Property Investors Look for Life Beyond London

This article by Art Patnaude of The Wall Street Journal on October 30th, 2013 tells us that commercial real estate investors are scouring for London property market.

London's hot property market has commercial-real-estate investors scouring the rest of Britain.

Investors all but ignored cities like Manchester, Edinburgh and Birmingham while the U.K.'s economy faltered in the years after the financial crisis. They preferred the safety of London and its appeal for global buyers. But prices for office buildings and retail space have risen so much in the capital that returns on purchases are anemic.

A London property investor last month bought the site of Edinburgh's former Royal Infirmary. A complex of offices, hotels, apartments and shops is in the works. Murdo MacLeod for The Wall Street Journal.

 

Not so in the rest of the country, where even riskier development projects are proving to be a draw. Last month, London-based property investor Moorfield Group bought the site of Edinburgh's former Royal Infirmary for an undisclosed sum from Gladedale Capital, an Edinburgh-based developer. A complex of offices, hotels, apartments and shops is in the works. Development of the project, called Quartermile, stood still for much of the financial crisis.

In the past four months, real-estate investment firm Benson Elliot has spent £100 million on property in Manchester, Cambridge and the northern town of Preston.

The trend in the U.K. mirrors what has happened in the U.S. commercial-real-estate market in the wake of the financial crisis. Investors initially started buying trophy properties in the biggest markets with the most international appeal, like New York and Washington. As prices in those markets increased, demand has shifted to other cities such as Minneapolis and Denver.

Bold Move

London's property market has long benefited from the city's status as a global capital of finance and culture. Prices are stable, there is relatively strong demand from tenants, and foreign buyers like the stability of owning an asset denominated in Britain's currency.

London's appeal as a safe harbor rose during the financial crisis, and prices have continued to climb since then despite new construction. Increasingly, the city's lack of affordable options and low returns are turning investors' focus to areas they had largely ignored.

In 2012, deals outside London accounted for about 40% of all commercial property investment in the U.K. In the first half of this year, that figure edged up to nearly 50%, according to Savills, a real-estate services firm.

The largest deal in Leeds this year was the £29 million sale of the Toronto Square office complex. At the time of the sale in August, it was 20% vacant. With a net initial yield of 7%, "a year ago, this wouldn't have been an attractive proposition," said Clare Bailey, commercial property analyst at Savills.

High demand and low returns in London are "forcing people to see what can be done in the regions," said Edward Trevillion, head of real-estate research at fund manager Scottish Widows Investment Partnership, which manages £146 billion ($235 billion) of assets.

During the financial crisis, investors placed their bets in London, which is less subject to fluctuations in the U.K. economy. Many worried the economic downturn could hurt occupancy levels outside the capital.

Vacancy rates in U.K. offices jumped to 15.8% in 2009, after dropping as low as 7.1% in 2007, according to Savills. They are on the way back: Savills projects the rate to fall to 11.5% next year.

Investors looking for higher yields are focusing on places like Edinburgh, where a complex is being built on the site of the former Royal Infirmary. Scotsman/Zuma Press.

 

Confidence that a growing economy will help bolster businesses outside London has helped swing real-estate investment. While some regions are outperforming others, "all regions are sharing to some degree in the current U.K. economic recovery," said Richard Holt, regional economist at Capital Economics. The U.K. economy is expected to expand 1.5% this year, the firm projects; Scotland is expected to post 1.3% growth.

Peripheral cities is offer larger yields to commercial-property investors, who typically raise funds to buy a property and earn a yield on their investment through rents.

In London, rising prices have left yields low. In the city's financial district, the yield on office buildings peaked in January 2009 at 6.75%, not far under the 7% for property outside the capital, according to Savills. As of last month, the London yield had fallen to 4.75%; outside the capital it had only dropped to 5.75%.

Marc Gilbard, chief financial officer at Moorfield, which has £2 billion under management, said that while investors have pushed out to the regions before, this time around has been "particularly acute." That is partly due to foreign buyers seeking to buy real estate in central London as a place to park their money, he said.

