Portuguese Real Estate Boosted by Foreigner-Friendly Investment Climate
A combination of improved fundamentals and government measures to relax tax and visa rules applying to foreign property investors has kick-started sustainable recovery in Portugal’s property market.
Recovering property prices, low mortgage rates and a more investor-friendly tax climate are helping to make Portugal one of Europe’s most attractive overseas property destinations this year, according to the Algarve office of PortugalBuyingGuide.com.
Elaine Ferguson, head of the resource centre at OverseasGuidesCompany.com said: ” Our PortugalBuyingGuide.com office in Vilamoura has noted an upturn in demand in 2015, partly fuelled by the weaker euro but also by the favourable mortgage deals available in Portugal now. Meanwhile there is evidence of limited supply of new-build in some areas of the Algarve, which is also putting upward pressure on the market. In terms of mortgages, since Portugal’s exit from the bailout last year, there has been more confidence in the home finance market, with Portuguese banks becoming more competitive, typically offering 80% LTV (loan-to-value) and rates of below 3.5%, helped by the incredibly low Euribor rate “.
Improving fundamentals and bargain prices continue to attract foreign property investors in Portugal
In the August publication of the RICS’ Portuguese Housing Market Survey , the dynamic of solid demand and falling supply is expected to support house price recovery in Portugal. The report highlights the imbalance between rising buyer enquiries and falling new sales listings continue to underpin a steady increase in house prices. Likewise, in the lettings market, solid tenant demand growth has pushed rents up marginally although a relatively flat trend is still projected by the RICS in the near term.
The report goes on to indicate that sales volumes are expected to pick up at a smart pace in coming months, with the backdrop of solid demand from foreign property investors underpinning price growth.
With demand outstripping supply in Portugal’s housing market, property prices have continued to recover across all regions. What’s more, the latest data suggest the rate of house price inflation accelerated across each market during August. The survey’s respondents – all real estate professionals operating in Portugal – remain confident that house prices will rise further at both the three and twelve month horizons. ” Indeed, over the year ahead contributors forecast national prices will increase by around 3% and by (on average) roughly 5% per annum over the next five years, ” the report states.
Portugal’s government has been actively engaged in stimulating foreign investment in its property market by improving the investment climate through improved taxation and schemes like the Non-Habitual Residents (NHR) programme which guarantees considerable tax breaks on pension and income in the first ten years of residency.
Comparatively low taxation to other EU nations attractive to non-EU buyers in Portugal
Other attractive incentives for overseas property investors in Portugal is that there is no wealth tax at all and negligible inheritance tax compared with other EU countries, adding to its appeal to non-EU property buyers.
Portugal’s Golden Visa scheme has continued to attract foreign buyers in its real estate market, predominantly from China, Brazil and Russia. Many purchase properties in Lisbon where relaxed rental controls from 2012 have triggered the rehabilitation of many of the city’s older, imposing buildings, many of which are being converted into luxury apartments.
Tourism has been booming in Portugal in 2015 with Porto, the country’s second city seeing more visitors this year after EasyJet launched direct flights from Bristol, Luton and Manchester in April. Porto has been rebranded to convey a more ‘youthful, cosmopolitan’ feel that is attracting holidaymakers like a magnet to the historic city, set on the banks of the Douro in the north of Portugal.
Improved tourism infrastructure and increasing visitor numbers has elevated interest among foreign property investors in Portugal through 2015. However, in the recovery of Portugal’s housing market, there is clearly a shift in interest from investing in the country’s traditional hotspots in The Algarve more towards buying for the domestic and holiday rental markets in Lisbon and Porto.
With supply still gathering pace to meet the huge demand for Portuguese real estate, there are still some bargains to be found although opportunities will become increasingly scarce unless there’s a pick-up in construction in the near term.
Article by +Roxanne James on behalf of Propertyshowrooms.com
US Hotel Performance Climbs to Record Levels in 2015
According to credit agency Fitch Ratings, hotels in America are reaching record levels of occupancy and profit, although in some markets the sector appears to be moving beyond its peak. In its quarterly update of the four major property types, Fitch recorded stability in hotel, multifamily and office, while the retail sector struggles on.
