Global Property Guide - News and Discussions
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, Dirk Strandouml;er, 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. Dirk Strandouml;er 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.
New Zealand's rural housing markets to boom, following immigration policy changes
New Zealand's already-pressured rural housing markets are likely to be boosted by new immigration policies, under which migrants who say they are prepared to live and work outside Auckland will get 30 points credited to their application from November 1, up from the previous 10. A skilled migrant needs 100 points to obtain a residency permit. Points for immigrants on entrepreneur work visas will double to 40 if they set up business outside Auckland. Many believe that the immigration policy was altered in view the Auckland's housing crisis, which is being blamed on increasing number of people migrating to New Zealand's largest and most populous city. Auckland's population increased by 34,000 in just one year due to migration. Prime Minster John Key has downplayed fears of pressure on housing in provincial New Zealand due to change in immigration policy. He said that it was unlikely to have an impact on the Auckland's housing markets. 'I don't think it'll have a dramatic impact. We're not arguing the case this is the answer to the challenges that the Auckland housing market are facing.' The opposition parties are however accusing the government of sabotaging rural New Zealand. New Zealand First leader Winston Peters said more than 1100 immigrants were arriving every week. 'This puts pressure on the rental and housing market and forces Kiwis to compete with tens of thousands of people coming here on work and student visas...Don't blame the immigrants or the foreign buyers for what they are doing, blame those in this country who encourage it,' he said. Property prices in New Zealand have continued to surge at a record pace. Property values are now rising at their fastest pace in eight years, driven by the overheated Auckland housing market, according to state-owned agency Quotable Value. Property values are now about 27% above the previous market peak in late 2007. 'We are now seeing a definite upward swing in market activity in the upper North Island...This is especially evident in Hamilton, but also in Tauranga, Whangarei, and the Franklin, Hauraki and Waikato districts," said QV spokeswoman Andrea Rush. 'Net migration remains at record highs and there are now incentives for new migrants to move to areas outside of Auckland, so this coupled with record low interest rates is likely to see continued upward pressure on home values as we move towards spring,' he added.
Housing starts and permits reach record levels in US
Groundbreaking and permits to new build new homes have surged steeply in the US, reaching the highest level in the past eight years, according to the U.S. Commerce Department. This is the strongest recovery in housing starts since 2007-08 financial crisis. Groundbreakings on new homes surged 26.6%, and permits to build new homes went up 30% year-on-year in June. Economists say an increase in both starts and permits could help ease the demand for housing, in the face of limited supply. There were 1.174 million housing starts (seasonally adjusted, annual rate) in June, up from June 2014andprime;s rate of 927,000. Permits for June reached an annual rate of 1.343 million (seasonally adjusted, the highest level since July 2007, when housing permits stood at 1.361 million. "This month's reading is in line with recent data showing stronger sales in both the new and existing home markets as well as continued job growth... However, builders still face a number of challenges, including shortages of lots and labor.," the National Association of Home Builders' chief economist David Crowe said. Housing starts for multi unit buildings have witnessed a particularly large boost. Starts on buildings with five or more units shot up by 28.6% in June, to an annual rate of 476,000 (seasonally adjusted). Experts believe that the main reason behind increase in starts is that people who were forced to sell their homes in 2007-08 financial crisis are back in the market, looking to be homeowners again. This has boosted the demand for comparatively cheaper housing. Builders are trying to meet this demand through multifamily housing projects. The home ownership rate in the USA is currently 63.7%, the lowest in the past 20 years.
Rate cut by Canada's central bank fuels housing bubble fears
Canada's central bank has reduced its overnight lending rate to 0.5%, from 0.75%, to counterbalance slumping oil prices. In response, several Canadian banks have cut their prime rates.
Toronto-Dominion Bank has cut its prime lending rate by 10 basis points to 2.75%. Royal Bank of Canada, TD Bank, Bank of Montreal, Bank of Nova Scotia and Canadian Imperial Bank of Commerce have cut also their prime lending rates by 15 basis points.
The rate cut has come at a time when real estate markets in Canada are already overheating. The cut will lead to increased borrowing, which will result in faster property price growth.
This is the second lending rate cut by the Bank of Canada this year. The central bank surprised economists in January when it reduced the rate to 0.75%.
These interest rate cuts were followed by the highest number of monthly sales for several years in May and June, according to the Canadian Real Estate Association (CREA). there were 56,839 transactions by CREA members in June, up 11% from the same month last year.
Home prices in Toronto and Vancouver continue to surge. The average cost of purchasing a condo, townhouse or low-rise property in Toronto has jumped 38% during the five years to June, according to the Canadian Real Estate Association.
