Bahrain’s Investcorp Targets Push into European Property
Investcorp, one of the biggest foreign buyers of US real estate and an early backer of luxury brands like Gucci and Tiffany & Co., is planning to buy European property for the first time, said its recently appointed executive chairman.
” We want to do things we haven’t done before within our areas of expertise. We’re thinking about Europe now, ” said Mohammed Al Ardhi, who took over the top job at Investcorp in June, in an interview with the Wall Street Journal. He added that Investcorp is assessing the right opportunities to target in European real estate, particularly in the UK and Germany.
The asset management firm is considering whether to buy an existing European real estate investment business or build one itself, he said.
Investcorp has$2bn invested in real estate assets on top of more than $8bn in hedge funds and private equity and has poured around $1bn into American property in the past year, including student housing in California and Florida and commercial property in the Northeast. It currently has no real estate investments outside the US.
Investcorp will focus on commercial and residential real estate but not on the trophy assets targeted by many overseas investors, particularly in central London and the firm will continue to expand its US property portfolio.
Investment in European commercial real estate is surging. In the 12 months through the end of the third quarter, investment volumes reached nearly €238bn ($263bn), the highest level on record, according to data from broker Cushman & Wakefield . The previous high of almost €235bn for the comparable period was in 2007.
With interest rates low, returns on property appear attractive compared with other asset classes like bonds and demand for real estate in Europe shows no signs of slowing. Investcorp’s push into Europe will also involve trying to target more investment from the region’s ultra-high net worth individuals and families, Mr Al Ardhi said.
Earlier this month, the firm bought eight residential properties in Las Vegas, Denver, Chicago, Atlanta and Dallas for approximately $400m. All eight were so-called multifamily rental properties, a sector Investcorp has been involved with in the past.
For property investors in Europe with smaller budgets, the entrance of big players into the arena indicates there is still value to be had in real estate markets, particularly in central London and in the five big cities of Germany where Investcorp are zooming in.
It’s always worth making particular note of investment activity in commercial markets to find the best value in residential property. As labour markets expand and companies fill newly constructed office buildings, retail and industrial sites, demand for residential property naturally increases as a result and a dynamic is created that presents value to savvy buyers.
The principal interest for large-scale investors in residential property has been in income generating assets in 2015. Properties that provide homes to specific groups like students, hospital staff and low-income families are generally the vehicles of choice for consistent rental yields.
Article by +Roxanne James on behalf of Propertyshowrooms.com
Five African Property Markets in Top 10 Emerging Economies
Emerging markets present unique and individual challenges for property investors and tracking data to identify the most sought-after emerging economies is no easy task. Nevertheless, a new report from global real estate researchers Cushman & Wakefield ranks five African markets in the top 10 most transparent emerging economies.
According to the latest annual Emerging and Frontier Markets report (2015) , a 55-page study that provides investors with overviews of the office market and relevant indicators for 42 countries globally – from Angola to Zambia – Africa dominates the top 10 rankings through South Africa (3rd), Ghana (4th), Morocco (8th) and Tunisia (10th) – in addition to Botswana in southern Africa that retains its 2014 top ranking.
Reasons for Africa’s dominance in the top 10 most attractive emerging markets include a growing middle class population, better infrastructure and technological improvements in a number of countries possessing transparent real estate markets.
” Emerging markets are often mistakenly viewed as homogenous,” notes Richard Middleton, Head of account management & client services for EMEA at Cushman & Wakefield. “However, in reality real estate dynamics vary considerably as do the sets of risks and opportunities on offer for occupiers across differing geographies and business sectors “.
As emerging markets become increasingly integrated into the global economy it’s important to remember the sheer size and diversity of developing economies. Middleton adds: ” Africa is a good example of this with countries [across the continent] offering very different operational profiles. Real estate strategies [consequently] need to reflect this “.
One of Africa’s up and coming markets is the Western Regional capital of Sekondi-Takoradi in Ghana. The city’s status has burgeoned in recent years with the discovery of oil in the Western Region, with foreign and local oil companies taking the opportunity to tap the newly discovered ‘black gold’. Demand for both commercial and residential properties in the city has risen exponentially as a result and with an abundance of other natural resources such as gold, timber and cocoa, Sekondi-Takoradi stands in good stead to be one of the giants of Africa.
The same is true over in Casablanca in Morocco where the country’s industrial and business centre has become home to numerous Moroccan and international companies, taking advantage of its close proximity to Europe and international trade routes. The dynamic city is increasingly attractive to Morocco’s young population, looking to settle down in a modern area with an abundance of employment opportunities. The city is seeing a number of commercial development projects taking place to improve the retail and entertainment facilities on offer, additional incentive for savvy property investors.
