Rescue measures intended to coax mainland Chinese to purchase residential property in Hong Kong have failed to woo buyers, as the financial hub’s property market slump deepens.

It comes six weeks after Hong Kong Chief Executive John Lee tweaked official housing policy, lowering purchase duties and weakening disincentives against quick resales.

“My WeChat has been buzzing with inquiries from [Hong Kong-based mainlanders] about the specific [changes], but not a single one is interested in viewing properties,” said a real estate agent surnamed Pan, who has some two decades of experience in Hong Kong.

For the past five years, Pan has focused on so-called Hong Kong drifters, a mostly professional class who plan to be in the city long term and lack permanent residency but may be working toward it. Hong Kong is thought to be home to about 350,000 such people.

On Oct. 25, the chief executive delivered his second policy address, an annual speech that sets the political agenda in the city. Lee adjusted a regime of property controls intended to keep a lid on prices that dates back to the global financial crisis. Two key stamp duties that previously added 30% to a purchase price would be cut in half, he said.

Lee also beefed up talent incentives, announcing certain professionals that move to Hong Kong would not need to pay stamp duty so long as they subsequently obtained Hong Kong permanent residency (HKPR).

For long-term renters from the Chinese mainland, it should all have been good news. But Caixin has found that despite an uptick in the city’s new residential transactions, many still remain hesitant to buy.

“Mortgage rates are too high right now,” said Chen Yuan, a financial services professional who has worked in the city for six years. “There’s no good reason to take out a loan during a property market downturn.” Chen said turbulence in her industry, where her husband also works, was a key factor in their decision to put off buying a house.

Hong Kong’s property market continues to slump as rates rise and capital flees in search of safer investments like fixed deposits. The uncertainty has dented confidence as more potential buyers adopt a wait-and-see posture. A recent UBS report predicts the drop in property prices will reach 5% this year and accelerate to 10% in 2024.

Hong Kong’s property prices remain some of the world’s highest. They rose continuously, with occasional short-term corrections, from the global financial crisis of 2008 up until a historic annual decline in 2022. But the recent shift, and the absence of a sustained post-pandemic bounce, has many investors asking where the market is headed and what a recovery will look like.

Less than expected

Lee’s changes announced in the policy address fell short of market expectations. “This is not even half of what was expected,” said Joseph Tsang, chairman of the Hong Kong branch of global developer giant JLL.

“Over the past year, interest rates have risen significantly, various economies have shown moderated growth and transactions of the local residential property market have declined alongside a downward adjustment of property prices,” Lee said in his address.

He said an expected increase in housing supply in the near term justified easing the measures intended to cool demand. Those measures include three taxes on property sales: the special stamp duty (SSD), the buyer’s stamp duty (BSD) and the new residential stamp duty (NRSD).

Lee said that from Oct. 25 buyers would only need to wait two years before reselling if they wanted to avoid an SSD of 10%. Previously, homeowners were required to wait three years if they wanted to avoid the additional tax.

A continued rise in mortgage rates has discouraged potential buyers from entering Hong Kong’s property market.   © Reuters

Long an attractive place for mainlanders to park their money and hedge against risks closer to home, Hong Kong’s speculative inbound capital had nonetheless come in waves. A key instance was after the 2008 global financial crisis, when quantitative easing made the city’s property market an attractive proposition. The SSD was introduced in 2010 in part to combat that. The BSD followed in 2012 as a tax on purchases by non-HKPRs.

In his October policy speech, Lee also announced that the BSD and NRSD would be cut in half to 7.5%. The change was intended to ease the financial burden of housing purchases on HKPRs and non-HKPRs alike, he said.

Finally, a refundable upfront payment of the BSD and NRSD would be scrapped for “inbound talent,” meaning incoming professionals who eventually obtained HKPR. Lee said this was an “enhancement” of the refund arrangement, introduced last year, under which the cohort did have to pay the duties up front, but were entitled to a refund after they had lived in Hong Kong for seven years and obtained HKPR.

Rosanna Tang, executive director and Hong Kong head of Research at Cushman & Wakefield, said the new stamp duty exemptions for incoming talent were in line with the government’s broader efforts to remove barriers for individuals interested in developing their careers in Hong Kong.

Market carnage

Last year, Hong Kong’s preowned home price index fell 15.6%, with transaction volumes falling nearly 40%. Then, in the first four months of 2023, the property market experienced a rapid recovery after the border reopening with the mainland. From January to April, its preowned house prices rose for four consecutive months.

It would not last. According to data from Cushman & Wakefield, there were less than 9,200 housing sales in the third quarter of 2023, 25% down on the prior quarter and 21% down on the prior year. Edgar Lai, a senior director of valuation and advisory at Cushman & Wakefield in Hong Kong, told press that the third quarter, usually peak transaction season, was the worst he had seen in more than 20 years in the industry.

