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GLOBAL PROPERTY REVIEW

January 11, 2019

ST LOUIS

 

No sooner have some of us endured the frenzy of buying Christmas presents, that we’re back in the stores and malls from Boxing Day hunting for bargains. 

 

When it comes to real estate, St Louis is one of those cities that like the clamour of punters getting a deal. The Missouri city keeps the market liquid through annual auction of properties in default through non-payment of the tax - a so-called tax sale day. The last one occurred on 5 October, and by news accounts, made hay - the 94 properties that sold went for a total of just under $834,000.

 

The auction is part of a plan to rejuvenate the suburbs, in particular its abandoned buildings as residents left for work elsewhere, post-recession.

 

On the surface, the city represents some of the best value buildings - particularly for those with the cash to clear the tax debt, renovate, and rent out.

 

But here’s the thing. Last year, homeowners were rewarded for a circa 7 per cent rise in property prices with a hike in tax widely accepted as disproportionately high - local news found one bill up 76 per cent. City Hall has defended itself and its use of a Mass Appraisal System. 

 

The tax hike is to help deal with vacant buildings. Yet such a hike seems to be linked to the cases of default, each time creating… a newly vacant building. 

 

Properties that don’t make it to auction, or unsold at auction, are often swept up by the St Louis Development Corporation, which indirectly manages them to sell on, sometimes to private punters. So, a nice potential tax hike-auction-bargain-tax hike circle, there.

 

US 30-year mortgage rate: 4.55 per cent.

 

………………..

 

LYON

 

This year has been another good one for France’s so-called second city, down in the ‘belly’ of the country in the Rhone-Alpes region.

 

The city is an industrial and commercial hub, and like Geneva, it is strongly complemented by its location. Situated in the Rhone valley, it sits between two main rivers, and to the north, the famous Beaujolais wine region. The ‘belly’ nickname derives from its culinary pedigree.

 

The 40,000-odd sales made in the Rhone-Alpes last year were mainly in the city. 

 

As such, prices rose 8 per cent in 2017, leading to an average transaction of just over EUR 5,000 per square metre for the first time in years. Some prime properties changed hands for more than EUR 7,000 per square metre.  Rentals did well too, averaging around EUR 15 per square metre within a rough EUR 12-24 per square metre range, according to stats collected by Barnes, the broker.

 

The 40,000-odd sales made in the Rhone-Alpes last year mainly came from the city.

Considered more compact and more liveable than Paris, the city has less traffic than the capital and a lower price point. Indeed, Financial Times article from this year cited brokers reporting interest from Parisians. 

 

The city is growing by an average 10,000 people per year, research from ThisIsLyon found. This compares to Paris, which is falling in population. As such, the rental market is thriving, with a healthy competition that is good for landlords. Only 34 per cent of dwellings are owned by the occupiers. On the sales side, there are around 50 per cent more buyers than sellers. But mortgage options for those living abroad are patchy – typically a buyer needs to be at a multi-national company.

 

…………..

 

KUALA LUMPUR

 

The Malaysian capital is something of a sticky wicket for the regional government and developers. 

 

For the last year the city has seen oversupply in certain areas, which has depressed prices as buyers look to negotiate. The overall slump in oil and gas – a cornerstone industry - has reduced the demand by companies to provide top quality accommodation for senior staff, which might have been laid off or sent elsewhere.

 

There were 29,227 of ‘overhang’ residential units in the city at the end of the first half of this year, according to the National Property Information Service. The executive chairman of Rahim & Co called this ‘worrying’. Scheduled deliveries of new developments next year may come just at the wrong time, as buyers on the fence may potentially turn to te secondary market instead. 

 

The commercial market has been more stable, and JLL Property Services (Malaysia) expected rents to stabilize this year following – again, new inventory coming available.

 

In a sense, KL and Malaysia are battling the knock-on effects of national policies. An increase in capital gains tax in 2012 aimed to cool the market from the speculation of buy-and-flip. Curbs on mortgages also reduced the demand from overseas buyers, while curbs on cash outflows from China – the city’s biggest market – have had an effect. 

 

On the financing side domestically, this year’s budget announced a crowdfunding platform for local buyers, in which the 20 per cent deposit of the buyer would be matched with cash from a range of investors who would gain down the line from price appreciation. 

 

Prices – perhaps due to the oversupply – are attractive overall, around $400-700 per square foot compared to $900-1,000 in Bangkok, according to Financial Times estimates.

