Improved economy and political stability boost Cairo property markets
Tuesday, 14 April 2015 All sectors of the Cairo real estate market have witnessed a positive performance and improved sentiment during the first three months of 2015 due to stronger confidence and investment appetite created by increased economic and political stability.
A new analysis from international real estate firm JLL says that this confidence is most clearly illustrated by the recent announcement of the mega real estate project Cairo Capital which will serve as an extension for New Cairo and will draw the centre of gravity further to the East of the existing city.
The report shows that residential sale prices have continued to increase across Cairo in the first quarter of the year with office rents increasing in New Cairo and retail rents edging further upwards over the past quarter. The hotel sector has also recorded improved performance with tourist numbers and hotel occupancy rates improving.
The performance of both the tourism sector and other parts of the real estate market are expected to continue to benefit from increased levels of foreign investment into Egypt, committed at the recent Economic Summit in Sharma El Sheikh in March 2015.
The report points out that Cairo’s residential market continues to recover with improved sales figures as a result of the recovering economic and political sentiment. Apartment and villa sale prices increased during 2015 across all the areas monitored by JLL as many residential developments have few units left and have increased prices accordingly.
Performance in the rental sector remains more mixed, with some properties experiencing an increase while others are experiencing a reduction due to the unstructured nature of the rentals market in Egypt. An extra 31,000 units are planned to be delivered during 2015 of which 11,000 are in New Cairo and 19,000 are in the 6th of October.
‘The positive economic outlook arising from the Economic Summit is expected to result in additional investment in the residential sector, strengthening the market further in 2015,’ the report says.
During the first quarter of the year some 250 units were completed in Al Rehab City, New Cairo, in addition to 640 units in the Zayed complex, increasing the current supply to around 106,000 units. A further 31 residential developments are expected to complete in the rest of 2015 ten of which will be in the second quarter, adding an extra 30,000 units to the current supply.
The report points out that the Palm Hills Development is notable, with five of their developments planned to be delivered in the second quarter alone. ‘Despite this additional supply, the positive sentiment is expected to result in increased selling prices over the coming year,’ it adds.
Cairo’s office market witnessed a slight improvement during the first quarter of 2015 as rental rates increased significantly in New Cairo due to relatively higher demand. Rental rates in Central Cairo and West Cairo remained unchanged.
The major completion in the first quarter of2015 was Park Avenue located on the Cairo Alexandria Desert Road. This 15,000 square meter development is currently complete but not yet operational.
The report also shows that the vacancy rate has decreased by 2% since the fourth quarter of 2014, signalling stronger demand for commercial space. The year on year increase in vacancy rate is mainly due to the influx of more than 100,000 square meters throughout the year, it adds.
Cairo’s office supply is expected to expand further in 2015, with an additional 37,000 square meters being delivered of which 17,000 square meters is due for delivery in the second quarter of the year. The supply of office space is, however, generally lower than in previous years.
The demand for office space is now equally balanced between Sectors One and Two within New Cairo. Sector two benefits from higher parking availability, new supply and competitive pricing. This high demand is inducing developers to raise the asking price, the report adds.
Budget announcements set to boost India’s residential property market
Friday, 11 March 2016 India’s residential real estate market is set to see a boost with moves that will increase the supply of properties for sale and demand.
Experts point out that change announced in the 2016/2017 Union Budget will see a reduction for first time buyers of INR 50,000 on interest repayment for loans up to INR 35 lakh where the cost of a house is INR 50 lakh and this will boost the demand for housing at the lower end of the market.
This move is also likely to benefit purchasers in tier II and tier III towns such as Surat, Nagpur, Lucknow, Vadodara, Jaipur, Pimpri-Chinchwad, Indore, Chandigarh, Gurgaon, Rajkot, Bhopal, Kanpur, and Thane, according to Shishir Baijal, chairman and managing director of Knight Frank India.
On the supply side, a 100% tax exemption on profit for developers and an exemption from service tax for the construction of houses up to 325 square feet in metro areas and 650 square feet in other cities will encourage supply in the affordable housing segment.
The budget has also increased the limit of deduction of rent paid under section 80GG which provides for deduction of house rent paid, provided that a deduction for payment of House Rent has not been claimed under any other section of the Income Tax Act, from INR 24,000 per annum to INR 60,000 per annum, thus providing relief to those who live in rented houses.
For investors, the abolition of the dividend tax (DDT) means that there will be no barrier to launching REIT schemes. ‘Removal of REITs from DDT will also make this type of investment more appealing to retail investors. In the long run higher transparency levels will ensure that the cash strapped real estate sector will get easier access to funds at a reasonable cost,’ said Baijal.
A focus on improving infrastructure and rural development is also expected to give a much needed fillip to the real estate sector. This includes a significant outlay on improving roads, railways and developing smaller airports to improve regional connectivity. Additionally, incentives to MSME, Make-in-India will get a further boost that will benefit the real estate sector in the long run.
‘Additionally, the government’s focus on digitization of land records is a step in the right direction, especially in more rural areas. The move will also lead to higher transparency levels in the real estate sector,’ Baijal added.
There is also likely to be more demand from overseas investors with the forthcoming Indian Property Show in London in April expected to be well attended by Indian expats seeking to invest in real estate.
They are expected to be interested in smart gated communities which are being developed in major cities such as Delhi NCR, Mumbai, Hyderabad, Chennai, Bangalore, Pune and Kolkata.