The strong stock market rebound at the end of 2022 also petered out. Hong Kong stocks have been hemorrhaging since then, disrupting the traditional investment approach of making money on the stock market and investing it in property.

Meanwhile, the continued rise in mortgage rates has discouraged potential homebuyers from entering the market. The U.S. Federal Reserve began a round of successive interest rate hikes from near zero at the beginning in March 2022 to a range of 5.25% to 5.5% in September this year.

Facing the high cost of funds, several major commercial banks in Hong Kong started to raise their prime lending rates for mortgage loans in September 2022. After the latest hike in July 2023, HSBC, Bank of China and Hang Seng Bank currently have a prime rate of 5.875%, representing a cumulative increase of 0.875 of a percentage point. Smaller banks such as Bank of East Asia and Citibank have raised their prime rate to 6.125%.

Meanwhile, Hong Kong’s tourism and retail sectors recovered less than expected following the city’s reopening. Locals cleared out in favor of tourist destinations abroad. Dampened by the sputtering Chinese economy, few inbound tourists replaced them. In the first eight months of 2023, only 20 million tourists visited Hong Kong, less than half as many as in the comparable period of 2018.

Sellers quick to offload

As U.S. interest rates remain high, the interest on Hong Kong dollar fixed deposits continues to rise steadily. Major banks have all raised their three-month fixed deposit rates to 4.5%, with some smaller banks offering more than 5% interest on large fixed deposits.

Timed deposits, which tend to offer lower returns than stocks and bonds and lack flexibility, have become the de rigueur place to park cash from a housing sale.

Meanwhile developers are struggling with unsold inventory. According to data from Centaline Property Hong Kong, unsold inventory of new private residential properties surged to 20,483 units in the third quarter of 2023, reaching a near 20-year high.

In fact, since the second half of this year, the market has seen a number of residential properties at lower prices. In early August, CK Asset Holdings, the property flagship of Hong Kong billionaire Li Ka-shing, sold its Coast Line II project in Yau Tong at a discounted price, causing a stir in the primary market.

Road to recovery

In the six weeks since the changes, the transaction volume of new residential properties has noticeably rebounded, but the downward trend in property prices continues.

Between Oct. 25 and Nov. 25, the transaction volume of new residential properties was up by around 2.8 times month-on-month, reaching 678 transactions, according to Centaline.

Meanwhile, an index for private flats from the Rating and Valuation Department fell by 2.2% month-on-month in October, marking the sixth consecutive monthly decline.

While the uptick in new housing sales may be related to the policy changes, it could also be down to developers aggressively promoting the sale of new properties at low prices, analysts said.

Derek Chan, head of research at Ricacorp Properties, believes low-cost launches by primary developers will continue to put pressure on preowned home prices.

Chan predicts that with a significant inventory of new residential properties, developers will continue to adopt a “quantity before price” strategy with low-priced launches in December. As a result, homeowners seeking to resell will need to do so at lower prices. He expects Hong Kong property prices to decline by 7% for the full year.

Ken Yeung, head of property research at Citi in Hong Kong, predicted that an improvement in economic conditions and interest rate cuts next year could see Hong Kong property prices bottom out in the first half of 2025.

Source : NikkeiAsia

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UK house prices rose for the second month in a row in November, according to a leading index, as a slight easing in mortgage rates helped coax more buyers into the market.

The average price of a UK property rose by £1,394 – or 0.5% – last month to £283,615, according to the mortgage lender Halifax.

It signals an uptick in activity across the housing market, where price growth has stalled over the past year because of an increase in interest rates and subsequent affordability pressures that have driven away otherwise eager buyers.

UK house prices have also been underpinned by a shortage of available properties over the past year, as many sellers wait for the market to normalise and prices to recover.

On an annual basis, prices are down 1%, although Halifax said this was a “relatively modest” drop given the economic headwinds that have weighed on consumers over the past 12 months. Average house prices are still £40,000 above pre-pandemic levels, having been skewed during the Covid crisis, when people scrambled to buy larger homes.

“Recent figures for mortgage approvals suggest a slight uptick in activity levels, which is likely as a result of an improving picture on affordability for homebuyers,” Kim Kinnaird, the director of Halifax Mortgages, said. “With mortgage rates starting to ease slightly, this may be leading to increased buyer confidence, seeing people more inclined to push ahead with their home purchases.”

However, Kinnaird said house prices were unlikely to continue their upward climb into the new year. “The economic conditions remain uncertain, making it hard to assess the extent to which market activity will be maintained. Other pressures – like inflation, the broader cost of living, overall employment rates and affordability – mean we expect to see downward pressure on house prices into next year.”

Northern Ireland has experienced the strongest rise in house prices over the past 12 months, with the average home costing £4,294 more compared with last year, at £184,684.

While London maintains the top spot for the highest average house prices in the UK, at £524,592, prices have fallen by 3.8% over the past year.

