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GLOBAL PROPERTY REVIEW-1 July 2019

July 1, 2019

Bern

 

The relationship between prices and rental yields make for an interesting scenario in the Swiss property market at a macro level. 

 

With negative central bank interest rates – though the SNB just last month launched its own policy rate basis, away from Libor - investors have looked to real estate to gain rental returns and get some capital appreciation. 

 

And appreciate it has – the central bank last year voiced concerns of a possible correction. This is because property prices haven’t kept step with incomes, meaning rents have broadly not risen, so prices and yields are going in opposite direction, potentially compromising the asset class’s attraction for now.

 

Foreigners need a permit to purchase, usually applied for when the property negotiation gets serious. Purchases are typically restricted to tourist areas and ski areas in a buy to let scenario, with the owner allowed to live for a maximum six months in the property per year. Buying as permanent, personal residence is possible, though with all the related residency requirements.

 

Bern, the de facto capital, is in one of 28 cantons (regions) in which foreign ownership are allowed. Around one-third of this medieval city contains expatriates, Cadogan Tate noted this year, and the range of property is broad. The Old City is a mix of apartments and mansion-type structures, while the more modern Kirchenfeld may be a simpler purchase of the latest interiors. Luxury apartment blocks are up and down the river, while PSP Swiss Property is among institutional investors that have purchased city centre buildings to bump up the yield in what it sees as a steady city market.

 

The suburbs include large villas and family homes, as well as the start of chalet type properties.

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Ras Al Khaimah

 

The market for tenants and buyers may continue in attractiveness for the rest of the year in Ras Al Khaimah, despite a rise in transaction values last year. 

 

The fourth biggest emirate in the UAE, with a state capital of the same name, Ras Al Khaimah covers the most northernmost area of land, protruding into the Persian Gulf. Though its economy has diversified in the last decade, its cooler climes and coastland is associated with a getaway destination.

 

Signs in English and Russian in the resorts represent the target tourist segments, while coastal villa complexes have attracted residents who prefer to commute into Sharjah and Dubai, even if construction work has varied in intensity in the last decade.

 

Headline figures have caught the eye. Deal transaction rose to $740 million in the first half of last year compared to that of 2017, up one-third, according to Ras Al Khaimah Municipality. Roughly 60 per cent of the 1,412 sales were mortgaged – residents can borrow up to 75 per cent, loan to value. 

 

But prices and rentals should be noted for those looking to buy for investment. Sales prices rose 0.6 per cent in last year’s second quarter against the first quarter. Rental rates continued to soften last year, according to Asteco, including rents for affordable housing units. On the other hand, with renters able to negotiate, there’s evidence of a shift to larger villas.

 

Reidin, the property data provider, told local media that the delivery of new residential developments in Dubai has put pressure on sales in the northern Emirates.

One positive element in Ras Al Khaimah is its population growth. Estimated at just under 500,000 last year, it is expected to rise to 520,644 by 2020. 

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Boston

 

The brakes appear to have been gradually applied to Boston’s wider real estate market as we exit the first half of 2019. 

 

The last two years has seen little but price appreciation, making the city one of the most expensive urban areas in the country – although still behind the likes of New York and Washington DC, living expenses have risen overall. Potentially now, we could be seeing some relief to the market, and some scope for younger families to put down for that first abode.

 

While prices during March for houses and condominiums rose, the number of transactions has leveled off on a monthly basis, according to the Greater Boston Association of Realtors. Indeed, the number of condos listed for sale has risen – potentially a sign of landlord investors cashing in on the price appreciation. 

Boston’s broader metropolitan area is home to around 4 million residents. Its broad reputation as a student city, retaining graduate talent has made it an obvious target for buy to let owners. AirBnB has been a friend to such investors as well, since the city is a magnet for city-break tourists.

 

A median home in the city in February this year was $598,000, according to Zillow. This is a leap of 6.7% over the previous 12 months, with an 8.9 per cent growth expected in 2019 – though more recent evidence of fewer sales may adjust this prediction. 

The median rent price in the city is $2,895, which is higher than the Boston-Cambridge-Newton Metro median of $2,600.

 

 

 

 

 

 

 

 

 

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