Global property report 2012

Global Property Report
2012
Avondale Investment Management
(UK)
“Inspired Investment Solutions”

A WORD FROM THE AUTHOR
The international property markets since the global financial crisis and continuing Eurozone
crisis have been in a state of variable flux for some time.
So as we head into the later part of 2012 where are the hot spots, potential new emerging
markets, and places to avoid?
The Global Property Report 2012 is the most up to date and definitive property guide to the
world’s property markets on the web and is designed to help both the commercial investor
and private property buyer in their quest to find that unique investment opportunity or dream
property.
The Global Property Guide contains over 42 pages of in depth information covering 21 of the
world’s most important property markets providing investors, the most up-to-date and
thoroughly researched information on the market.
Tony Randall
Global Property Report 2012

Authors note and Copyright
Authors note
Every possible effort has been made to ensure that the information contained in this book is
accurate at the time of going to press, and the author and publishers cannot accept
responsibility for any errors or omissions, however, caused. No responsibility for loss or
damage occasioned to any person acting, or refraining from action, as a result of the
material in this publication can be accepted by the editor, the publisher, or author.
Copyright
The right of Antony Randall to be identified as the author of this work has been asserted by
his accordance with the Copyright, Designs and Patents Act, 1988.
All rights reserved. No part of this publication may be reproduced, transmitted in any form or
by any means, stored in a retrieval system without the prior written permission of either the
author or publisher, or in the case of reprographic reproduction a license issued in
accordance with the terms and licenses issued by AIM Ltd.
Avondale Investment Management Limited 2012

Contents

List of Contents
1. Introduction page 1
Section I Global Property Market Review 2011 page 2
1. Global Property Market Review pages 2 - 6
Section II Global Property Report 2012 page 7
United Kingdom Market
1. UK Market pages 6 – 9
International Property Markets in 2012 page 10
European Property Market Sectors page 10
1. Irish Market pages 10 - 11
2. French Market pages 11 - 13
3. Spanish Market pages 13 – 15
4. Portuguese Market pages 15 – 17
5. Greek Market pages 17 – 18
6. Turkish Market pages 18 - 19
Middle Eastern Markets
1. UAE Market - Dubai and Abu Dhabi pages 19 - 21
2. Bahrain pages 21 - 22
3. Saudi Arabia page 23
North American Markets page 23
1. Canadian Market pages 23– 25
2. USA Market pages 25- 26

Russian Market page 26
1. Russian Market pages 26 - 28
South American Market page 29
1. Brazilian Market pages 29 – 31
2. Argentinian Market page 31
Asian Markets page 31
1. Chinese Market pages 31 – 33
2. Hong Kong Market pages 33 -34
3. Singapore Market pages 34 - 35
4. Thai Market pages 35 – 39
Asia – Pacific Markets page 39
1. Australian Market pages 39 – 42
2. New Zealand Market pages 42-43
Bibliography and Authors Biography page
1. Bibliography page 46
2. Authors Biography page 48

Avondale Investment Management (UK) Copyright Material. www.avondaleinvestment.com Page 1
.
Introduction
Regrettably the international property markets since the global financial crisis are still in a
state of flux and although, the traditional property markets such Europe, North America, and
the United Kingdom are at best stagnant and at worse still in recession.
The good news is that the new and emerging markets are showing robust growth and much
potential. Hot spots and prospective emerging markets such as South America and in
particular Brazil and Argentina and the Asia- Pacific region which encompasses Australasia
and New Zealand, China (the world second largest economy), India (one of the BRIC
member nations), and the ASEAN (Association of South East Asian Nations), member
countries such as Thailand, Singapore, Indonesia, and Malaysia.
These new and emerging markets are certainly compared to their traditional and illustrative
neighbours offering good potential investment opportunities for the shrewd commercial real
estate investor who is prepared to do their research and take that educated risk and invest in
the new world markets .
As we head into the latter part of 2012 this report which is in two sections, firstly reviews the
most important global property markets of 2011 and secondly takes a more in depth look at
the key traditional, and new and emerging property markets of 2012 .

Section I
Global Property Market Review 2011
The worlds housing markets had a weak fourth quarter of 2011 according to the latest
survey of worldwide house price indices prepared by the World Property Guide. During the
year-end to Q4, house prices fell in 25 countries (out of 44) and rose in only 19.
The Middle East with its strong and established tourism structure with popular destinations
such as Egypt, Dubai, UAE, Tunisia, and Morocco for example have all seen dramatic falls
in tourist figures.
Regrettably, a year on from the Arab spring, there is no sign of the current political crisis
abating due to the continuing social and political unrest throughout the region. With
continuing civil un-rest in country’s such as Syria. It is difficult to see confidence returning to
the property market and perhaps more importantly foreign investment return to the property
market’s within the region in the near future.
Property prices in Dubai through 2011 fell by a median average of 15% and there is no
likelihood of an increase in sales growth or prices for this year. In Abu Dhabi, it was a similar
storey with property prices falling by a median of 14% last year.
Closer to home the picture in terms of the property markets in Europe, look in terms of
investment opportunities in the established second home residential markets and
development sector appear to be just as gloomy to say the least for the near future.
The Spanish property market contracted by 19.8% in 2011 after the feeble recovery of 2010
ran out of steam. 2011 was the worst year on record since Spain’s property boom turned to
bust, as illustrated by the chart above.
There were just 313,637 homes sales in 2011 (excluding social housing), down 19.8% on
2010 and 56pc more than half on 2007.
In value terms, the market has shrivelled up to 30% less than what it was in the go-go years.
If anything, the trend got worse towards the end of the year, with December 2011 down 26pc
compared to the year before, considerably worse than the -17 YOY in November 2011.
The market is not much better in Portugal another established second holiday home market
where a weak economy and lack of lending is continuing to depress the residential property
market with a median price drop of 17%.

Residential property prices in Greece continue to fall, with the Greek economy enduring one
of its worst crises in its history. The average price for new apartments fell by 4.5% and for
old apartments by 5.5% respectively by the year-end of 2011. Average house prices across
the country fell by a median average of 6.75%.
(Opposite left French residential property prices
bucking the general trend across Europe and
showing steady price increase especially in
regional international tourist areas outside
Paris)
The good news in Europe is the steady rise of
residential property prices in France,
particularly in popular locations, which are
continuing to rise steadily, the latest report from
the FNAIM shows.
By the end of the third quarter of 2011 prices rose by an average of 3.3% yoy within the
metropolitan area of Paris and 4.3% for properties outside of the country’s capital.
The domestic market in the UK where the property market is depressed and is at best
stagnant, admittedly apart from the established hot spot of London and there only the high
end residential market is showing signs of improvement due mainly to external investment
from Asian customers.
The future signs are not good, with the UK economy slowly dragged into a wholesale
recession by external economic factors such as the Eurozone crisis. Closer to home with
personal income is becoming ever more squeezed by internal economic factors such as
inflation, increased year on year prices in the consumer sector, stagnant wage growth,
higher taxation, increased unemployment, historically low interest rates and lack of lending
from the UK’s financial institutions.
Perhaps remarkably against this dismal economic backdrop UK house prices remained
relatively unchanged in 2011 Nationwide Building Society spokesperson (House price
indices table below Nationwide indices in blue) said that the average home rose in value by
1% in 2011, but fell by 0.2% in December compared with the previous month.

However, the economic climate was likely to lead to a similar situation for the housing
market in 2012 and more than likely carry into at least the 2nd
quarter of 2013, it said.
There were geographical differences. Prices in Northern Ireland fell sharply in 2011 but rose
in London.
"The 1% rise in house prices recorded over the past 12 months could hardly be described as
a strong performance, but against a backdrop of anaemic economic growth and a
deteriorating labour market, UK house prices were surprisingly resilient in 2011," said
Nationwide's chief economist Robert Gardner.
However , a word of caution must be added to the UK property market property analysis’s
predict that property growth and prices will not reach the pre global financial levels of 2008
until 2018 at the earliest, yes a decade after the global financial fallout.
In Ireland since the economic bubble burst both commercial and residential property prices
since their peak at year-end 2007 have dropped by an average 58% across the country.
Property price by the end of 2011 stood at median of 11.9% and prices are expected to
continue to drop in Ireland with best and worst case scenarios of between 2.5 to 22%
dependent on the continuing Eurozone crisis.
The American property market particularly popular with British nationals many thousands of
who have holiday and retirement homes in the sunshine state of Florida. Is regrettably still
bumping along the bottom with only small increases in regional pending sales across the
country and with no real growth predicted until unemployment is effectively tackled and
capital released by the countries financial institutions. Residential property prices throughout
the USA dropped a median 4.9% across the country.
An example of the depressed regional state of the property market in the USA can be
witnessed in the contraction of property prices across the state of Florida. (See table below):
Building Type No of bedrooms Price Location Median Capital
Appreciation 2011 +/-
2 bedroom house-
good location near
beach with no
parking space
2 bedroom and 2
bathroom, etc.
$159,800 Miami -19% p.a.
Condo unit -good
location near beach
or with sea view-with
restricted parking
space
1/2 bedroom low
end of market
$97,400 Miami -30% p.a.
At the year-end of 2011 on average prices dropped in the Miami area by 30% for a 1/2
bedroom condominium unit close to the sea and house prices dropped by an average 19/%
for a similarly located two bedroom house.
One shining light in terms of a success story is the burgeoning growth and investment
opportunities which can be found in the property markets in South America and in particular
Brazil