The Halifax findings chime with those of the rival Nationwide, which reported last Friday that house prices had risen for a third consecutive month in November.

Source : TheGuardian

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Chinese authorities are putting pressure on state banks to accelerate lending to private property developers, as they strengthen efforts to revive the country’s debt-stricken real estate market by supporting some of its biggest and most precarious companies.

Chinese regulators have instructed state banks to ensure the amount of loans to private property developers at least match the sector-wide average, according to two people who attended a gathering in Beijing on Friday of senior government and banking officials.

Shares of private developers jumped on Tuesday. The companies, which lack the support of their state-backed rivals, have been at the heart of a crisis in China’s property sector, which previously accounted for more than a quarter of economic activity in the country.

A barrage of defaults at private developers, led by Evergrande, the world’s most indebted property company, in 2021, has shaken confidence in China’s economy, leaving creditors to chase unpaid debts and real estate projects to sit unfinished across the country.

The unfolding funding crisis has pushed Country Garden, once China’s biggest private developer by sales and long thought of as more financially stable than its peers, into bond default this year.

“These new measures reflect concerns of policymakers on the credit risk of private developers,” said Larry Hu, chief China economist at Macquarie. “It would boost the short-term market sentiment for sure,” he added, while cautioning that “what commercial banks can do is limited”, pointing to the lack of success of previous support packages.

At the meeting on Friday, regulators also told state lenders to issue mortgages to home buyers purchasing property from private developers at least at the same pace as they issue mortgages to buyers from all developers.

The latest moves, conveyed to banks in person by representatives from the People’s Bank of China, the Central Financial Commission, the National Administration of Financial Regulation and the China Securities Regulatory Commission, illustrated authorities’ urgent concern about arresting the downward spiral in the property sector.

Regulators also pledged on Friday to consider unwinding some restrictions, such as caps on bank loans for mergers of developers.

Previous piecemeal support measures have failed to reverse the slowdown. A flagship $27bn PBoC bailout scheme has disbursed only about 3 per cent of its funds after state lenders could not find creditworthy developers.

At the Friday gathering, China’s biggest banks, brokerages and distressed asset managers were directed to meet property developers’ funding needs to a “reasonable” degree, according to an official readout.

The People’s Bank of China, NAFR and CSRC did not immediately respond to requests for comment.

Shares in Chinese property developers gained on Tuesday, with the Hang Seng Mainland Properties index, which tracks Hong Kong-listed Chinese developers, rising 2.9 per cent, well ahead of a 0.6 per cent increase for the broader Hang Seng benchmark.

Shares in developer Sunac China leapt 19 per cent after disclosing on Tuesday that it had begun implementing a $10bn debt restructuring. Country Garden climbed 7.8 per cent and Longfor Group rose 5.8 per cent, while China Vanke and China Overseas Land added 5 per cent and 3 per cent, respectively.

“A key thing to watch is whether and when policymakers will take bolder action, such as creating a lender or buyer of last resort for property developers,” Hu said. “If it happens, this will be the turning point for the property market.”

Source : FinancialTimes

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Riyadh is fast emerging as a serious contender in the real estate sector globally, challenging Dubai’s long-standing dominance, riding on the back of a huge price advantage over the UAE city and the Saudi government’s big push to woo international investors through financial incentives, a latest industry report revealed.

A vast pool of potential domestic investors – estimated at 37 million, besides the rising number of international investors, are the other factors that could propel the Saudi capital city to become the new regional hot spot for real estate investments.

“In stark contrast to Dubai, Riyadh’s affordability has been a key magnet for investors, promoting substantial economic expansion,” the report by Dubai-based proptech Realiste said.

“In comparison to real estate prices in other global cities, Riyadh offers notably affordable options at an average cost of $1,394 per square meter, whereas Dubai showcases prices at $7,002 per square meter,” the AI-driven analysis-based report said.

“Investments in Saudi Arabia are expected to reach hundreds of billions of dollars in the next 5 years, which will certainly raise prices and open up new opportunities for investors to receive multiple refunds,” Alex Galt, founder of Realiste, told Arabian Business.

The average sale prices for apartments are expected to surge by 22 percent, while villa prices are anticipated to rise by 12 percent year-over-year in Riyadh, according to data from Knight Frank.

The global consultancy’s data also showed that Riyadh is set for remarkable growth with over 1.5 million available units and a projected 10 percent increase in supply by 2025.

Dubai vs. Riyadh: The competitive edge

Realiste said while Dubai has long been a powerhouse in the real estate market, Riyadh is fast emerging as a contender for remarkable growth and dominance in various aspects, fuelled by Saudi Arabia’s rising status as a global innovation and economic powerhouse boosting the capital city’s burgeoning real estate market.

“With ambitious initiatives, robust economic growth, and an increasingly attractive investment environment, Riyadh is poised to challenge Dubai’s long-standing reign as the regional real estate leader,” said the report by Realiste, which operates in over 100 cities worldwide.

