Tag Archives: middle-east
European commercial real estate investment up 2.5% in second quarter of 2016
Commercial real estate investment remained strong across Europe in the second quarter of 2016 totalling €54.0 billion, up 2.5% on the previous quarter and 30.4% on the 10 year average, new research shows. However, overall activity fell short compared to the second quarter of 2015 with the office sector having the strongest quarter, seeing an 8.3% increase on the first three months of 2016, driven by a particularly strong performance in the Nordic region. The research from CBRE also points out that despite uncertainty in the UK caused by the European Union referendum, sentiment remained strong in other European markets and investment levels were stable year on year. Investment volumes in France and Sweden, Europe’s third and fourth largest markets, were particularly resilient. The data shows that over the last year investment in these markets has grown 32% and 20% respectively. Indeed, second quarter results in both France and Sweden were boosted by buoyant office sectors. Ireland also performed extremely strongly, transacting a record €2.3 billion of commercial property deals in the second quarter of 2016, more than double that of the same quarter last year, although the sale of the Blanchardstown Centre for close to €1 billion closed during this quarter. Poland followed suit, transacting €1.5 billion in the second quarter, over three times the level recorded in the same period last year. But Germany showed decreased levels of investment in the second quarter, which is likely connected to a lack of availability of stock in the core markets, which dampened the European total. Core property in Germany remains highly regarded as a safe haven and sentiment remains strong. The UK also performed less strongly than its continental European counterparts in the run up to the Brexit vote although strong fundamentals continue to underpin the UK market. The recent depreciation of sterling, coupled with low interest rates, has attracted the attention of overseas investors to the UK, and with the spread between bond yields and property being the widest on record, the fundamentals of UK and continental European real estate remain attractive. ‘Whilst investors have reacted cautiously to Brexit, the market fundamentals remain strong and investors still have significant capital to deploy. The uncertainty means that many investors will watch and see how the market develops before deciding how to act, said Jonathan Hull, managing director of Investment Properties EMEA at CBRE. ‘However, sentiment is already improving as the UK enters a more stable political environment and there are signs that the market is responding positively to this,’ he added. According to Miles Gibson, head of UK research at CBRE, the EU referendum risk was undoubtedly one factor affecting investment activity in the second quarter. ‘But instability in the financial markets earlier in the year was similarly important in causing investors to be more risk averse,’ he added. Continue reading
Caution due to Brexit likely to affect UK housing market in short term
Caution is likely to affect sales in the mainstream housing market in the UK as a result of the decision to leave the European Union but low interest rates will underpin prices, according to a new analysis. The market is seeing initial caution, particularly among discretionary buyers, and this likely to curtail housing market activity as buyers’ willingness to commit to a major purchase weakens. Over the medium term, the analysis from real estate firm Savills, suggests that sentiment will improve but also fluctuate as negotiations to leave the EU proceed. It also suggests that buyer sentiment is likely to lead to lower sales volumes in the short term. Also, the possibility of tighter lending could pull transactions numbers further down from recent UK highs of 1.3 million a year. ‘However, at this stage, we do not expect sales volumes to decline to post credit crunch lows,’ said Lucian Cook, director of residential research as Savills. The report points out that so far it has been business as usual for lending. ‘Should downside risks persist, there is a possibility that lenders tighten lending criteria. If stricter borrowing rules come into play, first time buyers and second steppers will be the most affected,’ Cook explained. He believes that low interest rates will underpin house prices with the prospect of a cut in base rates and this may present opportunities for those on low loan to value mortgages. Overall, house price growth is likely to slacken as a result of weaker demand in the short to medium term but looking ahead, Cook said that the possibility of a slower economy could have an impact on price growth. ‘We do not rule out the possibility of price falls in weaker markets. Low levels of house building has resulted in a market that is fundamentally undersupplied. This has not changed,’ he added. The analysis report also points out that the short term impact on sentiment is also likely to vary geographically and between different buyer groups, in part dependent on the level of opposition to or support for Brexit. That would potentially indicate more caution in the domestic markets of London and among first-time buyers and second steppers but less among mature home owners. ‘While this short term sentiment effect is likely to take longer to feed into the house price indices, we would expect the first indications of this impact to come from consumer confidence surveys and mortgage approvals,’ Cook pointed out. ‘At this stage, it appears that the downside risks to the housing market are milder than the events that led to the 2008 financial crisis. However, political and economic uncertainty is likely to curtail housing market activity initially as discretionary buyers exercise caution,’ he said. ‘The potential for lenders to tighten lending criteria presents a longer term risk to market activity, especially among first time buyers and second steppers. This could mean that UK housing transactions, which reached a post credit crunch high… Continue reading
US housing market growth expected to be steady in 2016
Housing market growth in the United States is holding steady with a rise of 0.6% quarter on quarter, according to the latest real estate analysis report. The annual spring housing boom has been beneficial to most regions across the nation, with most markets outside of the Northeast seeing a small bump in quarter on quarter growth in the last month. The data from real estate firm Clear Capital also shows that in the West quarterly growth has increased by 0.2% to 1.3%, while quarterly growth in the South and Midwest have increased to a modest 0.8% and 0.3% respectively. However, growth figures in the Northeast are concerning with the firm’s models showing an average of zero price growth in the region over the last quarter. ‘This is especially alarming when considering that the spring season is a time when markets typically gain momentum leading into the busy summer season,’ said Alex Villacorta, vice president of research and analytics at Clear Capital. He pointed out that while prices in the region as a whole have appeared to stagnate, there are markets in the region that are performing positively, such as New York and Hartford, where prices have increased by 0.5% and 0.7% respectively over the last quarter. The regional year end forecasts may also be a cause for concern, with the West and North-eastern regions projected to fall potentially into negative territory over the next six months. The analysis predicts that by the end of 2016, the nation may see a new leader in terms of regional growth as the South and Midwest are predicted to have the highest price growth over the next six months, around the 0.5% mark. ‘While these six month growth rates are lower than what we have seen in recent years, slower growth does not necessarily spell disaster and instead could be indicative of markets that are finally beginning to moderate and even stabilize in these regions,’ Villacorta explained. On the MSA level, southern cities are dominating the top spots in our forecast, with six of the top 10 markets located within the region. Home prices in Dallas and Nashville are predicted to see growth throughout the remainder of 2016, increasing to the tune of 3% to 4% by the end of the year. Major Florida markets are also predicted to continue to rise, with Jacksonville and Orlando growth forecasts around 2.5% by the end of 2016, while homes in Tampa may increase by almost 4% over the next six months. ‘Overall, our forecasting models are predicting the second half of 2016 to be much slower than its start, with all regions forecasted to see very little price change by the end of the year,’ said Villacorta. ‘The Federal Reserve won’t be raising interest rates this summer, and while this will help keep the cost of mortgage lending to a minimum, at least in the short term, there are other key global factors that could spell… Continue reading
