Demand Remains High for Thai Real Estate
Despite the sluggish economy, demand for real estate remains strong in Thailand with the nation currently leading the region in the hotel residence boom, the property investor’s vehicle of choice in 2015.
Economists predict the real estate market will grow by 5%-10% this year after receiving a boost from the government’s property stimulus measures, implemented to stimulate interest from property buyers overseas.
The stimulus measures include reductions in housing transfer and mortgage fees, personal income tax deductions for those purchasing a property for less than €75,000 and soft loans amounting to €250,000 offered by Thailand’s Government Housing Bank, (GH Bank) .
Last Tuesday, the cabinet approved cuts in housing transfer and mortgage fees to 0.01% each for six months for homes priced at €75,000 or less, down from 2% and 1% respectively. Also approved was a proposal allowing first-time buyers who purchase a home below the same threshold to deduct 20% of the value of the home from their annual personal income tax over a five-year period.
The cuts will take effect this month for both new and resale properties in Thailand .
Thai Condominium Association president Prasert Taedullayasatit said the tax incentives, if they took effect this month, would boost the overall housing market in the fourth quarter by 20%-30%, boosting full-year housing market values 12.6% from last year.
Investment in hotel residences has surged in Thailand in 2015, with many opportunities falling well below the new threshold for tax incentives. The sector has a significantly improved outlook on the back of the Thai government’s stimulus measures and construction has been stepping up to meet rapidly increasing demand for robust, income-generating assets in branded hotels.
According to new research by Thai-based hospitality consulting group C9 Hotelworks, there are currently more than 28,000 hotel-branded residential units for sale across the region overall, representing almost 120 projects. In Thailand, there are 44 developments on the market, representing 4,775 units, with the top three locations for hotel residences being Phuket, Bangkok and Pattaya.
The average price per square metre for urban properties in Thailand is €5,960, while in resort destinations it is €3,283. One key catalyst for the rising tide of buyer interest has been an increasing number of mixed-use projects that contain hotel and real estate components. Recognised hotel brands are being tapped to help engineer pricing premiums for property sales, which in market-wide terms has equated to 26% in urban locations and 14% for resort products.
Commenting on the research, C9 managing director Bill Barnett said: ” The historic pattern of hotel and real estate marriages has moved away from the beach and leisure destinations and is gaining traction in urban city offerings. Traditional lifestyle buyers are being supplanted by end users, with Asians representing the largest transaction segment. Bangkok’s stirring success story at the St Regis Residences demonstrated this, while the more recent Four Seasons offering has struck a chord with both local and overseas buyers “.
The two leading Southeast Asian real estate marketplaces are Thailand, offering 37% of the region’s hotel project residences, followed by Indonesia with a 22% share.
Article by +Roxanne James on behalf of Propertyshowrooms.com
Egypt Lures Foreign Investors with Currency Devaluation
Egypt has allowed its currency to weaken to a record low, seeking to attract foreign capital and replenish reserves that dropped the most in almost four years during September, while the black market premium to buy dollars surged.
The Egyptian pound weakened 1.3% to 7.9301 per dollar after the country’s central bank devalued it by the same margin at a regular dollar sale to local lenders, according to prices compiled by Bloomberg. That takes the currency’s decline for the year to 9.8%, making it the worst performer in the Middle East behind Algeria’s Dinar.
Foreign reserves in Egypt plummeted last month due to one-time expenses such as expanding the Suez Canal, upgrading the country’s electricity grid and repaying debt to foreign oil companies, central bank governor Hisham Ramez said in a televised interview on Saturday. Egypt has burned through just under $6bn of loans received from Gulf Arab allies in April and is now seeking $3bn from the World Bank to support its budget.
” The central bank needed to allow the pound to lose some value as a basic step toward correcting the decline in its foreign currency base, ” said Hany Farahat, a senior economist at Cairo-based CI Capital, a unit of the Egypt’s biggest listed bank, adding that the devaluation ” should continue throughout this week, otherwise the move would be just insignificant “.
Outside the banking system, the Egyptian pound tumbled to a record 8.484 to the dollar, according to the average quote of seven currency dealers surveyed by Bloomberg last week in Cairo, Alexandria and Aswan That compares with 8.204 on Thursday and represents a 5.6% premium over the official rate, the most since January, according to the weekly surveys.
The devaluation of Egypt’s currency has been predicted by analysts since the beginning of the year and there is rising opinion that it has still to reach fair value for foreign investors. There is a common belief among real estate buyers in Egypt that there is another anticipated decline of the pound’s value, but the timing is unknown which has consequently delayed investment due to uncertainty of future impacts on cost and revenues.
Investors are also concerned about existing restrictions on US dollar deposits in Egypt’s banks and the complex process of transferring foreign currencies from inside the country, which represent the most significant challenges facing investments, over and above currency declines.
