Pakistan Property & Real Estate News

Investment opportunities in Costa Rica

The country, which is often deemed the USA's version of Spain, has the longest life expectancy in the western hemisphere, with the tourist industry growing rapidly over recent years.

Costa Rica Invest says the low cost of living and low property taxes have attracted retirees to the country, with 60 per cent of tourism arriving from the US. Invest says new opportunities to buy in the country could attract UK buyers looking for a second home.

The company is currently offering potential buyers the opportunity to harvest teak on the land, the profits of which can be used towards purchasing a home in the country or as an investment.

James Cahill, managing director of Costa Rica Invest, said: "Investors with a medium to long term investment view will see the benefits of an investment in development land with the added benefit of teak growing on it. Our premier project Finca Di Pacifico Dos offers a unique opportunity to invest in Costa Rica.

"The teak growing on your land will provide a good return but better than that as the world economy recovers and more baby boomers seek out their little piece of paradise the value of your land will increase rapidly giving you a spectacular return."

The country's slogan, La Pura Vida, meaning the pure life, is fitting given its current status as one of Dan Buettner's, 'Blue Zones'; with the country's Nicoya Peninsula deemed as one of the few places in the world where people live to a 100 in great numbers.

Invest have also discovered a US and Central America trade deal, the Central American Free Trade Agreement (CAFTA) brought in at the beginning of the year, should help buyers by encouraging competition in Costa Rica.

Judy Ferguson, spokesperson for Costa Rica Invest added: "Some of our purchasers are planning to break ground on their development land this summer. Perhaps they already know about the health and longevity benefits of life in Costa Rica.

"As word spreads further about longevity in Costa Rica, demand for 'La Pura Vida' will further rise, benefiting our pure investors who plan to sell their land."

Property price falls 'not caused by supply and demand'

Prices fall because people cannot afford to buy, not because there are not enough properties on the market or buyers are not interested, explained Paul Holmes, chief executive officer of first-time buyer advice firm Firstrung.

"The reason they can't buy a property is because the speculative mortgage product has completely disappeared," he commented.

"They can't afford to buy because there is no more cheap money available."

Figures from Nationwide show that house prices fell by one per cent month-on-month in February.

The average price last month was £161,320, compared to £163,481 in January.

It suggested the recent fall is due to the winter weather and expiry of the stamp duty holiday, rather than being the start of a new trend.

More of those who obtained a mortgage last year opted for a variable rate product, hoping to make the most of low interest rates.

Banks must lend to aid mortgage market, expert says

There is pressure on banks to lend and they must do so, said Catherine Hearnden, director of financial advice firm MyMortgageDirect.

She pointed out that increased loan-to-value mortgages are being offered, but buyers still require a deposit and face higher interest rates.

Homebuyers must continue to be sensible with their finances and assess mortgage options carefully, the expert continued.

Figures from the British Bankers' Association show that mortgage lending in January was relatively weak, with the winter weather blamed for the drop.

Some 35,000 new mortgages were taken out, compared to 46,000 in December.

The figure could also have been a reflection of the changes to stamp duty that came into effect at the beginning of 2010, meaning buyers made the most of the relief at the end of 2009.

Self-build market "more favourable"

Increased land availability, falling prices and cheaper materials and labour mean there is a real demand from homeowners who are frustrated by the current property market, explained Raymond Connor, chief executive of construction supplier BuildStore.

"With a low supply of quality homes and such good savings to be made right now, in terms of land, labour rates and materials prices, there has never been a better time or more affordable time, to build your own house," he commented.

Mr Connor called on the government and local authorities to recognise this trend and aid self-build projects.

It has also been suggested that VAT should be cut on home improvements to further boost the property sector. Alex Hawkes, news editor at Construction News, suggested the move would boost the construction sector.

Influential institution calls for more transparency in the UK property industry

There are significant gaps in transparency of professional fees in the UK property industry and consistent and comprehensive regulation of the real estate sector is needed, it is claimed.

A Royal Institution of Chartered Surveyors working group has found numerous examples of unwelcome practice and inconsistencies in the level of transparency provided for professional fees charged. This leaves consumers unaware of what they are paying for when purchasing services, it says.

RICS is calling on the government to review and improve regulation in the sector after its research found that consumers want a breakdown of professional fee including any commission earned, clearer and more accurate information, and the relevant information they need to enable them to make an informed choice.

