Global Property Guide - News and Discussions
Post-Brexit panic subsides in Britain, as property funds resume trading
The nervousness which affected the U.K.'s real estate markets following the Brexit vote has subsided. Some property funds have eased penalizes on redemptions by investors, while others have resumed trading. At least seven major property funds had halted trading or put restrictions on redemptions immediately after the Britain's decision to leave the European Union, as investors tried to cash in their assets managed by these funds. Columbia Threadneedle Investments reopened its U.K. Property Fund recently. The company had either sold or agreed to sell some 25 properties with prices just 1% lower than valuations before the referendum, the firm said, suggesting that Brexit has not had a major impact on U.K. real estate markets. "We saw animal spirits drive unprecedented levels of redemptions," Don Jordison, managing director of property at Columbia Threadneedle, said in a statement. "Much of the earlier commentary now appears slightly irrational and more informed reflection has settled the market." Aberdeen Asset Management Plc and Canada Life have also reopened trading for their U.K. property fund. Redemption penalties are still in place, but have been lowered substantially. Experts were expecting a short-term fall in property prices after Brexit, as domestic buyers adopted a 'wait and watch' strategy. On the other hand, dollar-based overseas buyers have been taking the opportunity to snap up UK property and make a saving of around 12%, and there has been a surge in interest in buy-to-let property from investors in the Middle East, Hong Kong and other countries with currencies pegged to the dollar.
Property agents to be targeted by New Zealand's anti-money laundering laws
The New Zealand government is to include real estate agents in the scope of its money laundering laws amid fears that some agents may, either knowingly or unawares, be helping overseas buyers and companies to stash ill-gotten gains in New Zealand property.
New Zealand's money laundering laws currently lay out punitive action only against financial institutions and casinos. The new rules, likely to be implemented by mid-2017, will also cover property agents along with lawyers and accountants.
The government is under pressure to curb money laundering via real estate as most people in New Zealand blame foreign buyers for skyrocketing property prices. Some other countries, including Canada and the United Kingdom, already have money laundering laws which specifically target real estate investors, and professionals related to the industry.
The New Zealand government was under pressure to introduce a law against money laundering in real estate after the release of the Panama Papers in April. The papers provided detailed evidence of the already well-known fact that offshore companies were setting up trusts in New Zealand to invest in real estate, and evading tax in this way.
Until recently, the government has been denying claims that foreigners have contributed to a steep rise in home prices in New Zealand.
Only 11% of dwellings in New Zealand are owned by people living overseas, according to the New Zealand government. The data was compiled by the Inland Revenue Department (IRD) in June last year, and recently released a few months ago by Housing Minister Nick Smith. Based on this data the government argued that since foreign home ownership is lower in New Zealand than in other countries, the restrictions on foreign residential investment demanded by the Opposition are unnecessary.
The results were based on property owners' tax returns. Of 199,000 taxpayers making rental tax returns, 11% were non-residents and 1% were of unknown residency. The 'non-resident' category included New Zealand citizens who lived overseas and the data did not distinguish between expat New Zealanders and foreign buyers, Smith said.
Vancouver to tax empty homes
Close on the heels of the Vancouver government's decision to impose an additional property transfer tax on overseas property buyers - at no less than 15% of the property's price - Vancouver has decided start taxing vacant homes by the year's end, in a further attempt to rein in foreign buyers and absentee homeowners who have allegedly contributed to a steep increase in Vancouver home prices.
Overseas buyers are being blamed for pricing middle class families out of the housing market in Metro Vancouver.
There are 10,800 homes lying empty in Vancouver. The government believes that absentee homeowners will be forced to rent out their properties to avoid the new tax, thus easing the unaffordability crisis.
The tax, which targets properties left empty or underutilized, would be levied through self-declaration, audit, and compliance measures, according to Mayor Gregor Robertson.
'Owners will have to prove they or tenants occupy the homes for a minimum number of days a yearandhellip;Vancouver's dangerously low vacancy rate is putting our renters in crisis,' Robertson said in a statement. 'Our proposed empty homes tax is first and foremost about bringing rental homes back into the market.'
The government is yet to decide the annual amount of tax, but it could be between 0.5% and 2% of the property's assessed property value, the mayor said. If the tax is collected on just 5% of the nearly 11,000 empty homes, it would raise C$2 million (US$1.51 million) in annual revenue, he said.
