International News

A few snippets of news from around the worlds property markets.

Latvia on the Verge of Collapse?

It appears Baltic state of Latvia is about to run out of Money and default on its international debt, forcing IMF intervention. Whilst Oyster International always avoided this market, others poured money into the region and Riga quickly became the ´New Prague´. Unfortunately the entire boom was built on credit and now that credit has dried up, the harsh reality of debt has brought dire consequences. Despite estimates of GDP falling 25% in 2 years, the currency devaluing like a stone, real estate values falling by half, the worst isn´t over yet.....

June 09 - Spanish Bank BBVA reports Property prices in Spain are on target for a 10% fall this year, with another 12% in 2010, following approximately 30% fall since summer 2007.

Dubai Property Values fall Over 50% in 6 Months!!!

Figures from Dubai suggest the wheels have fallen off the property Bandwagon..... More

A report from respected global property company Colliers, suggest Dubai Property values in some areas dropped over 50% in 6 months, with 41% in Q1 2009 after an 8% fall in Quarter 4 2008, following their original ´forecast´ for  0% change. However, confirming the decline Morgan Stanley report property values have dropped 25% since Sept. However, new reports suggest prices recovered some ground in April & May 09. HSBC reports.

Dubai received a $10billion bailout from the Central UAE Bank, but commentators suggest this is just a small fraction of overall debt of the Dubai Government, therefore it could be just the first of many handouts..... where have I seen that before?!?!

California & Las Vegas Lead USA Price Falls

June 09 - According to the California Association of Realtors, prices fell approximately 30% year-on-year across the State. Whilst Las Vegas median home prices fell a whoppong 44% in the past Year (MDA DataQuick). Ouch! Worse still is the news that yet more US Banks are failing. Through July, 57 Banks in the USA have collapsed, by August 15th, the number had risen to 77, with many more likely over the next 2 years.

Irish House Prices Continue to Fall

House prices in Ireland fell 14.66% in 12 months to July, according to web protal MyHome, with Dublin recording 17.8% fall. Overall rate of decline has slowed, asking prices from Peak have fallen 18.5% nationally and 23.3% in the Capital since March 2007.

The permanent tsb/ESRI house price index show prices down 1.3% in May, with a 10.9% annual fall compared with a 7.6% in 2007.

Agency Knight Frank also report Dublin ´Super-prime´ house prices down 16.7% year-on-year. Property Portal, Daft.ie report asking prices are 10.7% lower than a year ago, and 3.8% lower over the past 3 months.

Far East Asia starting to see Prices Fall

Recent reports suggest even the Asian financial powerhouses are seeing corrections in the housing markets with Japan losing 3.4% over the last 12 months , whilst Hong Kong shows 14.5% fall, according to the Economist.

Property Crash.... Literally!

June 09- A 13 storey block of apartments under construction on the outskirts of Shanghai collapsed on Saturday killing one worker. This latest incident raises concern over the quality of materials and construction in the country.

In other news, the Chinese economy continues to grow rapidly and fears of a property bubble have again been raised.

Romanian Bubble Bursts

Reports from Romania suggest the bubble has well and truly burst, with anything between 10 - 60% falls predicted. Prices per m2 are currently down around 25%, but with mortgage funding unavailable, falls are set to continue, particularly off-plan projects, where investors rely on funding, will have to sell, reducing prices further.

Czech Republic Investment Falls Flat

DTZ reports a fall in total investment in the country of 96%!!! from Quarter 2 2008.

India to Become a Self-fulfilling Prophecy?

Feb - Incoming CEO of ICICI (Indias´ largest private Bank) Chanda Kochhar expects real estate values to fall 15 - 20% with ´maybe´ more, as a correction in the economic climate.

Real Estate Values to Fall 25% in Bahrain

DEC - In the opinion of the CEO of the countries leading Banks, 2009 will see prices continue to fall by as much as 25%, although he does say it´s almost impossible to know as property transactions have virtually stopped. He does go on to comment on the contracting economy by saying ´it´s still not at the level of Dubai´.

But it´s not all bad news, Abu Dhabi claims the global credit crunch is not effecting the local economy and few lay-offs have been seen, with some companies even expanding operations. However it is forecasting the economy to slow over the next 2 years.

Candian Market Sees Modest Decline

April - According to Teranet-National Bank, Canadas´s Real Estate Index fell 5.8% year-on-year, and increase from -4.1% previously. However, neighbour USA has experienced a fall from peak of over 35%, whilst Canada´s -8.5% is modest in comparison.

´Sacre Bleu!´ France Gets It Too!

Frances´ National Estate Agents Federation (FNAIM) expect property values to be between 5-10% down over 2008, depending on the area, with worse to come in 09. (Statistics from France have been notoriously wild with huge swings both up and down over the years, it´s difficult to evaluate these numbers.)

The Nederlands gets Lower

Jan 09 - According to the Dutch Real Estate Association (NVM) property values fell 1.8% in 2008. Forecasting around a 5% fall in 2009.

Spain Not So Much Pain?

New figures from Ministry of Housing report countrywide, prices fell just 3.2% in 2008. (????)

Singapore Gets the Chills of Global Recession

Jan 09 - Singapores Urban Redevelopment Authority revised its figures from previously suggesting prices fell 5.7% in Quarter 4 08 to 6.1%. After a 2.4% drop in Q3, followed the peak. Although, the URA index has never fully recovered it´s peak in 1996. However, at the start of 2009, Real Estate Investment Funds are looking at Singapore as a ´Buy´ investment.... Strange?