Credit agency Fitch Rating, however, says that the decision by the central bank to reduce its overnight lending rate by 25 basis points will not have much impact on borrowing.
"Given the current rate environment, which has been at near-record lows for several years, Fitch does not expect the rate cut to have much impact on market mortgage rates, or on affordability for current borrowers," the company said in a release.
Despite this, Fitch says it believes the Canadian housing market is still 20% overvalued, with what it described as "modest variation" across provinces.
"However, a number of positive market factors are expected to moderate any negative price pressure. Most importantly, the Canadian mortgage market does not have significant exposure to riskier mortgage products that would be at high risk of default," said Fitch.
"Expect a soft landing nationally, where the price growth that has characterized the country's housing markets for more than a decade will abate, with modest declines to follow," the company said.
Indonesia to allow foreigners to buy luxury apartments
The Indonesian government is planning to give foreigners the right to own and trade apartments in Indonesia, under a new law likely to be introduced by year-end, Land Affairs and Spatial Planning Minister Ferry Mursyidan Baldan said recently. Foreigners are currently barred from directly obtaining properties in Indonesia. Under the new law, foreign investments in apartments that cost at least Rp 5 billion (US$186,000) will be legitimate under the "right-to-use" category, though not under the 'right-to-own' category, which is reserved to Indonesians. The government also aims to pocket luxury tax by legitimating these investments. There are reports that foreigners are buying properties through proxies in large numbers, avoiding paying taxes. 'The state will allow foreign nationals to have apartments in Indonesia for their lifetime, and the apartments may be bequeathed to their descendants or resold...However, the status of these apartments will fall under the right-of-use category, not the right-of-ownership category,' Ferry said. Under the right of use category definition, a lease holder's possession of the property expires in 25 years that can be extended 20 years or lifetime for the land's legally defined use. However, the land law also provides for the right of ownership - known in Indonesian as hak milik - that has no time limit but is applicable only to Indonesian citizens. While the regulation will allow foreigners to invest in apartments, they will still not be able to buy landed houses. Foreigners will be able to own the apartments for their lifetime and pass on to descendants as inheritance if they decide not to sell it. 'We will issue a government decree on foreign possession of property before the end of the year,' Ferry said. Ferry said the government had no intention to restrict the location of apartments available for foreigners to possess in Indonesia. 'Foreigners normally prefer living in South Jakarta areas like Kemang or in the Sudirman Central Business District so it's useless to restrict their purchase locations,' he said. Experts say that the regulation will stimulate demand in the country's luxury market. Some experts have warned the government to increase the threshold of the property's minimum value from Rp 5 billion because the shopping spree by foreigners may create a bubble situation in coming years.
Bargain hunters looking for properties on Greek islands may be disappointed
The Greek stock market may have hit rock bottom, but prominent Greek real estate brokers report a surge in enquiries for homes on the Greek islands. The agents say that most enquiries are from Europe and Middle East Asia. Many foreign buyers are eyeing vacation villas on the world famous islands of Mykonos and Santorini, as well as Port Heli, in hopes that their prices will plummet.
Property prices in Greece have fallen 40% since 2007, according to Bank of Greece. Property prices on the island of Mykonos went down 30% before stabilizing last year. The island saw a brief spell of recovery in prices in 2014.
However though enquiries have increased, there haven't been many sales
Home owners on these islands seem unwilling to sell. They are watching developments and not lowering their asking price, real estate professionals report. They are opting to rent their properties, instead of selling at throwaway prices.
European Leaders are still hoping to rescue Greece from its financial crisis. Greece needs to agree on the details of a new aid program before August 20, when the country is scheduled to make a payment of 3.2 billion euros on bonds held by the European Central Bank.