With pockets of economic growth emerging across the African continent, it’s no surprise that real estate in those markets is beginning to boom. Africa has become particularly appealing to large scale investment from China in 2015, which has brought considerable buoyancy to real estate markets in key investment areas across several African countries.
Mining and oil remain a primary focus for China’s investments; however, the country’s investments extend throughout virtually every market sector, including everything from infrastructure to food processing. China’s investments in the largely undeveloped infrastructure of African nations are particularly strong, encompassing key areas such as utilities, telecommunications, port construction and transportation.
There is significant growth potential in several of Africa’s emerging property markets that combined with demand levels outstripping supply is likely to see increasing property prices in the near future. However, with rising affluence in key cities that are expanding and growing, buy-to-let investment opportunities will be sharp in the focus of the savvy investor seeking high-yield opportunities.
Article by +Roxanne James on behalf of Propertyshowrooms.com
Irish Rental Crisis Inflamed by Government Division
For some time, investors have been calling for government intervention to slow rising rents in Ireland and bring much needed relief to the country’s growing housing crisis. However, the situation has remained the same despite promises to introduce measures, resulting in significantly reduced appetite for Irish property.
The Environment Minister, Alan Kelly promised some form of curb on rising rents as long ago as last March at the Labour Party national conference in Killarney. Eight months later that promise remains unfulfilled leading to speculation that uncertainty in Ireland’s housing market is set to continue.
Mr Kelly insists that ‘rent certainty’ will be brought in as a short-term measure and the minister who has notably always avoided the term ‘rent controls’, argues that it ” has to happen “. However, he is unable to say how this scheme might work and without these details, others struggle to assess this unknown quantity.
Experts are now linking the rise in rents and the drop-off of investment in Ireland’s rental market to uncertainty over what cooling measures the government will implement, suggesting that property investors are taking a back seat and a ‘wait and see’ attitude. It is widely felt that the very existence of the promise of ‘rent certainty’ has fed instability in an already disturbed rental property market.
Rents in Dublin have climbed 8.5% over the last 12 months compared with a 15% jump in the preceding 12 months and just outside Dublin, an 8.7% rise in rental costs has been recorded over the last year. In terms of cash values, the national average rent was €934 between April and June this year compared with €860 for the same quarter in 2015. In Dublin, the average price renters are paying is €1,368 while in Cork the average is €889 and €818 in Galway, according to Irish property website Daft.ie.
Rents are being driven higher by the supply and demand dynamic. At the beginning of August there were just 4,600 units available for rent compared with 6,800 on the same day a year earlier. On August 1 st 2009 there were around 23,000 properties to rent across the Republic. However, there are less than 2,000 properties available for rent in Dublin today.
Ireland has a huge rental market with more than 700,000 people living in leased housing and apartments. Identified at the beginning of the year as an investment hotspot for property investors, Dublin’s rental market has seen supply issues constraining growth in recent months.
The additional uncertainty introduced by the government’s lack of action on rent increases has led to a dip in sentiment for Irish property among investors. Overseas buyers in the country have the additional issue of a weak euro that is currently diverting significant wealth to stronger dollar and sterling markets.
Unless the Irish government take a firm stance on the issue of rising rents and directly address the rising issue of affordability among the renting population, the rental market is likely to remain constricted. Lack of supply in an uncertain economic framework is not a reliable investment instrument and is not likely to appeal to a savvy investor’s risk appetite at the current time.
Article by +Roxanne James on behalf of Propertyshowrooms.com
Home Sales Improving and Buyers Getting Older in the US
According to data released from the US earlier this week, new home sales are at their highest levels since 2008, bringing homebuilder confidence back to its height of 10 years ago with mortgage applications steadily increasing.
Economist say there are clear indications that the US housing market if finally starting to be a real boost to the national economy for the first time in a decade, instead of dragging it down and hampering growth as it has been.
However, there is a real difference in today’s real estate market than before the recession with American home buyers getting older and buying bigger homes. According to US Census data the median age of a homebuyer in the States has gone from 35 to 43 since 1985. When the housing boom was nearing its peak in 2005, the median homebuyer’s age was 39 and is now 43, the data reveals.
” We consistently tell that story of people delaying homeownership, ” says Skylar Olsen, senior economist at US property portal Zillow . ” People are delaying things that pre-date homeownership, like getting married later and having children later “.
Construction is picking up to meet the demand for larger homes among middle aged buyers in the US, with many seeking homes with at least 200m² with new homes typically having that space available, according to analysis by the National Association of Home Builders . The same research shows that back in 2000, the typical American home for sale had around 165m2 of living space.