In 2011, asking prices on average for new residential apartments throughout the country
rose a median 24.3 % throughout the year. House prices also continued to grow albeit at a
slower pace of just 5.6%
However, a word of caution must be added, the property market in Brazil is still relatively in
its infancy and is yet to fully develop and become established. With inherent problems in the
country’s infrastructure ( not uncommon in South American countries) which need to be
tackled such as poor logistics in terms of just in time delivery at port side and a lack of
investment in the countries domestic transportation system. Brazil has still a long way to go
to be a safe investment bet.
Witness for example the chronic under funding in Brazil’s domestic airlines and regional
airport’s at first hand and you will understand the need for a complete new funding and
planning strategy for transportation in this fast developing country. These are just a couple of
examples of important crucial infrastructure issues that the country must address sooner
rather than later and that the external investor must consider when venturing into the
property market in Brazil and further afield.
Down under residential property markets in Australia generally struggled for growth in 2011
with reduced buyer activity and decreased median house prices recorded in all capital cities.
Data from Australian Property Monitors shows that in the latter part of the year an expected
spring revival in buyer activity failed to happen. National median house prices fell by 1.6%
over the third quarter and were down by 4.2% over the year.
(Opposite left a glut of residential property for
sale in India could lead to a huge drop in
residential property prices analysts predict)
According to the latest BOI (Bank of India)
report, the sub-continent of India has seen
steady increases in both the residential and
commercial property prices across the
country by the end of the 4th
quarter 2011.
Taking into consideration, regional variation
residential property prices have risen on average 3% to 9% and commercial property prices
have seen increase in the region of between 4% and 9.5%.
However, slow sales and a glut of properties across the country are set to hamper the
residential real estate market especially in the metropolitan areas such as Delhi and Mumbai
for example and prices could fall as much 30% according to analysts at Bonanza Properties.
The glut is likely to extend into 2013 as steady streams of new developments are launched
on the market; Developers who bought land at high prices now have to bring prices down.
The world’s second largest economy China saw home prices in China fall for the fifth
consecutive month in January as real estate and lending tightening measures continued to
take effect.
Prices have fallen on average 0.18% from December to RMB 8,793 per square metre in the
major cities across the country. In September, prices dropped for the first time in a year and
then from October to the end of 2011, prices fell by between 0.03% and 0.28%.

The data comes after Chinese Premier Wen Jiabao reiterated the government's tough
stance on the real estate market. He said that the government must continue with
macroeconomic controls, consolidate its property tightening campaign, and bring about a
reasonable correction in housing prices.
The Russian property market last year saw record investment volumes into Russian
commercial real estate with growth of over 200% above the level reached in 2010, according
to the latest research by CBRE.
There were 43 investment deals last year compared to 27 investment deals in 2010 and 50
deals closed in the record 2008. Investment rose to €4.55 billion and the average deal size
was approximately €105.6 million. This compares with an average deal size of €71 million.
The research report says that the stabilisation of the Russian economy in 2011 saw a level
of confidence return to the real estate investment market. Domestic investors continued to
dominate at 59% but the share of foreign investors rose significantly from that in 2003 to
2011 and this was much more balanced than in recent years, when 70 to 80% of
investments were accounted for by Russian money.
In pre-crisis years, the balance was usually 70 to 80% foreign money. Residential property
prices increased on average 9% across the country. Analysts predict strong growth in all
sectors of the property market for this year.
~

Section II
1. United Kingdom Market
Residential Market
House sales per surveyor across the UK are
almost 40% lower than five years ago at the
peak of the boom, according to the latest UK
Housing Market survey from the Royal
Institution of Chartered Surveyors.
During May, the average number of
completed sales per surveyor was 15.6. This
represents almost a 40% drop from May
2007’s figure of 25.4 and goes some way to
illustrating the extent to which market activity has fallen in recent years.
With transactions down and affordable mortgage finance now harder to come by, homes are
taking considerably longer to sell. Indeed, during the three months to May, surveyors sold
23.1% of the homes on their books, a significant fall from the same period in 2007 when it
was 40.9%.
Looking ahead, chartered surveyors expect transaction levels to see a slight upturn over the
coming three months, with a net balance +9% more respondents predicting rises, while
expectations for future prices remain squarely in negative territory.
Prices continued to fall last month as 16% more respondents reported falls rather than rises
in prices. This reading has now been in negative territory since June 2010.
Across the UK, the results in most parts of the country were consistent with prices edging
downwards last month. The capital once again outperformed the rest of the country as the
only area to record more surveyors reporting increasing rather than decreasing prices.
Perhaps unsurprisingly, the amount of homes coming onto the market and the level of new
buyer interest were both similar to April, as respondents reported flat net balances of -3%
and -1% respectively.
‘It is no surprise to see such a sizable drop in transactions since the market peak back in
2007. On-going economic instability in the UK and overseas has continued to undermine
consumer confidence, and the reluctance of many banks to offer affordable mortgage
products has created something of a stagnant market,’ said Peter Bolton King, RICS housing
spokesperson.
‘In spite of this, a gradual stability is returning to the market and surveyors expect transaction
levels to increase over the coming months, even if prices continue to dip across most parts
of the country,’ he added.

Residential property prices increased in May by 0.5% compared with the previous month,
taking the average house price in England and Wales to £161,677, according to the latest
Land Registry figures published.
On an annual basis, property prices have now increased by just 0.4% across England and
Wales .London experienced the highest increase in its average property value over the last
12 months with a movement of 7.7%.
London also experienced the greatest monthly rise with an increase of 2.6% while Yorkshire
and the Humber experienced the greatest annual price fall with a decrease of 3.9%. Apart
from London, the only other region to see prices increase was the East of England, up 1.6%
on an annual basis.
On a monthly basis, London saw prices increased of 2.6% followed closely by the West
Midlands at 2%. The North East saw the most significant monthly price fall with a decrease
of 1.9%. Only two other regions saw monthly price falls, Wales down 1.8% and the North
West down 1.5%.
The most up to date figures available show that during March 2012, the number of
completed house sales in England and Wales increased by 25% to 58,609 compared with
46,742 in March 2011.
The number of properties sold in England and Wales for over £1 million in March 2012
decreased by 41% to 501 from 845 in March 2011.
The South East of England topped the table of regional applications with 267,587 in May
and overall there were over 54,000 properties lodged for registration ranging from £10,000 to
£28 million.
Land Registry's House Price Index (HPI) is the most accurate independent house price
index available. Using data on completed sales, it is the only index based on repeat sales. It
includes figures at national, regional, county and London borough level.
One industry commentator said that a stagnant market is a clear sign of actual inactivity.
Ashley Alexander, managing director of estate agent review website MeetMyAgent.co.uk,
said that major sporting occasions this summer would mean fewer people spending time out
house hunting.
"There are simply too many factors preventing a purchase. A lack of stock generally,
intransigent sellers, tougher lending criteria and consumer caution are keeping transaction
levels low," he added.
"Even the prospect of low interest rates for another year or two, or even three, is not enough
to convince people to buy."
“The continued uncertainty in the economy and an "intensification" in the Eurozone crisis
meant that lenders would continue to be cautious in offering mortgages. This would continue
to put the brakes on any housing market activity or price rise.”
As we move towards the beginning of Q3 2012, the other big obstacles preventing the UK
residential property market from real growth are:

1. Austerity measures - Such as the continuing interest only mortgage crackdown by
lenders. Lenders have made it much tougher to take out cheap interest-only loans,
which have helped prop up the property market. This is policy creates a reduction in
credit and will exert downward pressure on prices. Government cuts are also starting
to filter through, as the UK tries to balance the books. That will mean public sector
job losses, higher taxes and a dip in confidence.
2. The Eurozone crisis - The second problem is that lenders are still cash-strapped and
the Eurozone debt crisis is weighing heavily on the banking sector - it may have
contributed to a dramatic fall in swap rate money market costs and the fixed rate
mortgages that these heavily influence, but if things get worse banks will find their
balance sheets hammered.
3. The cost of moving is also sky-high - Those buying family homes in areas where a
relatively modest property of its kind costs more than £250,000. Face a stamp duty
bill of at least £7,500; add estate agent and solicitors' fees and moving can set a
normal family back £15,000 or more, without even having to find the extra cash for a
25% deposit on a more expensive home.
Commercial Market
After a robust finish to 2011, UK commercial property saw deterioration in performance at
the start of 2012, with values falling by 0.3% and total returns of just 0.4% in April , according
to the latest monthly report from CBRE.
It says this is the culmination of a gradual decline in market sentiment over the past six to
nine months, and despite a surge in investment activity in December, a buyer’s market is
prevalent.
Last year saw £33.4 billion worth of property exchanged, with around 35% bought by foreign
capital but all three sectors, offices, retail and industrial, saw values fall by 0.2% with
industrial and offices delivering better returns of 0.3% thanks to a larger income component.
Whilst most sub-sectors saw a negative step
in performance in March, the once resolute
central London office market saw its first
decline in values after two and half years of
positive growth.
(Opposite left, Canary Wharf and one of
London’s key Commercial property markets)
‘This has caused a softening in overall office
performance this month, as the counter
buoyancy effect of a strong central London office market has stalled,’ says the report.
Both outer London/M25 offices and rest of UK offices saw values fall by 0.4%. The latter
markets have not experienced much of an upturn in values since June 2009, with outer
London M25 up just 2.6% whilst rest of UK values have fallen by 0.9% over this time. If it

were not for central London, which has seen a recovery of 47.2% in values over this time,
the overall office market would easily be the worst performing sector.
Like the wider market, all retail suffered a general weakening in performance over the first
quarter of 2012, seeing total median returns of 0.2%, down from 0.4% at the end of last year,
as values fell 0.2%. This deterioration came amidst the continuing cooling in investor
sentiment, especially evident in shopping centre performance throughout Q1.
In summary there is nothing to suggest that the UK property market will be anything different
than what it was like in 2011 with low to stagnated growth in all sectors accept for perhaps
slight growth in the rental sectors.
International Property Markets in 2012
European Property Market Sector
1. Irish Market
The residential rental market in Ireland has remained notably stable for the last twelve
months. Indeed, rents have stabilised as far back as December 2009, with little change since
that date.
This quarter under review mirrors this trend. As previous quarterly reports have shown,
national rent indices still appear to mask a rural/urban split within the Irish rental market, with
rural prices continuing to fall, albeit at a slow pace, and these falls are offset by increasing
rents in urban areas.
Similarly, the stock of available properties available for rent continues to fall. In March, the
total number of rental properties stood at 16,023 (v 16,932 March 2011); a 5.7% decline on
the previous year's levels.
House prices in Ireland could drop by 55% from peak to trough, according to stress tests
being used by the Irish Central Bank (at the beginning of 2012) to assess the true extent of
bad debt in the country's financial institutions.
The outlook seems bleak, with house prices destined to fall by 55% between the peak of
2006 and the trough of 2013.
(Opposite left, houses in Ireland have fallen in
price, but can they go any lower?).
The figures will be of little comfort to those
homeowners who paid high prices during the
boom that saw modest three-bedroom houses
in Dublin selling at £1m.

