2010 for the global real estate market - a reconstruction. Most of the events and news of the past period has been associated with this trend. However, in selected markets continues streak, despite government efforts to remedy the situation. And some Asian countries, according to analysts, the worst of times still lie ahead.
1. The return of stability and renewed growth in prices
Predicted by many second wave of the crisis still not covered the world. Against the backdrop of the retreat of the threat began the stabilization of most world economies. Investment activity is restored, the banks resume lending operations. Oil prices have returned to the level of 2007. "The restoration of liquidity in the global market in the first place - on the commodity markets and stock markets. Many countries have benefited from support from central banks. And so far cost the "hole" covered by secured loans ", - says Director of Mission Status Home to Russia Alexander Gladkevich.
A significant outcome of the year for many countries - the return of real estate markets to pre-crisis level of activity. The most obvious example - the United Kingdom. "England in the year recovered well, as scheduled. Now the market is actually reached all the pre-crisis indicators. It can even play due to a weak pound, but in general prices and demand is completely back to earlier positions, "- commented the director of Department of investments in foreign real estate IntermarkSavills Igor Indriksons.
According to the Status Home, by mid 2010 61% of countries indicated a positive annual growth rates. "In most countries, price increases can be attributed to unintended consequences of measures to stimulate the economy taken by governments. For example, the support of the European Central Bank of Ireland and Greece. Low interest rates and the selective support of the banks also contributed to higher prices "- explains Gladkevich.
Director of the Department of elite real estate Knight Frank Elena Yurgeneva also notes that for the first time since 2008 there has been a positive growth in prices once in all regions of the world: Asia-Pacific countries (9.9%), Middle East (5.1%), North America (4.2%), South America (3.5%), Africa (3.0%) and Europe (0.8%).
2. Restoration of investment activity in real estate markets
Square meters again acquired the status of an attractive investment instrument in the eyes of both private and corporate investors. So, as far as stabilizing the economy, intensified foreign pension funds: for the entire year, they poured money into stable housing markets. "They got a huge amount of money that needed to be urgently invest. First they used the most developed real estate markets, but today there are ready to consider a wider range of countries ", - said Indriksons.
According to forecasts Status Home, soon all the major players will be returning to the real estate market. True, this strategy of most investors was distinctly conservative. If on the eve of the crisis, many investors, especially private ones, were willing to take risks and invest in growing markets and cheap, but now this kind of profit nobody cares. The basic principles of selecting projects for investment are the stability of the market and the value of rental income. This trend is gradually spreads, and Russian buyers, particularly preferred a more risky strategy. "Foreign buyers of residential real estate" investment "is increasingly oriented to the buy-to-let property, ie property that is purchased for lease and obtain a stable and predictable income. If 2-3 years ago, 80% of investment transactions in residential property abroad committed by Russians in the calculation of the considerable increase in value, now only 40% of investment transactions Russians are counting on significant growth in property values. And in 60% of transactions dominated the calculation for income from rental "- says President of International Real Estate Agency Gordon Rock Stanislav Singel.
First place in popularity among global investors today stands UK. "Here, investors expect to earn as rent, as well as on the currency difference, since the pound even weaker," - says Igor Indriksons. Also, the money actively invested in the developed and stable European countries - France, Switzerland and Germany.
Singel said that much of the resort real estate is now offered on the final investment model - a combination of the leaseback (guaranteed return), cash-back (interest on deposit made for the period up to commissioning), BMV (below market value, buying below market value) and non-status mortgage (financing from the developer).
3. Restoring credit markets
One of the main events of 2010 - renewed in most European markets securitization mechanism - that is, a system under which banks get financing through the issuance and sale of securities backed by mortgages on the credits for real estate. "This means that the banks again have the opportunity to massively extend credits" - explains Indriksons.
Because of this, as well as overall economic stability and low interest rates refinancing of the European Central Bank, the restoration of credit market last year went on in many countries. And banks are not just resume lending, but also began to improve conditions, bringing them closer to the pre-crisis.
The cost of loans in the central and western European countries returned to pre-crisis 2-6% per annum. The initial contribution again fell to an average of 30%.