The US hotel sector has posted 59 consecutive months of revenue per average room (RevPAR) growth through July, benefitting from the tailwinds of favourable demand barometers and with low oil prices working in their favour. Fitch also sees positive signs for refinancing existing commercial mortgage-backed security deals, increasing property values in a landscape of continued low interest rates and limited supply
In its report, Fitch Ratings identifies four markets, including its hometown of New York City that should be watched for potential oversupply. Along with New York, which has by far the largest number of rooms under construction, other development hot spots include Houston, Seattle and Miami.
Although low oil prices bode well for most US hotel markets, they are detrimental for Houston and Calgary, as both areas dominate America’s oil and gas sector and have been hit hard by declining oil values. Other macro events, such as the impact of California’s drought laws on resorts with water attractions of golf courses, need to be taken into account, as does the possible dampening effect of the strong dollar on international tourism.
Another property sector with five years’ strong growth behind it as well as tailwinds for its future, multifamily also is marked by the prospect of ” significant ” increases in supply for some markets, Fitch says. That portends vacancy increases in some markets; citing data from commercial real estate researchers Reis, Fitch says Washington DC is already there. The apartment vacancy rate in the nation’s capital has moved upward from 4.2% in the second quarter of 2012 to 6.9% in Q2 of this year, as ” record new supply in the market over the past two years has been slow to be absorbed “.
Reis predict a vacancy increase for Houston as well, according to Fitch, with the energy hub’s new supply outpacing demand by 2019. That’s the case even as some multifamily projects may be postponed amid uncertainty over the impact of low oil prices on its economy. Conversely, Fitch notes that the diversity of Houston’s economy makes it difficult to gauge that impact, while in the near term, the city’s apartment vacancy has continued to trend downward, falling 100 basis points year-on-year to 5.7% at the end of the second quarter of 2015.
Conversely, the office sector in Houston has seen vacancies increase to 15.6% from 14.2% a year earlier. Its construction pipeline is the largest of any US city with 11 million square feet to be developed in coming years, exceeding even the 9.5 million square feet in the pipeline across New York City.
Outside of Houston, Fitch is keeping an eye out for a potential ” tech bubble ” in the Bay Area as well as Seattle, Boston and New York. That’s the case especially as certain tech-heavy submarkets in those cities, such as Midtown South in Manhattan and Cambridge/Route 128 North in Boston, have seen year-on-year rent increases of more than 7%.
Retail vacancy across the US has reached a new low, while rents have achieved modest growth of around 0.6% over the last 12 months. Fitch note its concern that continued store closings along with underperforming class B and C malls in secondary and tertiary markets will drag the retail sector down. Among the retailers announcing or having implemented closings recently include Gap, Macy’s and Golf Galaxy.
Despite mixed results from the different sectors of America’s commercial real estate sector, in general the outlook is highly positive, despite declining oil prices dampening growth. As a testament to improved affluence resulting from economic recovery, America’s residential housing sector is proving to have the most potential for continued growth as buyers seek the security of home ownership as confidence increases.
Article by +Roxanne James on behalf of Propertyshowrooms.com
America’s Property Markets Officially in ‘Clear Buy Territory’
A new report published by academics in Florida reveals that the US as a whole is moving deeper into buy territory, with home ownership expected to produce greater wealth on average than renting.
The Beracha, Hardin & Johnson Buy vs Rent Index (BH&J Index) reveals that as of the end of the second quarter of 2014, the housing market in the US is generally trending towards home purchase, as numbers of households in private rented accommodation have started to decline.
” The US as a whole is still in clear buy territory,” said Ken Johnson PhD, a real estate economist who is one of the index’s authors. “The cities of Cincinnati, Chicago, Cleveland and New York City are deep into buy territory “.
As prices for property in the US start to reflect better core value in certain areas, more affordable opportunities for home ownership are becoming available and American buyers are responding positively to the improved dynamics. Miami and Portland, two cities which in recent years have been edging further into rent territory have ” pulled back from the edge, ” Johnson said. ” It’s coming back toward a toss-up between buying and renting. That’s a good sign for home pricing in Miami and Portland as it suggests prices are going to level off in these metro areas “.