There are others signs that money is flowing back outside London. Stephen Rees, head of real-estate advisory at Coutts, the private bank used by Queen Elizabeth, says competition for deals has stiffened.

On a recent commercial deal in Edinburgh, Mr. Rees—who was looking to buy the property on behalf of a wealthy client—said three of the four bidders were institutional investors. "I wasn't expecting that," Mr. Rees said. "That wouldn't have been the case the previous summer."

Investors say they still need to be cautious of occupancy levels, the reliability of tenants and the health of local economies. "You want that rent coming in every month," said Ainslie McLennan, fund manager for Henderson U.K. Property Unit Trust.

Basing an investment decision on U.K. economic-growth figures also needs to be more closely considered, said Marc Mogull, manager partner at Benson Elliot, which has €850 million of equity under management "You're not going to see fundamental growth in the regions like what you'll see in London," he said.

Article Source: http://online.wsj.com/news/articles/SB10001424052702303471004579163561521996776

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Cranes point to upturn in city's property market

According to this article by Manchester Evening News on October 16th, 2013 Manchester now leads the property market and is soaring ahead of its regional rivals

Research by Deloitte Real Estate shows that 19 major new developments are underway in the city centre – compared to 13 in Birmingham and eight in Leeds.

Eight new residential developments, three new hotel developments, two student housing schemes and one new office development have contributed to Manchester’s growth, according to the Deloitte Crane Survey.

The new residential developments are around Salford, Ancoats and the Northern Quarter and between them add up to 963 new homes, the highest number under development in the central Manchester area since 2009.

The two new student housing schemes will add 1,246 new bedrooms.
Hotel development is already gathering speed – and expected to be one of the fastest growth areas in 2014, say the authors of the Crane Survey.


They report that 633 new hotel bedrooms are under construction. Four further hotel developments could add another 830 beds, with two of the projects likely to start on site imminently.

The office market is also improving, says Deloitte. The company says that 324,500 sq ft of new office space is under construction, half of which is already let to occupiers. Deloitte warns that the supply of new office space will soon run short.

The total under construction is well below the 480,000 sq ft averaged over the last ten years and so far no new developments are planned to complete construction work in 2015 or 2016.

Meanwhile, demand for office space is rising, with total take-up of all grades of city centre office space up 49 per cent in the first half of 2013.

Last year, they recorded just five developments for Manchester across all sectors.
The Deloitte report comes as other economic data points to an upswing in the fortunes of the city’s economy.

Earlier this week, the latest Lloyds Bank Commercial Banking North West PMI index revealed that levels of new business across the north west expanded for the eighth consecutive month in September.

Article Source: http://www.manchestereveningnews.co.uk/business/business-news/research-deloitte-real-estate-shows-6192874

Property Forecasts Predict A Positive Future For UK

This article by Les Calvert of property-abroad.com on October 15th, 2013 reveals the prediction of a positive future for UK property according to property forecasts.

With the property market outlook indicating a positive trend, we are in for a season of good growth forecasts. BNP Paribas' forecast for instance has recently predicted fairly impressive rental growth in just about every sector by 2016. The same forecast predicts 2015 as the best year for the office and retail sector with the prediction of a somewhat less than 12 percent return.

Current real estate situation 

The earlier forecasts have proven correct, and the trends seem likely to continue. The pricing and rental demand are forecast to grow because of the lack of occupational supply. In addition, further investments in the region around London will continue because of the inherent strengthen of the region.

Of the total UK investments so far, 47 percent has taken place in Central London alone which accounts for more than £12bn. Of this investment in total, nearly two thirds was invested in the office sector, while investment in mixed use asset constituted about 20 percent. In addition, the transaction volumes have been bolstered by overseas demand. 

Nearly 50 percent of investments in central London could be attributed to the buyers from outside the region, while the far eastern buyers contributed nearly one fifth of the total investment.

Foreign investors have also invested nearly one third of the investments made outside of London. The total investment outside London is nearly £14bn. North Americans, Middle Easterners and the Europeans are popular buyers in the UK property market.