The new tax (15% of the property's price) on foreign buyers came into effect on August 2. It is in addition to the province's general property transfer tax of 1% on the first C$200,000 (US$153,500) of a home's value, and 2% on any further value up to C$2 million (US$1.54 million). The new tax applies to foreign corporations and individuals buying residential properties in Vancouver.
Malaysian developers can once again make loans to property buyers
In a reversal of recent policy, the Malaysian government will allow property developers to make loans to property buyers. The initiative is aimed at assisting home buyers who are unable to get a full housing loan from banks or those who may only be given a partial housing loan.
Developers can charge people buying properties from them an interest rate of between 12% (for loans with collateral) and 18% (without collateral), according to the ministry of Urban Wellbeing, Housing and Local Government.
The initiative is part of the Developer Interest Bearing Scheme (DIBS), which was abolished in 2014 after it led to massive speculation in the property sector. However, Malaysia's property markets have slumped over the past one year, so industry players urged the government to reintroduce the scheme.
"The ministry agreed to give money lending licenses to any developer that is interested, especially developers that are more establishedandhellip;Buyers sometimes don't get a 100% loan. Sometimes the bank only gives them a 70% loan and they only have money to pay 10% so the balance, the developer can give them a loan,' Minister Tan Sri Noh Omar said while making the announcement recently.
The minister said that this proposal is a win-win situation for both developers and house buyers.
"For the developers, this end-financing facility offers a second profit centre. First, of course, from the sales of these houses and second from the proceeds of the end-financing scheme," he said.
Developers will have to obtain a money lending license from the ministry in accordance to the Moneylenders Act 1951.
The ministry did not impose any restrictions on the types of properties the loans will apply to.
A world first for Greece: government to tax every short-term rental
The Greek government will impose a tax on home owners who rent out their properties through short-term rental websites like Airbnb. Owners will have to register their properties with the government before advertising them on the Internet. The government plans to levy a tax of up to 5% on every booking. A proposal to this effect will be voted through next month, Greek media has reported. "We will ensure that properties are registered. Anyone posting on internet sites that they have property for rent will have to have registered it first. This is just part of the government action we're taking to fight tax evasion, illegal trading and corruption," Deputy Finance Minister Trifon Alexiadis was quoted as saying. The tax is likely to affect thousands of properties in Greece. There are 50,000 short-term rental listing on Aibnb alone. Greece is probably the first country to levy additional tax on every booking in short-term rental which are gaining massive popularity in the country, to the extent that it has had severe ramifications on the hotel industry in Greece. Many hotels in popular tourist cities like Athens are reporting higher vacancy rates.
Home sales plunge in Vancouver after tax on foreign buyers
A new tax on foreign buyers has had a huge impact on the Vancouver property market. While home prices continue to rise at a robust rate, sales reported an unprecedented 26% drop in August compared to the same month last year. August 2016 sales also represent a 22.8% decline compared to last month's sales. The drop in sales volume stands in sharp contrast to the continued rise in prices. The MLS Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $933,100 (US$711,801). This represents a 31.4% increase compared to August 2015 and a 4.9% increase over the last three months. The data was released nearly a month after Vancouver in British Columbia became the first Canadian city to impose an additional property transfer tax on overseas property buyers - at no less than 15% of the property's price. The tax, which came into effect on August 2, is in addition to the province's general property transfer tax. The general transfer tax equals 1% on the first C$200,000 (US$153,500) of a home's value and 2% on any further value up to C$2 million (US$1.54 million). The tax applies to foreign corporations and individuals buying residential properties in Vancouver. "The record-breaking sales we saw earlier this year were replaced by more historically normal activity throughout July and August," Dan Morrison, REBGV president said. 'Sales have been trending downward in Metro Vancouver for a few months. The new foreign buyer tax appears to have added to this trend by reducing foreign buyer activity and causing some uncertainty amongst local home buyers and sellers. "It'll take some months before we can really understand the impact of the new tax. We'll be interested to see the government's next round of foreign buyer data.' Though the sales volume dropped, prices continue to rise at a robust rate. "In aggregate, we continue to see an imbalance between supply and demand in most communities. However, we're also seeing fewer detached sales in the highest price points and fewer detached home sales relative to all residential sales," Morrison said. "This is causing average sale prices to show a decline in recent months, while benchmark home prices remain virtually unchanged from July." The average price is the simplest home price measure to explain but is not the most accurate since it may be skewed by the mix of properties. More high-end or low-end sales will skew the number up or down. The new tax was introduced amid fears that foreign buyers have contributed to the city's skyrocketing property prices, pushing middle-class families out of the market. The province of British Columbia has also allowed the city of Vancouver to impose an annual vacancy tax on residential properties left uninhabited. In Metro Vancouver, foreign buyers make up 5% of all buyers, according to data released by British Columbia's finance minister Michael de Jong, though certain areas have higher foreign investment ratios, notably Richmond (14%) and Burnaby (11%), with Chinese the biggest segment of foreign buyers. In British Columbia, according to the report, 3.3% of all property transactions involve foreigners. However the data generated scepticism among real estate experts, with many unwilling to believe foreign investment in British Columbian real estate is so low.