The numbers on economic growth and current trends in real estate prices indicate that Riyadh is indeed set for remarkable growth, signalling a promising future for Saudi Arabia’s real estate market and its potential to outperform Dubai, it added.

“Saudi Arabia is obviously the next big market – it is home to 37 million people. While prices – vis-a-vis the world market – are still low, the housing area there remains one of the largest in the world,” Galt said.

“In addition, there is a lot of need for infrastructure development and construction, which creates a great demand for quality housing,” the Realiste founder said, adding that “domestic demand, especially, is growing vigorously”.

Government push to further boost Saudi real estate sector investment potential

The report said government-sponsored measures to enhance the city’s infrastructure, advance technology, and foster cultural hotspots have been instrumental in attracting visitors and investors to Riyadh.

To address the increasing land and housing prices, Saudi Arabia has allocated 100 million square meters of land for the residential sector in the capital and other cities.

“This move aims to balance supply and demand, allowing for a more sustainable growth pattern,” the Realiste report said.

Alex Galt, founder and CEO of Realiste

“Investment demand is also fuelled by the fact that foreign investors were previously restricted the right to purchase real estate, but now everyone expects that they will get such an opportunity,” Galt said.

A booming market with enormous potential

The report said with a burgeoning population, increasing demand for housing and lifestyle facilities, supportive regulatory frameworks, and its strategic regional location, Saudi Arabia’s real estate market is expected to soar with vast potential in the coming years.

The country remains an attractive destination for global investors, despite the current regional challenges, it added.

Galt said despite some possible difficulties in the region, such as the situation with Israel and Hamas, most expect Saudi Arabia to become the next huge market in the next 5 years.

“It will continue to grow, attracting the attention of investors from all over the world, including Europe, Russia, and Arab countries,” he said.

Source : ArabianBusiness

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Global commercial insurance pricing has stabilised in the third-quarter according to broker Marsh, but the property and in particular the property catastrophe insurance market remains the most challenging area.

There is more consistency being seen across insurance rates in general, but US property insurance continues to rise faster.

US property insurance rates increased by 14% during the third-quarter, down from 19% in the quarter prior, with insurers likely responding to loss activity, exposure growth and inflationary effects, as well as higher reinsurance pricing.

Globally though, commercial property insurance pricing actually slowed in the third-quarter of 2023, being up 7%, on average, down from an increase of 10% in the previous quarter, Marsh explained.

However, while the rate of increase slowed, property insurance rates still experienced increases in every region of the world and it is the catastrophe exposed properties that face the largest increases in every region, it seems.

Insurers remain concerned about the effect of inflation, Marsh said, with this a key consideration at renewal time.

Pat Donnelly, President, Marsh Specialty and Global Placement, Marsh, commented, “The property market – and property catastrophe in particular – remains challenging and is an area of focus of our work with clients.”

Marsh said that Q3 2023 was the twenty-fourth consecutive quarter in which pricing of property insurance rose in the United States.

These increases were driven by “driven by the costs of reinsurance and capital, strong demand, limited new capacity from insurers, and continued losses,” the broker explained.

As in previous quarters, it appears to be the catastrophe-exposed US property that faced the largest increases.

Marsh said, “A bifurcation of renewal results has continued in 2023; better results were typically experienced by insureds with best-in-class risks, limited natural catastrophe exposures, and stable incumbent capacity.”

Adding that, “Higher pricing was generally experienced by risks that carriers viewed to be of average to poor quality, loss impacted, and/or with assets concentrated in catastrophe (CAT) zones, such as along the Gulf of Mexico, Atlantic coast, or in California.”

Discipline on catastrophe deductibles remains, as insurers continue to enforce more stringent terms of coverage, while underwriters are also focused on inflation and insurance to value, Marsh said.

Insurance buyers are countering the continued rate hardening through the adoption of higher deductibles, or by taking up alternative methods of risk transfer, including captives, parametric risk solutions and structured products.

Marsh said that catastrophe exposure is also under scrutiny in commercial insurance renewals in the United Kingdom, Europe, Canada, Latin America, Asia, and all other regions of the world.

In Canada, underwriters have started to model convective storm exposures, Marsh said, which is expected to have an effect on pricing right through 2023.

In Europe, secondary perils and catastrophe risks are also affecting commercial insurance pricing, with natural catastrophe aggregates and deductibles being scrutinised.

In Latin America, higher catastrophe limits and poor loss records meant significantly higher pricing in Q3, Marsh said.

While in Asia and Pacific, catastrophe-exposed clients are also facing greater scrutiny and continued price increases and recent weather patterns are causing some insurers to be cautious.

Finally, even India, the Middle East and Africa are feeling the effects of the insurance and reinsurance market’s catastrophe aversion, with rate increases being driven by increased reinsurance and capital costs, while nat cat related terms and conditions are under scrutiny here as well, Marsh explained.

