International uncertainty

Falling demand and housing prices, auction sales, freezing new projects is only part of the symptoms of crisis fever, which covered the world real estate markets. What the coming year promises? Experienced experts refrain from overly optimistic forecasts.

Rise from the bottom

results 2009 g. for the global real estate markets will, certainly, different: some countries the crisis touched more, some - less. Baltic markets hit hardest, Dubai, Spain. Latvia became the leader in falling prices: here they collapsed by more than 50% compared to the pre-crisis period, and in some cases on 75%. Similar figures were recorded in Dubai - about 40-50%. Due to lack of funding and lack of buyers, construction projects in Turkey were closed, Bulgaria, Montenegro, Spain, Thailand, USA and others.

However, in some countries, such problems hardly touched. Those states, where prices rose slowly, and mortgage banks adhered to a conservative policy, no loss. German markets survived the crisis year safely, Switzerland, Austria, Sweden. France turned out to be quite stable, Italy, Cyprus and the resort cities of Turkey. In Turkish cities, where the main demand was provided by the local population, the number of transactions dropped dramatically and, Consequently, real estate has dropped significantly. First of all, this affected Istanbul, Ankara, Adana. According to Global Property Guide, in Istanbul on the outskirts of prices fell by 50%, in the central regions - on 20%. However, in the resort segment, the situation is completely different.: prices have not changed, and demand even increased. Largely due to the fact, that due to the fall in income, that class of buyers also switched to this market, which used to target Italian and French resorts.

But anyway the last quarter 2009 g. became a transitional period for most markets. Crisis passions have subsided somewhat, banks began to resume lending to construction companies and the public, number of panic predictions, published in the media, decreased. Seduced by discounts, home buyers, reassured by the stability of recent months, began to return to the market: the number of not only calls to real estate agencies has grown, but also real deals.

Director General of MIEL DPM Natalia Zavalishina considers, that the first two quarters were the most “fishless” 2009 city: "Deals went, but they were few. The amounts were also insignificant. People came to us with 20 thousand. euro, from 15 thousand. euros and even smaller amounts. After hearing the news of the colossal fall in prices, they wanted to buy a home, eg, in Egypt or Bulgaria. Transactions for at least 30-50 thousand. euros were rare ". However, in the second half of the year, according to her, everything has changed. Serious buyers with serious money appeared. Real estate markets in most countries have started to recover since autumn.

Igor Indriksons, Head of Overseas Property Investment Department at IntermarkSavills, also says, what the last months 2009 g. there was a recovery in both stock markets across Western Europe, and real estate markets. GDP growth was noted almost everywhere. Based on this, and. Indriksons suggests, that the proverbial bottom of the crisis, finally, passed and economic recovery will gain momentum. Now, according to his forecasts, until next spring, there will be a lull in the real estate markets of Western European countries, and from spring growth will resume.

Stop or pause?

However, countries remain, whose prospects for overcoming the crisis are still very dubious. First of all, it concerns America. “We talked with our colleagues from the USA, tried to find out from them, what will happen to the market next. They do not know", - says N. Zavalishina. Situation in America, in its opinion, can develop in different ways: from new decline to growth.

It is about the United States that the opinions of experts differ the most.. Somebody think, that the American market has already begun to recover. Others claim, that today's stabilization is a temporary lull and the markets of individual cities may sink even lower, since the system of the updated mortgage has not yet been launched, and the current stabilization is the result of government cash injections.

In the end 2009 g. one of the signs of market recovery has appeared in the USA - a decrease in the number of residential real estate, put up for sale at a reduced price. If at the beginning of the year they were 45% of the total market volume, then at the end of the third quarter - already 39%. "Percentage of houses, for sale with discounts, accurately reflects the actual level of demand in a particular market, - says Michael Simonsen, CEO of Altos Research. - The fall of this indicator indicates that, that buyers are ready to purchase objects at market prices ". Moreover, the volume of housing construction began to grow. However, according to I. Indriksonsa, it's too early to talk about overcoming the crisis, because banks are not ready to issue new mortgage loans, because they can't figure it out, what to do with subprime loans, previously issued.