Multi-family homes are also booming in the US as people buy homes as investment properties to rent out. In the late 1980s, people would rent for four years before purchasing their first home. Now it’s at least six years.
With large homes translating into boosted profits for America’s construction sector, it’s not surprising that stock market funds that track homebuilders are soaring this year. The iShares US Homes Construction ETC, SPDR S&P Homebuilders ETF and iShares Residential Real Estate Capped ETF are all up about 6% or more in 2015. That’s much better than the overall stock market performance, which is negative for the year.
The other common explanation for this big shift in American real estate is that young people have too much debt to buy homes, especially from student loans. However, economists at Zillow took a look at the probability that someone would buy a home with zero debt all the way up to $50,000 from student loans and found that higher student debt had almost no impact on the decision to buy a home.
America has seen a similar pattern emerge in its housing market that has been witnessed elsewhere in the world, like the UK for example. American pension savers can invest in vehicles known as Individual Retirement Accounts (IRAs), allowing them to making real estate purchases to hold as assets to grow wealth for later years.
Similarly in the UK, pension savers were boosted earlier this year when changed in regulations came into force allowing pension holders to release lump sums beyond the age of 50 to spend as they wish. This led to a surge in sales of income generating property assets in the UK and a dramatic increase in the number of more mature private landlords throughout the country.
Whatever the reasons for increasing home sales in the US, it has to be great news for the economy and also for the dollar which continues its marathon run of strength against major currencies. However there are concerns that this growth may not be sustainable and that unless the demand for affordable family housing is met, there could be trouble ahead.
Article by +Roxanne James on behalf of Propertyshowrooms.com
Improved Outlook for Malaysian Real Estate in 2016
According to a survey by Malaysian property portal iProperty.com, 2016 is set to show significant improvement in the country’s ailing property markets. The iProperty.com Asia Property Market Sentiment Survey (H2) 2015 reveals that Malaysia’s domestic market is still hampered by affordability issues and many respondents indicated they are most likely to have saved a down payment within the next two years.
Malaysia’s property market has softened considerably this year due to cooling measures implemented by its government including stricter and more stringent loan requirements. According to a report published by Malaysia’s Real Estate and Housing Developers Association (REHDA) , loan rejection rates in the country have been reported to be as high as 70%, negatively impacting the country’s property market.
REHDA suggests buyers are finding it difficult to purchase affordable homes. Apart from narrowing down the selection criteria where the margin of financing (MOF) is often below 90%, the debt servicing ratio (DSR) has also been made more restrictive by central bankers Bank Negara Malaysia (BNM).
Goods and Services Tax (GST) was implemented across the board on 1st April 2015 and while a pre-GST sales rush was anticipated, property transactions in the first quarter of the year fell by 4.6% from 92,900 for the same period in 2014, based on year-on-year transactions.
New property prices are estimated to have increased by 3.97% due to higher material costs and developers are estimated to have increased their prices by approximately 4%. A new government ruling allows developers to claim a 6% rebate for GST while still being able to pass the surcharge on to purchasers.
While Malaysia’s property market has achieved relative stability compared with the bull run of recent years, it is perceived that this is largely due to the economic situation in the country and not because of the implementation of GST. Domestic buyers are increasingly unable to enter the property market at affordable levels which has resulted in market stagnation in certain regions of Malaysia.
However, respondents to the iProperty.com survey were largely of the opinion that economic recovery will continue at a modest pace, allowing them the opportunity to purchase property in the next 1-2 years. The government has stepped up construction activity to meet the critical demand levels for affordable housing and when supply increases, prices should ease a little in the domestic market.
In terms of foreign investment in Malaysian real estate, the fall in the ringgit in recent quarters has attracted considerable investment in the country. However, foreigners are only allowed to buy high-rise units priced at least €200,000, reserving availability of family homes for local homebuyers.
REHDA President Datuk Seri F D Iskandar said that Malaysia’s property market should take advantage of increased interest from foreign buyers and promote their properties in overseas markets. He feels that as foreigners look for upmarket properties in specific areas, their value will remain buoyant, he told a media briefing on the property industry in September.
Meanwhile, Iskandar expects property price hiccups for high-rise buildings, apartments and condominiums due to the weakening of the ringgit. ” The prices of certain construction materials have actually gone up but that of residential buildings shouldn’t as most of the components are locally sourced. However for high-rise buildings, components like lifts, escalators and air-conditioning are still imported. Definitely, there would be hiccups in terms of prices for high-rise projects, ” he said.
Article by +Roxanne James on behalf of Propertyshowrooms.com
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