The tests for commercial property also look bad for those trying to fill empty office space
around Dublin and beyond. In the best case, the central bank is forecasting a 2.7% drop
throughout the year, but a massive 25% drop if the economy deteriorates further. The tests
are being conducted by Blackrock Solutions and are designed to reveal the full potential
losses at four Irish banks: Allied Irish, Bank of Ireland, Irish Life & Permanent, and the EBS
Building Society.
"Given what is going on in the world, with Japan and Bahrain, there could be a slowdown in
global growth and Ireland is an open economy and hugely dependent on the international
markets for exports. There is no growth at all on the domestic side and exports would be hit
by a global deterioration," said Alan McQuaid, chief economist at Bloxham Stockbrokers.
Speculation has been rife that the test results will reveal a further black hole in Irish banks
and lead to calls for a second bailout when they are published on 30th
of April 2012. Some
€35bn (£30bn) has already been earmarked under the IMF-EU assistance programme, but
some leading banking figures predict another €15bn will be needed.
Blackrock looked at 15 key economic indicators including GDP growth, unemployment,
investment, consumption, and inflation.
The best outlook is that GDP will grow 0.9% by the end of this year, but the worst case
scenario is that it will shrink by 1.9% this year before moving back into a positive figure of
0.4% in 2013.
Currently median house prices have dropped by a further 5.6% by the end of April of this
year.
In an effort to help stimulate the Irish residential property, market the Bank of Ireland and
Permanent TSB confirmed earlier this year (April 2012) that they will make available, albeit
in limited circumstances, special mortgages that will enable borrowers to effectively carry
over negative equity from their existing home and add it onto a new home loan.
This will come as great news to both distressed investors and to Irish families who need to
trade-up but could not find a solution to date.
2. French Market
(How will the UK’s closest neighbours fair in
respect to the French property market for the
remainder of 2012?).
As we enter the second half of 2012, the
residential property market in Paris is expected to
be flat during the rest of 2012 after a mad rush at
the beginning of the year due to new capital gains
tax rules.

January was an extremely busy month for the market as sellers rushed to beat the new
legislation and buyers snapped up good deals but since then the property market in Paris
has slowed down considerably, according to a new report.
Stock levels have fallen and a two tier market is emerging once again, as prime property
sells but everything else is sticking on the market, says the report from property company
Lonres.
With the deadline, for the changes to Capital Gains Tax (CGT) legislation on 1st February
2012 looming, there was a real sense of urgency for vendors to sell in January. This resulted
in a higher than average volume of instructions being recorded for the time of year. Buyers
took advantage of the increase in stock levels, combined with low mortgage and interest
rates, by putting in reduced offers. This resulted in a slight decrease in prices of 3%.
Since the passing of the CGT legislation deadline, activity levels in the Parisian market have
quietened down dramatically. Stock levels have fallen considerably and the market has
returned to how it was prior to the changes.
Buyers can still find quality prime stock in the right locations but non-prime stock is proving
harder to sell and is once again tending to stick on the market. ‘This is resulting in a distinct
two tier market re-emerging. Buyers are still dictating the market and once a property is at
the right price it does sell,’ said director of the firm’s French operation, Laurent Lakatos.
The recent Presidential elections meant that the property market in France, including Paris,
slowed down as people sat tight, and waited, to see what happens. ‘We expect that the
residential market in Paris will be fairly flat for the rest of the year and we may even see falls
in the region of 1% to 5%,’ explained Lakatos.
He explained that central Paris has a very different demand base to that of central London.
Wealthy French nationals drive the majority of the prime Parisian market. Presently, many
are investing in property in Paris as a means to exit the stock market and to place cash
during the Eurozone Crisis.
International buyers are far less prevalent in Paris. The number of multi-national companies
with offices in Paris has fallen in recent years and as a result so too have the number of
expats.
‘Investing in residential property in Paris is also unattractive to international investors as
there is so much red tape involved, no tax loopholes to exploit and tenants are legally very
well protected.
A few trophy properties are purchased by very wealthy overseas buyers, typically Russian or
Chinese, but are either used as second homes or left empty for capital growth purposes,’
said Lakatos.
‘The Paris market is also not influenced in any significant way by bonus pay outs. Although
some firms do pay bonuses they are generally of a much smaller magnitude and less
widespread than London employees and therefore their impact is far less reaching,’ he
pointed out

For the British (and any other overseas buyer who currently has a strong home currency),
whose love affair with French property sees no sign of waning there is good news for
prospective buyers in France. With the euro plummeting to new lows against the pound,
property prices have fallen in French areas popular with British buyers
Just four years ago, the plunging pound forced thousands of British to abandon their dream
of a new life in France. However, with the euro falling to new lows against the pound, and
the French property market showing signs of recession, the tide is turning.
The association of estate agents, FNAIM, predicts a fall of 5% on average over the year, and
the French notary association sees a drop of between 5%-10%, while Crédit Agricole, one of
France's largest banks, puts the falls at 5%-6%.
They are quick to emphasise the situation is nowhere near that of the bursting of the
property bubble in 2008-2009 and cautiously talk of an "adjustment" rather than "a crash".
Like London, property in Paris is considered some of the most overvalued in the country with
an increase over the last decade of a whopping 184%.
Outside Paris, prices have also fallen in areas popular with British buyers – 4.6% on average
in Brittany, 6% in Lower Normandy, 9.7% in Burgundy and between 3%-4% in the Dordogne.
According to the property website seloger.com, Albi in the south-west Tarn region takes the
prize for France's biggest price drop – a massive 18%.
The trend is likely to be relatively long term. According to the Bank of France, the number of
mortgages issued dropped a dramatic 41% between January and February this year, the
lowest for nearly three years, as financial institutions tightened lending criteria and insisted
on higher deposits.
Simon Malster of Investors in Property says buying in the French Alps is a different story. "It
is a special market and not as volatile. Values are also holding up in ski resorts in Austria
and Switzerland."
Negotiation is the key in France. Sellers are having to accept some hard bargaining – which
could mean that dream cottage in Carcassonne is closer to becoming reality.
3. Spanish Market
The Spanish property market continues to suffer acutely according to the latest reports.
Some 700,000 homes are currently languishing on the market unable to find a buyer, and a
further 300,000 part-completed properties are in the same boat. Most of these are in the
popular holiday areas.
As well as the dire state of the market (oversupply, overvalued, non-completed
developments, prices falling and illegal properties), the weak pound/euro exchange rate is
also being blamed.
Along, with other domestic economic factors such as the high public debt which is forecast to
rise to 90% of GDP by the end of the year, and the high unemployment rate which currently
stands at 24.4 % of the Spanish workforce (June 2012) .

Such dire economic factors have even led to a well-known domestic desperate developer,
offering a guaranteed rate of 1.30 Euros to the pound in order to entice buyers to take the
plunge in their Catalunya golf resort.
(Opposite left, an unfinished residential
building on a mountain in Estepona, near
Malaga, southern Spain. Many residential
building projects in the country have come
to a standstill due to the financial crisis.).
Another major problem for the market is the
baron mortgage market, arguably especially
for foreigners.
Spain stands out with a housing market and
a lending record that is far worse than
France, Portugal, or Italy. If you must buy, somehow try to re-mortgage money from your
own home back in Britain,” says Melanie Bien of mortgage broker Private Finance
The official view from The Bank of Spain (Banco de España) is slightly more positive, the
bank states that it does not expect to see the Spanish economy improve this year. The flip
side to this prediction is that the weak nature of the economy may push property prices
lower, which will help attract more homebuyers, according to Spanish property website
TheSpanishBrick.com.
The Bank’s official 2012 forecast predicts that the Spanish economy will shrink by 1.5%
during the year and the unemployment rate will rise to 23.4% which is already been
corrected to nearer 26% by year end.
Furthermore, the International Monetary Fund projects that Spain will still be in recession for
two more years because the negative G.D.P. will be 1.7% in 2012 and 0.3% in 2013.
The dire economy forecast is further evidence that Spain’s property market, which is
suffering from a lack of activity and an oversupply of homes, is unlikely to recover anytime
soon.
Therefore, as we moved into the second quarter of 2012 the market sector predictably has
shown further signs of contraction and over supply. In the first three months of the year,
Spanish house prices fell a further 12.6% year on year, the end of their sharpest decline
since current records began.
The figures from the national statistics institute, INE, marks the biggest fall since it began
collecting data in 2007, easily beating the previous trough of 7.7% in the second quarter of
2009. It comes during a deepening a property market slump and is more bad news for the
country's battered economy.
Spanish banks were left high and dry after a housing boom collapsed four years ago,
saddled with billions of euros in bad debts related to the property sector, while sky high
unemployment has driven a sharp climb in unpaid loan rates. With the banks struggling to
stay afloat, loans for anyone wishing to buy a new home are declining rapidly, with mortgage
lending suffering its largest fall in over six years in April.

