Homeownership in the US threatens to fall to its lowest percentage since 1960, because of the volume of foreclosures which has continued to increase into 2010. The latest data showed that 66.9% of Americans owned their home in the second quarter of this year, down from 69.4% in 2004.

“Anybody who knows anything about housing thought it would be flat in the second quarter,” said John Burns, CEO of John Burns Real Estate Consulting, a national housing market analyst based in Irvine, Calif. “Homeownership fell during the quarter when government was offering a tax credit (to first-time homebuyers). What do you think is going to happen now that there’s no tax credit?”

The continued decline — 0.5 points lower than the same time a year ago — points to a fast plunge, he said.

Burns believes that up to 6 million of the 8 million households currently in distress could lose their homes in the next 2 years. This “shadow inventory” could push ownership rates down to 61.7% within two years, he said.

Some believe that it will not fall as quickly, because some of the foreclosed homes will be bought by first time buyers, who will then become homeowners.

Either way, it is missing the point to think that falling homeownership is a problem, as far as problems from the economic crisis and the massive number of foreclosures goes, falling homeownership is a pretty small one.

Homeownership fosters stability, and a high percentage of homeowners, a good, cared for neighbourhood and/or community. But joblessness, homelessness, depression, desperation and empty houses are all far bigger side effects than anything surrounding a 10% drop in the percentage of homeowners.

According to some, falling homeownership is not only being caused by the crisis, and some, including Burns even believe that, right now, falling homeownership is a good thing.

According to Burns, large numbers of households right now do not have the responsibility to hold down a mortgage. It may be that these are being kept from obtaining a mortgage by the stricter credit systems, which is a good thing in preventing future financial meltdowns.

Daniel McCue, senior research analyst at Harvard University’s Joint Centre for Housing Studies says another factor causing homeownership to fall is more people questioning the pros, cons, risks and rewards of homeownership and deciding whether homeownership is right for them.

“We’ve seen low-income homeowner rates declining by twice as much as higher-income groups. Everyone is looking harder at the benefits and potential risks of homeownership. Is it the right option for you?”

Image credits: Taber via Flickr

This Post is from: Overseas Property Mall, part of Fuzz One Media Group

US Homeownership Rate Slipping, Could Slip Back to 1960 Low

Hanoi, the Vietnamese capital is to become home to the second largest tower in Asia, material proof of the growing economic prowess of Asia’s brightest emerging markets.

The design of Nikkei Sekkei, a Japanese architectural firm was chosen for the 102 storey, 528 meter tower to be built in the Me Tri commune in Hanoi’s outlying district of Tu Liem. The est. 1.2 billion dollar tower, financed by the Petro Vietnam Construction Joint Stock Corporation (PVC), the Vietnam National Oil and Gas Group, the Ocean Group and the real estate developer SSG Group, will comprise trade centres, offices for lease and apartments.

The tower is phase 2 of a massive complex being built by the corporation, with phase 1 comprising 3 150m hotel and apartment towers. Construction of phase 2 is due to start in 2011 and take 30 to 36 months to complete. When complete, the tower will be second only to the Burj Dubai Tower in the United Arab Emirates.

This is a big deal for Vietnam. As China and India become global economic superpowers, one would expect them to be coming out with towers like this, for Vietnam the structure will be a symbol of how far the nation has come, and something that all Vietnamese citizens can be proud of.

During the recent global construction and property market boom, Vietnam became known as one of the hottest emerging markets in the world. As the recession crossed from America to the UK and rumours of a global crisis began to emerged, Vietnam was talked about as one of the few markets with a chance of escaping recession.

Unfortunately it suffered a recession, but is thought to be rebounding strongly. The International Monetary Fund is forecasting growth of 6% this year, and 6.5% next year.

There is also undeniably a great deal of wealth in Vietnamese corporations like PVC, and developments like this will not only bolster economic growth, by providing jobs from the lowest level to the highest, but also by growing merchant companies who supply materials for its construction. We will be watching this development very closely and keeping our readers apprised of its progress.