Predictions for 2013

There are several predictions for the current year. It is expected that there will be a slight improvement in the total investment volume this year. Last year, it was £33.5bn, which could go up to around £35.5bn this year.

According to Claire Higgins, BNP Paribas Real Estate head, this year London is expected to finish its performance at the top level. The total returns from central London retail is expected to be highest this year at 13 percent, while city offices will most likely perform at around 8.7 percent with West End offices returning around 10 percent. The 2013 forecast for all property is likely to be 6.6 percent, while industrial return is expected to be 7.3 percent.

In other words, there is overall optimism for 2013 in real estate investment which it is expected will continue throughout the coming year ahead. At this rate it is expected that the peak of 2008 could possibly be surpassed shortly with much of the momentum building up in 2013.

Future forecasts 

The future forecasts indicate a bright prospect with the next five years up to 2017 leading to the national recovery. The other markets too will be driven to catch up with London. Strong returns are expected by the south-east offices. Shopping centers and logistics will follow the south east office sector closely.

The growth momentum comes from the U. K’s economic position which currently looks brighter and there is little likelihood of the momentum sliding back in the short term. The current growth trend of the U.K appears better than some other countries, while the output is yet to catch up with the peak of pre-recession years. However, the UK economy is still behind France, and other nations like U.S and Germany.

It may be interesting to note that between 2008 and 2013, the UK real estate industry claimed to be the third most productive. The first two were transport equipment followed by services.

Written by Les Calvert writer of Overseas Property news

Article Source: http://www.property-abroad.com/england/news-story/property-forecasts-predict-a-positive-future-for-uk-19317795/

Prime Property Prices in Central London Up 116% in Last 8 Years

Research shows that in the past 8 years prime Central London house prices have more than doubled and it is up by 116% outpacing the RPI by 86%, according to this recent article on September 11th, 2013 of the Property Wire.

Prime central London house prices have more than doubled in the past eight years, up by 116 and outpacing the Retail Price Index by 86%, new research shows.


By contrast the average UK property price is 19.3% down on the same period, according to the research from Savills which tracks the expansion of the market since its indices were launched in 1979 and analyses in detail the performance of different locations in the latest market cycle.

It shows that prime central London property prices have grown on average 4.9% per annum since 1979.  This compares to just 3.6% above inflation across greater London and a UK average of 2.9%, opening the gap between prime London and the rest to its widest ever.

Mayfair tops the growth chart with growth of 139% since the middle of 2005, followed by Knightsbridge, Belgravia and Chelsea with growth of at least 128%.  All are now at least 30% above peak.

The analysis points out that supply has failed to keep pace with demand, resulting in an expansion of prime London from its Belgravia core in the 1950s to a swathe that runs from Richmond in the south west to Islington in the north, from Chiswick in the west to Canary Wharf in the east.

‘London is seen as one of the premier world cities in which to both live and invest. London’s economy has been put at nearly a third the size of that of the whole of the UK. Like other global cities, London attracts capital from around the world,’ said Yolande Barnes, head of world residential research.

She pointed out that the demand catchment for London housing is therefore global and the appetite for investment remains strong. Also London is physically limited in size and by very low levels of new supply so real house prices have risen much faster  than elsewhere.

‘London is a honey pot for wealthy real estate buyers but many of these buyers also live and work in London. It would seem that London’s housing market is inextricably tied with its economic success but it has been failing for some time to increase supply at a sufficient rate to curb price growth,’ explained Barnes.

This means that the lack of housing supply is playing out most visibly in London’s prime housing markets where the wealthiest home owners can compete most effectively for space.

Looking forward, the analysis suggests that the strength of outer London prime markets will be dictated by the creation of new wealth from the London economy and the flows of wealth between prime markets.

The report says that generally, over the next five years, London and the south east are expected to lead the economic recovery in the UK. In London, the economic growth from the all important financial and insurance sector is likely to be on a par with the average for the capital. The highest economic growth is forecast from the professional scientific and technical and information and communication sectors.