Landlord tax-relief slashed to discourage Britain's buy-to-let frenzy
A radical change is ahead for UK landlords. Tax reliefs favouring UK landlords have led to a steep increase in investment in buy-to-let properties in the UK, and have contributed to inflating property prices and rents, making housing increasingly unaffordable. Landlords are currently able to claim tax reliefs worth 40% or 45% of interest payments on buy-to-let mortgages. However under new rules, from April 2017, they will be able to claim maximum tax relief of only 20% of the interest payment. The change will be unfolded over the next four years. The landlords will also not be able to claim 10% of the rent against wear-and-tear costs. From April 2016, landlords will only be able to deduct costs they actually incur. Britain's two million buy-to-let landlords will be affected by these tax regulations. 'Buy-to-let landlords have a huge advantage in the market as they can offset their mortgage interest payments against their income, whereas homebuyers cannot,' Chancellor George Osborne said recently. Osborne added that how popular buy-to-let mortgages have become in Britain can be gauged from the fact that they now accounted for more than 15% of new mortgages, causing the Bank of England to sound warnings about the market. "So we will act. But we will act in a proportionate and gradual way, because I know that many hardworking people who've saved and invested in property depend on the rental income they get," he said. The government also announced a major tax relief to home owners who let a room in their own home to a lodger. Homeowners will be able to make tax-free income in rent up to £7,500 (US$11,548) from lodgers. Earlier, the tax-free limit was £4,250 (US$6,544). The change comes into effect from April next year. Advocates of affordable housing welcomed the announcement. They said that buy-to-let landlords were being given unfair advantage over regular home buyers. They hoped that the government would take more such measures to give home-buyers a level playing field.
Australian banks restrict lending amid housing bubble fears
Australia's major banks have tightened underwriting rules for property investors amid growing fears of a housing bubble, after the Australian Prudential Regulatory Authority warned that Sydney's housing bubble could destabilise the financial system.
Paying heed to the warning, Australia's four major banks - Commonwealth Bank of Australia, Westpac Banking Corp, ANZ Banking Group and National Australia Bank - have raised the minimum down payment to 20% of the purchase price, having previously required only 5% money down. Stricter mortgage approval criteria have been introduced, and the banks are either not providing interest rate discounts on mortgages to property investors, or discouraging discounts.
Australia's regulators still want the banks to take more steps to check the country's runaway property price rises, particularly in Sydney, asking them to set aside more capital against mortgages. Sydney's house prices have risen 40% over the past three years.
Treasury secretary John Fraser warned last month that Sydney is 'unequivocally' in a housing bubble, due to interest rates at historically low levels. 'When you look at the housing price bubble evidence, it's unequivocally the case in Sydney. Unequivocally,' he said.
Dubai-based developer to promote 37,000 properties to Chinese buyers
Dubai-based prominent real estate developer Damac Properties has inked a deal with a Chinese property broker to promote its 37,000 properties in Dubai to Chinese investors.
Beijing-based property broker 5i5j employs nearly 30,000 real estate sales professionals and boasts of "selling a unit every four minutes".
The deal underlines how Chinese investor interest in Dubai real estate is growing.
In fact, there have been many signs of this phenomenon. Dubai has seen a surge in the number of Chinese visitors in the recent past, many of them exploring real estate investment opportunities, experts believe.
In 2014, a total of 344,329 Chinese visited Dubai, an increase of 25% over 2013, according to data released by the Dubai Corporation for Tourism and Commerce Marketing (DTCM). Dubai is home to about 200,000 Chinese expatriates.
Wealthy Chinese visitors nominated Dubai as their third most preferred luxury travel destination in the world follow Australia and France in 2014, according to a luxury travel report.
Bilateral trade is also flourishing between the two countries. China has become Dubai's biggest Asian trading partner, overtaking India. The Dubai government is also trying to increase acceptance of China's currency - the renminbi - within the emirate.
Damac is targeting Chinese for both its hotels and real estate projects, said Ziad El Chaar, Damac's managing director. The company is focusing on buyers from Beijing, Shanghai and Guangzhou, as well as the northern city of Urumqi, home to China's largest Muslim population.
"[The Chinese Muslims] on their way to Makkah, pass through Dubai, so they're a growing, important part of the tourism in Dubai," El Chaar said.
He added that the tourism industry required far more flights between the UAE and China in order to grow it further.
"One of the main things that has to happen so we can get more Chinese tourists to Dubai is we need more flights from China because the demand for hospitality is always related to the number of seats you have on planes coming from that country," he said.
Spain relaxes residency permit norms for non-EU property investors
Encouraged by the recent surge in foreign investment in real estate, Spain has relaxed norms for issuing residency permits to non-EU nationals. Now a foreigner investing more than ?500,000 ($560,855) will automatically qualify for permanent residency. Moreover, residency permits will be granted not only to the investor, but also to his or her parents and children, adults as well as minors. Until now, only the spouse and minor children could qualify for residency permits. Over 350 residency permits were issued to non-EU investors during the year since the scheme was launched in February last year. The residency permits are also open to those investing in public debt, and businesses in Spain. Spain is one of the several European countries to have introduced schemes by which residency permits are granted to wealthy foreign real estate investors, in return for buying prime properties. Other countries are Portugal, Greece, Hungry, and Cyprus. The investor has to retain the property in order to continue enjoying residency benefits. In Greece and Hungary, the minimum value of the property has to be ?250,000 ($280,481). In Spain and Portugal, the minimum investment is ?500,000 ($560,855), while it is ?300,000 ($336,577) in Cyprus. Investors, mainly from China, Russia, Brazil, Angola, South Africa, and India, are applying for Golden Visas in Spain, with Chinese topping the chart by a big margin.