In a report earlier this month (June), the International Monetary Fund (IMF) said Spanish
house prices could drop by almost 20% by the end of this year under an adverse scenario.
The INE data shows how prices are faring in different regions.
Andalucía saw price falls of just 9.8% whereas the Balearic Islands were down 14.9%, as
were prices in Aragon and Catalonia. The latest house price index published by Tinsa, a
leading appraisal company, showed a decline of 11% in May compared to the same time last
year, with house prices on the Mediterranean coast, where most holiday homes are located,
and from the peak of the market to present are down 14%, with the Balearic and Canary
islands down 24%
All these figures are too rosy, according to Mark Stucklin, of Spanish Property Insight. It
seems the measures recently introduced by the government to bring down house prices are
having some effect.
” Or maybe we are just reaching the point where official figures can no longer keep up the
pretence that house prices haven’t fallen as much as they have,” he said.
He believes that in reality the prices at which properties actually sell are down by between
30 and 50%. Rosy official figures are no laughing matter. They cause people to wait for price
falls that have already happened, which just drives the price down further, and drives away
foreign investors, he explained.
The problem is that all the most influential organisations take official figures at face value.
One of the best things the Spanish government could do right now is produce some accurate
and reliable house price data, and fast, he added.
4. Portuguese Market
With the on-going saga of lifeline bailouts to Eurozone nations, property buyers will be
forgiven for channelling their buy-abroad aspirations elsewhere.
Although the full impact of austerity measures (bolstered by a £70 billion EU-IMF bailout
package) has yet to hit home, signs of life in this default-wary country have been present
since the second quarter of this year. A flat-lining economy has been seen as a milestone in
the journey of gradual value recovery.
Residential property prices and sales are continuing to fall, according to the March 2012
index from the Royal Institution of Chartered Surveyors and Confidencial Imobiliário
published today (Wednesday 25 April).
The results highlight the continued, broad based weakness of the sales markets in terms of
prices, activity, and expectations in contrast to the partial strength of the lettings sector.
In the sales market, although the national price balance improved slightly from -64 to -56,
indicating 56% more respondents experienced price falls rather than rises, it remains very
negative.
Meanwhile, the national confidence index, which is a composite index, based on price and
sales expectations, improved slightly from -53 to -48, a five point rise, but it also remains
negative.

The report says that house price declines continue to be driven by falling demand. Rising
supply is not presently an issue, with new vendor instructions falling since December 2010.
In recent months however, there has been a trend towards stabilisation, increasing the risk
that supply may be an additional factor weighing on the market going forward.
The lettings market, meanwhile, continues to benefit from the fallout in the sales market, as
households who cannot access mortgage finance are renting instead. Indeed, tenant
demand continues to rise and lettings expectations remain robust.
However, rents are falling and rental expectations are negative. This could reflect an excess
of rental stock in the market, but affordability constraints may also be an issue given the
macro environment. Moreover, there is also some anecdotal evidence from agents of a
mismatch between the type of stock offered to let and that in demand.
‘Almost all comments from agents mention the critical impact that financial institutions are
having on the market at present. Not only are credit restrictions limiting transaction volumes;
banks are also aggressively trying to run down their distressed property inventory, which is
being cited as an additional source of downward pressure on residential prices,’ said CI
spokesman, Ricardo Guimaraes.
Nevertheless, Josh Miller, RICS senior economist, pointed out that rents are also declining.
‘Although sales volumes continue to fall, activity in the lettings market is rising as households
who cannot access mortgage finance look to rent instead.
However, rents are also declining in spite of the shift in tenure preference away from owner
occupation which may be indicative of the current stresses on the household sector reflected
in a 15% unemployment rate,’ he explained.
(Opposite left, residential properties in
upmarket international tourist areas such
as Vale de Lobo are at best likely to retain
their value or at their worst drop in value by
up to 5%).
At present, residential real estate in the
country's pricier southernmost stretches
and the Lisbon area is averaging £1,250 to £2,000 per sqm, central and northerly regions
around £800 per sqm. “Prices are down from their 2007 peak but are far from out,” adds
Stephen Anderson of Vilamoura-based consultancy Infinito Real “Because the Algarve took
the pain of the global downturn early on; the market has had more time to adjust as
motivated vendors push for fair deal prices, although the potential for corrections in more
oversupplied areas remains.”

As to the best properties to target: “Those in prime positions: beach access and frontline
golf, remain the most sought after as many purchasers consider that they will sustain their
value over the long time,” says De Meillac. “.
"The western Algarve, around Lagos and Praia da Luz, also has strong international appeal,
with buyers from the Continent and Russia now investing. Prices in this region were more
heavily reduced in 2009/10, and are now falling at a slower rate, as the market shows signs
of stability.”
Developers seem more optimistic in their outlook for the sales market, with developers
recording broadly stagnant sales expectations in the third quarter of 2012 as opposed to
falling sales expectations for agents.
6. Greek Market
The Greek economy remains in a precarious state. The impact of fiscal consolidation and
internal devaluation are clear to see, with unemployment in the double digits and the real
estate sector, along with most sectors of the economy, seeing severe contractions.
Prices in the residential property market are expected to at least fall by 15%, this year, while
the decline could prove even greater if the country’s financial situation worsens.
Based on the level of transactions carried out in the market in 2011 (defined as one of the
worst years for the sector) the prices of old and new properties suffered a decrease on
average of about 20% to 35%, market experts say.
(Opposite left Greek real estate prices are
set to continue to decline throughout 2012)
According to Lefteris Potamianos, owner of
the Search and Find agency, as well as
treasurer of the Attica and Athens real estate
agents association, the price drop concerns
transactions carried out through real estate
agents and buyers’ negotiations.
“While the asking prices were about 10 to
15% lower compared to previous years, the end prices were often lowered by another 10%
following negotiation,” noted Potamianos. Nevertheless, according to the real estate agency
owner, the most important decline recorded in relation to older properties, were in a number
of cases the financial needs of those selling was the driving force behind the transaction.
On the opposite end of the market spectrum, transactions regarding newly built properties
developed by construction firms were minimal last year, even though most construction
companies, especially in the fourth quarter, showed some conciliatory signs by lowering their
initial demands. Towards the end of the first quarter of 2012, transactions for new built
properties have shown a decrease on sale year on year end Match to 2012 of 2.1%.

Overall, however, it is estimated that total transactions across the country decreased by 50%
compared to the previous year, because of buyer hesitation, lower spending power, and
banks refusing to administer mortgage loans -- the latter in stark contrast to practices
observed in previous years.
The above factors are not expected to show any signs of changing this year, given that the
coming weeks are expected to be crucial in terms of the country’s economic fate. In the case
of a positive outcome, there could be a stabilization of prices starting in the second half of
2012, although even this scenario seems more like dreaming than a realistic prospect. In
any case, prices are expected to drop in the first half, reaching 10% to 15 % less compared
to 2011.
Currently, at the end of the beginning of the second quarter (April 30th
), median house prices
dropped by 12.1%.
As a result, prospective buyers will have the opportunity to buy residential properties at
considerably lower prices compared to 2008.
However, as market professionals such as CBRE Atria managing director Yiannis Perrotis
point out, the taxation initiatives undertaken by the country’s Finance Ministry have dealt a
heavy blow to the real estate market.
“It is inconceivable that in this particularly negative climate, both in terms of the economy
and the real estate sector, there is talk of increasing the property values used for tax
purposes,” he said.
7. Turkish Market
(Opposite left, the Turkish residential property
market is currently bucking the trend of
stagnation, and decreased value of sales of
property in its residential and holiday villa
market in 2012 will the trend continue?)
National sales prices for existing residential
property in Turkey increased by 0.95% in
April, according to the latest data from the
Reidin Gyoder the Turkish home price index.
Regionally they increased 1.06% in Adana, 0.75% in Ankara, 0.49% in Antalya, 1.18% in
Istanbul, 0.85% in Izmir and 0.33% in Kocaeli.
New home prices increased by 1.28% compared with the previous month and 11.62% higher
than they were year on year in April 2011. Trademarked projects on the European side of
Istanbul increased by 1.38% and on the Asian side of the city they were up by a smaller
margin of just 0.69%.
The increase is mainly down to increased sales in the holiday villa market with strong sales
being recorded from both the expanding Russian and Scandinavian overseas holiday home
markets and strong sales being recorded from the more traditional overseas second home
markets of Britain and Germany.