In Portugal, properties offering good views, better sunlight, may attract higher tax
The Portugal authorities plan to adjust council taxes on residential properties on the basis of the amount of sunlight they enjoy and the quality of views they offer.
But the proposal has drawn strong criticism from real estate industry experts, and from citizens.
An increase of up to 20% in council tax is proposed for apartments offering decent views and facing south, and a 10% decrease for dwellings overlooking a cemetery, or located on the ground floor, or facing north. The tax authorities will also take into account other factors like noise pollution.
These tax adjustments will not impact existing dwellings, but only newly built properties, and properties currently being reappraised.
The purpose is not to gain additional revenue, but rather to tax people according to the homes and luxuries they enjoy, said Rocha Andrade, Secretary for Finance.
Real estate experts have criticized the proposal, saying that the government is planning to penalize people for making sensible decisions.
"This law makes no sense whatsoever,' said Association of Lisbon Homeowners (ALP) President Luandiacute;s Menezes Leitandatilde;o. 'People are paying tax on something that generates no profit. These are people's homes and many of them could now face not being able to pay these new taxes.'
Most people in Portugal prefer to buy apartments facing south, because they offer great exposure to sunlight.
Local media have compared the proposed tax to the window tax imposed by King William III in Great Britain three hundred years ago, when people were taxed according to the amount of daylight entering their homes.
That's chivalry! Businessman pays tax owed by Mexico's first lady on her Florida property
Mexican President Enrique Peandntilde;a Nieto has landed in the middle of yet another property scam. His telenovela star wife Angelica Rivera has been accused of accepting 'property tax favours' from a Florida businessman who has business interests in Mexico.
Businessman Ricardo Pierdant paid nearly $30,000 in property taxes on a luxury condo owned by the Mexican first lady Angelica Rivera in Florida.
According to reports, one of Pierdant's companies will likely bid to run Mexico ports. Pierdard owns a popular bike sharing company, DecoBike, in Florida.
Angelica Rivera bought the property, south of Miami beach, in 2005, through a holding company.
The holding company paid a total of $1.7 million for the 3,000-square-foot, spacious three bedroom unit located at Ocean Club, a gated waterfront community on Key Biscayne.
Public records show that Rivera's company paid property taxes every year, except for 2014 when one Biscayne Ocean Holdings, managed by Pierdant, paid the annual $29,703 tax bill.
After the Guardian broke the story recently, the Mexican president's office in a statement, terming it "all speculation".
"The story termed Ricardo Pierdant as a "potential" government contractor without offering a single data, document or declaration to support itandhellip;It is all speculationandhellip;the story predicts the future," the president's office said, adding that Ricardo Pierdant has not entered into any agreements with the Government of the Republic.
The scandal gives credence to reports that foreigners are investing money linked to corruption in Florida real estate under the shield of shell companies. These foreigners include Mexican government officials.
The federal government announced last month it would expand its crackdown on secret cash deals for pricey homes in Miami-Dade County and Manhattan to other luxury real estate markets in Florida, New York, California and Texas.
In January, an agency of the U.S. Treasury Department said it would temporarily order title insurance companies to identify the true owners of shell companies that pay $1 million or more in cash for homes in Miami-Dade and $3 million or more for homes in Manhattan.
Because buyers can cloak their identities in opaque shell companies, regulators say cash home deals are a magnet for money laundering. Corrupt foreign officials, drug dealers and other law-breakers have been caught parking dirty money in U.S. real estate.