‘These sectors will, like financial services before them, also attract international investment and human capital which is expected to be reflected in overseas demand for housing. This is likely to widen the profile of buyers and support underlying housing demand for prime property beyond central London,’ it points out.

It also suggests that an increased proportion of prime demand is likely to be focused on the commuter zone given the gap between pricing in these markets and prime domestic London.

‘We expect to see a continued displacement of wealth from the prime central London markets into other parts of prime London and beyond. The markets in closest proximity to prime central London will see continued overseas buying activity, mainly from full time residents in the capital. This means the prime central London and other prime markets will remain linked,’ adds the report.

Article Source: http://www.propertywire.com/news/europe/london-prime-property-analysis-201309118224.html

Affordable Homes to Rent – Not Buy – Will Rebalance the Property Market

John Banham of The Independent on 18th August, 2013 stated that affordable homes to rent will help property market back into line.

Headlines about rising house prices may persuade observers that the housing crisis is over, and that the nation can safely return to the behaviour that caused the financial crisis in the first place. This would be a tragic waste of a huge economic opportunity.

The national housing crisis has been a long time in the making: a lack of housing that can be afforded by young working families, while rents soar; the future of farming at risk, because there is nowhere for retiring farmers to live; unsustainable villages becoming the preserve of wealthy retirees, with schools and post offices closed down.

For decades, in contrast to every other developed Western economy, Britain has been underinvesting in new homes. The consequences are all too apparent: two million families on council waiting lists for affordable homes, annual expenditure of over £20bn on housing benefit. The number of new homes built every year needs to treble, to around 300,000. No wonder Shelter could only raise half a cheer for last week's news that housing starts in England rose 7 per cent to 110,000 in the year to June, generating headlines that "Britain is building again".

Half of the new homes should be for rent or shared ownership, built on brownfield land in urban areas and in small developments alongside villages where the new homes house local families, are welcomed by local people, and where the land is invested through a Community Land Trust.

In a report published at the end of last year, the Future Homes Commission showed how the housing crisis could be turned into a massive opportunity for economic growth. Trebling the number of new homes built every year for 20 years would add at least 3 percentage points to annual GDP growth, an economic prize comparable to the impact of shale gas on the North American economy. If half of the new homes are in sustainable communities of rental or shared ownership properties, these would be funded by pension funds and international real estate investors. No additional government funding would be needed.

Despite the scale of the housing crisis and the size of the economic growth opportunity, local authority pension funds' pressing need for better investment returns, and the relaxation of Treasury constraints on these funds (which could free up as much as £30bn for investment in rental housing and infrastructure projects), progress towards the goal of trebling the number of new homes built every year has so far been disappointing. The Government's Help to Buy scheme does nothing to make housing more affordable or for would-be tenants, and a new house-price bubble could form.

Far from being embraced as a massive economic and social opportunity, the housing crisis is deepening; and millions of couples are having to postpone setting up home together. Nationally, the average age of first-timers buying without parental help is 33; in rural areas, where wages are lower and house prices are higher, it takes even longer. Local Enterprise Partnerships (LEPs) are backing affordable housing, and Lord Heseltine ensured that over £5bn of EU growth funding was allocated directly to LEPs, bypassing both Whitehall and local councils. Now there is no planning bureaucracy standing in the way of local communities having the homes they want and at prices they can afford: well-designed and energy-efficient homes can be built for £100,000. LEPs could kickstart the expansion of build-to-let homes and communities.

By separating developments of homes for rent and shared ownership from market housing, both sectors would benefit. Market housing would not be compromised by the need to accommodate a percentage of "affordable" homes (which are anything but). Towns and villages could have the number of new homes they wanted, rather than huge developments which rarely go ahead. Existing social landlords would be well-placed to manage the completed developments. These, in turn, could be sold on to pension funds and other investors, freeing up LEP funds for more local schemes.

The LEPs now have all the tools to address the local housing crisis and generate economic growth of over 3 per cent a year which will be sustainable for a generation, without leading to another house-price bubble. Now it could be harvest time, turning the local housing crisis into the economic and social opportunity for which the countryside has been waiting for decades.