In terms of the property size, properties between 51 and 75 square metres increased in
value by 1.03%, those between 76 and 100 square metres increased by a slightly higher
margin of 1.32%.
Properties of between 101 and 125 square metres increased by just 1% and those between
126 and 151 square metres increased by 1.21% property sizes with floor plans above 151
square metres increased by 1.14% compared with the previous month of March.
The rental market for both holiday lets and second homes are showing strong signs of
recovery as we move into the second half of the year. With rental, yields in excess of 8% for
smaller apartments possible and the best places to invest are on the European side of
Istanbul.
There are also some promising up and coming areas close to the city's university campuses.
Many of these areas are seeing significant property development and further improvements
in infrastructure close to the city centre.
The best bargains can be found in the outlying districts of the city, overseas buyers with
healthy budgets which can stretch far enough, should consider the city centre which still
offers excellent rental yields even with high prices taken into account.
Buyers looking for holiday properties should consider resorts such as Antalya and Fethiye
and for an outside bet Kalkan which provide the best prospects along Turkey's popular
coastlines.
Yields of up to 8% are possible in these locations with average yields around 6% which is
higher than most overseas buyers can expect in holiday locations elsewhere in Europe.
Modern seafront homes in Kalkan for example can generate up to £3,000 a week in the peak
season of June to September.
Middle Eastern Markets
1. UAE Market - Dubai and Abu Dhabi
(Opposite left, Dubai where it is expected that
house prices will continue to fluctuate
throughout this year 2012.).
Sections of Dubai's battered property market
has shown some nervous signs of recovery at
the beginning of this year but the release of
new supply coupled with wider global
economic woes has still seen an overall
decline in prices, an Arabian Business poll
found.

Well-established communities in Dubai such as Emirates Living and Downtown Burj are
expected to see house prices rise by 3 to 6% by year end, a survey of real estate analysts
found. Currently the median property price increase for the end of the first quarter of 2012
has shown a modest increase of just 1.7%
However, property prices in less desirable locations such as International City and Dubai
land could decline 4- 12% leading to a marked two-tier property market in the Emirate, the
poll found .Currently property prices in these location to the end of the first quarter of 2012
have shown a median decrease of 4.1%.
“Prime developments or locations have in the last year enjoyed some moderate price and
rental appreciations and we expect this trend to continue through 2012,” one analyst said.
“For the secondary developments we expect prices and rental rates to soften further as more
supply comes onto the market into the second half of the year.”
The office property sector in Dubai remains highly competitive due to the high levels of
supply in the Emirate, touching on 60 million square foot, with an additional 10 million
anticipated by the end of the 2012, according to the latest analysis report from Cluttons.
The effect of such high supply is that vacancy rates have remained high at approximately
40% across the city. However, instead of on-going downward pressure on prices
experienced throughout 2010 and 2011, Cluttons notes that average quoting rents for prime
developments in the city have remained stable over the past three months.
DIFC, Emaar Square, and the Sheikh Zayed corridor remain the most expensive locations,
with JLT, Barsha and Tecom offering the lowest rates.
Despite the excess of supply, there remains a relatively short supply of good quality
buildings for corporate occupiers with major requirements. Single landlord owned buildings
still remain an essential requirement for most larger corporate occupiers but there is a lack of
supply in prime areas of buildings that can accommodate larger requirements over 40,000
square feet.
Cluttons is noting a greater appreciation of ‘green’ or sustainable initiatives from occupiers
and the market is seeing evidence of this becoming a regular requirement in the search
process
Analysts polled said average prices in neighbouring Abu Dhabi could fall up to 10% amid
increased supply. Analysts expect an average of 19,716 units to come on to the UAE
capital's market this year.
“Prices will fall in Abu Dhabi this year in the region of 5-10 %. The emirate is going through
the same problems as Dubai did in the past,” said one analyst. Property prices in Dubai
soared after the city opened its real estate sector to foreign investors in 2002, granting them
freehold ownership rights at many developments.
From start-2007 to mid-2008, prices rallied almost 80 % Morgan Stanley estimates showed,
with billions of dollars’ worth of new projects launched by local developers. Nevertheless,

home prices in Dubai, the Gulf property market that had the biggest reversal because of the
financial crisis, have declined 60% in the wake of the global economic downturn.
While prices in Abu Dhabi fared better during the crisis, analysts remained concerned about
the significant supply of high-end homes scheduled to enter the market.
Several Dubai-based developers have turned their sites to midmarket housing in a bid to fill
the gap left by the collapse of the emirate’s housing bubble. The year ahead will see an
increasing number of developers look to develop affordable housing projects but these can
be hindered by the rising cost of land and declining house prices in the GCC, analysts said.
Rental prices in Dubai and Abu Dhabi will also see a downward trend, dropping 5% and 10%
throughout the year and currently stand for Dubai at an average of 5.1% decrease of the first
quarter of the year.
Analysts’ opinions remained split regarding what they considered the biggest challenge
ahead for the UAE’s property sector. Excessive supply and the impact of Europe’s economic
woes were cited as he biggest concerns, alongside a lack of clarity in Dubai’s regulatory
environment.
2. Bahrain
There has been an upturn in the number of new expats settling in Bahrain, specifically in the
oil and gas industry, which has resulted in companies taking on multiple villas and driving
down prices, according to the latest real estate report from Cluttons.
The company, which has specialised in the Middle East markets since 1976, said, however,
that demand in the market is not as strong as it was pre-2011 and rents are only being kept
flat due to the lack of new properties coming to the market, with many of the larger projects
being delayed or put on hold.
In its first quarter report on Bahrain’s, residential market is says that there is some price
stability in popular areas such as Amwaj, Jasra, Hamala, Saar and Janabiya, and well
maintained compounds with good facilities and security are proving to be more popular than
individual villas.
However, some apartments in even the most popular areas have experienced falls in rent of
6.25% compared with 2010. Other areas have suffered significant losses due to their close
proximity to perceived areas of unrest.
Rents have started to stabilise, but this is partly due to the lack of new properties coming on
to the market, as many of the larger projects are being delayed or put on hold, the report
points out.
The sales market is quiet, with the majority of sellers refusing to realise a loss, thus keeping
their properties on the market for longer periods. The majority of sales taking place now
involve forced sellers who are taking a loss on the originally paid prices. Most sales take
place in Riffa Views or Amwaj Islands.

The first units on Bahrain’s $1.6 billion Dilmunia Health Island project (see above) are
expected to be ready to handover by the end of 2014, the developer behind the project has
announced.
The first of four infrastructure development phases, which will include the 125-hectare
island's highways, bridges, landscaping, power, water, sewerage, and drainage and
telecommunications supplies, has been offered to 30 contractors.
The winning firm it is hoped will be appointed by the end of May 2012 and work is due to
start at the beginning of the third quarter. Construction is expected to take 24 months to
complete, enabling subcontractors to begin work in parallel.
‘End users can be handed the keys to their units by the end of 2014,’ said developer Ithmaar
Development Company (IDC) in a statement. It will be comprised of a mix of residential,
leisure and commercial sub-developments, surrounding core health and wellness facilities.
The company says that Dilmunia is more than just a high quality real estate development
because it will be adding value through the health and wellness amenities that will benefit all.
Dilmunia wants to tap into the $100 billion global healthcare market and in addition is
expected to provide housing for approximately 15,000 residents. Thousands of who will work
in the project’s medical, well-being, hospitality, and retail sectors.
‘In many cases it will be introducing entirely new industries, which people in Bahrain
previously had to travel abroad for,’ said Mohammed Khalil Alsayed, chief executive officer
of IDC.
Preliminary developments, including dredging, reclamation, and rock protection works, have
already been completed on the artificial island, located off the northeast coast of Muharraq.
Later phases of the infrastructure work will also include completion of the Grand Canal.
‘The 2.2 kilometre Grand Canal is important to highlight because it will be one of Dilmunia's
key features, offering patients, residents and visitors a unique and atmospheric recreational
amenity. It will be another first for Bahrain,’ Alsayed added.

3. Saudi Arabia
Villa prices in Jeddah have increased by up to 11% in the first quarter of 2012, signalling that
the Saudi real estate market is performing well; based on a new study by real consultancy
firm Jones Lang LaSalle.
The western area of the Red Sea city saw average rates of around SAR4,600 (US$1,226)
per square metre and the capital city Riyadh has also seen prices rise, with average villa
prices up to SAR4,200 (US$1,119) per square metre.
Apartment prices are also higher at SAR2, 600 (US$693) per square metre and in the office
sector, the recent sale of the Eastern Tower in Jeddah has shown there is strong demand.
However, the completion of new projects in both cities is likely to see rates start drop in the
second half of 2012, JLL says.
Meanwhile the retail market has become more fragmented, with an increasing variation
between the rents that can be achieved for line stores in the most popular centres and the
average rental value around SAR2,380 (US$634) per square metre, which has remained
stable at the end of the first quarter of 2012.
While Riyadh did not see the completion of any new hotel projects, Jeddah has remained
one of the strongest performing hotel markets in the Gulf, with occupancy rates of 79%,
room rates of SAR770 (US$205) and revenue per available room also on the rise.
‘The residential and hotel sectors of the Jeddah market have so far performed most strongly
this year, with continued growth in sale prices, rental levels and occupancies,’ said Soraka Al
Khatib, head of JLL’s Jeddah office. ‘In the office and retail markets, the completion of more
projects will increase options for tenants during 2012 and will lead to more competitive rental
levels being offered to retain and attract tenants,’ Al Khatib added
North American Market -Canada and USA Markets
1. Canadian Market
Residential median property sales in Canada fell 3.8% from January to March 2012, the
biggest monthly fall since July 2010, the latest figures from the Canadian Real Estate
Association (CREA) show.
It was also the first monthly fall since October 2011. The monthly decline reversed a string of
monthly increases over the closing months of last year, and returned national activity to
where it stood at the end of the third quarter of 2011.
Last year was also muted in terms of price increases, with the national average home price
up less than 2% year on year in March one of the smallest increases of the last 12 months.
The actual (not seasonally adjusted) national average price for homes sold in March 2012
was $348,178, representing an increase of 1.2% from its year ago level. This ranks among
the smallest increases since early 2011. On a seasonally adjusted basis, the national
average home price rose 1.6% on a month on month basis, marking a rebound from a
decline of similar magnitude in December of last year.