‘Whilst we have been working on this consultation we have witnessed a change in the banking world. The focus is now on sensible lending, transparency and proper management of risk. This consultation has highlighted both good and bad practice in how the property market operates. However the current market solutions are piecemeal at best,’ said Max Crofts, RICS President and Chairman of the Transparency Working Group.

‘We have a great opportunity to take the initiative and work with others to build upon the good practice that already exists. We need to put a stop to the unwelcome practices and enhance regulation and its coverage across the sector in order to improve standards and raise consumer protection. The industry will do what it can, but to obtain consistency in transparency of fees and commissions across the entire industry action and legislation is needed from government,’ he added.

The key recommendations are that landlords, letting agents and managing agents should be subject to appropriate regulation in order to achieve consumer protection, efficient markets and consistency across the sector.

Regulation of the industry should involve an independent body, for example, the Property Standards Board (PSB), and that body should approve and hold the agreed code(s) of practice that the industry follows. The Government should legislate to provide the PSB with the authority and backing to ensure that all landlords, letting agents and managing agents comply with appropriate regulatory requirements, RICS says, and the government needs to undertake a review of existing legislation in the residential sector.

RICS believes it can work with the relevant authorities to ensure that there is greater transparency and clarity in the description of mortgage and valuation fees for mortgage applicants.

And it adds that the industry needs to put greater emphasis on making sure clients, especially consumer clients, are made aware of the relevant remuneration, commission and any other payments paid on the purchase of insurance. Regulators should also impose requirements to improve transparency in relation to insurance.

CDA to upgrade all markets

Islamabad: Capital Development Authority (CDA) is making all out efforts to upgrade all markets and beautify the federal capital, said CDA chairman Imtiaz Inayat Elahi on Thursday.

According to a press release, he was addressing the inaugural ceremony of a water filtration plant at F-10 Markaz. He said the recent rain spell had improved water level in the reservoirs. He said normal supply of water to all sectors would be restored by the end of April.

Tentative signs of Vietnam real estate recovery as developers seek to tempt back foreign investors

After a bleak past two years during the global economic downturn the Vietnam real estate market needs foreign investment to recover, it is claimed. The industry is hoping that tentative signs of increasing interest will lead to more robust interest from overseas buyers.

‘Since the global financial crisis, many foreigners have left the country and foreign demand has dried up. Although fundamentally there is still demand for property, it is not as strong as it used to be since the foreigners left,’ said ECM Libra analyst Bernard Ching.

Ching believes that the real estate market in Vietnam is v very much a long term investment and is very much dependent on the entry cost.

However, optimists believe that the closure of all gold trading floors in the country by the end of March will lead to a re-channelling of capital flows from gold exchanges to the stock and property markets.

‘Several trillion dong could flow into stocks by the end of March. Investors will then park their money in real estate, analysts claim. They also point out that another positive factor will be in public infrastructure investment such as the Thu Thiem bridge and the East-West highway in Ho Chi Minh City which will improve the accessibility of more districts.

And Setia Bhd, president and chief executive officer of Tan Sri Liew Kee Sin, believes that Vietnam offers good opportunities for developers. ‘Vietnam’s favourable demographics with a population of 87 million people living mainly in the countryside presents opportunities for development. Demand for property, including suburban and modern housing, has picked up quite strongly due to a rapidly expanding urban middle class,’ he explained.

‘Even second home vacation properties are seeing good take-up and this shows the kind of appetite that still prevails in Vietnam,’ he added.

View also believes that Vietnamese investors are beginning to pull out of conservative asset classes like gold. Limited launches by developers during the global crisis has also resulted in a more favourable supply-demand scenario.

Vietnam is also experiencing a sub-urbanisation trend with cities like Ho Chi Minh City getting over populated and the infrastructure unable to accommodate the rapid population growth and associated demands as far as housing is concerned, he added.

‘As their lifestyle changes, the Vietnamese are looking to purchase second homes away from the city. This has caused a higher demand to create better homes and more choices for the Vietnamese,’ said a recent report from international property consultants CB Richard Ellis.

‘The market is still relatively untapped with demand higher than supply. This segment of the new money population that are seeking better quality products such as second homes and luxury homes is growing exponentially as the people’s purchasing power rises,’ it added.