This Post is from: Overseas Property Mall, part of Fuzz One Media Group

Vietnam to Build Second Tallest Tower in Asia

News of the IKEA plan follows the recent approval of a Tesco housing scheme in Bromley-by-Bow, consisting of 450 residential units, a primary school, shops and a hotel, which is Tesco’s fifth development after those in Dartford, Kent, Streatham and Woolwich.

The Tesco story went national for obvious reasons, while IKEA’s previous developments were completed with much less fuss. Yes, that’s right; this isn’t IKEA’s first foray into property development in the UK. The company has built a development of prefabricated houses in Gateshead, which, despite all the jokes about flat-packed housing are fully occupied, and “honestly modern” according to the Telegraph. The firm had a proposal to build a 19 story apartment block across from Hillingdon station refused.

The system used to build the Gateshead houses was called BokLok, similar to the kit-houses being made and sold by UK firms.

Plans have not been released for the Sugar House Lane development, all we have is statements from Inter IKEA saying that they won’t look like the BokLok housing, and a statement from Peter Andrews, the chief executive of the London Thames Gateway Development Corporation (LTGDC). Andrews said that he expects the units to display “the ethics of IKEA”.

“From what I’ve seen, they’re going to be different to the high-rise-dominated plans that were up before,” he said.

Andrews also said that he fully expects the development to become “a Covent Garden in the East End”. A retail, housing and leisure hub abutting the Olympic Park, this IKEA village will be one of the things making the new East End a place in which people will be proud to live, as well as a tourist destination to die for.

The question of whether this is good or bad depends on your viewpoint. From the viewpoint of outward facing business in the east end this is a good thing, because UK developers and investors are often prejudicial to the industrial east end, whereas those from outside are coming in with an open mind. Inter IKEA are currently joined by Australian developers Westfield and Lend Lease.

From a first-time buyer’s perspective this could also be good, because it is expected the 35% of the 1500 units will be affordable housing, and affordable by IKEA’s standards may be more affordable than that of Barratts.

For the residential property industry, agents, surveyors, architects, and for the wider economy, companies with substantial capital entering the market can only be perceived as a good thing.

On the whole though, time will reveal whether retail big-shots have a place in the creation of residential housing in the UK or not. One thing is certain; most developers care about the bottom line more than whether housing is affordable to core society, and it is unlikely that Tesco, IKEA, Inter IKEA or any big retail chain will have different priorities.

This Post is from: Overseas Property Mall, part of Fuzz One Media Group

Ikea Joins Tesco in UK Property Development – Good or Bad News?

Japan was the most active market in terms of volume, accounting for 29% of total investment in the region. The US$8.8 billion worth of transactions completed in the country during the first six months of the year, a rise of 62% year-on-year, was only slightly below the all-time high recorded in the first half of 2007. There was a steady flow of small and medium sized transactions involving the acquisition of assets in Tokyo as the period witnessed growing interest on the part foreign investors looking to return to the market and expand their Japanese portfolios.

Land acquisition by developers increased significantly in the second quarter in Thailand. Buyers were condominium developers and AIA purchased a site from the Stock Exchange of Thailand to build an office building. Two completed buildings, the Future Park Bangkae and Fenix Tower were sold to local investors. There was no decrease in prices despite the unrest in Bangkok in April and May. The appetite from developers to acquire sites and investors to buy building increased in June. The Thai property market continues to be dominated by local investors and developers with very little foreign interest.

Hong Kong, South Korea and Taiwan all posted a strong quarter-on-quarter increase in transaction volume in the second quarter, rising by 33%, 81% and 79% respectively, as high net worth individuals and domestic buyers continued to display a strong appetite for prime investment property. Hong Kong recorded US$3 billion and US$4 billion of real estate investment transactions in the first and second quarter respectively, such that the aggregate total for first half year was approximately US$7 billion.