On the second day of Egypt’s Economic Development Conference back in March, Egypt signed agreements and memoranda of understanding with international companies worth $158bn, signalling one of the best years for foreign direct investment to come. However, subsequent large-scale investment has been delayed while international investors eye Egypt’s market with uncertainty as to where its currency will find its level.
Egypt’s government has made considerable investment into its domestic residential market in attempts to satisfy the need for more than half a million homes for its rapidly expanding population , contributing to the woes of its currency last week. The strategy was for foreign investment to step up to support government spending, with a balanced injection of capital in the nation’s real estate markets.
However, as a wait-and-see attitude prevails among foreign investors at least for a few weeks, it is difficult to say which way Egypt’s property market will go. Recent real estate market activity has seen shortage of housing supply pushing up property prices, although transaction volumes have been high among foreign buyers nevertheless. At the current time, investors are reluctant to make decisions borne out of uncertainty, particularly due to the considerable impacts further currency devaluation may have on margins and capital value.
Article by +Roxanne James on behalf of Propertyshowrooms.com
Cypriot Property Tops Popularity Charts for Chinese Investors
According to the Chinese property portal Juwai.com, the most property searches among Chinese buyers overseas were focused on the island of Cyprus during the second quarter of 2015.
The Juwaui.com Purchasing Intent Index showed that potential property buyers from China were principally looking for real estate in Cyprus , followed by Spain, Italy, Greece and Portugal from April to June this year.
Limassol and Paphos were the most popular destinations within the sunny Mediterranean island, with Cyprus’ major cities also identified as having increasing appeal to British buyers by UK property portal Rightmove.co.uk.
According to the study by Juwai.com, which indexes trends in sentiment among Chines property buyers overseas: ” Chinese interest in Cyprus starts from a particularly low base, given the island’s small size and the difficulties that investors have faced there – due to the banking crisis, the title deeds scandal and allegations of overpricing “.
The average price for Chinese property hunters in Cyprus was €720,058 in the second quarter of 2015, down 3% from the prior quarter’s average price of €739,952. ” The index for Cyprus has climbed highest, by 450% for the period – albeit from a low starting point in absolute numbers. This trend points to growth in future property transactions by Chinese buyers which will benefit these hard-hit economies, ” the study added.
It also revealed the index increased 102% since the previous quarter and 351% since last year and points to the appeal of Cyprus’ golden visa programme, currently one of the most affordable countries in Europe for residency to Chinese property buyers. Cyprus is outside the EU Schengen visa zone but it is unique in its offering of immediate citizenship by investing €2.5m in property. This grants a Cypriot passport and EU citizenship then allowing the freedom to work, travel, study and live anywhere within the EU, importantly including the UK.
The Juwai.com Purchasing Intent Index tracks online property hunting activity on one of China’s largest property portals, such as property searches, property detail page viewings, email enquiries, clicks to view, agent phone numbers and more. The data is not based specifically on transaction activity but on the property hunt activity that precedes and leads to transactions.
President of Cyprus Nicos Anastasiades, currently in China announced on Saturday that he would create 15 authorised centres for processing visa applications in Chinese cities where there are no Cypriot diplomatic missions.
China’s state shipping company COSCO is among several international companies interested in acquiring part of the operations of its main port at Limassol under a scheme to privatise state-owned businesses, according to the Chinese news agency Xinhua .
Addressing the China Business Forum, Anastasiades told potential investors how Cyprus could become China’s gateway to Europe and Africa. The forum was organised by the China Chamber of International Commerce, the Cyprus Chamber of Commerce and Industry as well as the Cyprus-China Business Association.
Cyprus’ President said the government was currently implementing a series of measures which included the simplification of procedures for the faster issuing of permits and licensing of investment projects and operation of businesses, as well as the speedier granting of residence permits to foreign investors.
” Opportunities for growth exist in the majority of economic sectors of Cyprus including commerce, tourism, privatisation of ports, electricity and telecommunications, shipping, real estate, large-scale development projects, education, health, research and innovation, ” he said.
Article by +Roxanne James on behalf of Propertyshowrooms.com
Chinese Investors Pull-Out of London’s Commercial Property Market
After a prolonged period of sustained and large scale Chinese investment in London’s commercial real estate market, some of the biggest players are now ditching deals at the eleventh hour of negotiations.
Concerns have been mounting that Chinese capital will seek refuge in dollar markets, particularly in view of sterling’s recent volatility, reducing its appeal as a safe haven currency for real estate investment.
According to the UK Property Weekly, a publication targeted at the Chinese-speaking community in Britain, a Shanghai-based private property conglomerate Shenglong Group has withdrawn from a £195m deal to acquire Thames Court office tower in the City of London. They also reported the Chinese mainland’s Anbang Insurance Group, which bought New York’s Waldorf Astoria hotel for US$2bn last year, has now abandoned its plan to buy one of the tallest buildings in London’s financial district, the 46-storey Heron Tower.