In general, it is a picture of heightened weather and natural catastrophe risk aversion among insurers, cascading down from the reinsurance market and exacerbated by inflationary factors as well.

Source : ARTEMIS

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In the last nine years, Carol Schenk of Wichita has seen the assessed value of her home increase from $152,000 to $240,000 — pushing her annual property tax bill from $2,200 in 2014 to more than $3,000 in 2022.

Schenk told lawmakers in a letter earlier this year that the tax on her nearly 30-year-old home is becoming too much.

“I can’t even imagine what my new tax bill will be,” Schenk said, “but I am struggling to afford it right now.”

Many Kansans have lined up at public meetings to say rising property values and the taxes that come with them are out of control. Kansas Republican and Democratic lawmakers have taken notice. But they are proposing rival amendments to the state constitution in an attempt to reel in rising property taxes.

The Republican-backed plan would cap how much property values can increase each year. That would hopefully standardize increases for taxpayers and spare them from large spikes year to year.

The Democratic proposal wants to shift some of the burden of property taxes off of residential homeowners and onto commercial and agricultural real estate. But that will be a tough sell to the Republican leaders of the Legislature who are more business and agriculture friendly.

However, both proposals only address one side of the property tax equation. Neither change would be able to stop local governments from increasing their tax rates. So homeowners could still see a spike in property taxes when their cities and counties raise their mill levies.

Additionally, a tax expert argues big changes to property tax codes can come with unintended consequences that are hard to reverse. Richard Auxier, senior policy associate for the Tax Policy Center, said a better strategy is targeting relief at specific groups, like retired homeowners.

“You would much rather go slow,” Auxier said, “And not overextend yourself, then try and go back and fix something that you’ve done.”

Capping rising value

The Republican plan calls for capping yearly increases to property valuations at 4%.

The amendment passed the Senate with a 28-11 vote, mostly following party lines. The House can consider advancing it to send it to voters during the 2024 legislative session.

Republican Sen. Caryn Tyson said on the Senate floor that many states cap increases to property values, including states from both sides of the political spectrum like Oklahoma and Oregon.

The plan allows for exceptions to the cap, like new construction adding value to the home or when a home is sold. So when someone purchases a house, the suppressed property value for tax purposes will revert to its true assessed value. 

Auxier argues the plan disproportionately benefits people who have owned their home longer than their neighbors. That can mean someone who’s lived in their home for decades paying significantly lower property taxes than someone who just bought a house down the street.

“The person who bought it last year,” Auxier said, “pays an astronomical rate because the government needs to catch up. And so you get these big disparities.”

But Republican Senate President Ty Masterson has the plan is fair because the new homeowner knows they are purchasing a house that will spike in tax value.

Shifting the burden

Meanwhile, the Democratic plan calls for reducing the taxable amount on residential properties. Currently, homes are taxed on 11.5% of their value. The proposal would drop that to 9%.

However, commercial property and agricultural land would not see a similar reduction. So owners of that kind of land would end up paying more in taxes to make up the difference. That’s likely to run into opposition in the Republican-controlled Legislature.

Dylan Lysen

/

Kansas News Service

Democratic Rep. Vic Miller, the minority leader in the House, said the proposal would begin shifting the property tax burden away from homes and onto businesses and agricultural land. He said that’s necessary because homeowners have gradually been taking on more of the property tax burden in the state over the last 30 years.

Kansas voters last changed the property tax code in the state constitution in 1992, when the 11.5% rate was created. That change led to homeowners paying 35% of the total collected property taxes in Kansas, while commercial and agriculture made up the other 65%.

The homeowner portion of the pie gradually increased over the years and now makes up more than half, 56%, while commercial and agriculture paying the other 44%.

Miller said that the proposal would shift the residential portion down, making a 50-50 split between taxes collected from homes and other properties. He said that would help address how home values are rising much faster.

“It’s been shifting over time onto homes away from the other properties,” Miller said. “This would simply make some corrections to that shift.”

The agriculture industry and the Kansas Chamber, one of the largest lobbying groups in the state, oppose the plan unless the similar property tax relief offered to residential homeowners was provided to commercial and agricultural land as well.

Targeted approaches

Auxier argues both plans may be too wide-reaching and could cause a significant decline in tax revenue for local governments that won’t be easy to fix.

He said lawmakers should consider targeted tax policies that help a specific group to make sure they don’t accidentally throw the entire tax structure out of whack.

Some examples of targeted approaches include providing property tax breaks to people who are older than 65 years old or lower income And tax cuts are more useful when they are addressing a specific situation, like helping young families purchase a home or helping retired residents remain in their houses.

“There are numerous ways to limit property taxes,” Auxier said. “But it would be a lot better if you explained why, and who specifically we’re trying to help.”