Korea witnessed a tepid start to the year but enjoyed a more active second quarter as a number of major acquisitions of office assets were completed in Seoul, collectively accounting for 95% of transaction volume. Total investment concluded during the second quarter reached US$1.5 billion, up 81% from the preceding quarter. In Taiwan, end-users and local insurance companies completed a significant number of acquisitions within the same time frame, with investment sales totalling US$951 million in the second quarter, up 79% from the US$532 million recorded in the first quarter.

In contrast to other major investment destinations in Asia, China registered a sizeable decline in transaction volume of 87% quarter-on-quarter in the second quarter as a series of cooling measures implemented by the government to expand housing supply and squeeze speculators.

The relatively small flow of deals which were completed during the period were largely accounted for by domestic investors.

“The region is experiencing an uneven recovery and the persisting mismatch between sellers’ expectations and buyers’ risk tolerance will continue to restrict market activity in the second half of 2010,” said Mr. Andrew Ness, Executive Director of CBRE Research Asia.

“However, the relatively steady level of activity witnessed in the first half could potentially be matched in the second half and total investment volume in Asia for 2010 could therefore reach around US$60 billion,” added Mr. Ness.

That said, the high level of outstanding corporate and government debt remains a cause for concern and continues to be viewed within the region as a potential downside risk. Nevertheless, the steady level of acquisition activity by both institutional investors and REITs, which jointly accounted for over US$5.6 billion or 43% of the total investment recorded during the second quarter, demonstrates that the Asian real estate investment market remains generally buoyant, although expanding at a slower pace than originally forecast.

Asian Direct Real Estate Investment Volume

Notes to Editors

1. Asia property investment sales volume/value is based on surveys carried out by CBRE Research Asia on major notable property transactions in major Asian cities.

2. CBRE Research Asia has adopted relevant measurements and definitions in calculating real estate investment capital flow figures in Asia (i.e. we only track publicly announced deals above a minimum threshold which are converted to US dollars using exchange rates recorded during each survey period.)

3. Investment volume excludes development site transactions.

- Ends -

About CB Richard Ellis

CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2009 revenue). The Company has approximately 29,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide.

CB Richard Ellis established an office in Bangkok in 1988, followed by Phuket office in 2004, and Samui office in 2007. CB Richard Ellis (Thailand) Co., Ltd. has grown to be a leading real estate services provider, offering strategic advice and execution for sales and leasing for all types of property, property and facilities management, valuation and advisory, and research and consulting. For more information, visit the company’s website at www.cbre.co.th

This Post is from: Overseas Property Mall, part of Fuzz One Media Group

Press Releases: Momentum Slows in Q2 in Asia’s Direct Real Estate Investment Market

The collapse of British demand for overseas property crippled many markets, not least Dubai, Cyprus and of course Spain. The latter split into regions gives even more locations that felt the severe pain of the British-buyer exodus.

Even now demand from British buyers is at nowhere near the same levels as seen in the run up to the 2008 crash, and of the overseas property markets that are leading the recovery, Russian buyers is a common phrase that we are hearing.

Of course Russian buyers are no new phenomenon. They became a big and growingly important market in the overseas property world towards the latter part of 2007 and into 2008.

At the time many of the larger UK based overseas property agents launched Russian language websites, some backed by Russian speaking telesales operatives. We also saw the industry magazine Overseas Property Professional launch a division specifically aimed at the growing Russian market. In fact it was this growth that undoubtedly spurred the launch of the aforementioned 1-property.ru at around the same time.

As this rolled into 2008, when the American housing and mortgage crash had crossed the Atlantic and started having an effect on British buyer numbers, there were many reports suggesting that Russian buyers could replace them and keep the overseas property industry rolling on with barely a scratch. It was expected at the time that the Russian economy would continue to grow strongly.