UK home prices to rise 25% over next five years: RICS
Reeling under the problem of acute shortage of homes, the UK's home prices will rise 25% over the next five years, according to the Royal Institution of Chartered Surveyors (RICS). New buyers are entering the market at the fastest pace in a year. Yet the supply of homes has gone down alarmingly, causing property prices to go up faster in May compared to April. The supply of homes for sales has dropped by 12% since the start of this year, said RICS. Their data is based on the average number of homes for sale on chartered surveyor estate agents' books. RICS said that the average stock of houses per surveyor has now fallen to 52, the lowest level since records began in January, 1978. Earlier it was believed that the supply of homes would rise after the general election. "There had been some hope that the removal of political uncertainty would encourage more properties on to the market, but the initial indications are that this is not proving to be the case. As a result, it is hardly surprising that prices across much of the country are continuing to be squeezed higher, with property set to become ever more unaffordable," said Simon Rubinsohn, chief economist at RICS. Rubinsohn added that the feedback RICS was receiving from its members "points to prices at a headline level rising by another 25% over the next five years". He added that there was no real confidence among members that effective measures to provide a major boost to new supply would be delivered by the government any time soon. The North West and London saw the sharpest drop in new homes coming onto the market compared with April, RICS said. "More ominously, U.K.-wide listings have now failed to see any meaningful growth since the middle of 2013," he said.
Berlin implements rent control legislation, more cities likely to follow
Landlords have been barred from increasing rents by more than 10% above the average for a locality in Berlin as legislation enacted in Germany three months ago, has come into force.
Berlin is first city to implement the rent control legislation, a move considered by many a necessity to rein in rent growth. The rate of rent rise in many areas of Berlin is the fastest in Europe.
There is already a 10% increase cap existing tenancy contracts, but new contracts will also now come under this legislation's ambit.
"The rent cap already applied to existing tenants, meaning the difference between what was charged for existing contacts and new contracts was high. The other problem is that we have 40,000 more inhabitants per year," said Reiner Wild, the managing director of the Berlin Tenants' Association.'
"We don't want a situation like in London or Paris," he added. "The reality in Paris or London is that people with low income have to live in the further-out districts of the city."
Rent control may be introduced in more German cities in the near future.
Berlin has witnessed gentrification at a very fast pace over the past one decade. Migration into the city increased, so did rents and property prices.
Rents have risen more than 30% in the past three years, according to a Jones Lang LaSalle report.
Rent control legislation was enacted in Germany in March. "We're creating a fair balance between the interests of landlords and tenants," German Justice Minister Heiko Maas said in a statement. "We want to foster and maintain the high appetite for investment in the residential market."
Foreigners buying properties in Australia illegally face jail term and fines
Stepping up pressure on foreigners suspected to have bought properties illegally, the Australian government has told buyers to come forward and disclose their unlawful transactions by November, or face three year jail terms plus whopping fines.
Under the new rules, foreigners who have bought properties illegally in Australia face fines of A$127,500 (US$100,050) and up to three years jail for individuals, and fines of more than A$637,500 (US$499,000) for companies.
Third parties such as real estate agents who knowingly assist a foreigner to breach the rules will be fined up to $42,500 (US$33,254) for individuals and $212,500 ($US166,230) for companies.
Abbott said foreigners were illegally buying into the existing residential property market and driving up prices.
"We want to ensure that locals are getting a fair go, that the playing field is at least level and, if possible, slightly tilted towards the locals," he told reporters in Sydney recently.
Foreigners need to seek permission from Australia's Foreign Investment Review Board (FIRB) before buying. They are not allowed to buy an established (previously occupied) house. They may buy an unoccupied new dwelling, but only if the FIRB feels that the purchase will not add to the shortage of properties available to native Australians. However, many foreigners are believed to have flouted these restrictions. Abbott said foreigners were illegally buying into the existing residential property market and driving up prices.
Treasurer Joe Hockey said the government was already investigating some 100 cases of illegal purchases. The Australian government has asked 55-year-old Hong Kong property developer Hui Ka Yan - the 15th wealthiest person in China - to sell a Point Piper mansion in Sydney within 90 days or face having it repossessed by the Commonwealth Department of Public Prosecutions.