Source : KCUR

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TOKYO, Oct 4 (Reuters) – Mie Kawamata dreamed of owning a home where she could tend a small garden and her 1-year-old daughter could play outside, yet still be close enough to commute to central Tokyo.

But after much searching, Kawamata and her husband, who both work in accounting, gave up on the house idea and bought an apartment about a third of the size that she’d wanted.

“I’m not sure ordinary people can buy a house anymore,” Kawamata, 31, said. “Housing prices and rents have risen a lot compared to the past, but in the end, salaries haven’t gone up that much.”

After weathering decades of deflation and stagnant growth, Japan is seeing an investment boom that has made apartments in central Tokyo unaffordable for young Japanese professionals.

The flood of investment drove the average price for a new condominium in central Tokyo up 60% to a record 129.6 million yen ($865,000) in the first half of this year, according to the Real Estate Economic Institute.

For locals, the surge in prices has made Tokyo the second most unaffordable city worldwide, only behind Hong Kong, according to a UBS global real estate report.

A 60 sq m (646 sq ft) apartment in Tokyo now costs 15 times a skilled worker’s salary, up from 10 times a decade ago and well above London, Singapore and New York, the UBS report showed.

While partly due to low interest rates, the price surge is being driven by foreign buyers taking advantage of the weak yen, now near a 33-year low, and those looking to shift funds out of China, where a real estate crisis and geopolitical concerns are putting a chill on investment, according to property experts.

Foreigners have piled more than 1.8 trillion yen into Japanese real estate since 2019, outstripping flows from institutional investors, property funds, and corporations, according to consultancy Cushman & Wakefield.

And there’s more to come. Funds from property speculators have piled up over the pandemic, and Japan looks to be a prime destination in Asia for it to land, said Cushman & Wakefield director Mari Kumagai.

“If they want to keep the money in Asia Pacific, it tends to be either Australia or Singapore or Japan,” Kumagai said, adding that Japan was the most attractive of the three, based on value stability and size of the economy.

Average condo prices in central Tokyo were bumped up in the past year by a large supply of high-end residences hitting the market. Emblematic of that is the new Azabudai Hills complex, featuring the country’s largest office tower and about 1,400 residential units.

The Azabudai project, which looms over the iconic Tokyo Tower, is catching the attention of investors in Taiwan, said Wang Mao San, president of Shingi-fusaya Realty Inc.

Super wealthy Taiwanese are snapping up Tokyo properties worth more than 100 million yen for second homes, he said, while regular rich investors focus on condos in the 30-70 million yen range in Tokyo and the western metropolis of Osaka.

“In Japan, the political and economical situation is stable,” Wang said about the attractiveness of the market. “Tokyo is still not that expensive compared to other big cities like Hong Kong and London.”

A luxury condo in Tokyo’s high-end Motoazabu area is priced at less than half that of Hong Kong and 45% cheaper than London, according to the Japan Real Estate Institute data.

That’s cold comfort for Mari Mochizuki, a single mother and salesperson for a music company who’s been hunting in vain for an apartment big enough for her piano and perhaps the addition of a cat.

The 39-year-old is eager to find a place that will hold its resale value in case she has to move for work. But the options she’s seen in the city centre are either too pricey or worn out, pushing her search area to the northern edges of the capital.

“It seems like prices for every apartment of decent size are blindly going up, even those out of the way areas or with surprisingly cheap interiors,” she said. ​

Source : Reuters

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International real estate is a frequently chosen vehicle to diversify an investment portfolio, and demand for residential properties doesn’t appear to be easing. According to Knight Frank’s “The Wealth Report 2023”, a third of investors are turning to property investments to provide an inflation hedge and diversification. In the year ahead, 19 percent of UHNWIs (ultra-high-net-worth individuals) intend to invest directly in income-producing real estate, with 13 percent planning to take the indirect route.

Global UHNWIs consider residential real estate the safest asset class, with 45 percent of Knight Frank’s survey respondents favouring this type of investment vehicle over gold, bonds or commercial real estate. UHNWIs’ share of residential real estate owned outside of their countries of residence currently stands at 28 percent.

One of the top destinations for investors and lifestyle buyers is Portugal—particularly the Algarve, which still promises property-price growth and guaranteed rental returns.

As a result, our team at Ombria, the sustainable lifestyle resort in the Central Algarve, has seen continuous demand from international buyers from the United Kingdom, the Netherlands, France and the United States.

Ombria Golf Course

What makes the Algarve an attractive choice for investors?

Three hundred days of sunshine per year, regular flight connections from Faro International Airport, arts, culture and an abundance of activities to experience have all established the Algarve as a tourism hotspot. Inevitably, this has driven demand for holiday homes, with real-estate values and rental returns growing over the past few years.

In the 12 months to September 2022 alone, real-estate prices in the golden triangle of the Central Algarve increased by 15 percent, making it the second-highest performing European real-estate market.