As most of us know, this did not pan out. The Russian economy took a hard hit from the international recession, and the Russian’s wealthy from the stock market, among the biggest overseas property buyers were among the worst affected. A prime example was the Villa Leopolda story: Russian millionaire Mikhail Prokhorov paid a 525,000 USD deposit in July 2008 after having his offer of $525 million accepted. But when it came time to pay the balance and complete the sale in December, Prokhorov pulled out. He subsequently lost his deposit in a legal battle.

However, the drop in Russian buyers was more to do with a drop in confidence than wealth. With practically the entire world falling into the worst recession since World War II, only lifestyle buyers and the super rich were buying. Now that there is growing confidence of a bottom in many places, and the Russian economy is rebounding strongly, Russian buyers are back at the forefront of overseas property.

For that reason, the Russian Summit event to be held at the World Trade Centre in Moscow on 11 & 12 November could be an important one for the overseas property industry going forward.

This Post is from: Overseas Property Mall, part of Fuzz One Media Group

Russian Summit Could Be Important to Overseas Property Industry

Russian Summit brings together some of the biggest agents working in international real estate in Russia such as Intermark Savills, Knight Frank Russia and Gordon Rock; with an audience of international agents and developers from destinations across the globe.

Ashley Rigg, director of co-organizer Globaledge.co.uk believes the event is an industry first:

“There are a number of successful international property shows in Moscow and St Petersburg but they are all aimed at the end consumer. There has never been anything focused on helping agents and developers both understand the market and more importantly meet local agents who can refer business”.

Globaledge.co.uk have partnered with Russian media company aiGroup to deliver an audience of local agents. Kim Waddoup, CEO of aiGroup believes the event will address a real market need:

“We have worked in this market for over seven years and it is amazing the number of misconceptions people have about the country. Russia is different. If you are serious about this market, you have to build personal relationships and this is incrediably difficult to do without visiting the country and meeting people”.

“The aim of Russian Summit is to create a complete solution where agents can learn about the market but also meet agents at our mini-exhibition. We will be taking care of everything from translation of properties into Russian to personal interpreters and airport transfers”.

Russian Summit will be held at the World Trade Centre in Moscow on 11^th & 12^th November 2010. The event compromises an English-language conference and a dual-language exhibition aimed at Russian agents. The organizers guarantee a minimum of 100 local agents will be attending the event.

For more information please visit www.russiansummit.com.

Background information

The aiGroup has more than seven years experience working in the overseas property market in Russia. It organises the country’s leading international property shows which include the Moscow International Property Shows and the St. Petersburg International Property Shows as well as publishing International Residence Magazine and overseas property portal www.1-property.ru.

Global edge is the leading news & networking website for professionals working in the overseas property industry. Over 30,000 internationally-focused agents and developers visit the site every month to keep up-to-date with the latest trends and to source interesting projects to sell.

Contact:
Ashley Rigg
Director
Globaledge.co.uk
Tel: +44 207 199 7891
Email: ashley.rigg@globaledge.co.uk
Web: www.globaledge.co.uk

This Post is from: Overseas Property Mall, part of Fuzz One Media Group

Press Release: New Event to Help International Agents do Business in Russia

4 August 2010 Asia — Asia’s leading commercial centres recorded impressive growth in office demand in the second quarter of 2010 as the steady regional economic recovery encouraged multinational companies to reactivate expansion plans suspended earlier after the onset of the global financial crisis, according to a leading international property consultants CB Richard Ellis.

Led by strong growth in Greater China, overall office rents in Asia rose 2.1% in the second quarter of 2010, ending seven consecutive quarters of decline. Overall vacancy declined by 90 basis points quarter-on-quarter to 10.9%. The increased level of enquiry for office space during the second quarter did not immediately translate into leasing transactions. However, this suggests that the leasing market will remain active over the coming quarters.