Management service for Airbnb hosts launches in six cities
Landlords who balk at the hassles of short-term renting: the startup Guestready.com, launched on Tuesday, may be what you're waiting for. Aimed at real estate investors and Airbnb or HomeAway hosts looking for help managing their property, it provides a range of host services such as laundry, cleaning, check-in and check-out of guests, but more importantly, manages entire properties, including guest communication, maintaining listings on multiple short term rental sites, and ensuring that the property generates the maximum possible yield. GuestReady has launched its services in London, Paris, Amsterdam, Singapore, Kuala Lumpur, and Hong Kong, and is expected to roll to more cities across the world in the near future. "Airbnb and similar websites have been well-established among leisure travellers, but the short-term rental platform is also becoming increasingly popular among business travellers who are looking for an alternative to long-term stays at hotels or serviced apartments," said the start-up's London-based CEO Alexander Limpert who sees this trend as the big opportunity for GuestReady. "As the short-term rental industry is maturing, there is a natural need for more efficiency, professionalism, and standardisation. Especially with business travellers, the property and any service related to a stay need to be of immaculate quality. For non-professional hosts, this is hard to achieve, which is where we step in," Limpert said. While traditional property agents focus on long-term rental and management of properties, GuestReady focuses on the underserved niche of short-term and vacation rentals. By launching GuestReady globally, the startup leverages location-specific advantages and taps into economies of scale to keep costs at bay. The startup is backed by the Swiss Founders Fund with an undisclosed sum. Romano Brandenberg, Venture Partner at Swiss Founders Fund, sees big potential in the growing and maturing short-term rental market. "Living and work patterns are becoming ever more mobile and the 12-month rental agreement or a room in a hotel is often not an adequate solution anymore for today's business travellers, digital nomads or city hoppers. Short-term rentals offer a great alternative for these audiences," elaborates Brandenberg. He considers GuestReady the missing link in the industry, enabling more property owners to become hosts.
Prime residential real estate market in Dubai still buoyant, says latest report
Acclaimed by many as a 'safe haven for UK commercial property investors' and ranked topmost target for real estate in the Middle East, Dubai's market is fast becoming vibrant and remains stable despite the geopolitical unrest. The property market in this country features first-class infrastructure and a regulatory environment considered as one of the most favorable in the world. After several years of turbulence, Dubai's real estate market is thriving again among foreign investors, thanks to the high rental returns and government initiatives aimed at enhancing stability-an economic boost previously relied upon by the country. According to Knight Frank's report earlier this month, high-end properties in Dubai are spearheading the property market indicators even as prices soared during the first quarter of 2016. The report also noted that rental prices within the prime segment inched two percent during each quarter between Q4 2015 and Q1 2016. The surge in the property market was unexpected considering that the economy recorded the slowest pace in five years earlier this year. Foreign Investors: They Dominate Dubai Real Estate Market As the country's economy keeps improving, so is foreign investment-and indeed, the market is currently dominated by foreign investment. In fact, British citizens were the second largest investors in Dubai property market after investing a whopping £1.9bn in 2015. Despite the 9% drop across the mainstream real estate market in the last 12 months to April 2016, the monthly General REIDIN sale price index remained relatively flat, with no tangible changes in performance for both villas and apartments, says the report. Dubai's extremely attractive rental yields--currently averaging a little over seven percent compared to other cities (Hong Kong averages at about two to three percent and London at three to four percent), are driving new projects into the market, and quickly appealing to the growing pool of global and regional investors and property funds looking to diversify their property portfolio. The country's growing yields are attributed to the robust rental property market and the increased job opportunities. Renting is now a quick and easy option compared to buying property, hence the first choice for most residents. Knight Frank's report also highlighted that Dubai's top-end properties outperformed the market average despite the 5% drop in the prime price index during the 12 months to April 2016. Notably, the performance of apartments outweighed that of prime villas, with the index pointing to a slight quarterly increase of 2% over the same period. On the other hand, prime villas did not record any significant price change. While it's too soon to predict the real impact of the Expo 2020 on the residential property sector, sustained government commitment to spending on projects aimed at supporting events such as Dubai Parks and Resorts and Route Metro 2020 would grow investor confidence in the market and draw inward capital. 'Looking ahead, the residential market in the UAE is expected to soften over the second half of the year. While it's difficult to predict when the next growth cycle will be, we expect the residential market to level out by the end of 2016 before seeing gradual recovery in 2017. We expect prime residential properties will continue to outperform the market average in the short to medium term,' the report says in part. 'We expect Dubai to continue attracting investments both regionally and globally. However the outlook for the emirate in general and the real estate sector in particular depends on a number of fundamentals,' it explains. 'Further volatility in oil prices, the European Union referendum in the UK, the US presidential elections in November and ongoing geopolitical tensions are likely to impact the behavior of currencies, investor sentiment, and demand for property,' the report concludes. In order to ensure the country doesn't plunge itself in the economic hardship as 2009, Dubai needs to have confidence in its property market, which is largely driven by foreign investment as this could save its real estate revenue, accelerate progress and drive other sectors such as retail, tourism and hospitality.