Sir John Banham, chairman of the Future Homes Commission, is a former director general of the CBI
  
Article Source: http://www.independent.co.uk/voices/comment/affordable-homes-to-rent--not-buy--will-rebalance-the-property-market-8772635.html

Property Sales on the Rise in Cheltenham say Estate Agents

Good news for property buyers because property sales are prospering in Cheltenham according to this article by Gloucestershire Echo on August 14th, 2013.

PROPERTY sales are booming in Cheltenham, according to local estate agents.

There are less houses on the market than there are willing buyers, making demand for homes the highest it has been in four years.

During July, the number of potential buyers looking to enter the market nationally grew at the fastest rate in the UK since July 2009.

Since the start of the year, buyers have gradually been returning to test the market and the number of would-be buyers seen have grown.

Erling Lindoe, branch partner for RA Bennett & Partners based in Bath Road, Cheltenham, said: "Everything is wonderful.

"The housing market is booming and there are not enough properties to go around.

"If you have got a property that is priced well, it will sell, which is probably due to demand.

"Over the past four years, rents have been increasing and have caused borrowing to stay very low." With rising buyer confidence, more potential sellers looked to test the market and place their homes up for sale.

Last month, 15 per cent more respondents reported rises rather than falls in new instructions.

Mr Lindoe said: "I wasn't necessarily aware that there is a major issue in the market.

"The market in Cheltenham is a very simple case of demand and supply. Demand is currently exceeding supply which helps. But I don't see that house prices are rising at the moment."

As part of continued growth, a Royal Institute of Chartered Surveyors (RICS) residential market survey expects sales to rise rather than fall over the next three months.

RICS global residential director Peter Bolton King said: "These results are great news for the property market as it looks like at long last a recovery could be around the corner.

"Growth in buyer numbers and prices have been happening in some parts of the country since the beginning of the year but this is the first time that everywhere has experienced some improvement.

"It is clearly good news those parts of the property market that were struggling are at last showing some signs of life."

Article Source: http://www.thisisgloucestershire.co.uk/Property-sales-rise-Cheltenham-say-estate-agents/story-19655110-detail/story.html#axzz2c02FvAzB

Record Numbers Plan to Fund Retirement by Selling Property

According to this article by Patrick Collinson on August 13th, 2013 of The Guardian nearly five million homeowners say they will sell or rent their main property, as annuity rates slump to new low.

Record numbers of people are planning to sell their main home to fund their retirement, according to research published on Tuesday, which comes amid claims that pensioners will have to live to 90 to make annuities "good value".

The research, by Baring Asset Management, found that 13% of people (nearly 5 million) say they are planning to rent or sell property to fund their retirement, up from 11% last year.

But there were big regional variations, with people in the south west four times more likely to have property to sell their primary residence in retirement compared to people in Scotland and the West Midlands.

Faith in property as an investment for retirement mirrors the decline in confidence about annuities. An annuity is the annual income that savers buy from their pension pot, but rates have collapsed over the past decade, and moved to new lows as quantitative easing and Funding for Lending has depressed interest rates.

Ros Altmann, a former pensions adviser to Tony Blair, told the Daily Mail that annuities are now "the biggest gamble" of pensioners' lives, and that they will have to live to 82 to get their money back, and 90 before they become "good value".

She said: "Buying an annuity is considered the 'safe' thing to do when reaching retirement. This is misguided. The 'safety' only refers to the fact that the amount of income will be set for the rest of your life.

"But the capital itself is at risk. Most people will receive a very poor return on their money – and many will not get their money returned to them at all."

Many people have turned to buy-to-let as an alternative to traditional pension plans, as the investment does not have to be turned into an annuity – and have enjoyed much better returns than equities or bonds.

The Office for National Statistics reported on Tuesday that house prices rose 0.4% month-on-month in June, as they had done in May, which pushed the annual rate of increase up to 3.1% from 2.9%. This is being inflated by strong price rises in London (up 8.1% year-on-year in June).