“Within the second quarter, Greater China witnessed the largest upsurge in leasing activity with both multinational and domestic corporations quite active in taking up space in major cities. The total net absorption of prime office space in Hong Kong and first-tier Chinese cities, namely Beijing, Shanghai and Guangzhou, collectively accounted for three quarters of the regional aggregate in the second quarter,” explained Mr. Andrew Ness, Executive Director of CBRE Research Asia.

“Office rentals in these cities also recorded a larger magnitude of growth compared to other Asian cities. Singapore was another standout performer, with Grade A rents returning to growth after six consecutive quarters of decline,” added Mr. Ness.

Elsewhere across Asia, robust demand has as yet to induce significant hardening in rentals as landlords competed to fill space amid relatively high availability and, in certain markets, a large quantum of future supply scheduled to come on-stream over short-to-medium term.

Commenting on the outlook for the remainder of this year Andrew Ness said, “The Asian office market is expected to remain relatively muted for the remainder of 2010. Companies continue to be confident about the regional economic outlook, but concerns over a slower global economic recovery following the outbreak of the eurozone debt crisis will probably curtail aggressive expansion by multinationals over the short-term.”

Thailand

In Thailand, overall business conditions improved, as reflected in an increase in the Business Sentiment Index (BSI) to 49.9 in May, up from 46 in April. The improvement was driven by an increase in all BSI components, especially production which resumed its normal level after the ending of the protests. Vacancy rates of Grade A CBD offices declined slightly to 16.45% in the second quarter of 2010 (compared to 17.4% in the first quarter of 2010), with a net absorption of 10,160 sq.m. The growth in take-up was due to the relocation of an international bank to a Grade A office building from a Grade B building. Prime office rents stood at THB 680 per sq.m. (US$ 1.95 per sq.ft.) per month in the second quarter of 2010, compared to THB 683 in the first quarter of 2010.

Japan

In Japan the Tankan economic survey confirmed that the country’s economic recovery was continuing and that businesses were regaining confidence. The turnaround in the economy encouraged some tenants to relocate to higher grade buildings or to those in more convenient locations. In some selected cases, companies expanded their footprint and moved to buildings with more space. However, overall demand for office space in Tokyo remained weak and rents were unchanged over the quarter.

Korea

In Korea, office demand in Seoul increased along with the improvement in corporate sentiment, but notwithstanding this fact, the average vacancy for Grade A office properties continued to climb as new space was added to the market. New buildings scheduled for launching in the second half were observed offering below-market rents to recruit tenants. Rental growth in Seoul is expected to remain limited in forthcoming quarters, although office leasing demand should remain stable as the economy is expected to hold up well.

Hong Kong

In Hong Kong, near full occupancy in premium Grade A buildings and the strong recovery in demand from investment banks drove CBD rental growth of 8.4% quarter-on quarter. Office buildings in decentralised locations attracted strong interest from companies looking to relocate and consequently enjoyed a brisk rate of absorption. Looking ahead, large space users will be hard pressed to find available space citywide given the lack of current options and rents are expected to see further growth in light of the limited quantum of new supply in the pipeline.

Mainland China

In Beijing, all the major office submarkets recorded growth in rentals with citywide prime office rents climbing 4.1% quarter-on-quarter. The Financial Street and Zhongguancun areas saw demand for prime office space outstrip supply although the CBD continued to record vacancy of over 20% despite the rise in leasing activity. Improved business sentiment and new rounds of hiring also resulted in an active office leasing market in Shanghai. However, the substantial amount of future supply in the pipeline acted as a counterbalance to landlords’ becoming overly aggressive with respect to excessively raising their quoted rents. Elsewhere, the Guangzhou prime office market continued to recover during the second quarter. Encouraged by the buoyant leasing activity witnessed since the beginning of 2010 and the consequent decline in available space, landlords raised their rental expectations for office buildings that had earlier been launched with more conservative leasing strategies in the preceding quarters.