End of South Africa's foreign buyers' boom
The surge in foreign buying of South African residential properties has "more-or-less" come to an end, according to First National Bank (FNB), one of South Africa's biggest banks. Foreign interest in the South Africa residential property market started to rise from 2012 onwards, peaking in the final quarters of 2014, according to FNB. John Loos, household and property sector strategist at FNB, said that fluctuations in the rand's exchange rate had raised the cost of local property for aspirant foreign buyers and could have influenced foreign buyer levels. However, he said that FNB believed that the popularity of property globally as an asset class had a larger influence, and it appeared that property had "gone off the boil" since late 2013 to early 2014. FNB's agent survey suggested that foreign buying interest had slowed since 2014 despite the further slide in the value of the rand up to the end of last year. "What had changed from 2014 onwards was slower global house price growth." "Using the Knight Frank Global House Price index, the post 2008/09 recession peak in global house price growth was reached in the third quarter of 2013, measuring 6.3% year-on-year. By the first and second quarter of 2015, the rate of increase had subsided to 2.1% before recovering somewhat to 3.4% in early 2016," he said. He said the vote in the UK referendum to leave the EU might have had a mild impact because the weaker pound had made South African property more expensive for sterling-based buyers. Loos added that South Africa had never been a major residential investment destination, but buying by UK residents had been a significant source of demand.
Vancouver to impose punitive tax on foreign property buyers
Vancouver in British Columbia has become the first Canadian city to impose an additional property transfer tax on overseas property buyers - at no less than 15% of the property's price. The tax, which comes into effect on August 2, is in addition to the province's general property transfer tax. The general transfer tax equals 1 percent on the first C$200,000 (US$153500) of a home's value and 2% on any further value up to C$2 million (US$1.54 million). The tax will apply to foreign corporations and individuals buying residential properties in Vancouver. The new tax reflects fears that foreign buyers have contributed to the city's skyrocketing property prices, pushing middle class families out of the market. The province of British Columbia will also allow the city of Vancouver to impose an annual vacancy tax on residential properties left uninhabited. In Metro Vancouver, foreign buyers make up 5% of all buyers, according to data released by British Columbia's finance minister Michael de Jong, though the study found that certain areas have higher foreign investment ratios, notably Richmond (14%) and Burnaby (11%), with Chinese the biggest segment of foreign buyers. In British Columbia, according to the report, 3.3% of all property transactions involve foreigners. The data generated scepticism from real estate experts, with many unwilling to believe foreign investment in British Columbian real estate is so low. According to the finance ministry, the data was drawn from Property Transfer Tax filings by residential purchasers between June 10 and June 29, 2016. The data represents a first, early look at purchases of residential property by foreign nationals who are neither Canadian citizens nor permanent residents. There were 10,148 residential real estate transactions in B.C. between June 10 and June 29, totalling more than $7.6 billion (US$5.83 billion). Of total transactions, only 3.3% involved foreign nationals, but overseas buyers' dollar share was 5.1% as they bought higher-valued properties, worth in total $390 million (US$299 million).