‘The national housing market is stabilizing and remains well balanced. That said, forecasts
for economic and job growth going forward vary widely for different parts of the country,
suggesting a possible continuation of a softening trend in some markets, as well as the
potential that demand will pick up based on strong fundamentals in others,’ said Gary Morse,
CREA’s president.
Activity was down in over half of all local markets in March from the previous month. Led by
declines in Greater Toronto and Montréal, demand also softened in a number of other major
urban centres including the Fraser Valley, Calgary, Edmonton, Winnipeg, Ottawa, and
Greater Vancouver.
(Opposite left, Vancouver city saw a drop in
new listings of 1.4% in March 2012)
Actual (not seasonally adjusted) national
sales activity was up 4% from year ago
levels in March, the smallest year on year
increase since last May. As was the case in
a number of months last year, actual sales in
February 2012 stood close to the five and
10-year average for the month.
The number of newly listed homes edged down 1.4% on a month on month basis in March
following a 2.9% increase in December and January. The monthly decline in new supply
reflects a drop in new listings in a number of Canada’s largest urban centres, which offset a
jump in new listings in Vancouver, CREA said.
Sales fell in January and February shifting the national market back towards the mid-point of
balanced territory and reversing the recent trend that had seen the market becoming tighter
over the final four months of 2011. The national sales to-new listings ratio, a measure of
market balance, stood at 53.8% in January, down from 55.5% in December and 55.4% in
November.
Based on sales to new listings ratio of between 40 to 60%, some 60% of local markets were
balanced in February. Compared to January, there were fewer buyers’ and sellers’ markets,
and a greater number of balanced markets.
The number of months of inventory stood at six months at the end of January on a national
basis, up from 5.7 months in December 2011 and returning it to where it stood in October
2011. The number of months of inventory represents the number of months it would take to
sell current inventories at the current rate of sales activity, and is another measure of the
balance between housing supply and demand.
‘Year on year comparisons in the national average price are expected to become volatile
and may turn negative, reflecting average price developments in the second half of 2012 in
Vancouver,’ said Gregory Klump, CREA’s chief economist.
‘At that time, high end home sales in Vancouver’s priciest neighbourhoods surged to all-time
record levels, which skewed the national average price upward considerably. A replay of this
phenomenon is not expected this year,’ he explained.

‘As a result, comparisons for national average price to year ago levels over the coming
months will reflect an upwardly skewed base effect. For this reason, year on year
comparisons should be kept in perspective. Developments in the MLS HPI (Housing Price
Index) will provide important guidance on price trends, since it is not affected by the problem
of compositional shifts in the mix of sales activity,’ he added.
2. USA Market
Residential property prices the US decreased again in the fourth quarter of 2011 and few
areas are likely to see increases this year according to the latest data from Zillow.
The Home Value Index fell (May 2012) 1.5% but there were less significant declines in the
previous quarter compared to the overall median drop across the country in 2011 of 5.7%.
Including distressed sales, the five states with the highest price gains were Montana, which
was up 4.4%, Vermont up 4%, South Dakota up 3.2%, Nebraska up 2.5% and New York up
1.7%.
(Opposite left, some good news for the
beleaguered relators in New York property
prices increased by 1.7% in the first quarter of
2012)
Including distressed sales, the five states with
the greatest fall in prices were Illinois, which
was down 11.3%, Nevada down 10.6%,
Georgia down 8.3%, and Ohio down 7.7% and
Minnesota down 7.5%.
Excluding distressed sales, the five top states were Montana where prices increased 7.7%,
South Dakota up 3.5%, Indiana up 3.3%, Alaska up 3.1% and Massachusetts up 2.9%.
Excluding distressed sales, the five states with the greatest falls were Nevada down 9.7%,
Minnesota down 5.2%, Arizona down 4.9%, Delaware down 4.2% and Michigan down 3.5%.
Including distressed transactions, the peak to current change in the national HPI (Housing
Price Index) from April 2006 to March 2012 was -34.7%. Excluding distressed transactions,
the peak to current change in the HPI for the same period was -24%
Zillow predicts that home values will continue falling throughout the year but with smaller
declines than 2011, probably ending the year 3.7% down. While home values in some
individual markets are likely to reach a bottom this year, Zillow does not forecast a definitive
national bottom until the middle of 2013.
The Zillow Home Value Forecast uses data from past home value trends and current market
conditions, including leading indicators like home sales, months of housing inventory supply
and unemployment, to predict home values over the next 12 months for the nation and the
25 largest markets.

Metropolitan statistical areas (MSAs) like Los Angeles, Riverside, California, and Phoenix,
which were among the hardest hit in the housing downturn, will likely reach bottom soon and
will experience home value increases or stability by the end of 2012, according to the
forecast.
Other markets that are likely to reach a bottom and see home values increase or remain flat
in the second half of 2012 are Baltimore and Washington DC. Markets which may end 2012
without significant increases in home values, but which are likely candidates to see a bottom
late in the year are Dallas, Denver, Miami-Fort Lauderdale, New York, Pittsburgh, San
Diego, San Francisco and Tampa.
‘While it may be disconcerting for home owners to see values nationally fell at a fairly rapid
clip at the end of last year, that trend won't last through 2012,’ said Zillow chief economist
Stan Humphries.
The fourth quarter's weak performance proves that pronouncements of a bottom in home
values have been premature, but the good news is that 2012 will prove to be a better year
than 2011. In fact, many markets show signs of a bottom this year, although a bottom may
continue to elude the nation as a whole in 2012,’ he explained.
Humphries cautioned that healthy job creation is necessary to ensure a solid recovery in
both housing and the overall economy. ‘The job market has sputtered recently, and because
variations in local job creation impact housing demand, markets will recover unevenly
around the country,’ he said.
‘Fortunately, against a backdrop of modest further declines in home values, we expect that
home sales will pick up briskly this year as affordable prices bring more buyers to the table,
especially investors and second home buyers,’ he added.
At the end of the first quarter of 2012, the rate of homes foreclosed edged upward from eight
out of every 10,000 homes in February to 8.4 out of every 10,000 in March.
However, the rate was lower than at the end of the fourth quarter of 2011, when 8.6 out of
every 10,000 homes were lost to foreclosure.
Additionally, foreclosure re-sales made up 19.4% of all sales in March. Foreclosure re-sales
have steadily risen since August, when 17.1% of all sales were foreclosure re-sales.
Russian Market
1. Russian Market
At the end of 2011 beginning of 2012, the Russian housing market did not recover - despite
appearances. Resale apartment prices rose 3.79% during the year to end-Q4 2011,
according to the Federal State Statistics Service, but the kicker was inflation - resale
apartment prices actually fell 5.25% when the price figures are adjusted for inflation.
• Moscow - resale apartment prices fell 5.38%, after inflation.
• St. Petersburg - resale apartment prices fell 15.23%, after inflation.
Rents are also declining. In February 2012, the average Moscow rent fell 2.7% y-o-y to
RUB207,582 (US$6,439) per month, according to the Bureau.

Moscow Mayor Sergey Sobyanin imposed a ban on residential construction inside the Third
Transport Ring, the main access road to the capital’s business centre. As a result, new
housing supply contracted by 18.1% y-o-y to H3 2011.
Russia had a massive housing boom from 2000 to 2007, with secondary market prices
skyrocketing by 436% while primary market prices rose 362%. Property prices started to
weaken in late 2008, and began falling in the second quarter of 2009.
House prices are still declining, though the rate of decline began to slow in Q3 of 2010.
According to the Land Code of 2001, private ownership of land properties is allowed for both
locals and foreigners. The legislation was extended to Moscow in January 2006.
The enormous price-rises over the past few years in Moscow mean that it now makes better
sense, in Russia’s capital city, to rent than to buy - at least so far as concerns the high-end
district central Moscow apartments.
Gross rental yields on central Moscow apartments at the beginning of 2012 were firmly in the
3% to 4% range, which is not very attractive to property investors (but attractive to renters, of
course). This is the result of the boom in prices of the last few years.
(Opposite left, St Petersburg Europe’s fourth
largest City, where rental yields are predicted
to increase his year but property prices are
due to drop).
Surprisingly, St Petersburg at the beginning of
2012 still had highly attractive gross rental
yields on smaller apartments, with 60 square
metre apartments averaging around 9.4%.
It must be stressed that these yields are
gross, i.e., before vacancies, costs, or any other expenses, and that they are based on
offered prices, not actually achieved prices. The rental yields also relate specifically to old or
refurbished apartments, not new apartments.
Although rental yields are expected to continue to rise throughout the year, median house
prices are expected at best to be stagnating or drop by a median of between 3 to 5%.
Last year saw record investment volumes into Russian commercial real estate with growth of
over 200% above the level reached in 2010, according to the latest research by CBRE.
There were 43 investment deals last year compared to 27 investment deals in 2010 and 50
deals closed in the record 2008. Investment rose to €4.55 billion and the average deal size
was approximately €105.6 million. This compares with an average deal size of €71 million.
The largest deal in 2011 was the purchase by Morgan Stanley of the 191,000 square meters
Galleria shopping centre in St. Petersburg in December, for an estimated €840 million.