Savills Vietnam, in its latest market update, said demand for housing is expected to remain high in the medium term.

Sea View to be developed as beach park

The Cantonment Board Clifton (CBC) has said that around a one kilometre area of the Sea View beach would be turned into a free-for-public beach park till August 14 this year.

Around 1.5 acre area of the Sea View beach adjacent to the Mc Donald’s restaurant has already been turned into a green patch, making it a prominent portion of an otherwise arid beach.

Under the beach park plan, around a one kilometre area of the beach between Mc Donald’s and the Village restaurant will be developed as a public park.

Like other parks of the Clifton Cantonment, the beach-going public would be given free access to the beach park. However, “Clifton Cantt will not allow commercial exploitation of the park land”, said CBC Garden Superintendent Hasan Anwar Siddiqui while briefing newsmen on Tuesday.

The CBC official said that no contractor or consultant was hired for the development of the cantonment beach park as the Clifton cantonment used its own labour and resources for the development of the park. “Only the seeds used for the grass in the park were imported from abroad”, he said, adding that coconut trees are also being planted for the development of the beach park.

Egyptian developers turn to middle priced projects in the short term, report indicates

The current shortfall in mid-priced residential real estate in Egypt will continue until 2012 and could push prices higher, it is claimed. According to a new report from Markaz, property developers have focused more on the market sector as housing prices and demand for luxury properties fell in the country as a result of the global economic downturn.

Despite this the mid priced real estate sector remains undersupplied but the report predicts that as the economic recovery quickens developers will return to high end projects within the next two years although not to the extent that was seen in the past.

‘After going through the moderate impact of the economic slowdown, Egypt’s real estate sector is expected to provide healthy long-term prospects in all of its sub-segments,’ the report says.

The report studies the economic cycles in Egypt back to 1986 and argues that the average real GDP growth rate has been on the rise from 3 to 4% during the 1990s to 4 to 5% in the past decade. It forecasts that the cycle will last until 2014/15 with an average growth rate of 6%. But the possibility of a double dip in global economic growth trends could create a temporary glitch in this expected growth pattern.

Egypt’s population is expected to grow at its natural growth rate of 2% per annum and income growth is the key driver for real estate demand, it suggests. As more people get better paid jobs then a growth in demand for middle prices real estate is expected.

The report also suggests that take up levels are poised to return to the vibrancy of 2006/08 in 2012 when the average real GDP growth rate is expected to reach 6 to 7% again.

Due to the low mortgage penetration, which stands at 0.4% of nominal GDP, the source of funds to purchase a house has essentially been savings and sale of existing assets. Savings got leveraged by the growth in mortgage financing during the recent boom. However, the growth in lending has slowed down of late and the report expects mortgage financing by banks to recover during 2010/11 aided by an 8% average growth in deposits.

The report shows that in the residential sector sales levels contracted due to the economic slowdown which manifested itself in a fall in reservations and rise in cancellations of property offerings by major developers. But the downtrend turned around during the third quarter of 2009.

Meanwhile separately Blair Hagkull, head of the Middle East office of the property consultancy Jones Lang LaSalle, said that Egypt had been shielded from the worst effects of the financial crisis as it was less exposed to other global markets than other Gulf states.

UK property lending hits ten year low, latest figures show

Property lending in the UK was more than fifth lower in January than a year ago, with loans plunging to a ten year low, the latest figures show. Gross lending fell to £9.1 billion in January, a 32% fall from December levels and 21% lower than in January 2009, according to the Council of Mortgage Lenders.

While the council said it is normal for lending levels to fall between December and January, lending fell back to its lowest level since February 2000.

Separately, the Bank of England said lenders also reported that the severe weather around the year end had depressed mortgage approvals in January.

‘The larger than average drop between December and January this year confirms our view that house purchase activity was boosted in December by a number of borrowers trying to complete their purchase before the end of the year to take advantage of the stamp duty holiday,’ the CML said.

Its figures also show that there was a 56% jump in the number of mortgage advances for properties affected by stamp duty changes back in December, much higher than the 11% rise across the rest of the market.

Paul Samter economist at the CML predicted that the early part of 2010 will see a fall in activity as more deals were done in the last part of the year than is usual and the upcoming general election will also create uncertainty over the Spring months.

‘It will be difficult to gauge the true underlying state of the market for some time and the next few months are unlikely to add much to our reading of developments,’ he said.