The attraction of stability

Buyers' preferences have changed over the past year, but not too drastically. So, according to almost all agencies, Bulgaria remains the most popular country among Russian property buyers. Despite all the shortcomings of this market (some overstocking, unfinished risks), Russians continue to actively purchase apartments here. The reason is cheapness, aggravated after the crisis.

Rating of other countries, according to different companies, also not too different. Overall in the list of the most demanded real estate markets, as before, Spain remain, Montenegro, Ukraine (Crimea), Cyprus, Turkey, Germany, Egypt, Czech Republic and USA. But at the same time, the popularity of real estate in Montenegro has dropped markedly. According to MIEL DPM, the number of applications for objects in this country has almost halved. Probably, as experts suggest, the reason is, that prices were overpriced. And even now, after the fall, they do not always correspond to the quality.

Demand for housing in Israel has also decreased. A big surge in interest in buying real estate in this country was recorded after the abolition of the visa regime - at the end 2008 g. However, according to N. Zavalishina, gradually it faded away: “Now calls from potential buyers are being heard, but not a single real deal has yet taken place this year ".

But the demand for real estate in Germany increased, which used to be less attractive. Over the past ten years, housing prices have remained practically unchanged., and foreign investors were not attracted by such conservative investments. But in the midst of the crisis, the stability of the local market became his trump card.. Russians are increasingly considering German apartments as an option for foreign purchases.

Russians have also developed an interest in Latvia.. maybe, the popularity of the local market will soon increase, because the, according to N. Zavalishina, the Latvian government is considering a bill, which will allow you to obtain a residence permit after purchasing the property, which for some Russians will be a significant argument in favor of such an acquisition.

Main reasons, by which Russians buy housing abroad, also remained the same. According to MIEL DPM, this is a vacation plus an investment perspective, doing business abroad, obtaining a residence permit and net investment. “Few people are looking for housing just for recreation. Usually, people are always aiming for that, so that the purchase makes investment sense. Many also talk about purchasing housing to educate children.. But in reality we did not have such deals. ", - comments N. Zavalishina.

According to Gordon Rock, the main reason for buying today is the possibility of acquiring a property with a large discount based on the growth in the value of the asset (which is especially important in light of the crisis). Next in popularity are getting a stable income from renting, residence permit and diversification of existing business.

Between buying and waiting

Many experts recommend buying liquid objects in those markets, where the most significant price drop occurred: in USA, Spain, Baltic, because the, probably, with a stable economy, the cost of quality objects will start to rise again. However, the speed of recovery of the pre-crisis price level remains questionable.. of course, sooner or later prices will win back. But this period can be delayed for a long time. for instance, like in japan, where after the collapse of the real estate market in the early 90s. last century, prices have not returned to their previous level.

However, one should not expect a global reduction in price everywhere.. Even in countries, where many objects have lost in value before 75% of the cost, some housing is still in price. n. Zavalishina cites her client as an example, who bought a house in Jurmala, cheaper by only 25%: “It's just that Jurmala is the same area, how is our ruble. And real estate here will not become significantly cheaper ".

AND. Indriksons advises investors to choose the markets of those countries, who went through the crisis with minimal losses, with a stable economy, where real estate prices fell slightly; markets, where the terms of mortgage lending have not changed and tend to improve. Today, Austria meets these parameters, Switzerland, France, UK and Cyprus. Here you can earn 20% per year for the invested funds ". In the above countries, mortgage lending did not stop during the crisis, and at the moment, the conditions for issuing loans have even improved here.

Thus, the crisis brought not only difficulties. He also created new, more favorable conditions for buyers and investors. In some countries prices, at last, correspond to the quality of real estate. AND, let us say, three-room apartment in Montenegro, near Rafaelovici (near Budva) can be bought for 100 thousand. euro, and not for 350 thousand., as before the crisis.

Author: Yana Kazakova

Journal “The property & prices”

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