The research report says that the stabilisation of the Russian economy in 2011 saw a level
of confidence return to the real estate investment market. Domestic investors continued to
dominate at 59% but the share of foreign investors rose significantly from that in 2003 to
2010 and this was much more balanced than in recent years, when 70 to 80% of
investments were accounted for by Russian money. In pre-crisis years, the balance was
usually 70 to 80% foreign money.
The retail sector attracted slightly more investment than the office sector in 2011, some 38%
versus 37%. The hotel sector also featured prominently at 13% due to the Ritz-Carlton sale.
The industrial sector accounted for just 3%, and mixed-use projects was 9%.
Moscow accounted for the majority of investments, with over 74% of all investments. St.
Petersburg accounted for 22%. Other Russian cities which received investment in 2011
included Kaliningrad, Kaluga, Murmansk, Ulan-Ude and Samara. The majority of foreign
investment outside Moscow was directed to St. Petersburg.
Yields are rarely disclosed in Russia however, the report suggests that yields for prime
objects in Moscow at the end of 2011 were 8.75% for offices, 9.5% for retail, and 11% for
industrial.
Prime objects in St. Petersburg can expect to attract similar levels in retail, as it is the fourth
largest city in Europe with a population of 4.8 million that has greater wealth than the
national average.
According to CBRE, overall economic growth in Russia is believed to have been in the
region of four to 4.5%. The consensus view is that growth will be of a slightly lower level in
throughout the year, though still far higher than the expected levels in the European Union.
As such, the record volumes of investment in 2012 are unlikely to be repeated.
CBRE expects that Moscow will remain severely undersupplied in terms of quality new office
centres in the short and medium term. In turn, this may propel investors towards other
sectors such as retail and hotels.
‘2011 was a record year for investment in Russian real estate with €4.55 billion invested,
which is over 1.5 times higher than in 2008, the previous record year.
For the first time in a few years, retail attracted the largest portion, and accounted for the
largest deal,’ said Christopher Peters, director of research, CBRE in Russia.
‘The share of foreign investors rose significantly from that in previous years, though
domestic investors have accounted for the majority since the onset of the financial crisis.
Yields in all sectors fell compared with 12 months ago. With slightly lower economic growth
in Russia and globally predicted for this year than in 2011, the record level is unlikely to be
exceeded or repeated this year,’ he added.

South American Market
1. Brazilian Market
Property prices in Brazil are likely to increase modestly, around 5 to 10%, throughout 2012
and the real estate sector should avoid a bubble, according to a poll of real estate and
financial experts.
The Reuters poll of 15 banks, research groups, and business associations downplayed the
risk of a sharp downturn, with a recent credit boom underpinned by a steady improvement in
wages and affordability conditions.
Overall consumer inflation is expected to hover around 5.5% in 2012, according to market
forecasts compiled by the central bank.
That performance turns the Brazilian housing market into a rare bright spot in a gloomy
scenario around the globe. Further gains, however, should be smaller than in 2011 as the
Brazilian economy cools off.
Brazil's gross domestic product (GDP) growth slowed to a standstill in the fourth quarter of
2011 as the Eurozone debt crisis hurt global demand and is expected to grow by around
3.5% by the end of this year, much less than the 7.5% growth recorded in 2010.
Most of 2012’s rise in house prices have been concentrated in the first half of this year,
added the participants. Seven out of 15 thought prices would stabilise by the end of the year.
The rapidly expanding Brazilian middle class is expected to keep a close eye on
opportunities to stop renting and move into ownership, holding up prices even after they
almost doubled in some neighbourhoods.
‘When the slums disappear and the Brazilian housing sector gets more mature, then prices
will stop rising,’ said Andre Perfeito, chief economist at Gradual Investimentos Brokerage.
In Sao Paulo, Brazil's biggest city, average new home prices skyrocketed 85% from April
2009 to February 2012, to 6,019 reais per square metre ($3,250), according to
a survey conducted by the Ibope polling firm. Consumer inflation rose nearly 15% over that
same period.
‘There are structural factors in place to justify such a strong performance. A sharp fall in
prices this year is very unlikely,’ said Paulo Cesar das Neves, analyst for the local research
firm LCA.
Rental yields for residential property across the country have continued to move strongly
upward in Brazil in terms of US dollars, in defiance of widespread worries that the Brazilian
property market may be becoming overheated.

(Opposite left, Rio De Janerio, where both
property prices and rental yields are
expected to grow throughout the year)
In Rio de Janeiro, the price movement was
strongest, with apartments moving up in
price an amazing average of 48%, from an
average of US$3,429 per sq. m., to
US$5,094. Rio penthouses moved up by
less, and apartments in Barra da Tijuca
hardly moved up at all.
In Sao Paolo, the prices of 50 sqm apartments moved up 33% during the year to date, to
US$3,384 per sqm; apartments of 120 sqm have moved up 10.5% to US$2,616 per sqm.
Sao Paolo apartment prices moved strongly up across all size ranges, except for the largest
apartment sizes (200+ sqm).
During this past year, the Brazilian Real moved 3% up against the US$ (a relevant fact, as
real estate prices in Brazil are measured in US $). Sao Paolo penthouses moved up across
the size range, with 120 sqm, apartments moving up 37%.
The good news for overseas buyers from Britain (and other countries with strong currencies)
is the strength of Sterling against the Brazilian Real means that for British buyer’s property in
Brazil is even more affordable than ever.
Sterling is trading at a two and a half year high against the Brazilian Real and this means
that if you bought a five star two bedroom beachfront apartments south of Natal on 01 June
2011, it would have cost £111,617 but now the cost is £90,564.
Samantha Gore a property consultancy specialist from Rio comments that;
‘From early June 2011 until now the Brazilian Real has been fading against the Pound, to
the tune of 28%. Likewise, the US Dollar is at a two and a half year high and the Euro a two
year high against Brazil’s currency,’ she said.
She pointed out that a very attractive Brazil property buying scenario has come about by the
retreat of the Real. The Eurozone collapse has sent shockwaves over to Brazil as investors
fear that demand for this Latin American nation’s exports could drop sharply as an at least
partial Eurozone breakup becomes increasingly likely.
Brazilian Finance Minister Guido Mantega is pleased that the Real is losing value and
therefore becoming more competitive
. ‘The weak real is beneficial for the Brazilian economy because it makes Brazilian products
more competitive, which means that Brazilian industry can better compete with imported
products that become more expensive, and can export more,’ he said recently.

Ms Gore believes that optimism in Brazil extends further ‘The middle class continues to
grow, fuelling demand for poverty in the domestic market which in turn is keeping prices on a
upward curve, at least the foreseeable future. Benchmark interest rates have just been
lowered to 9%, which is great news for local buyers eyeing a mortgage and developers
seeking finance for new projects.’
2. Argentinian Market
(Opposite left, property prices are set to
continue to rise across Argentina albeit at a
slower pace throughout the year).
Politicians in Argentina have approved a
controversial new law to restrict the sale of
agricultural land to foreign buyers.
The bill, which has been approved by the
Chamber of Deputies and is expected to be
endorsed by the Senate later this year , limits the amount of land that can be bought by an
overseas buyer to 1,000 hectares in key areas of the country. It also sets a limit of 15% of
total land being owned by foreigners.
Chamber of Deputies general law committee head Luis Cigogna said the purpose of the new
law it to keep strategic and non-renewable land for Argentines.
However, the new law makes an exception for foreigners who have married Argentines or
have lived in the country as permanent residents for more than 10 years.
In Argentina, it is estimated that foreigners own 11% of the country’s 445 million acres (180
million hectares) of productive land, according to the Argentine Agricultural Federation,
which has long pushed for limits.
More and more foreign buyers are interested in property in Argentina as it is seen as an
emerging property market with huge potential. Brazilians, Americans, Canadians, and
French buyers are looking for second homes as prices are expected to escalate in the
medium term.
According to the Argentina Real Estate Chamber (AREC), property sales increased by 16%
in the first three months of 2012 and prices are now around 20% up on a year ago. With the
continuing uncertainty of the global financial markets and the Eurozone crisis, in particular it
is predicted by the AREC that median property prices across the country will rise this year by
3 to 6%.
Asian Markets
1. Chinese Market
The primary residential market remained quiet in the fourth quarter of 2011, amid the
government’s home-purchase restrictions and the wait-and-see attitude adopted by potential
buyers. The total transacted area of primary residential properties in 20 major cites dropped
6.4% quarter on quarter, or a significant 45.4% year on year. Adjusted new home prices fell
2.3% quarter on quarter. This represented the first drop since the first quarter of 2009.

Only Haikou and Jinan registered year-on-year growth in total transacted area, while others
among the 20 major cities witnessed drops of 20–73%, with Shanghai, Chongqing,
Hangzhou, Suzhou, Tianjin and Dalian recording falls of over 50%.
Adjusted primary residential prices in over half of the 20 major cities showed quarter-on-
quarter drops. However, only four cities (Hangzhou, Wuxi, Chongqing, and Xiamen)
registered price reductions compared to the same period in 2010.
(Opposite left, Shanghai, will the central government’s new
property tax have a detrimental effect on property prices in
the city?).
Property prices in major Chinese cities continued the
downward trend in January to March of this year as the
government's tightening measures remain in place.
From January to March 2012, 48 cities out of the statistical
pool of 70 major cities saw drops in new home prices, while
home prices in 22 cities remained unchanged, the National
Bureau of Statistics (NBS) stated.
On a year-on-year basis, 15 cities saw price declines in
January to March, up from nine year end in December
2011, the NBS said. In month-on-month terms, prices of resold homes in January to March
fell on average in 54 cities, up from 51 cities one month ago. The NBS also said that the five
cities that saw price rises in resold homes in January from December reported a gain of no
more than 0.15%.
In year-on-year terms, resold home prices dropped in 37 cities in January to March, up from
29 in December last year.
Since 2010, the country has imposed a raft of measures aiming to calm property prices.
Those measures include higher down payments, a ban on third-home purchases, a property
tax in some cities and the construction of low-income housing.
Knight Frank’s (China) forecast for the property market in the world’s second largest
economy expects increased inventory and funding pressure will force more developers to cut
prices to promote sales, but the sentiment in China’s residential market is set to remain
weak throughout this year.
Meanwhile, the central government, and a number of local governments emphasised that
regulatory measures on the property market would continue throughout this year. Property
tax is also expected to be extended to other cities from Shanghai and Chongqing, which
could further regulate and promote healthy development of the market.
However, taking into account the contribution of the property industry to the local economy,
some cities may fine-tune current policies to promote demand for owner-occupied homes.

