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GLOBAL PROPERTY REVIEW - 22 April 2019

April 23, 2019

DUSSELDORF

 

 

Dusseldorf has crept into the consciousness of European property investors after being a favourite of businesses for their footprint in the city, as well as the general rise of Germany as a European destination for real estate capital.

 

The seventh largest city is home to more than 9,540 companies, Jones Lang LaSalle estimated in February this year, and is one of the largest sources of expatriate workers in Germany. International companies such as Accenture and Ogilvy have made the city home, and it is on the front foot when it comes to the co-working revolution, which is real estate related.

 

Despite this recent history of foreign investment, prices have grown relatively modestly compared to the currently extraordinary price rises in Berlin and Munich - up to an annual growth of ‘only’ 5 per cent up at the time of Deutsche Bank’s 2018 report. 

 

But since all of Germany’s top-seven cities have seen strong demand internationally, with property construction falling far short of the required stock, it’s all relative. Rents for new contracts rose 4.5 per cent in 2017 alone, nationwide, and there’s talk about adjusting the rules on rental increases to five-year periods relative to inflation.

 

Nevertheless, the city is second among the seven when it comes to price, behind Munich, and the highest in West Germany. Apartment prices rose 8.78 per cent in the 12 months up to Q2 last year, or an average EUR 2,625 per square metre. Houses for one- and two-family houses rose 4.09 per cent over the same period.

 

New house supply is falling, however - GlobalPropertyGuide research found that just 1,000 homes were completed in 2017, less than a quarter of the annual requirement.

 

 

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EDINBURGH

 

 

Nothing like a success story amid the fatigue-inducing news reel of Brexit debate.

 

Edinburgh has continued its strong price rises in this year’s first quarter from last year, as investment from home and abroad weighs the scales even more firmly to the demand side. 

 

The Scottish capital rose 6.8 per cent overall in 2018, putting it top of the charts among British cities for pure growth. This is essentially flat when compared with the 6.9 per cent of the previous, year, Hometrack data show. First-time local buyers may find that first rung on the ladder more steep than the trek up to the castle.

 

It’s a heady mix of attributes: a grand city that is a tourist magnet at numerous points in the year (leading to a lucrative market in the short term holiday lease play) a bucket load of students and modern in its business mix. Further, with UNESCO World Heritage around many corners in the city centre, there’s a pretty hefty lid on new supply, except for multi-storey building renovations. 

 

Demand for family homes rose 9.2 per cent last year, with flats up 5.5 per cent, Knight Frank data show.  And there’s evidence of locals cashing in on all this capital gain, too - Warners Solicitors & Estate Agents reported that listings rose 27 per cent in February this year compared to 12 months previously. The second half of 2018 also saw home listing rise more than a fifth.

 

 

While a peak is not always discernible, a combination of Brexit caution and a natural pause may be in evidence.

 

Though the average house rose to GBP 237,600 last year, research from Edinburgh Solicitors Property Centre found that while the number of properties sold over Edinburgh, the Lothians and Fife fell 3.4 per cent against 2017. 

 

 

 

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CASABLANCA

 

 

We might be at an interesting turning point in Morocco, with its largest and perhaps most iconic city reflecting some national trends. 

 

Morocco is a stand out among other north African nations. Its general political stability has been reflected by a rise in tourists last year 8.8 per cent (ONMT), boosting the returns from hospitality. More capital spend and a focus on the industrial sector also bode well. The economy grew 3.2 per cent and Oxford Economics predicts a 3.3 per cent rise in GDP this year. 

 

Casablanca is a diverse city, and a prime target for outside investment. JLL noted the new developments in the city as a catalyst for ever better investor sentiment, while the focus on tourist safety and infrastructure is all to the good. Further, it is one of the leading financial hubs in Africa,, bolstered by the development of the Casablanca Finance City, a public-private venture.

 

The turning point relates to real estate prices. In general, they haven’t kept the pace with economic growth. Casablanca home prices rose just 1.5 per cent last year, which contrasts poorly against the country’s other major cities and with previous periods of strong growth nearer the beginning of this century. 

 

The price of riads - traditional houses sporting local architecture and an inner courtyard - have been falling, a trend also felt elsewhere.

 

But demand has been rising. Bank Al-Maghrib found that transactions rose 16 per cent in the last quarter of 2018 against a year earlier, nationwide, while quarterly sales figures have risen more than 9 per cent. So the argument is that the property prices will soon catch up to the positive economic story generally, with Casablanca set to benefit.

 

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