Reserve Bank of New Zealand says excess immigration key to rising property prices
Reserve Bank deputy governor Grant Spencer, in a speech in Wellington recently, said the bank would come up with new measures to curb rising property prices and tackle investors involved in speculative activities. His most controversial remark was the suggestion that there may well be merit in the government reviewing current migration policy. 'Like taxation of investor-owned housing, migration policy is a complex and controversial issue,' Spencer said adding that the government cannot ignore that the 160,000 net inflow of permanent and long-term migrants over the last three years has generated an unprecedented increase in the population and a significant boost to housing demand. Spencer warned that immigration adjustments would only work 'at the margins', but they could, over time, help to calm the housing market. Spencer's observations has come in the wake of the government's statement that it is not about to make any changes to immigration policy, on the grounds that high net migration was strongly influenced by returning Kiwis, and Kiwis choosing to stay. The central bank has already tightened loan-to-value (LVR) restrictions in November, making banks demand 30% deposits for a mortgage secured against Auckland investment properties. New Quotable Value data that came out recently showed national house prices were rising at their fastest in 12 years. The prospect of stricter lending rules was cited as a reason for increasing investor activity. Spencer said, 'The Reserve Bank is considering tightening loan-to-value ratios (LVRs) further to counter the growing influence of investor demand in Auckland and other regions, and to further bolster bank balance sheets against fallout from a housing market downturn'. Such a measure could potentially be introduced by the end of the year. 'Limits on debt-to-income ratios (DTIs) might also have a role to play but would be a new instrument that would have to be agreed by the Minister of Finance under the memorandum of understanding on macro-prudential policy. Further investigation of this option will be undertaken.'
South Africa's most expensive home sold for $19 million
A three-storey, seven bedroom house in Cape Town has broken the record for the most expensive house ever sold in South Africa. Situated in Bantry Bay, the house has been bought by a German billionaire for approximately US$19 million, breaking previous records by a whopping margin of US$6.5 million. The deal has cheered local real estate professionals who were concerned over the stagnating property market in the country's capital, amid the falling value of the rand. The house offers stunning views of the Atlantic sea and the gorgeous mountains. It boasts nine bathroom, eight garages, extensive art work and an infinity pool. The sellers were so happy with the deal that they gifted the buyer, who runs Europe's one of the biggest online and public advertising companies, a Porsche Cayenne and an Aston Martin DB9. The two-year-old house was designed by South Africa-based architects SAOTA, which won two awards for the project. The buyer and his wife chanced upon the house when visiting a friend in Cape Town. The deal was finalized last month. The couple have two children, and plan to use the property as a vacation home. Properties on Cape Town's Atlantic seaboard and below iconic Lion's Head Mountain are the most sought after in Cape Town, but estate agents were worried as there had been no trade over the US$6 million mark in the recent past. The estate agents believe the houses are worth more than $6 million if combined with the cost of land. There has been an influx of overseas property buyers into South Africa, primarily due to the falling value of rand against other currencies including Sterling and US dollar. As the magnitude of foreign investments has increased, locals are blaming overseas buyers for pushing property prices up. Opposition parties are pushing the government to impose a ban on foreign ownership of land in South Africa.
Speaking of luxury: Bangalore's villa market
Bangalore has become the leading real estate investment location in India and is being viewed as an enticing option for home investors and developers. In the past two years the city has experienced a flurry of major residential project releases. As more people come to Bangalore to explore new and better opportunities, the demand for residential apartments is quickly growing. But apart from the usual requirement for apartments, residential villas now have an unprecedented appeal to consumers today, with their higher propensity to spend. In the course of just one year, Bangalore has seen a strong rise in villa projects, with as many as 13 projects being developed. Being a major IT hub, there has been an ever-increasing rise in the tech population. The Silicon Valley of India has seen huge sums of cash pumped into the system, leading to an elevated demand for posh residential areas. Central locations like Sarjapur Road, Whitefield, Marathahalli, Bellary Road, Jigani-Anekal RD, Old Airport Road, Nandi Hills, Devanahalli, and Haralur Road have been experiencing a significant demand for villas. These areas offer a host of benefits like uninterrupted water supply, electricity, conveyance, connectivity and of course, they are close to tech parks, schools and commercial areas. These factors have contributed to such areas being significantly more costly than others. High traffic locations like Whitefield are again in high demand due to their proximity to IT centers. Whitefield is one of the most expensive areas and here, according to residential builders, there is an exceedingly high requirement for villa plans and projects. Within a significant radius of Whitefield, prices are no less, and are listed anywhere between US$ 1.1 million and US$ 1.5 million for 350 sq. m. to 550 sq. m.. These areas have observed a boost in absorption. Residential contractors are developing an creasing number of villas in and around Whitefield. In surrounding areas like Hebbal and Devanahalli, prices have surged to around US$ 1.1 million and US$ 1.2 million. The northern part of Bangalore is also experiencing explosive growth and consequently high demand for posh residential villas, because of its nearness to Bangalore International Airport; and its excellent public facilities. Various reports have pointed out that there will be almost two to three luxury properties available for sale every month in this particular area. Gone are the days when people had to choose from very few residential options. Today, consumers rule the marketplace and they want only the best. To appeal to them, contractors are now focused on building self-sustained residential areas complete with all international facilities. Right from health clubs to indoor swimming pools, home developers now have understood that these extra trimmings go a long way in attracting high net worth individuals who are willing to pay the extra buck for a bit of added luxury.