China’s central bank however has pledged support for domestic first-home buyers as a
crackdown on real-estate speculation threatens to trigger a property slump in the world’s
second- biggest economy.
Officials will increase support for construction of affordable housing and ensure that “loan
demand from first-home families” will be met, the People’s Bank of China said on its website
yesterday evening.
Policy makers aim to limit public discontent by making housing more affordable, with Vice
Premier Li Keqiang, a possible contender to be the next premier, describing the distribution
of low-cost homes as a key test of government credibility. At the same time, the ruling
Communist Party aims to avoid the economic “hard landing” that Fitch Ratings said
yesterday is a key global risk.
“The government doesn’t want to see home transactions slide too fast that may hurt
economic growth,” said Lu Ting, a Hong Kong-based economist at Bank of America Corp.
2. Hong Kong Market
(Opposite left, Repulse Bay Hong Kong Island,
will property prices continue to drop throughout
the year)
According to the latest report released by Knight
Frank, Hong Kong’s property market remained
quiet through the first quarter of (January to
March) 2012 with the global economic outlook
still unclear. While the office and residential
markets recorded low levels of activity, the retail-
leasing sector continued to outperform as
international brands continuing to enter or
expand in Hong Kong competed for prime spaces.
Prime office -Layoffs threatened a number of financial institutions in Hong Kong, as
uncertainty in the global economy started to take its toll. The office leasing market saw only
a handful of transactions over the first quarter. In Central, a law firm took up a mid-floor
measuring 5,483 sq ft in Prosperity Tower, while a 5,479-sq-ft low floor in Henley Building
was leased.
Grade-A office rents in Hong Kong continued their downward trend, with the average rent
dropping 1.5% in January to March. Central recorded the biggest correction of 1.9%,
followed by Mong Kok / Yau Ma Tei, where rents decreased 1.5%. Hung Hom and Kowloon
East, however, saw rents grow a respective 3.2% and 1.2% last month (May 2012). Grade-A
office rents in the CBD are likely to see a 10–15% correction in the first half of the year.
Meanwhile, asking rents in non-core areas are likely to remain firm, with landlords enjoying
low vacancies amid strong relocation demand.
Residential – The number of residential sales dropped further in January to March 2012.
Residential sales fell 18.4% month on month to 3,507 to March—the lowest figure since
November 2008. Sales of luxury homes valued over HK$10 million fell 17.4% to 385.

In the leasing market, an increasing number of landlords released their flats for lease.
However, absorption was weak during the traditional low season. As a result, luxury rents
decreased a further 1.3% month on month to the end of the first quarter.
Looking ahead, announcements confirming no further regulatory measures in the 2012–
2013 Government Budget cleared some uncertainty. Knight Frank believes residential sales
volume will rebound in April.
Retail - Strong retail sales growth continued up until the end of the first quarter with a
number of shopping centres and high-end retailers reporting double-digit sales growth.
However, many retailers, especially mid-market operators who cannot afford sky-high rents
in prime locations, are expected to move to non-core areas or up to higher floors. Knight
Frank expects rents in non-core areas to rise by a moderate 5% this year.
3. Singapore Market
(Opposite left, a mixed forecast from analysts for
the property markets in Singapore for this year.).
Residential property prices in Singapore fell
slightly by on average of just 0.1% in the first
three months of 2012, according to the latest
figures published by the Urban Redevelopment
Authority (URA).
This compares with a 0.2% increase in the
previous quarter and is the first quarterly fall in
prices since the second quarter 2009, following
nine consecutive quarters of declining price increases.
Prices of non-landed properties in Core Central Region (CCR) and Rest of Central Region
(RCR) both fell by 0.6% compared with the 0.5% and 0.1% increased respectively in the
previous quarter.
For Outside Central Region (OCR), prices increased by 1.1% in the first quarter 2012,
compared with an increase of 0.6% in the previous quarter.
Rentals of private residential properties registered a lower rate of increase compared to the
previous quarter. Rentals increased by 0.3%, less than the 0.4% increase in the previous
quarter.
The data also shows that 6,903 uncompleted private residential units were launched for sale
by developers in the first three months of 2012, compared with just 4,105 units in the
previous quarter.
Developers sold some 6,458 uncompleted private residential units in the first quarter of
quarter 2012, compared with 3,525 units in the previous quarter. Take up of so called shoe
box units, which are smaller than 50 square metres, accounted for 27% of new sales in the
quarter.

Lower priced units less than $750,000 accounted for 42% of new sales, much higher than
the 25% in the last quarter of 2011. Overall, many of these units are located in the suburbs,
as 82% of the new units sold by developers were from OCR in the first quarter of 2012.
It means that the rate of increase in rentals has been slowing for three consecutive quarters,
since the third quarter of 2011.
Cautious market sentiment and waning demand restrained office-leasing activities for Q1
2012, according to Savills Research Singapore. Expectations from financial and banking
services have declined significantly amid the current economic volatility.
In line with this, vacancies among Grade A office buildings in the CBD grew 6.9 %, while
Grade A rents slid 1.5% for the second consecutive quarter. “Investment activity of en-bloc
office space resumed, but Grade A capital values fell by 3.8% quarter-on-quarter,” it said,
adding that “only two sites were offered for office development under the Reserve List of the
1H/2012 Government Land Sales (GLS) Programme.”
Moving forward, into the second half of 2012 the bleak global economic outlook will continue
to affect the leasing market. Capital values are expected to decline by 10 % while Grade
A rents will likely fall 15 % this year. “Negative fallout arising from the prolonged financial
turbulence and global economic slowdown has intensified, resulting in slower absorption of
Grade A office space. This has continued to push up vacancy rates and put downward
pressure on rents in the CBD,” noted Alan Cheong, Savills Research.
Overall, Singapore’s economy expanded 3.6% year-on-year in Q4 2011 and achieved a 4.8
% growth in GDP for the whole year. However, the pace of growth has considerably dropped
on a quarter-on-quarter basis since then.
4. Thailand Market
(Opposite left, will the Thai property
markets fully recover from last year’s tragic
flooding of central Thailand and Bangkok?).
Although, Bangkok may struggle to recover
this year, international tourist resorts such
as Pattaya, Hua Hin and Phuket will likely
see continual steady growth.
Last year’s flooding to central Thailand and
Bangkok has inevitably had an impact on
the property market in Thailand with sectors affected across the board, according to
international property consultants CBRE.
In the short term, residential project sales in Bangkok have slowed down whilst the city is still
affected by the aftermath of the floods and in the medium to long term, the crisis will also
have an impact on multiple levels from location to product and pricing, the latest analysis
says.

There has been a change in demand patterns in terms of preferred location and product in
Bangkok. ‘Buyers obviously have been hesitant to purchase in areas where heavy floods
have occurred. The business areas of Lumpini, Silom, Sathorn, and lower Sukhumvit will
continue to be the preferred locations while other areas will be assessed once the remedial
work has been completed,’ says the report.
Buyers are paying more attention to design features and flood protection measures while
housing developers in the future will need to ensure that both estate infrastructure and
individual houses incorporate flood protection features when launching new projects, it
explains.
Post flooding, construction costs in Bangkok have risen due to a high demand for
construction materials and skilled labour, particularly qualified technicians and contractors to
rehabilitate damaged properties. Projects under construction in affected areas such as
Rangsit and along the MRT purple line are now back on track but remedial work to repair
flood damage has had to be undertaken before construction can be re-started.
Affordability and pricing has also been affected, particularly for the entry level and middle
market. ‘The crisis has directly affected the spending power of those affected who may have
lost their income or face additional expenses such as repair or replacement of damaged
cars. This and many other flood related issues has slowed down purchase decisions and
has shifted the focus to lower priced products,’ the report explains.
At the mid to high end of the market, demand for second homes from wealthy Bangkok
residents has started to rise, notably for city, resort condominiums, and villas. Resort
markets such as Pattaya with its good and fast transport links to Bangkok and the
international resort island of Phuket will benefit.
‘Overall, the market in Bangkok has seen a slight shift toward condominiums and away from
houses or townhouses, particularly among younger buyers. The perception is that even if
condominium buildings are inaccessible if flooding occurs, possessions and furniture will still
be safe. This is not to say the market has completely turned away from housing
developments, but it is expected that housing sales will drop in the medium term until buyers’
confidence is restored and until developers can demonstrate effective prevention measures
and designs that minimise flood damage,’ the report adds.
The office sector is one of the least affected sectors. ‘While demand has been improving,
concerns about the global economy will slow down decisions, but it is unlikely that
companies will look to reduce space. In terms of location, it is again too early to say if a
particular area will benefit, as we do not yet know the full extent of the flood impact. The
fundamentals of the office market remain strong. With limited supply coming online in the
next three years, we are unlikely to see a dramatic drop in rents even if demand weakens,’ it
adds.
The Thai price index for single-detached houses/villas rose by 12.16% in the year to end-Q 4
2011, according to the Bank of Thailand (BOT). When adjusted for inflation, the index
actually rose by 7.75% over the same period.

Global property report 2012

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