According to the report, Dallas and Denver dipped slightly deeper into rent territory, making renting the preferred method of wealth accumulation on average. Houston however, was plunged alarmingly into historic levels of rent territory.
” Housing is particularly worrisome coming in with a score or .633, ” Johnson said. ” Rapid property appreciation combines with shaky economic prospects to put Houston on the watch list for a near-term dip in housing pricing “. Relatively flat income growth and rising index scores that strongly favour renting are attributed to growth in the rented sectors of Dallas and Houston.
Honolulu, Pittsburgh, San Francisco and Seattle all sit on the fence in terms of preferences for ownership and renting. The report concludes that in these areas, the spread between monthly rent payments and ownership payments is at the point where neither ownership nor renting is statistically favoured.
The BH&J Index attempts to answer one of the toughest questions American consumers face: Is it better to rent or buy a home in today’s housing market? The quarterly index is designed to signal whether current market conditions favour buying or renting a home in terms of wealth creation over a fixed holding period in a particular market, relative to historical market conditions and alternative investment opportunities. The study examines the entire housing market in the United States and isolates the markets of 23 key cities.
The results of the index are standardised between 1 and -1, with negative scores favouring ownership and positive scores, renting. The BH&J Index provides information on both the direction and health of varying housing markets as well as collateral information for real estate professionals, developers, lenders and housing policy makers.
Realtytrac , a real estate information company, compiled data on 285 counties across the United States analysing the economics of buying versus renting a home in 2015. They found the average cost to rent or own a 3-bedroom house and determined the percentage an average worker would have to spend from their weekly income.
The report revealed some surprising results: ” The separate Buy-or-Rent analysis released today found that making monthly house payments on a 3-bedroom property is more affordable than paying fair market rent on a comparable property in 188 of the 285 counties analysed, representing 66% of the areas included in the survey “.
In general, the US is experiencing an increase in confidence among domestic home buyers that gives a strong indication economic recovery is improving nationally. Property prices in the majority of areas in America have reached levels that are more affordable meaning the rental option is becoming less attractive for those looking to increase their wealth prospects.
Article by +Roxanne James on behalf of Propertyshowrooms.com
Thai Property Market Showing Signs of Resilience
The outlook for Thailand’s property sector remains positive as domestic demand picks up to outweigh recently declining investment of foreign capital.
Foreign investment in Thailand’s property market took a hit from the Bangkok bomb blast in August but the sector is resilient and the long-term outlook is positive according to analysts and developers in the country.
James Pitchon, executive director of consultancy CBRE Thailand said: ” The tragic blast at the Erawan [Shrine] has hurt the overall market sentiment a bit. We were quite worried in the week afterwards but the overall state of the economy is a far more important issue driving the performance of the property market rather than a single tragic event “.
Koh Keng-Shing, the chief executive of Hong Kong-based Landscope Christie’s International Real Estate said one of his Thai clients, the developer Ananda, postponed its project sale campaign in Hong Kong to late September, although none of its buyers had backed off from deals in late August because of the bombing.
Thailand’s real estate sector is more domestically driven, reliant upon large-scale foreign capital. International buyers have been concentrated in the country’s luxury property sector, where prices are usually over €250,000. In central Bangkok, approximately 20% of high-end condo buyers are foreign, Pitchon said, with investors from Hong Kong and Singapore snapping up the lion’s share.
The blast in Bangkok also took a toll on Thailand’s tourist arrivals which had potential to hit the country’s hotel sector and resort related developments, although according to a recent report from Daiwa Capital Markets , it may only take three months for Thailand’s tourism to rebound after the blast.
Jonathan Umali, director of asset management at Arch Capital said: ” The market is very resilient. It dips down for a quarter or six months and it goes back up “. Umali is planning to launch phase one of his mixed-use 13 hillside villas and 75 beachfront condos that are priced from €200,000.
For tourism-driven resort properties such as Umali’s, being far from Bangkok gives it some insulation from urban upheaval. In the past, these types of properties have been popular among foreign expatriates, but since the global financial crisis in 2009, demand has cooled slightly, according to analysts.
Despite a moderate decline in foreign in interest in Thailand’s property, Chinese buyers are stepping up activity in the country and according to Chinese property portal, Juwai.com, Chinese appetite for Thai property is larger than for any other country.