Norwegian Real Estate Values Fall

Norways´ Association of Real Estate reveals Property Values fell 9.4% in the last 12 months, meaning a peak-to-trough fall of 15% since Summer 07. Forecasts for 2009 suggest an average 10% further decline.

New Zealand is Feeling the Crunch

Property values in New Zealand declined 7.1% over the last 12 months according to QV Valuers, a smaller change than previously experienced. With Auckland falling just 5.9%.

Chinese Property Market Comes Off the Boil

After Chinas economic awakening this decade, the first signs of reason appear in the Property Market. Property values in major cities like Shanghai, Hong Kong and Beijing have been soaring up until this year. Official numbers out Jan 09 from the NDRC show a 0.4% fall in average urban real estate values for 2008. However, this contradicts the National Bureau of Statistics which suggests real estate values in 70 major urban areas rose 6.5% in 08 following the 7.6% in 07.

Mall of Misfortune - In 2005 China opened the largest Shopping Mall in the world in Dongguan, Southern China, with 6.5milllion sqft of retail (4 times larger than Bluewater). It included themed areas, canals, fun parks and lots more. Unfortunately, only around a dozen of the 1,500 units have been occupied. It stands as a testament to the expression "Build it, they will come......." or not as it turns out!

Previous Articles:

Pain In Spain

As Britains economy grew, so did Spains housing boom. For almost 10 years, coastal Spain saw demand for property increase, and Spanish developers were happy to oblige, with new builds averaging about 800,000 a year. Today, the result is thousands of empty property (Officialy 650,000 but others put the figures at over 1 million), with few buyers willing to pay the inflated prices.

The Costas are suffering more than most, now the global credit crunch is biting. Estate Agents are reporting price falls of 30% over the past 2 years and still no end in sight. Rumours of ´bargains´ have alerted some potential buyers but only those desperate to sell, willing to reduce their price, by up to 50% in some cases, are finding buyers. (Oyster Comment: We expect this to continue for a while.)

Going into 2009, BBVA are predicting price falls of 25% until 2011 and both Credit Suisse and UBS are sticking with 30% fall in Spain.

Jan 09- With the strength of the Euro Vs Sterling, Spains tourist industry is struggling to attract Brit holidaymakers, which is lowering occupancy rates and rental returns, further weakening an already poor economic outlook.

So what went wrong?

Part of the blame has been aimed at the ´Global Credit Squeeze´, which made mortgages hard to get, but that´s not the whole story.

Spains´ over-supply started years ago, the rapid increase in prices made Spanish property less affordable and encouraged other markets to open to UK buyers, and canny investors started to look at new areas where there was still potential of price growth. Yet Spanish developers continued to increase their prices.

Add to this the increasing strength of the Euro Vs the £pound, and prices have simply got out of control.

So what can we learn from this? Property Markets all go through periods of strong growth and then either plateau or fall. It has been this way throughout modern history. 

The ´secret´ is to not jump on the ´band-wagon´ and buy in an area just because everyone else is doing so. Research the market, why are values rising, who is buying, what are the Supply-Demand ratios like, it´s not simple, but essential if you want to avoid owning a´White Elephant´.

Spain will continue to be a popular choice to visit, retire and own a second home. But the price of that is likely to fall before it recovers. Next on the list for falling property Values? .....Dubai? ...Bulgaria?

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Turkey - To Buy or Not to Buy

With recent rumours suggesting ´foreigners´ will no longer be allowed to buy property in Turkey, would it be a good idea to invest there?

Even if the Turkish Government perform a U-turn and allow ownership in an indirect way, would this be enough to satisfy would-be investors? Or if they simply change their mind, would you be confident they won´t simply change it again? (Oyster Comment: We suggest avoiding Turkey as an investment destination.)

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A Tale Of Woe To Take Notice of

NEW YORK - The name Harry Macklowe doesn´t mean much in the UK, but in Manhattan he´s known as one of the ´Faces´ of Property development and investment. Through ups & downs he´s managed to make $billions, in 2003 he purchased the GM building for $1.4bil. Restructured and now famous for it´s Apple Store, it doubled in Value. A great success! But just because something worked once it doesn´t follow that it a recipe for success.

In Feb 2007, Macklowe bought 7 Manhattan Skyscrapers for $6.8bil. Leveraging almost $7bil. in debt and personally underwriting much of it himself. Not just debt, but short term debt. Since then the ´Sub-prime´ fiasco has emerged and Banks simply aren´t lending in the same way they were. Now that short term loan is coming to a end and either new finance has to be found or the assets need to be realised. Which given the change in the market would probably lose more than 20% of the value.

So what will happen? Will Houdini find a way out? It´s not clear, but it is a situation to be considered.

KOREA UPDATED - August 08 - Korean Government has moved swiftly with measures to avoid the property crash currently being experienced in some parts of the world. A range to rules and regulations are being relaxed to kick start the real estate markets. These include: tax breaks, increase price rise caps and minimum ownership requirements. But the most interesting perhaps is that state-run companies including Korea National Housing Corp and Korea Housing Guarantee will buy unsold apartments at a discounted price to support builders.

Samsung Economic Research Institute cautioned that the country is facing a property bubble and may be heading for a nasty crash, estimating that housing prices nationwide were overvalued by about 30%, with household debt reaching 70% of GDP.

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