Supply and demand

As we know, property prices are very much dictated by supply and demand. The Algarve is no exception, and findings from the Portuguese National Institute of Statistics (Instituto Nacional de Estatística, or INE) reveal that over the past 10 years, for every house completed in the Algarve, seven houses were sold. That’s an annual average of 1,500 completed properties out of 10,300 sold.

Looking ahead, there are no signs of the demand for quality real estate slowing down. Residential sales in the Central Algarve region have remained robust, as transactions increased by 21 percent over the year to the second quarter of 2022. Based on this and the steady number of buyer enquiries we witness at Ombria, we foresee that investors can expect their property values to continue to appreciate.

The Spa

Rental returns

Bearing in mind that the majority of investors are seeking income-producing properties, one must factor in the impacts of the tourism industry. The general rule is: The stronger a destination’s tourism market, the stronger the chances are for a property to deliver a steady rental income.

In 2022, Portugal’s tourism sector enjoyed a return, including revenue from tourist accommodations, exceeding €5 billion. With 19.1 million overnight stays, the Algarve was the most popular area, welcoming more than 4.8 million visitors from all over the world.

Branded residences

Branded residences are not a new concept, yet buyers still favour an investment linked to a household hotel brand name with a trustworthy team to manage their homes. Ombria has seen strong buyer interest in its branded residences: Viceroy Residences. More than 80 percent of the 65 one- and two-bedroom apartments, integrated within the five-star Viceroy at Ombria Algarve resort (opening in the fall of 2023), are now sold or reserved, leaving only 12 units remaining.

Due to be completed this year, Viceroy Residences are fully furnished and offer a guaranteed 5-percent net rental return per year for the first five years. Owners can be confident that the renowned Viceroy Hotels & Resorts will manage their properties perfectly.

Viceroy Residences

The owner of a Viceroy Residence will have access to the hotel’s facilities and Ombria’s 18-hole golf course, eight onsite restaurants and bars, several heated pools, a spa, a kids’ club, a fitness centre, a clubhouse and a conference centre, as well as services such as the concierge, cleaning, room service and maintenance.

Last but not least, owners will benefit from various advantages and discounts on golf as well as at hotel facilities—including all of Viceroy Hotels & Resorts’ 10 locations, such as those in the US, the Caribbean, Central America and Europe.

Buyers can also discover Ombria’s latest phase, called Oriole Village—a collection of 83 one- to four-bedroom apartments, townhouses, semi-detached villas and detached villas, which Viceroy Hotel Group will also manage. 

Oriole Village, Ombria

Shift to sustainability

The world has been moving toward sustainability, impacting consumer and investor behaviours. Knight Frank’s wealth report reveals that energy sources (57 percent), opportunities for green refurbishments (33 percent) and materials/embodied carbon (30 percent) are increasingly being factored into investors’ decision-making processes.

Here at Ombria, we have seen a clear shift in buyer priorities, with the need for sustainable features becoming increasingly important to many house hunters. Today’s buyers seek not only a property with attractive onsite amenities but also a development that moves with the times and acknowledges the need for sustainability.

Ombria prides itself on being a sustainable lifestyle resort, and our properties and communal areas feature an abundance of sustainable features. Buildings will occupy less than a quarter of the development’s total area. Bioclimatic architecture will allow energy to be conserved wherever possible, using locally sourced materials perfectly adapted to the local climate.

Golden Visa

The Portuguese government plans to end the Golden Visa programme, hoping that this will reduce foreign real-estate investment and, as a result, help ease pressures on increasing property prices. However, it is unlikely that the end of the programme will have this impact as the number of property transactions with the objective of obtaining Golden Visas represents an insignificant fraction of the total real-estate transactions in Portugal (about 1 percent), thus having a negligible influence on prices.

Portugal is an attractive country for several reasons—namely, safety and quality of life, political and social stability, the quality of its infrastructures, a pleasant climate and low living costs. This has led to an increase in the number of people choosing Portugal to spend their holidays, buy holiday homes or live permanently. The most likely reason for the increase in property prices in recent years goes back to the topic of supply and demand, as the uplift in buyer demand has not been accompanied by an increase in the supply of properties.

Therefore, we would like to see the government implement measures such as reducing the tax burden and VAT (value-added tax) on construction, as well as reducing bureaucracy in licencing processes. These measures are essential for reducing construction costs and increasing supply, thereby decreasing real-estate speculation.

The ending of the Portuguese Golden Visa programme is unlikely to affect demand significantly, whether from the UK or other countries, as Portugal will maintain its attractiveness factors. It is also worth mentioning that any visa-driven investors are already deciding to apply for the D7 Visa (Retirement Visa or Passive Income Visa) instead.