But he added that the lacklustre recovery and uncertainty in the sovereign debt markets mean he expects only a gradual recovery in the housing market.

As banks will need to refinance £300 billion of wholesale funding provided under the Bank of England’s Special Liquidity Scheme next year, he believes funding costs will rise and that could keep a lid on lending to households and businesses.

Royal Institution of Chartered Surveyors senior economist Oliver Gilmartin described the figures as disappointing and said they underline the continuing difficulties facing the construction industry.

‘Housing completions in 2009 were the lowest since 1947 in England and the latest quarterly decline in housing starts offers little near term comfort. Furthermore, housing starts are running at more than 50% below what is needed to satisfy projected household growth according to the government’s own estimates,’ he said.

‘An urgent re-assessment of the procurement route for bringing housing to market is critical as market mechanisms have clearly not worked over the last two decades. Annual housing completions have averaged a paltry 148,000 dwellings since 1989, less than 20% of mortgages approved during a typical year,’ he pointed out.

‘With sharp cuts in public spending in the coming years, available public money for housing will have to be used more intelligently and there will need to be additional effort to ensure that private investment is brought into the market,’ Gilmartin added.

Gulf developers urged to negotiate with investors who default on payments

Real estate developers in the Gulf region are going to have to negotiate creatively with investors during 2010 to avoid a rise in defaults, it is claimed. Anecdotally there is evidence that real estate investors have defaulted because they are concerned that the projects they have invested in will never get built.

But instead of chasing them for payments developers should enter into a dialogue and come up with options that will entice them back on track, according to Craig Plumb, head of research for the Middle East and North Africa with consultants Jones Lang LaSalle.

‘Clearly, there will be more investors who have decided not to pay for things that are never going to get delivered and if I was in that boat I would probably default as well,’ he said. ‘What’s happening is that owners and developers are going back to those investors and coming up with different options,’ he added.

Plumb explained that that due to a lack of established regulations and the sheer expense of the legal option, negotiation is often the only course of action. He confirmed that Union Properties, Nakheel and Emaar are all pursuing this route.

‘Developers can offer a unit in a finished building instead of one in a building that will never be built. So if a developer has ten projects and only 10% of them are sold, they can put all of that10% of payments into one project and leave the other nine until demand returns,’ he said.

His colleague, regional managing director Blair Hagkull said that he expected that prices would remain flat during 2010, with a margin of 5% either way. However, he added that outlying areas that don’t have the amenities or proximity to services of locations like Sheikh Zayed Road and Downtown Dubai could see prices drop by between 15 and 20%.

Govt to launch low

CHIEF Minister Mian Shahbaz Sharif on Tuesday said the government had decided to launch low-cost housing schemes in the province to provide shelter to the poor.

He said that in the first phase, five low-cost housing schemes would be started simultaneously in various districts of the province and later the scope of the project would be extended to the whole province.

He was addressing a meeting regarding low-cost housing schemes at the Chief Minister’s Secretariat. The CM said the Punjab government was taking steps under the leadership of Nawaz Sharif for the welfare of the masses and a number of projects were being implemented in this regard. He said low-cost housing scheme was such a step for the low-income people. He said the Punjab Land Development Company was being set up for the implementation of the project which would also be completed in a transparent manner. He said that in the first phase, the project would be started in Lahore, Faisalabad, Sargodha and Jhelum. He said the land for low-cost housing schemes would be identified within three days and the procedure for allotment would also be devised.

Shahbaz directed the officials concerned to evolve an effective publicity plan for public awareness regarding the low-cost housing schemes while the houses constructed under the schemes should be of a high standard. He gave approval to the chairman and board of directors of the Punjab Land Development Company.

Earlier, the Chief Minister was given a briefing on the pace of progress of low-cost housing schemes project. The Planning and Development chairman, Housing and Information secretaries and other officers concerned were present.

‘Malir Town spent Rs1.83bn for uplift work’

The Malir Town Administration has said that during last four years of its term, it spent over Rs 1.83 billion on various development works in the area.

The acting town Nazim said the outgoing town administration had completed project for five million gallons additional water supply for the Malir town areas through the K-III project. Another project of 26 kilometre-long 36-inch diameter water trunk line is also nearing completion.