Brexit impact: Singapore bank suspends housing loans to London property buyers
One of Singapore's major banks has decided to temporarily suspend housing loans to customers looking to buy properties in London. United Overseas Bank (UOB) said in a statement recently that it wants to protect its customers from uncertainties surrounding the impact of Brexit on UK real estate. "We will temporarily stop receiving foreign property loan applications for London properties. ... As the aftermath of the UK referendum is still unfolding and given the uncertainties, we need to ensure our customers are cautious with their London property investments," the bank argued. The bank's decision has come amid claims from experts that Brexit has made UK real estate more attractive for foreign buyers. The general perception is that since Sterling fell to its lowest level since 1985, Dollar-based investors may indulge in short term buying, pushing prices upward. United Overseas Bank is Southeast Asia's third largest bank by assets, and provides loans to customers for buying properties in countries including Australia, Japan, Malaysia and Thailand, apart from London. Other financial institutions including Singapore's biggest lender DBS Group Holdings have announced that they would continue to provide housing loans for buyers in London, but have advised their customers to exercise caution when buying properties in the UK.
Overseas buyers snap up UK property as pound drops against dollar
With the plunge in the value of sterling in the wake of the Brexit vote, overseas buyers have been taking the opportunity to snap up UK property and make a saving of around 12%. Agent Matthew Lavin of Benoit Properties International says there has been a surge in interest in buy-to-let property from investors in the Middle East, Hong Kong and other countries with currencies pegged to the dollar. Over the past seven days, the value of the pound has fluctuated wildly, reaching $1.5 the day before the referendum and falling as low as $1.31 afterwards - representing a 31-year low against the dollar. "UK property is now more than 10% cheaper in dollar terms than it was on Thursday night and for clients buying for the long term this presents huge opportunity," says Matthew. "Over the weekend we sold six apartments in The Exchange Building in Liverpool to a group of buyers from Saudi Arabia who had seen the news about the falling pound and seized the opportunity. They saved around $130,000 collectively compared to what they would have spent on Thursday night. "It is also a huge bonus to our existing overseas buyers. One North African client who secured 10 student properties in Leeds with us in May saved $121,000 due to the exchange rate falling from $1.44 when he agreed the deal to $1.32 when he completed. "While the market may not be as favourable for domestic buyers, and clearly there is a lot of uncertainty for business, the fundamentals of the property sector remain strong and demand will continue to outstrip supply. "Our investors are typically looking five to ten years ahead. They see UK property market as a secure place to park capital for long-term income and growth. The added value presented by a weak GBP is an added bonus and presents an unmissable opportunity."
Clampdown on Hong Kong developers offering 120% mortgages of property's value
Developers in Hong Kong are offering home loans up to 120% of a property's value in order to create demand in the falling Hong Kong real estate market. These mortgages are appealing buyers, who don't quality for conventional mortgages. A sudden increase in these types of mortgages has drawn the attention of the city's de factor central bank. Hong Kong Monetary Authority has asked banks to exercise greater caution when financing developers. 'Developers providing mortgages to home buyers will indirectly increase banks' potential credit risks,' Hong Kong Monetary Authority Deputy Chief Executive Arthur Yuen wrote in an article posted recently on its website. 'We have been in communication with banks to study whether we will need appropriate measures to strengthen risk management over banks financing developers that provide high mortgage lending." Sun Hung Kai Properties Ltd., Hong Kong's largest developer, hogged headlines recently when it offered home buyers, who own another property to pledge as security, a mortgage of up to 120% at one of its projects. Sun Hung Kai Properties Ltd is not the only developer offering such a hefty mortgage. many developers are offering home loans of up to 95 per cent of a property's value, that too without the need for proof of income. The trend is catching up so fast that the share of developer loans was 22% in the total mortgage primary market in February. Putting gullible buyers to the risk of defaulting on their loans, these developers started these offers after Hong Kong reported a correction of 13% in property prices since they peaked in September last year. Hong Kong government has imposed several restrictions on buyers and sellers in order to cool the property market. Besides, banks have toughened underwriting rules. As a result, property prices are on a decline in this one of the world's most expensive real estate markets. The Hong Kong Monetary Authority recently capped loans at 60% of the value of a property costing less than HK$7 million ($900,000), down from 70%. Nonbanks, which charge interest rates eight times higher than traditional lenders and offer 90% financing, are seizing the opportunity created by mortgage rules. Buyers who don't have sufficient funds to make such a hefty down payment or fail to meet the banks' lending standards are falling into the trap of developers who are offering bigger home loans through their own financial subsidiaries without a mortgage stress test.