The figures come hard on the heels of a report from the Royal Institution of Chartered Surveyors, which indicated that Help to Buy and other schemes are fuelling a rapid recovery in prices.

Economist Howard Archer of IHS Global Insight said: "It is looking ever more likely that house prices will see marked increases over the rest of 2013 and during 2014, with the result that we have raised our house price forecasts. We now expect house prices to rise by at least 3% over the rest of 2013 and to then increase by 7% in 2014."

Article Source:  http://www.theguardian.com/money/2013/aug/13/record-numbers-retirement-selling-property

Henderson: UK Property at ‘Very Fair’ Levels

This August 6, 2013 article by Eleanor Lawrie of the FT Adviser reveals how Henderson fund is seeing healthy inflows as outlook improves. 

UK property valuations are at “very fair” levels even though they are significantly lower than prior to the 2008 crash, according to Henderson’s Ainslie McLennan.

The co-manager of the £989m Henderson UK Property fund said positive incremental changes in valuations were more reassuring than dramatic spikes up and down.

“We have come through such a difficult time in 2007-09 and we haven’t got close to getting back to those valuations,” the manager said.

Ms McLennan, who runs the fund alongside Marcus Langlands-Pearse, said the product was seeing “healthy inflows” as investors seek alternatives from volatile assets.

She said: “The fund has seen very healthy inflows over the year. There is money coming out of cash, some from bonds, some from commodities. I think it’s healthy that it’s coming from different places - a spread of asset classes.”

The manager described property as “the opposite to equities and bonds”, offering a gilt-style steady return but with roughly one-third the risk of equities.

Ms McLennan estimated that half of the recent interest in the fund had been from discretionary wealth managers, and half from the adviser community.

Ms McLennan said other property funds might struggle from tenants not being able to keep up with payments, but said the longer leases held by the Henderson fund would eliminate this problem.

The main tactical play in the fund is an underweight in high street retail properties, which make up just 5 per cent of its holdings. Ms McLennan said the changing habits of consumers in the UK had weakened high street shops, as people increasingly shop online or in retail parks.

“We are trying to find businesses that are relevant going forward and have longevity, and that aren’t at risk of massive change,” she said.

Instead, the fund owns retail stores in “robust locations” with little competition, such as a branch of Marks & Spencer in Nottingham and House of Fraser in Chichester.

Roughly 70 per cent of the fund is in the southeast of England due to the managers’ cautious outlook and the region’s strength relative to other areas of the UK.

The Henderson UK Property fund has underperformed the IMA Property sector in one, three and five years to July 31, according to FE Analytics. In three years, the fund returned 10.9 per cent compared with a 22.8 per cent average return from the peer group, while in five years, the fund has risen 2.3 per cent, compared with a 13.6 per cent average rise for the sector.

In June, Henderson announced it was combining its real estate business with that of US-based TIAA-CREF to create a European and Asian real estate company called TIAA Henderson Global Real Estate. Henderson has moved to reassure investors that there will be no changes to the management or process on the UK Property fund.

Article Source: http://www.ftadviser.com/2013/08/06/investments/property/henderson-uk-property-at-very-fair-levels-Q2h5oTJta3VmejjXFqxWZL/article.html

Who Lives in a House like this? Some Vendors will go to Great Lengths to sell their Property

This very interesting and informative article by The Independent on July 30, 2013 simply suggests homeowners the dos and donts in selling their houses to potential buyers.

What’s the best way to sell your house to a potential buyer? Put a pot of coffee on to brew before they arrive or make sure there are fresh flowers in every room when your estate agent comes around to take some pictures for its online listing? Well, one enterprising vendor in east London has given their bedroom a boudoir feel by leaving a racy fuchsia negligee, complete with bottle of red and two glasses on the bed for the estate agent’s snapper to capture.

Dodgy estate-agent pictures are a bit of an internet meme right now and there’s even a blog called Terrible Real Estate Agent Photographs on Tumblr. But this saucy shoot – which is gleefully doing the rounds on Twitter – for up-market estate agent Foxtons, takes the concept of “dressing” a room for sale to a whole new level.