Development of underground reserve water storage tanks in Malir area having capacity of 0.5 gallons is also near completion. Other important projects completed in Malir town during last four years included conversion of storm water drainage into sewerage line from Malir 15 to Saudabad, development of double-track road from Malir 15 to Saudabad, building of morgue, beginning construction of passport office in Malir town office, development of Shahrah Liaquat Ali Khan Road, building of monuments on important road points, and installation of street lights in the town areas.

Trendy spacious lofts in Hong Kong creating an underground market

Rising rents and surging prices of apartments in Hong Kong are driving a trend towards converting older industrial and commercial buildings into lofts for residential living. Lofts are the latest big thing and are often created without formal approval in old or disused industrial and office buildings, according to real estate agents. But they appeal because they tend to have high ceilings and prices well below market rates.

While a standard $500 square foot apartment in Hong Kong might set you back HK$4 million you could get double that in the unofficial loft market, it is claimed.

One agent said he recently helped an expat buy an 800 square foot commercial turned residential unit for HK$32 million which the buyer intends to uses as his office and home.

‘Rents of homes in Sheung Wan range from HK$20 per square foot to as much as HK$40 per square foot, but tenants in such loft apartments are paying less than HK$15 per square foot,’ he said.

But although these kinds of properties might be seen as bargains by buyers and tenants they end up with a distinctly unfashionable address in a rather run down neighbourhoods and run the risk of breaching government regulations. Long term use, for example, does not necessarily lead to lawful use.

A spokeswoman for the Buildings Department said whether or not such conversions were legal would depend on whether the building was zoned for residential use or whether structural changes had been carried out in which case Buildings Department approval was required.

‘For example, if an owner renovates a bathroom that requires structural change but does so without our approval we will require the owner to restore it because they are illegal structures,’ she explained.

Charles Chan Chiu-kwok, the managing director of Savills Valuation and Professional Services said that the occupation permit issued when a building is completed mentions its usage. If an owner does not follow this designation, the usage will not be lawful.

But the changes to the building only usually come to light if the owner decides to sell. So a converted building could be rented for years for residential use without the authorities knowing about the situation.

But the situation does not seem to bother those seeking to rent larger properties at a time when rents are rising. According to Simon Lo Wing-fai, director of Colliers International Hong Kong research and advisory department, rents have continued to rise in the last two months and he predicts a double digit rise in residential rental this year.

By comparison rentals for commercial or industrial properties turned apartments were much lower, he added.

The Consumer Council said there has been a proliferation of promotional materials for apartments situated in former factory buildings and warned that converting industrial or commercial buildings for residential use requires the approval of the Town Planning Board and buyers could not live in converted units if a developer had not been granted a change of use.

But others point out that from the outside it is difficult to prove that units in these industrial or commercial buildings are used for residential use.

Development work starts in I-11, I-12

Islamabad: Capital Development Authority (CDA) has started earthwork for development of sectors I-11, I-12 to provide accommodation facility to above 15,000 allottees coveting to have their shelter in federal capital.

MPO: “We have started ground work in sectors of I-11 and I-12. Machinery Pool Organisation (MPO) has moved its machines to the site to complete the earthwork prior to hiring of contractor,” said a senior CDA official.

He said the authority could not develop any residential sector for last two decades after opening of Sector F-11, so it was inevitable to complete development work of these two sectors without any delay.

The housing shortage has swelled in the city to above 50,000 units and the people are forced to bear skyrocketing house rents despite having paid the amount for residential plots in different sectors, he said.

The official said the basic purpose of activating MPO was to utilise authority’s own resources as the directorate was almost abandoned due to some procedural flaws and it was the only way to start the stalled work of sectors development.

Evacuation: He said the evacuation of land had been started after signing a package deal with the villagers. He said repatriation of Afghan refugees living there had been started with the cooperation of UNHCR.

“CDA had signed a package deal with residents of Soran (Sector I-11) and Bokra (Sector I-12) villages in May last year, resolving the 40-year old dispute of compensation hindering the development work,” said the official.

He said the hiring of contractor was also in progress, adding that MPO was executing work on the rates defined by the National Highway Authority.

“As we cannot solely develop whole sector so it requires the engagement of a contractor,” said the official.

He said besides giving possession of residential plots to 2,500 allottees, more than 300 commercial plots would also be available for auction to generate revenue for the civic body.