Experts divided over Brexit impact on UK housing market
Experts are divided over the impact of Brexit on UK house prices and sales amid reports of buyers pulling out of deals or trying to reduce their offers in several parts of the UK immediately after the country voted to leave the European Union. While domestic buyers may adopt a 'wait and watch' strategy, leading to a short term decline in property prices, dollar-based foreign investors may push the prices up on a short-term basis since Sterling fell to its lowest level since 1985, experts say. "The immediate impact is likely to be a fall in housing turnover and a rapid deceleration in house price growth as buyers adopt a wait and see [attitude for] the short-term impact on financial markets and the economy at large," Richard Donnell, insight director at property consultancy Hometrack, was quoted as saying by The Guardian. As uncertainty loomed over the outcome in the run up to the referendum, the Royal Insinuation of Charted Surveyors reported the biggest fall in the number of people trying to buy a property since the financial crisis. Among the credible agencies predicting a decline in the housing activity in the market were the Treasury and the National Association of Estate Agents (NAEA). While the Treasury had predicted a decline of up to 18% in housing prices, NAEA said an average UK house would worth £2,300 less in 2018 if the country left the EU. Experts say that a primary reason for a short-term fall in the prices will likely be a decline in non-urgent buyers. They would wait to see if home prices fall further. The trend may continue throughout the rest of 2016. House prices will also depend on international banks and multinational companies' decision on whether to stay put or move out of the UK. Housebuilder shares reported a fall of up to 20%. Shares in estate agency chain Countryside were down 26% an hour after the market opened. The FTSE 100 was down 4.85%. Since Sterling fell to the lowest level since 1985, Dollar-based investors, however, may indulge in short term buying activity, pushing the prices upward. 'In the short to medium-term, the fundamental demand and supply dynamics in the market are unlikely to change, with a continued structural under-supply of homes across the country, underpinning pricing in some of the most desirable and best-connected areas,' said Knight Frank.
Prevent money laundering in Real Estate in Canada: Experts
There is a growing call for stepping up efforts to rein in on money laundering in the real estate industry in Canada after media reports showed many firms have not complied with regulations intended to flag dubious property transactions.
The Canadian Press reported recently that at least 85 firms have not fully implemented compliance plan despite suspicion of money laundering in many cases. Real estate companies have to submit a compliance assessment report to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), the Canada's financial intelligence unit under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
The media report was based on data obtained from Fintrac that facilitates the detection, prevention and deterrence of money laundering and the financing of terrorist activities.
The data was compiled from 337 compliance assessment reports that were submitted to the federal anti-money laundering agency from roughly 1,000 companies in the real estate sector. There are about 20,000 real estate companies overseen by Fintrac.
Data obtained from Fintrac through an access-to-information request showed that of the 85 companies studied, 38 companies had only partially implemented a compliance regime while another 47 had not at all.
'We can have the best rules possible around keeping laundered money out of our real estate market, but if no one is enforcing those rules, what good are they?'' David Eby, the NDP housing critic in British Columbia was quoted by huffingtonpost.com.
'The realtors appear not to be taking the rules or the reporting obligations seriously, and Fintrac seems to be not too concerned when they see mass non-compliance.''
'I just wonder how many more audits with dismal results like this have to be returned to Fintrac and the federal government before they decide to really crack down,'' Eby said.
The Real Estate Council of Ontario said it will remind its members of their legal obligations as a result of The Canadian Press' report.