The vast number of transactions in the European markets once again began to occur with the use of mortgage funds. And in Turkey in 2010 started a real boom of mortgage lending. This market is quite young (mortgage law was passed only in 2008), and in times of crisis it is almost curled up like a Russian. But last year, banks again stepped up and started to grant housing loans at a very low percentage compared to Russia - 9.7%. In this regard, the Turks began hurriedly to refinance existing loans and take new ones. As a result, the volume of lending in real estate in the III quarter of 2010 rose 26% over the same period in 2009.
Russian buyers in 2010 were also more likely to resort to borrowing. "More than 50% of transactions with foreign real estate is made by Russians using a mortgage. Since the 2010 volume of the Russian real estate market is projected at more than $ 12 billion, this means that more than 6 billion dollars to buy foreign property Russians were taken in local banks, "- said Stanislav Singel.
4. Maturation of the bladder in Asian markets, government action against rising prices
Unlike European countries, selected from the effects of the crisis, some Asian markets in 2010, actively fought the rising prices. Asia-Pacific countries-Singapore, China and Hong Kong - continue to be the most overheated real estate market worldwide. Dynamics and motion vector of prices in the Asian region have changed, but even with all the containment measures of governments prices there rose by 9.9% over the first three quarters of 2010, "- says Elena Yurgeneva. In these markets, the situation has evolved in recent years against the global trends. This caused the inflow of investment money, and, consequently, an even greater appreciation of real estate. So, in April 2010 in major Chinese cities prices rose by 12.8% year on year. This is the fastest annual growth in the country's history. Prices for residential property in Hong Kong rose by more than 50% since the beginning of 2009.
Governments of China and Singapore, aware of the threat of growth of the bubble in real estate, in 2010 introduced the legislative innovations designed to limit the rise in prices and opportunities for speculation.
In particular, Chinese authorities have banned foreigners to buy more than one property in the country. First of foreign nationals working or studying here could purchase property without restrictions. Now for a transaction they will require documentary evidence of the absence of the other apartments or houses in China. Must also provide evidence of formal employment for one year prior to purchase. And foreign companies now allowed to purchase non-residential properties only in their official registration.
Another measure to cool the market was ending credits to developers, large banks: the four leading state banks stopped lending to developers in late October after the annual quota of this sector credit was exhausted. Was also prohibited the issuance of loans to Chinese citizens to buy third property, and the increased size of the initial down payment when buying a primary home.
Hong Kong authorities in 2010 also taken steps to limit speculative opportunities on the market. In particular, they imposed additional taxes and raised the amount of down payment when buying residential real estate loans. Starting November 20 and all objects that are sold within six months after the purchase will be subject to a 10 percent state duty. The initial contribution by credit facilities worth more than 12 million HK dollars (1.5 million U.S. dollars) were increased from 40 to 50%, and for objects ranging in price from 8 to 12 million Hong Kong dollars - from 30 to 40%. Also in August 2010, the authorities tightened the rules for mortgage loans for the purchase of luxury and investment projects and began to allocate more land for residential development. And in early October, the Minister of Finance of Hong Kong said that the state will cease to offer residence permits to foreigners who buy property on the island.
The authorities in Singapore in August 2010 to reduce the possible size of the credit for people who already have mortgages and want to get another one. Were also introduced state tax on the sale of objects within three years after their purchase. As a result of these measures in Singapore at 25% decreased sales in this segment of the housing, like condominiums in suburban areas. According to the observations of international experts, the number of speculative transactions began to decline, and appeared on the market affluent buyers who do not deter high upfront fees.
With regard to China and Hong Kong, experts here are more pessimistic. The rise in prices in the Chinese market by the end of the year has slowed, but not too radically. So, in November 2010, property prices in 70 Chinese cities still were up 7.7% compared with November 2009. "The government realized it too late. Bubble burst in Hong Kong and China in a few months ", - said Igor Indriksons. Many analysts share this position and to predict the collapse of these markets in 2011.
5. Unsuccessful attempt of the U.S. government to rectify the situation on the market
The U.S. government in 2010 tried to slow the fall in prices and rising defaults on mortgages. Was launched state program for "first time buyers» (? Rst-time buyers): for her people, for the first time to buy housing, received preferential loan for a down payment for a mortgage loan. Due to this, the Government hopes to stimulate demand and revive the market. However, managed to get only a partial effect: a fall in prices slowed, and a few months the market was in a relatively stable condition.