The average price of real estate searches by Chinese buyers has also increased significantly by 39% since the beginning of the year, representing an increase in budget of 111% on 2014 with Chinese buyers seeking properties with an average price of €534,723.
Juwai.com CEO Andrew Taylor said: ” Chinese buyers are taking advantage of their strong currency and proximity to Thailand to invest in vacation homes and investment properties. Over the past five years the renminbi has gained 19% on the baht. Chinese businessmen with commercial interests in Thailand were among the first buyers of local residential real estate. Now you see vacationers and investors joining their ranks. The top destinations in Thailand are Pattaya, Koh Samui, Phuket, Chiang Mai and Bangkok “.
” Thailand could greatly profit from the projected massive increase of Chinese international property investment in the coming decade. It could easily displace other countries that are currently more popular with Chinese buyers. Thailand has advanced from the 10th most popular country with Chinese buyers to the 9th,” he added.
Increasing Chinese tourism in Thailand has been a particular incentive for Asian developers to pour investment capital into the country’s commercial real estate market. The hotels and hospitality sector is booming in 2015 as major international brands steam into Thailand’s most popular resorts such as Bangkok and Pattaya, building to meet ever-increasing tourist demand, particularly from China.
Article by +Roxanne James on behalf of Propertyshowrooms.com
Dubai’s Real Estate Sector Shows Signs of Slowing
According to the latest Dubai Real Estate Tracker survey published by UAE bankers Emirates NBD, the majority of real estate agents in Dubai are suggesting that price declines over the last three months strongly indicate a slowdown in its property market.
Just 13% of the estate agents surveyed by the bank in the report, produced by financial information services provider Markit, recorded increasing sale values. An alarming 60% of respondents are of the opinion that Dubai’s real estate market has embarked on a downward spiral, reflecting a general loss of appetite among international property investors.
The latest data from buyer enquiries generated by estate agents in the Emirate shows that softer market conditions have resulted in great caution among buyers in the last three months, with 54% of agents noting declining investor sentiment over the period.
Khatija Haque, head of MENA research at Emirates NBD said: ” The Dubai Real Estate Tracker survey is consistent with price data and shows a further slowing in the residential real estate sector over the summer months. While the slowdown is partly seasonal, other factors including concerns about the economic outlook and US dollar strength have weighed on demand “.
The survey confirms increasing reports from leading analysts and consulting firms in the UAE that prices for property in Dubai are witnessing a sharp decline as the real estate sector continues to soften.
Global real estate consultants CBRE recently revealed that property sales in Dubai during the third quarter of the year were around 2% lower than the sales during the previous quarter, while property prices declined by 6% over the same period. Price data shows that property values in Dubai’s residential market are currently 3.1% lower from the same period a year ago and 21% below the 2008 market peak.
Nevertheless, the Dubai Real Estate Tracker indicates a rebound in confidence in its outlook for the next 12 months, with 45% of agents expecting a rise in average property prices, outstripping the 30% forecasting further declines.
Rents in Dubai’s residential segment remained stable over the three months to August, with estate agents reporting both a rise in newly-agreed rentals and increasing levels of new enquiries, according to the survey. ” However, the lettings market remains robust both in terms of the volume and price, suggesting that population dynamics are supportive of the real estate sector, ” adds Khatija.
Some real estate professionals believe that the current downturn in Dubai’s property market is better characterised as a stabilisation rather than a softening and remain of the opinion that the time is right for a price correction, following the rapid growth experienced over the last two years. Fears of a potential property bubble have now been replaced with growing confidence that stabilisation in Dubai’s real estate sector will continue to attract investment from overseas.
The report shows that residential real estate prices and sales volumes for apartments in the Emirate appear to be holding up better than villa prices, with just 56.8% of agents reporting declining apartment prices compared with 62.2% recording lower villa sale values.
The survey covered nine apartment communities and five villa communities in investor zones in Dubai and showed declines of 2.7% and 2.6% for apartments and villas respectively over the research period. However, transaction volumes remain broadly unchanged, indicating there is still a healthy appetite for investment property in the Emirate and declining prices may actually go some way to boosting buyer interest in the coming months.
Article by +Roxanne James on behalf of Propertyshowrooms.com
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