الرئيسية
By cashy.me
PROPERY is the preferred investment class for wealthy investors, making up the largest share of their investment portfolio.
Over 70% of high net worth individuals believe that 2010 will be a successful year for investing in property, with a further 50% predicting that residential property will see the highest returns.
Property investors in the Arab world are currently seeking out markets providing stability, established property laws and mortgage financing. Second to that, they are looking to the economy and the location of the property before making their investment decision.
The London, Hong Kong, Kuala Lumpur and Australian property markets are today’s preferred investment destinations for investors. In these markets, investors can expect gross rental yields from 4% to as high as 10% and strong capital growth potential. Here, cashy looks at the prospects:
LONDON
The London property market is recovering, with prices and market activity substantially up: over the last 12 months, prices are up 12%.
In July, London property prices increased by 1.6% – the biggest rise since January – with the average house now worth £343,730.
London remains the prime market for investment in the UK, with an average of 5.5 tenants competing for every property. Average rental yields are 4.7%, making London the best place for landlords in the UK.
Experts predict a relatively flat market in 2011, but expect steady year-on-year growth of 6% in 2012 and 9% in 2013.
HONG KONG
Apartment prices here steadily increased in the first half of the year, though most of the gains occurred in the first four months. Prices rose by 8% in the six months to end-June.
Supply is on the up, too. Completions of private residential properties surged by 124% over a year earlier to 7,030 units in the first half of 2010.
Apartment rentals in June rose by 7% from six months earlier. However, rental prices were only 3% below the rental peak achieved in 2008. The average rental yield for residential flats stayed at 3.6% in June, virtually unchanged from December.
The land sales market has been very active during the first half of 2010. A total of eight sites were sold, and a premium development site on Hong Kong’s famous hill ‘The Peak’ sold at auction in July for an expensive 10.4 billion Hong Kong dollars ($1.34bn). After the auction, home owners and property companies raised their asking prices by as much as 8.6% on The Peak.
KUALA LUMPUR
Over the last 19 years, prices in Kuala Lumpur have risen by 5.3% per year. In June, the total supply of residential housing in the Klang Valley was 1.67 million, up from 1.64 million at the end of 2009 and 1.66 million at the end of the first quarter of this year.
Of this total, just over 408,000 units are in Kuala Lumpur, accounting for just 25% of the total housing stock in the Klang Valley.
Growth in existing supply has dropped significantly over the last two years, with just 2% growth in 2009 and 6% in 2008 – helping to support prices.
In the luxury property market a number of recently-launched projects have sold well.
AUSTRALIA
Residential real estate prices in Australia have begun to slow, with the number of new properties being sold falling by 6.4% in May. However, house prices are still in positive territory, with growth of 0.2% in April and 0.5% in May.
The Australian property market has experienced 16 months of robust house price growth, which produced year-on-year price rises of 12.1% in capital cities.
Australia struggles year after year to build enough homes to cater for its growing population, up by over 440,000 in 2009. ANZ, the Australian and New Zealand bank, believes that 200,000 new homes are needed every year, but only 130,000 to 140,000 are approved for development each year.
The result is undersupply which will underpin price growth in Australian property from now and into the future.
Craig James, chief economist of Commsec and a respected market commentator, expects home prices to rise by 8-10% during 2010. “The population continues to grow and not enough homes are being built. For investors, rising rents and home prices is an attractive combination,” he says.
(cashy.me is a personal finance website covering the Arab world)