Taiwan

In Taiwan, despite brisk GDP growth in the first half of the year, office occupiers generally remained cost conscious. A significant number of Grade A buildings witnessed the downsizing or departure of SME tenants and hence prime office rentals remained flat.

Singapore

Leasing momentum in Singapore remained strong during the second quarter, partly due to pent-up demand from multinationals, which appear mostly to have recovered from the global financial downturn and who are now in a position to engage in cautious expand. Average prime rents grew 3% quarter-on quarter in the second quarter and vacancy across all micro-markets fell. Although 641,264 sq.m. (6.9 million sq.ft.) of new office space is scheduled to come on stream between now and 2015, a portion of existing office stock in the CBD will be redeveloped or converted to other uses, reducing the spectre of oversupply.

India

Major Indian office markets continued to see growth in leasing activity but rentals were largely unchanged or showed only incremental growth as the quantum of vacant space outside the CBD area remained significant. The New Delhi office market enjoyed a strong revival with considerable leasing activity reported across the National Capital Region. However, similar to the previous quarter, rentals in the Grade A segment did not witness any growth. Mumbai reported an increase in enquiries for office space although the growth in interest failed to translate into immediate transactions. Leasing demand was largely driven by corporate consolidation and relocation to achieve cost savings. The Bangalore office market continued to stabilise although landlords were forced to remain flexible when negotiating with tenants as demand still lagged behind prevailing robust levels of availability.

About CB Richard Ellis

CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2009 revenue). The Company has approximately 30,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide.

CB Richard Ellis established an office in Bangkok in 1988, followed by Phuket office in 2004, and Samui office in 2007. CB Richard Ellis (Thailand) Co., Ltd. has grown to be a leading real estate services provider, offering strategic advice and execution for sales and leasing for all types of property, property and facilities management, valuation and advisory, and research and consulting. For more information, visit the company’s website at www.cbre.co.th

This Post is from: Overseas Property Mall, part of Fuzz One Media Group

Press Release: Office Rents in Asia Rise 2.1% Ending Seven Consecutive Quarters of Decline

This Post is from: Overseas Property Mall, part of Fuzz One Media Group

International Property News Beat – Carlos Slim’s Mansion, Brazil Real Estate & Property Bubbles

According to the California Association of Realtors Annual Housing Market Survey, the proportion of ethnically Asian — most commonly Asian Indian, Japanese, Chinese or Filipino — buyers rose 3.8% between 2007 and 2008 and a further 2.3% between 2008 and 2009. This left the total proportion at 18.1 percent in 2009, up from 12% in 2007. The surveys also tell us that the proportion of Asian buyers never went higher than 12% even at the height of the boom (2003-2006).

Leslie Appleton-Young, chief economist for the California Association of Realtors (CAR), said the change in the proportion over time was noteworthy.

“They’re buying in distressed markets and utilizing (government incentive) programs,” she said.

The trend has also been noted by local realtors in San Diego and Southwest Riverside counties, who said that Asian’s tend to be uncomfortable taking on too much debt, and have preferred to invest in their small business rather than buy property during the boom.

“Asians are very conservative when it comes to buying,” said Scripps Ranch realtor and president of the San Diego chapter of the Asian Real Estate Association of America, Shonee Henry, “We don’t go out there and buy, and forget about what’s going to happen tomorrow. We tend to make sure we have enough money to support ourselves and everyday expenses.”

Henry mused that homes being too expensive was also a reason for Asians holding off buying during the boom:

“They might have had the down payment, but the monthly payments were too high,” she said.

Now that average house prices are down 35% the conservative Asians are in the fortunate position of having sizeable down-payments.

The CAR survey said Asian buyers put down an average down-payment of $90,000 in 2009, triple that of non-Asians. This was mostly in the form of 20% of the purchase price, compared to the 10% stumped up by non-Asian buyers. Appleton-Young said Asians may be avoiding low-down-payment programs such as those offered by the Federal Housing Administration.