According to Srividya Rajan, general manager for sales and brand engagement at Sumansa Exhibitions, the Indian Property Market is affordable compared to other international investment destinations and capital appreciation on real estate in India is far higher in the long term.
Slow start to the year for property prices and rents in UAE
Thursday, 03 March 2016 Residential property prices and rents have fallen in Dubai at the start of 2016, with the latest index figures indicating a falling or stagnant market.
Overall property prices rose just 0.09% in January and were down 9.6% year on year, according to the data from the latest ReidIn index.
A breakdown of the figures shows that apartment prices fell 0.19% month on month and 9.7% year on year while villa prices increased 1.23% but are down 8.9% year on year.
Overall property rental values fell by 1.57% and were down 5.3% year on year. Apartment rents fell 1.67% month on month and 5.2% year on year while villa rents were down 0.9% month on month and 5.9% year on year.
In neighbouring Abu Dhabi Residential the property markets are also more or less stagnant with the overall property price index up by 0.62% month on month and by 0.1% year on year.
Apartment prices increased 0.89% month on month but were down 2.6% year on year while villa prices increased 0.13% month on month and 3.1% year on year.
The rental market in Abu Dhabi was slightly more buoyant and values increased by 2.11% in January compared to December but are down 1.8% compared to January 2015.
A breakdown of the figures show that apartment rents increased 2.3 month on month but were down 0.9% year on year while villa rents increased 1.86% month on month but were down 1.6% year on year.
London to get another 11 new housing zones
Tuesday, 15 March 2016 The Mayor of London has announced 11 new Housing Zones that will provide 24,554 new homes and create new neighbourhoods across the capital.
An additional £200 million has been designated to the final 11 zones, which stretch from Havering to Kingston and Enfield and bring the total number planned in London to 31 which will see 77,000 new homes built.
The aim is to boost housing supply, stimulate building and produce the new low cost homes London needs to meet its growing population. Some 34% of the 77,000 new homes will be affordable, alongside transformational regeneration of key town centres, train station hubs and housing estates.
The Mayor made the announcement as he officially opened a new affordable housing development in the heart of London's West End. Trenchard House, spanning across Broadwick and Hopkins Street, is a former derelict Metropolitan Police hostel, on Greater London Authority acquired land released by the Mayor.
The site has undergone a £54 million redevelopment to build 78 new homes, including 65 affordable one to three bedroom apartments. The affordable apartments are intermediate rent with some offered at 75% discount to market rates. Exact rents are based on resident's incomes, and many of them work night shifts in the theatres and bars surrounding Soho and will now be within walking distance of their jobs.
The site, which had lain vacant for almost 13 years, is one of the 414 hectares of land transferred to the Mayor with every surplus site owned by City Hall now released for development. The intermediate homes are part of the 100,000 affordable homes the Mayor is on track to deliver by the end of his term.
‘Meeting the unprecedented demand for housing after 30 years of historic failure to build new homes is a critical issue affecting the capital. That is why I have led an enormous programme of regeneration with my 31 housing zones that will transform communities across London, creating nearly 80,000 new homes, plus new transport hubs and schools,’ said Johnson.
‘This new housing development in the heart of the West End is delivering a life line to hard working local people who were priced out of Soho and desperate to reside nearby their places of work. These apartments are just some of the 100,000 new affordable homes being delivered over my two mayoral terms,’ he explained.
‘This site forms part of more than 400 hectares of developable land the GLA inherited and which I have now released every inch of, to ensure as many homes as possible are built throughout London,’ he added.
As part of the Mayor's commitment to double house building, London's Housing Zones will unlock regeneration on hundreds of hectares of brownfield land across the capital. The special status has been awarded to areas identified and packaged up by local authorities. It removes all unnecessary planning restrictions, combined with the funds to maximise development, and fast track homes and supporting infrastructure.
UK landlords fear more woe in UK Budget
Tuesday, 15 March 2016 Landlords in the UK are concerned that the forthcoming Budget speech by the Chancellor of the Exchequer George Osborne could hold more bad news for their property investments.
Some 66% feel there will be more bad news and a fifth are already planning to pull out of buy to let this year, according to new research by property crowd funding platform The House Crowd.
It suggests that property investors feel increasingly under attack, with legislation such as the EU Mortgage Credit Directive and increase in stamp duty on buy to let properties coming into force.
Over 70% of those surveyed believe that these changes will have a negative impact on their investments, with smaller investors set to be hit hardest by ever tightening profit margins. 43% feel that the government is trying to squeeze small investors out of the market altogether.
Over half, 54%, of landlords indicated that they do, however, support tighter regulation from the Bank of England to clamp down on rogue landlords.
Despite sentiment towards traditional buy to let turning sour, it appears that investors still view bricks and mortar as the best way to secure their futures. The UK wide survey found 33% still prefer to invest their money in property as it is a tangible asset.
It also found that 38% think landlords need to be looking at smarter ways to invest while 57% think buy to let will remain a strong option as there is a continued housing shortage in the UK.
‘With house prices continuing to rise and the property market outperforming the FTSE, bricks and mortar presents a strong investment option,’ said Frazer Fearnhead, chief executive officer of The House Crowd.
‘Despite this, new legislation is making buy to let ever less accessible for the small landlords who want to invest in something sensible and tangible to secure their futures. As many of the landlords surveyed identified it's time for beleaguered investors to be looking at their options,’ he pointed out.
‘February was our strongest month yet, as investors turn to property crowdfunding to achieve the returns that property offers minus the stress and risk of being a landlord. Times are hard for the UK's small property investors but it's time to adapt, not despair,’ he added.