Furthermore, the South China Morning Post Sunday revealed that China Minsheng Investment, China’s largest private investment fund, withdrew from a £1.7bn integrated development in East London, seven months after a letter of intent was signed with the project’s owner in Shanghai.
In recent years, China’s government has made concerted efforts and taken strong measures to prevent capital flowing out of the country. However in the face of the government-induced devaluation of the yuan and the volatile stock market conditions in August, Chinese investors have relentlessly bought swathes of big ticket residential and commercial real estate in the prime markets of the US, UK and Europe.
However, there is a definite loss of appetite for UK commercial real estate assets among Chinese investors, whereas across the Atlantic, the story is quite different. Chinese buyers continue to love US real estate and some analysts are indicating that the appeal of dollar investments is causing them to abandon ship in European property markets.
According to research by global property consultancy CBRE, total Chinese investment in American commercial real estate stood at US$3.7bn in the first half of the year, more than 1.5 times the annual cash flows seen in 2015. Experts predict that Chinese investors will continue to invest in London’s residential markets, despite declining interest in the commercial sector.
Fred Richardson, a director at Hanover Private Office, which helps Chinese buyers acquire properties in and near London said that he doesn’t believe that there is a trend after the three recent incidents in the commercial real estate market. Many industry insiders are of the same opinion that London’s residential market activity is unlikely to be hugely affected by the loss of Chinese appetite for commercial property.
There is still much room for growth in the UK’s property markets although investment activity is now more concentrated in the regions rather than the capital. There are also many more vehicles for property investment that allow armchair investors access to the profits of huge funds with residential property holdings, through crowdfunding platforms with low entry levels.
Despite the small decline of Chinese money in London’s commercial real estate, it is largely due to the considerable force of their investment in recent years, that there is still plenty of buoyancy. In many respects, the path is now much clearer for other investors to profit from what is an undeniably – and at times illogically – an exceptionally rich real estate investment market.
Article by +Roxanne James on behalf of Propertyshowrooms.com
Sarajevo Rises in Popularity with Middle East Property Buyers
Bosnia has seen an influx of tourists from the Middle East in recent years and a growing number of property buyers from the GCC are seeking investment opportunities, particularly in the country’s capital, Sarajevo.
In response to rising demand from both tourists and investors, Dubai-based developer Buroj Property Development said on Saturday it plans to invest €4.3bn to build a luxury tourist resort just outside the capital, in what could be the biggest foreign investment of its kind in the Balkan country.
Bosnia, where Muslim Bosniaks are the largest of its three ethnic groups, holds significant cultural appeal to holidaymakers from the Middle East, something that Buroj seek to capitalize on with their largescale investment in the country’s tourist infrastructure.
” The initial investment in the project is worth around €920m, while the total investment will amount to €4.3bn ” over the next eight years, Ismail Ahmed, the company’s manager told a news conference.
The project, named the ‘Buroj Ozone’ will stretch over an area of 1.3 million m² and include thousands of housing units, hotels and the largest shopping centre in Bosnia, Ahmed said, adding that the project will create at least 10,000 local jobs.
Located in the municipality of Trnovo which lies below the Bjelasnica and Igman mountains, the venue of the 1984 Winter Olympic Games, around 20km from Sarajevo. Ahmed said construction is scheduled to commence in April or May 2016, pending a resolution of regulatory issues and necessary permits from the Trnovo municipality, which will lease the land the Buroj for 99 years.
” The aim of this unique project is to turn Bosnia and Herzegovina into a tourism leader of southeast Europe and to put its rich natural resources at the disposal of local and international clients. Many people associate this country with the war and this project will help change that image “, he said.
Since the end of the 1992-95 Bosnian war, which claimed 100,000 lives, Bosnia has fallen out of favour with foreign property investment. However, as tourism in the country continues to expand, property investors are starting to investigate opportunities in Bosnia, particularly in Sarajevo.
Tourism is now seen as an expanding industry that could provide Bosnia with a significant boost to its economy. Visitor arrivals in the first five months of 2015 were up almost 26% from the same period last year, and so it would appear that there is significant growth being experienced in the country. In fact, a World Tourism Organization study predicts that Bosnia is likely to have the third highest tourism growth rate in the world by 2020.
All of which is good to know from the perspective of the savvy property investor. Rising tourism indicates increasing yield opportunities, particularly in tourist hotspot areas and in Bosnia, the action is happening in Sarajevo.
Foreigners are showing rising interest in real estate across Bosnia and Herzegovina, Arabs and Russians in particular. Sarajevo is very attractive for Arabs who generally buy houses, apartments and land for the construction of office buildings. Apart from Arabs, investors from Syria, Jordan and Kuwait are also increasingly focusing on property investment, particularly in the luxury apartment market in Sarajevo.
Article by +Roxanne James on behalf of Propertyshowrooms.com
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