded as demonstrating the government's new hands off approach to planning and housing delivery.

Ministers have confirmed that they will not seek to call in the planning application for Green Property's £500 million One Nine Elms scheme in Vauxhall which includes a 200 meter tower.

The project becomes the tallest residential tower to gain planning consent without going to public inquiry after UK Secretary of State Eric Pickles confirmed that planning consent for the project, a collaboration between Green and their Development Managers CIT, would not be called in by his department.

 

Coming just four days after the Chancellor George Osborne signalled a major deregulation of planning laws as a means of boosting the British construction industry, the decision will enable the creation of up to 1,000 jobs during and after construction.

The scheme had the backing of London Mayor, Boris Johnson, who in a letter to Eric Pickles on 31 August urged him to; ‘Demonstrate the Government's commitment to economic growth and allow this decision to proceed at the local level’.

‘The decision of the Secretary of State not to call in the ONE project is a ringing endorsement of the hard work that the development team have devoted to delivering a scheme which is of the highest architectural standards and will bring real benefits to this area of London. We have worked closely with the London borough of Wandsworth and neighbouring Lambeth, the Greater London Authority and Mayor, to deliver a scheme which had the support of local community groups, and now the Secretary of State,’ said Michael Tapp, director of Green Property.

‘We have achieved a lot in 18 months which is a testament to the spirit of co-operation we have found with all involved. At a time of concern about the state of the property industry this decision sends a strong message that Government supports the development industry and believes in supporting growth and jobs,’ he added.

The twin tower development, designed by architects Kohn Pederson Fox (KPF), will be built on the site of the current 22 storey Market Towers building. When complete it will have a 50 storey, 200 meter City Tower and 43 storey, 160.5 meter River Tower which will have 487 high quality new homes, including 51 affordable, 11,000 square meters of modern office space, a 209 room four star hotel and 720 square meters of retail space.

The Market Towers buildings are now entirely vacant, enabling an early commencement of the redevelopment scheme. Green Property is likely to consider funding options imminently.

Sustainable Traditional Style Harbour Village Development For The Bahamas

A self sufficient and sustainable traditional harbour village development has been launched in the Bahamas with the aim of attracting international property investors seeking a safe haven.

Schooner Bay in South Abaco is described as an ideal investment for buyers with capital looking for a home abroad and a financially viable investment.

With the economic climate causing property markets to no longer guarantee a good return on investment, particularly in the more popular European destinations, looking further afield and beyond the Eurozone woes s becoming more attractive, according to director James Malcolm.

He pointed out that policies in the Bahamas are attractive for foreign investment and fundamentals remain strong as it has a politically stable government, a predicted 2.5% rise in GDP this year and a recent reduction to 10% in Real Estate Stamp Duty.

The popularity of the destination is also heightened by a highly competitive tax regime which has no income tax, capital gains tax, wealth tax or VAT and relaxed residency conditions.

Currently, for example, obtaining Permanent Residency gives investors the same tax benefits as those available to locals and with a minimum residential investment US$500,000 a residency can be obtained within three months, or fast tracked to 21 days for an investment of US$1.5 million.

The new 330 acre Schooner Bay development is on the east fringes of Great Abaco, a short flight or ferry ride from Nassau and is the creation of award winning developer Orjan Lindorth, a Swedish national brought up in the islands.

The thinking behind Schooner Bay wasn’t to create another gated development but to take a slower, more culturally attuned and ecological approach to development and to attract both local and foreign buyers.

Malcolm said that Schooner Bay’s keynote feature is its ecological footprint. ‘Only one quarter of the site will be developed, leaving the balance to be preserved. The natural dunes, hardwood forest and indigenous vegetation as Schooner Bay are surrounded by almost 25 miles of untouched beach and immaculate coastline. The need to protect this is paramount in creating a self sufficient community,’ he explained.

A total of 450 homes are being built with land plot prices from £110,000 for a two bedroom harbour cottage to £1.83million for an acre beach front plot. Most cottage and plot packages are available for around £500,000.

Malcolm added that Nassau has five weekly direct flights from London.

Real Estate Investments: Areas To Scrutinise Before You Invest

Age 35 Now The Average Time When Most People Think They Can Afford To Buy A Home

First time buyers in the UK are likely to be aged 35 before they can afford to buy their first home, research published today (Tuesday 11 September) reveals.

Almost one in three can't afford a deposit, nearly one in five say no stamp duty for first time buyers would help them get on the ladder and 47% expect it will take ten years or more to save a deposit for their first property, according to the research from Post Office Mortgages.

Would-be buyers living in the South East and South West have most difficulty with raising a deposit, with 65% and 56% respectively anticipating it will take ten years or more to raise a deposit. Meanwhile, 47% of Londoners say it will take them much longer to get the funds together.

 

The research reveals 35 is now the average age a prospective homebuyer expects to buy their first home, rising steadily since the 1960s. Those who bought their first home in the early 1960s were on average just 24 years old.

However, Scots buck the 30 something first time buyer trend. They don't expect to get their foot on the ladder until they are at least 40, while all other regions expect to buy their first home in their thirties.

The biggest barrier first time buyers face is finding it hard to raise a deposit unless their circumstances change, such as getting a better paid job or inheriting some money and not being able to afford the mortgage repayments.

The Post Office says that this is perhaps an unfounded worry as, on average, renters in the UK pay £876 more a year than the average homeowner with mortgage payments and mortgage rates are historically low.

 

Some 29% would be encouraged to buy a home if they were offered more government assistance and 19% said a re-introduction of no stamp duty for first time buyers would help them get a foot on the property ladder. Hitting important milestones in life such as getting married or starting a family are also triggers for non-home owners to buy their first property.

 

‘The average age of a first time buyer has been creeping up over the past 50 years and a perceived ten year wait to raise a deposit doesn't help matters. The sheer size of the deposit is the most daunting thing for would be first time buyers, but it appears to be worth the wait if it works out cheaper than renting,’ said John Willcock, head of Post Office Mortgages.

‘However, there are a number of competitive mortgage options for people keen to buy their own home, and prospective buyers may not have to wait until they're 35 to get a foot on the ladder. In fact, since the beginning of the year, 27% of Post Office mortgage customers have been first time buyers compared to industry figures of 18% and on average Post Office mortgage customers are 31 years old, suggesting some people may be able to afford to buy a home sooner than they think,’ he explained.

‘In addition the Post Office also offers a range of products, which only require a ten per cent deposit and our recently launched Mortgage Specialists are able to help people through the process of choosing a mortgage, discussing each individuals needs and answering questions to help customers make an informed decision,’ he added.