Where’s the hot property?
GLOBAL property markets have largely endured a torrid time, but some are firmly in recovery mode, according to experts.
Which markets should you watch for – and which should you avoid? cashy asked Tim Murphy, founder and chief executive of property investment firm IP Global for his recommendations.
He urges investors to seek out investment opportunities in London, New York and Malaysia, while keeping an eye on the up-and-coming markets of Turkey and the Singapore industrial sector. However, he advises on avoiding the Australian property market. Here’s more on what he had to say…
We remain optimistic about the London property market with mortgage financing becoming more competitive. Although interest rates are likely to increase in the second half of the year, there’s still a huge under-supply of property in London and overseas investors are now accounting for 48% of all prime central London property.
Rents are at an all-time high and supply levels are at an all-time low, so it still makes for a very interesting market to monitor over the coming months.
Elsewhere, the volume of sales to foreigners in Turkey was up 40% in 2010. There has also been massive growth in the construction sector and the property market in Turkey has rebounded significantly compared to the rest of Europe.
Property prices are set to increase with over 400,000 people immigrating to Istanbul every year, which has created a housing shortage of 250,000 per year. Turkey also has the fastest growing economy in Europe – a trend that is likely to continue after Istanbul won European City of Culture in 2010. This is expected to spur a huge amount of investment in coming months.
Moving onto the US, we remain very confident about the New York and Jersey City market. Capital values in Jersey City are still 50% below their peak in January 2007.
In Jersey City, just across the water from Manhattan, property is trading in the region of 25-30% of New York prices, with very strong rental yields, and great transport infrastructure giving speedy access to Wall Street and downtown Manhattan.
We have had lots of interest from our clients in Jersey City with properties selling faster than in Manhattan, inventory levels continually low and high yields of 6%.
The Kuala Lumpur market looks good as the government continues to implement economic stimulus packages, and forecasts capital value growth rates of 7-10% this year. The Malaysian property market is also benefiting from a lack of regulation compared to Singapore, Hong Kong and China.
Regulations certainly slowed up the Singapore market significantly in the first quarter of the year. Gross domestic product has slowed from incredible growth in 2010 and developers are now releasing considerably less residential projects.
However, we are still very favourable on the Singapore economy and are looking for value in the property market, but in the industrial sector rather than the residential.
Industrial property is capable of achieving high rental yields of 4-6% with the cost of borrowing low, at just 1%, making it a very attractive investment market. Indeed, the Singapore industrial property sector is one of the key markets to watch this quarter.
Further afield, Australia is having a tough time with a 30-plus year high for currency, interest rates and inflation, which are challenging home sales.
As such, we are starting to see a slight correction in the market as property becomes quite expensive to hold given the cost of funding. As a result, I think we will see quite sluggish second half of the year in Australia.
Pic credit: kongsky/ FreeDigitalPhotos.net
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