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GLOBAL PROPERTY REVIEW

May 12, 2018

VENICE

 

With an economy growing at only modest levels, it would take a lot for many of Italy’s major cities to be as automatically attractive as investments as they are visually. 

 

The growth of Italy’s gross domestic product is slower overall than last year - an annual growth of 1.6 per cent for 2017 was followed by 1.4 per cent and then 1.2 per cent in Q1 and Q2 this year, respectively, against those same periods last year.

 

Venice needs little introduction as a tourist venue, and the demand among property investors is significant. Around 70 per cent of residential home buyers in the city are foreign, with British, French and German citizens the most prevalent, according to Engel & Voelkers research. The focus is on capital appreciation - the broker noted that only around 15 per cent of purchasers were from owner-occupiers without the stated aim being later capital gains.

 

These motives might be rather smart, since protests from the local hospitality industry in the last few years may curb the expansion of AirBnB type short term rentals, and thus those buying for the rental yield specifically. Just to add to the mix, however, idealista.it research found a significant growth of rental properties nationally, with around 1 million properties used for this purpose. So there may be some ongoing push-and-pull in Venice ongoing per rental rules

 

Italy Property Guides pointed out that Castello, San Polo, Santa Croce and Dorsoduro - the latter by the Accademia and Guggenheim museums - are key hotspots in Venice. Luxury estates and Palladian villas outside, such as along Riviera del Brentare, are around €9,000 per square metre for prime areas. E&V sees the city overall as stable but pricey. 

 

 

 

BUDAPEST

 

The Hungarian capital is at an interesting point, property-wise. For the last few years it has seen significant price increase as it developed as a business hub, attracting companies for outsourcing and developing its home-grown middle class. So much of the opportunities for the younger generation in the country reside in the capital. 

 

But now there’s a turn in the screw. Prices that have increased for years are now stable. The inflation of apartments and townhouses has meant that selling is a sticking point, with the actual value as per earnings and prices at odds with each other. 

 

So prices may have plateaued for now, which may be tolerable for long term investors. For those looking to diversify, the number of apartments still for sale since the start of the year has risen, causing index.hu to classify some such as unsellable.

 

This may be feeding through to the secondary market. Real estate advertisements are 8 per cent fewer in the first four months of 2018, said a Budapest specialist talking to local TV.

 

But there are also changes and evolutions in the market, particularly at the top end. Where before the luxury segment was dominated by renovations of period buildings, in the last few years there have been new, purpose built buildings overlooking the Danube.  

 

The price per square metre is three times that of 2015, which represents at the top end between 1.2-1.5 million florints ($500-$850). The most desirable of Budapest’s 23 districts are the first, second, fifth, 12th and the riverfront portion of the 13th, according to Engel & Voelkers, talking to The New York Times.  

 

Outside Budapest, flats are selling on average 10 days quicker than last year.

 

 

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DUBAI

 

There’s still a significant question mark over the first city and emirate in the UAE to get global recognition. Out of an era of ‘buy it and they will come’ the city has seen significant fluctuations; from the dip of 2009-2010 to a peak around 2014 to an ongoing softening in prices as supply continues unabated. 

 

REIDIN, a market leader in data for the sector, paints a challenging picture for the would-be short- or mid-term investor. Prices overall in September were down 7.69 per cent, year-on-year, with apartments and villas shedding 7.31 per cent and 9.31 per cent, respectively.

 

REIDIN’s Dubai Residential Property Sales Prices Index down an extra 2.1 points for the month against August, with a 0.88 per cent fall overall and 0.92 per cent down for apartments. The fall over the last three months overall was 2.84 per cent, and over six months, by 4.26 per cent. Over two years, the market overall, plus apartments and villas, are all nudging 10 per cent when it comes to their price reduction. 

 

There have been interesting movements at government level. In addition to moving up eight places to 40 in Jones Lang LaSalle’s Global Real Estate Transparency Index, the authorities have halved the Municipality fee imposed on businesses. Businesses can now hold 100 per cent foreign ownership outside of designated ‘freezones’. Office space becomes more competitive, price wise, following the softer residential market.

 

The residential sector may be bolstered, however, by the allowance of ten-year visas for certain professions. 

 

 

 

 

 

 

 

 

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