Sadly it isn’t the worst example of property pornification, though. “The worst case of this sort of property ‘dressing’ I’ve seen is a set of sexy silk underwear draped seductively over a mink bedspread in a £20m mansion near One Hyde Park in Knightsbridge. All it needed were burly Russian bodyguards to complete the picture,” says Tracy Kellet, director of BDI Homefinders buying agents. “And perhaps unsurprisingly, it’s usually a male developer or interior designer that thinks it’s a good idea to sex up a property.”

Kellet isn’t the only property insider to have come across an unlikely scene. “I once saw a set of photographs with a man asleep in the second bedroom,” says Jo Eccles, the managing director of Sourcing Property, a search-and-relocation company. “And on a viewing once I saw an owner go a step beyond fresh flowers and set out a full jug of Pimms complete with ice, chopped mint and freshly chopped strawberries.”

So does all of this help sell your house? “In the end all it does is detract from your home, so potential buyers spend more time thinking how odd you are, rather than imagining themselves living in your home,” warns Eccles.

Article Source: http://www.independent.co.uk/property/house-and-home/property/who-lives-in-a-house-like-this-some-vendors-will-go-to-great-lengths-to-sell-their-property-8680507.html

Investing in Real Estate Without Buying Property

This article and video by Matt Nesto was published in Yahoo Finance on 26th July, 2013 stating the possibility of investing in real estate without buying property. Can this be possible?

To watch it click here.

History suggests that the home you live in is likely to be the largest investment you will ever make. But because the costs and barriers to get into the real estate market are so high, many investors look no further than their front door.

But as Phil DeMuth of Conservative Wealth Management explains in this installment of Investing 101, REITs (or Real Estate Investment Trusts) make it possible to buy properties you couldn't even dream of owning yourself.

Read more...

China’s Residential Property Market defies Cooling Measures

This article by Property Wire on July 22, 2013 shows how China's residential property market continues to defy expectations and prices are continuing to rise.

 Data shows that China’s economic growth slowed in the second quarter of 2013. Its economy grew by 7.5%, down from 7.7% in the January to March period.

However, property prices in the Chinese residential market continued to grow in the first six months of 2013. According to Knight Frank’s Global House Price Index, which measures mainstream house prices in key cities around the world, property prices in China have risen 10.8% so far in 2013.

The central government’s five new measures introduced in early March represent the latest attempts to try and cool property markets and control rapid price growth. But so far the effect is limited.

In Beijing there is a 20% capital gains tax is imposed on pre-owned home sales. This is exempted if a home owner sells the property after over five years from its purchase and the apartment is the only one owned by the family. Single adults with a permanent Beijing resident registration are allowed to buy only one apartment if they have no other homes registered under their names. The down payment ratio for a qualified family’s second home has been increased to 70%.

A new home price control target has been set in Shanghai with the aim of keeping prices stable. Shanghai has also introduced differentiated credit policies. Banks are not allowed to extend loans to buyers of third or more homes and should adjust their requirement for down payment ratio as well as interest rates for second home buyers. A 20% capital gains tax on property sellers will be strictly levied in the city if the original values of the homes can be verified.

In Guangzhou the ceiling of new home price growth is pegged with the increase in per capita disposable income. Non-registered residents are eligible to buy only one home in the city if they are able to present income tax or social insurance certificates to prove that they have resided in the city for a cumulative 12 months over the past two years prior to their home purchase.

‘Witnessing how different local authorities have responded to these policies underlines the issues that China continues to battle with as it tries to cool its housing market down,’ said Nicholas Holt, Knight Frank’s Asia Pacific research director.

‘On the one hand, local authorities do not want to bite the hand that feeds them, while on the other, they must be seen to support China’s State Council policies,’ he pointed
‘This is all being fuelled by investors who, amid growing wealth continue to invest significant proportions of their money into property. The lack of alternative investment options for many retail investors makes this situation unlikely to change,’ he added.

Article Source: http://www.propertywire.com/news/asia/china-residential-property-prices-201307228027.html