This is one trend that is not echoed however; Ric Manalo, a Realtor with offices in Temecula and Chula Vista, said that Asian buyers in Southwest Riverside were making use of low-down-payment programs.

“The margin between what it costs to rent a home and what it costs to buy a home is so small, most of these are FHA and VA (Department of Veterans Affairs) deals they can get in for very little money,” he said.

Henry pointed out variations between the different nationalities; she said that her Filipino buyers went with low down-payment programs, while Chinese buyers tended to have cash for big down payments.

Photo credits: Jeff Turner via Flickr

This Post is from: Overseas Property Mall, part of Fuzz One Media Group

Conservative Asian Buyers Snapping Up Distressed US Property

Experts believe that this is the first decline in what will become a downward trend to see out this year and possibly start next year.

“This is a turning point of the overall property price trend,” Yang Hongxu, a Shanghai-based analyst with E-House China R&D Institute, told AFP.

“The decline will continue for several months once the trend is consolidated — probably lasting into the end of this year or the beginning of next year,” he said.

One has to agree with this prediction really, because now that prices have turned investors — confidence dented — will almost certainly adopt a wait and see strategy, and there could also be a major rise in supply as those left holding the hot potatoes try to off load them before their profit evaporates.

There is no way to suggest that confidence won’t be dented, because on a run of record growth like the 16 month run just seen by China, people start to believe that it will never end. This has been especially true of China, where this belief was compounded with regular reports from realtors and supposedly impartial analysts stating that the massively rising population [Can't find a Link to a quote of analysts making such bullish statements, but I know I have read plenty of them, maybe you can have better luck] and rapidly growing affluence would sustain the growth forever more.

Maybe it would have done, but the government has worked hard to end the run of record growth, as evidenced by the fact that June prices were still almost 12% higher than June last year.

The measures started off quite small and highly targeted; things like increasing down-payments on second home purchases, and trying to loosen the relationship between realtors and mortgage brokers. Both perfectly good measures: one aimed at reducing run-away speculation and the other at reducing the likelihood of lenders giving out the level of bad-loans that crippled the US, UK and Spanish banking systems, and all aimed at cooling the market without crashing the economy.

The main target of the government’s efforts has always been the riskiest of speculators, the buyers that would see off plan properties change hands several times before they had even been built.

The first would have been immediately successful in the wider aim, because it meant that speculators would have a higher cash-to-credit ratio, assuming they didn’t scam the system, for instance using friends, family or even their prospective tenant on the mortgage document so they could get a first-timer deal*.

The prospective tenant would have been tempted into it on the basis that their rental payments would go towards the purchase of the property. In this the original speculator would still win because they tenant/buyer would pay a higher price, thus guaranteeing a profit on the property. Anyone with a poor credit rating would surely jump at such an opportunity, provided the profit was not unreasonable, though the main candidates would be close friends and family given the strict judicial system in China.

Apologies for the digression, but it is necessary to show the potential for the government measures failing to cool speculation. Not least because the measures did fail, and certainly not least because the government’s subsequent measures were also aimed at cooling speculation.

Measures that saw third home loans severely restricted to the point of near extinction, and restrictions tightened on advance sales of new developments — off plan is of course primarily the foray of the speculator, especially in a market entirely fuelled by internal buyers**.

**The Chinese property market has seen such incredible growth fuelled entirely by internal Chinese buyers; which in turn saw it fuelled by the massive growth in the Chinese economy, which continued throughout the international downturn. Part of the reason the bubble inflated was of course the fact that the government initiated stimulatory measures in a pre-emptive strike for a recession that never came. This of course caused a liquidity surge, similar to that seen in Australia and Canada, but far worse because of the level of growth the Chinese economy maintained.

In fact, it is because the growth is fuelled by internal buyers that the government’s measures have eventually worked. There is sufficient money and affluence is growing so rapidly that those fortunate enough to be a speculator in the Chinese property market needn’t risk the wrath of the government by taking the kind of shortcuts mentioned above*.