But after closing the program everything returned to normal. In general, the situation in the U.S. market remains catastrophic. U.S. real estate funds avoid investments in local facilities and prefer a stable Europe.
Annual growth of prices in the U.S. rolled to mark 0.6% compared to 4,2% in the II quarter of 2010. Now the average price of U.S. real estate located at the middle of 2003. According to the research portal Zillow, real estate prices in the U.S. fell by 25% compared with peak values in June 2006. Such a decline in its duration and depth of approaches to indicators of the Great Depression, when prices declined by 25.9% over five years.
The situation is exacerbated by the growing number of defaults on mortgages. Almost a quarter of homeowners, borrowers were unable to pay the loan in III quarter. Percentage of seizure of property for the debts of the banks has reached a new peak. In August 2010 the total number of housing units excluded was 95.4 thousand in September, this value has already reached 102.1 thousand, and the sale of seized property accounted for 20% of all transactions in the market. True, the fall of 2010, the Government has undertaken an investigation of this issue. It was found that documents the seizure of housing are often issued with infringements. Therefore, in October 2010 in the United States has been a moratorium on the removal of housing for the debts on the mortgage.
As a result of these developments, U.S. market recovery is delayed. "Previously we thought that it would take about a year now, most likely, it is not less than about two or three years", - says Igor Indriksons.
6. Changes in the Latvian law on immigration
Latvia property market back in 2009 was in a state of deep decline, along with U.S. markets, Lithuania, Estonia, Iceland. However, in 2010 the situation has changed markedly. "The real estate market in Latvia has proven extremely volatile. A year ago this country was at the end of the list with the index 70% of international price index for residential property Knight Frank (Knight Frank Global House Price Index), then in the III quarter of 2010, Latvia ranked first in our rating with the index 26.1%. These changes contributed to a combination of events, consisting of higher taxes and restrictive measures such as reducing the budget items and wages, as a result of Latvia's GDP reached 2.7% ", - says Elena Yurgeneva.
Moreover, demand for residential property was even more heated, as amended in the Immigration Act July 1, 2010. As a result, foreigners can obtain a residence permit in Latvia, having bought one or more properties for an amount not less than 100 thousand lats (141 thousand euros) in Riga, or at least 50 thousand lats (70.5 thousand euros) outside Latvian capital. This takes into account not the estimated value of the objects, but the real value of the transaction.
"Latvia has gained new impetus after the summer of 2010 the government amended the Immigration Act. For many Russians, this innovation seem attractive. For Russian clients first question was not buying real estate abroad, and the issue of a residence in the Schengen countries ", - says Alexander Gladkevich.
But in reality, this event turned out to be rather loud, what is really important. The number of requests to local objects has increased, but a noticeable change in the market it has not yet resulted. "We estimate that in 2010 a serious surge of interest in the Russians was awarded only to real estate in Latvia, which is due to the introduction of summer, a new law on the possibility of granting residence permits when buying property. But while this is only an increase in interest, which is not resulted in adequate growth in the number of deals with the Russians, Latvian real estate "- says Stanislav Singel.
According to realtors, growth will be gone. According to analysts, the new immigration law will not increase the investment attractiveness of the Latvian market - mainly because the new version of the law does not allow foreign property owners are no specific guarantees. The law states that a person invested the same amount, may qualify for a residence permit, but is not guaranteed that he receives it. In addition, such investments - a rather large sum for the local market: usually the Latvian market, buyers are interested in that layer, which deals with cheaper items.
Results of the year
The previous 2010 was a year of saving the trends emerging in late 2009. There have been no revolutionary change: we have not seen any new bubble burst, or unexpected twists. For the most part, all events are natural and expected. Stable countries with stable economies are actively recovering, weaker countries with overheated market still continued to overcome the crisis. Alignment on the world market has not changed significantly. Those countries which are deeply stuck in a crisis - the U.S. and Dubai - has not yet serving the real signs of future prosperity.