 

31 December 2018 

 

ST LOUIS

 

No sooner have some of us endured the frenzy of buying Christmas presents, that we’re back in the stores and malls from Boxing Day hunting for bargains. 

 

When it comes to real estate, St Louis is one of those cities that like the clamour of punters getting a deal. The Missouri city keeps the market liquid through annual auction of properties in default through non-payment of the tax - a so-called tax sale day. The last one occurred on 5 October, and by news accounts, made hay - the 94 properties that sold went for a total of just under $834,000.

 

The auction is part of a plan to rejuvenate the suburbs, in particular its abandoned buildings as residents left for work elsewhere, post-recession.

 

On the surface, the city represents some of the best value buildings - particularly for those with the cash to clear the tax debt, renovate, and rent out.

 

But here’s the thing. Last year, homeowners were rewarded for a circa 7 per cent rise in property prices with a hike in tax widely accepted as disproportionately high - local news found one bill up 76 per cent. City Hall has defended itself and its use of a Mass Appraisal System. 

 

The tax hike is to help deal with vacant buildings. Yet such a hike seems to be linked to the cases of default, each time creating… a newly vacant building. 

 

Properties that don’t make it to auction, or unsold at auction, are often swept up by the St Louis Development Corporation, which indirectly manages them to sell on, sometimes to private punters. So, a nice potential tax hike-auction-bargain-tax hike circle, there.

 

US 30-year mortgage rate: 4.55 per cent.

 

………………..

 

LYON

 

This year has been another good one for France’s so-called second city, down in the ‘belly’ of the country in the Rhone-Alpes region.

 

The city is an industrial and commercial hub, and like Geneva, it is strongly complemented by its location. Situated in the Rhone valley, it sits between two main rivers, and to the north, the famous Beaujolais wine region. The ‘belly’ nickname derives from its culinary pedigree.

 

The 40,000-odd sales made in the Rhone-Alpes last year were mainly in the city. 

 

As such, prices rose 8 per cent in 2017, leading to an average transaction of just over EUR 5,000 per square metre for the first time in years. Some prime properties changed hands for more than EUR 7,000 per square metre.  Rentals did well too, averaging around EUR 15 per square metre within a rough EUR 12-24 per square metre range, according to stats collected by Barnes, the broker.

 

The 40,000-odd sales made in the Rhone-Alpes last year mainly came from the city.

Considered more compact and more liveable than Paris, the city has less traffic than the capital and a lower price point. Indeed, Financial Times article from this year cited brokers reporting interest from Parisians. 

 

The city is growing by an average 10,000 people per year, research from ThisIsLyon found. This compares to Paris, which is falling in population. As such, the rental market is thriving, with a healthy competition that is good for landlords. Only 34 per cent of dwellings are owned by the occupiers. On the sales side, there are around 50 per cent more buyers than sellers. But mortgage options for those living abroad are patchy – typically a buyer needs to be at a multi-national company.

 

…………..

 

KUALA LUMPUR

 

The Malaysian capital is something of a sticky wicket for the regional government and developers. 

 

For the last year the city has seen oversupply in certain areas, which has depressed prices as buyers look to negotiate. The overall slump in oil and gas – a cornerstone industry - has reduced the demand by companies to provide top quality accommodation for senior staff, which might have been laid off or sent elsewhere.

 

There were 29,227 of ‘overhang’ residential units in the city at the end of the first half of this year, according to the National Property Information Service. The executive chairman of Rahim & Co called this ‘worrying’. Scheduled deliveries of new developments next year may come just at the wrong time, as buyers on the fence may potentially turn to te secondary market instead. 

 

The commercial market has been more stable, and JLL Property Services (Malaysia) expected rents to stabilize this year following – again, new inventory coming available.

 

In a sense, KL and Malaysia are battling the knock-on effects of national policies. An increase in capital gains tax in 2012 aimed to cool the market from the speculation of buy-and-flip. Curbs on mortgages also reduced the demand from overseas buyers, while curbs on cash outflows from China – the city’s biggest market – have had an effect. 

 

On the financing side domestically, this year’s budget announced a crowdfunding platform for local buyers, in which the 20 per cent deposit of the buyer would be matched with cash from a range of investors who would gain down the line from price appreciation. 

 

Prices – perhaps due to the oversupply – are attractive overall, around $400-700 per square foot compared to $900-1,000 in Bangkok, according to Financial Times estimates.

 

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