This Post is from: Overseas Property Mall, part of Fuzz One Media Group

Chinese Market Sees Run of Growth End… Starts Run of Decline?

Research by leading London Estate Agent Knight Frank has revealed that the number of nationalities buying up prime property (£2 million+) in London has risen to 51, as buyers from far-flung destinations like Malaysia, Iran and Brazil join the traditional Russian and club-med buyers in taking advantage of the weak pound.

According to the data, Russian buyers were the dominant force in the market, accounting for 14% of all purchases by foreigners. American buyers were next with 11%, followed by Italians with 9%, and Indians with 8%. Knight Frank also said that the number of Greek buyers had doubled in the last year, which they put down to their desire to bring their money out of their debt-laden country.

Knight Frank’s head of residential research Liam Bailey said: Despite the fact that prices have risen 24 per cent since last March and stand only six per cent below their March 2008 market peak, the weakness of the pound ensures that effective discounts available to foreign buyers are still very significant.

Therein lies the key, prime property prices up 24% to just six percent below the March 2008 peak. This growth is undoubtedly largely because of the foreign buyers flooding the market on the weak pound, and it is this growth that distorted the picture of the UK housing market. This is being hailed as positive by Knight Frank; the question is what happens to the market when the foreigners stop buying?

The other interesting finding of the research was that the different nationalities have a tendency to buy in the same boroughs.

For instance, the Russians tend to buy in the traditionally fashionable areas of London; Belgravia, Mayfair and Knightsbridge, Nigerians have a preference for Bishop’s Avenue in Hampstead, while the Greek, Italian and French buyers — tend to favour Chelsea, Fulham, Hampstead.

Celine Pommier, of Knight Frank’s Chelsea office, said: The Greeks and Italians see Chelsea as a stable area with a long-standing international reputation.

Photo credits: Herry via Flickr

This Post is from: Overseas Property Mall, part of Fuzz One Media Group

Foreign Demand for Luxury Properties in London at an All Time High

So, on the face of it Yahoo was a competitor but not in terms of their business models; they weren’t stealing any bread from each other’s tables if you like.

It must have suddenly (god knows why it took this long) occurred to Yahoo that not only were they missing out on a potentially lucrative side of their business, but that they were also letting many of their customers down.

Yahoo Real Estate itself admits this, in saying that there was tremendous demand to list properties on its real estate service, but that before now it was not serving these customers well on a “hyperlocal” advertising basis. In this statement they admit that they were missing out on revenues; by failing to advertise properties listed well on a localised basis they were not scoring any points with savvy agents looking to make the most of their advertising budgets, and letting customers down for the same reason.

“This partnership changes that,” says Steve Schultz, head of Yahoo’s real estate service.

Apparently, the partnership will be able to compete more closely with the market leading Realtor.com, owned by Move Inc. Realtor.com currently received 12 million visitors per month, pre partnership Yahoo Real Estate received 6.14 million and Zillow 7.05 million. This should give them a combined 13.19 million visitors, however, analysts believe there is a 10% overlap of their traffic, which means that combined the sites should receive just shy of the 12 million Realtor.com is host to.

That said: the 10% overlap is clearly only a guesstimate; it could be much higher or lower. This is especially true because of the fact that Zillow.com also has an overseas section, whereas Yahoo Real Estate is US only.

There is little denying that the partnership with Zillow.com will give those listing properties on Yahoo Real Estate access to a much wider audience than they have currently. This combined with the brand power of Yahoo could lead to the combination being able to mount a better challenge on the dominance of Realtor.com. Having said that, if the brand power of Yahoo was really an issue they wouldn’t need Zillow’s help to challenge anyone online — except Google of course. Time will tell.

This Post is from: Overseas Property Mall, part of Fuzz One Media Group

Yahoo Real Estate Partners with Zillow to Challenge Realtor.com