Tax benefits

Individuals of any nationality (European Union [EU] and non-EU citizens) can take advantage of attractive tax benefits via the Portuguese Non-Habitual Resident (NHR) programme. The NHR is not a visa such as the D7 Visa or a residency-by-investment programme such as the Golden Visa. It is a special tax regime for residents in Portugal, enabling qualifying entrepreneurs, professionals, retirees and HNWIs to enjoy reduced tax rates on Portuguese-source income (most foreign-source income is exempt from Portuguese taxation) for 10 years.

In addition to the financial, sustainability and lifestyle aspects discussed in this article, it might also be worth noting that the Algarve is home to the majority of Portugal’s golf courses, with Ombria benefiting from its own 18-hole course. With many business deals being completed on the green, the high number of golf courses in the Algarve may just be another contributing factor to the region being so popular among investors.

Source : InternationalBanker

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Q: Are property taxes rising in Tampa, Florida?

A: The Tampa City Council shot down Mayor Jane Castor’s proposal to increase the property tax rate 16% in a 4-3 vote during Tuesday night’s meeting.

With the city council’s vote, Tampa’s current property tax rates will remain the same.

Caster’s plan, which would have been only the second time the city raised property taxes since 1989, would have added about $232 annually to the average homeowner’s tax bill. The mayor had proposed using the budget to address the constantly growing backlog of maintenance projects around the city along with public safety, street and sidewalk repair, public parks and affordable housing.

Local residential property taxes are calculated by a millage rate that is applied to every $1,000 of the assessed “fair market value” of the property.

“The highest millage rate in Tampa history was in 1982 and it was 8.16%. The last increase was in 1990,” said Stephen Hachey, attorney at the Law Offices of Stephen K. Hachey, before the council blocked the proposal. “The current rate is 6.2076% and the proposed rate [was] 7.2076%—really smack dab in the middle between the current and the historic high.”

The same millage rate applies to all homeowners “but there are different exemptions available,” he said. “The one a lot of people get is the homestead, which takes up to $50,000 off of the assessed value.” A homestead in Florida is “loosely defined,” he added, “but essentially a homestead is your primary residence.”

Many Tampa residents will still see their property taxes rise modestly since home values, which are generally reassessed every January and whenever a home is sold, are rising. The Save Our Homes property tax cap currently places a 3% cap on annual increases in the taxable values of homesteaded properties.

“On a homestead property, the assessed value can only increase 3%,” Hachey said.

The axed tax-hike proposal would have raised Tampa’s property tax rates higher than both nearby Orlando and St. Petersburg. It would have net the city an additional $45 million a year in general revenue.

Source : MansionGlobal

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MUMBAI: Amid the luxury towers and expansive villas of Mumbai’s most exclusive postcode, a crumbling apartment block exemplifies the risks some people are willing to take to live in one of the world’s most expensive property markets.

Some 600 people, mainly middle-class civil servants and their families, live in the government-owned, dilapidated block, located across the Arabian Sea in the same Worli neighbourhood where the daughter of India’s richest man Mukesh Ambani lives.

Children play outside their units along corridors with rusted, broken railings held together with rags and the steel bars reinforcing the structure are visible from where the cement has fallen off the floors and ceilings.

“Anything can fall here, especially during the monsoon,” said Anil Aiwale, a government employee who has been living in the block with his family for the past five years. “The lack of affordable living options causes people to continue to live in high risk structures.”

Mumbai, capital of Maharashtra state, is India’s most populous city, and the nation’s most expensive place to buy residential property, according to data from Anarock Research.

Prices for prime property, such as that in Worli, saw the sixth fastest year-on-year growth globally in the first quarter of this year, a survey by international property consultants Knight Frank shows, just behind global financial hub Singapore and ahead of China’s financial capital Shanghai.

Some families living in the Worli block, which is particularly vulnerable to the monsoon rains that lash Mumbai from June to September every year, say these statistics reinforce their determination to stay put, despite the risks.

Because the block faces the sea, the walls and doors of many units are waterlogged and mouldy. Resident Rahul Makwana, who moved to a lower floor, said the entire fourth floor was going to be demolished because of structural issues.

“It’s dangerous, especially with parents and children,” added resident Sumit Shinde. “But it’s not possible for me, or any middle class family, to purchase a new home in Mumbai. It’s very expensive.”

Depending on their unit’s size, residents pay between 8,000 and 13,000 rupees (US$97-US$158) a month in rent to the state government. That rent would cover a property on the fringes of the city, but not anything more than a unit in a slum near Worli.

A state government official, who declined to be named because they were not authorised to speak to the media, said the bloc’s residents had not been served an eviction notice, but the state has offered them alternative accommodation in the suburbs.

Several residents, however, said transport to and from their offices in Worli would cost too much and take too long.

“The location of this building is great, it’s very convenient for me to go to work,” resident Aiwale said. “Affordable housing is impossible to find in a city like Mumbai.” ($1 = 82.2500 Indian rupees) – Reuters

Source : NewStraitsTimes

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