Own A House - real estate market news

The question about the future of European markets can be formulated as: whether they will follow America?
Before the crisis, according to the data of Deutsche Bank Research, European markets had developed synchronously with American one. Especially high correlation was in Britain, Holland, Denmark, Ireland, Spain, France and Sweden. At that, consider German analytics, prices for real estate in some countries of the Europe have obviously left the limits of common sense. «Investments into residential real estate differ from investments in shares and bonds by that it not only the object of gamble, but also consumer goods. Therefore, considering results of overpricing in this segment, experts can’t be limited only to simple calculations of cost and rent rates. They should take into account the factor of moderateness. And at a present price level residential real estate becomes inaccessible to consumers», - is marked in the report of Deutsche Bank Research.

The American crisis has already doubly struck the European real estate market: through the crisis of liquidity in the financial markets (in particular, in Europe mortgage credit rates have grown) and through expectations of recession in American and world economies.

It looks like Europe has already started to react to the American history. The prices for dwelling in second half of 2007 in Great Britain, Ireland, Spain and France have insignificantly eased. The French national federation of real estate agents has informed about falling of prices for residential real estate by 1 % in the third quarter of 2007 in comparison with the second quarter - for the first time since 1998. The Irish Research Institute of Economy and Sociology and mortgage bank Permanent have informed, that cost of apartment houses in Ireland has lowered by 1,9 % in August in comparison with similar month of the last year.

In the USA, when in 2000-2001 the Internet-bubble has burst, speculative capitals have poured from stock exchanges to the real estate market. For the five years prices have doubled. And for 25 years real estate in the USA has risen in price more than three times: if at the beginning of 80s average household cost approximately 60 thousand dollars, in 2005 the figure was already 200 thousand.

In a counterbalance to Europe and America, cost of houses and apartments in Japan for more than ten years only fell: real estate market could not recover from grandiose crisis at the beginning of 90s, and stabilized only in the last couple years.

It looks like the ten years’ trend «for increase» is finished. In the USA from the beginning of 2007 the prices gradually come down. Half-yearly coming down with significant sales slowdown has developed in August into severe mortgage crisis, which has spread worldwide as the crisis of liquidity.
Significant reduction in price for real estate has experienced Tampa and Miami (10-11 % for a year), San Diego, Las Vegas and Detroit (8-10 %). The price index for houses of Standard&Poor’s/Case-Shiller has fallen insignificantly for a year - all by 6,7 % (information for the third quarter of 2007). However the majority of analysts are sure, that the crisis only begins. The number of suits for bankruptcy of house owners increases: in 2007 more than 2 million families have lost their real estate, as they could not pay mortgage credits. The current year won’t differ from the previous one.

The world real estate market begins new stage of development. National governments more and more often refuse liberal market dogmas and start to carry out socially responsible housing policy.

«Even people with respectable salaries can’t buy an apartment. The prices are unreal!» - say Muscovites about the housing problem. At that it is meant, that situation in Moscow is unique and abroad everything is different.

However the current situation with dwelling in Paris and Madrid, Detroit and Dubai is the same. In 2000-2006 the price for real estate continuously grew almost worldwide, therefore it became inaccessible for middle class in the USA and Europe.

One of the main trends of the last decade is significant real estate cost increase in Europe and America. Price enhancement began in 1995-1997 (depending on the country) and has sharply sped up after 2000. For example, in Ireland for the last ten years (1996-2006) real estate prices have increased by 300 %. For the same period in Holland, Sweden, Great Britain, France and a number of other countries prices have doubled on the average. And only Germany pleases Europeans. Houses and apartment almost have not risen in price here, because the country has high supply, the big stock of social habitation and the market is not inclined to speculations.

The number of new buildings in the Great Britain in 2007 has reduced to a minimum for the last four years. It is connected to the fear of developers to offer a lot of houses, because of landslide of prices and sales impairment, writes The Financial Times.
In the last decade of 2007 37900 projects have been launched, that is 10% lower, than at the similar period of 2006. Besides, it is the lowest figure since 2003, says the official statistics.

In total for the last year, according to The Department for Communities and Local Government, in the Great Britain were launched construction of 166900 houses, that is 6% lower, than in 2006.

Royal Institution of Chartered Surveyors (RICS) considers that developers’ anxiety can complicate performance of the state program on increase in construction of houses. According to it by 2020 in the country should be constructed 3 million new houses.

Lately owners of the sold houses in the Great Britain have started to clean once their property thoroughly, taking out even such “integral” things as kitchen sinks and built-in lamps, or request additional money from the buyers, writes aboutproperty.co.uk. This way sellers try to compensate falling of the prices for real estate.

Surveys carried out by company Convex show, in the first half of 2007 60% of sellers were ready to leave to the future tenants curtains, jalousie and various lamps, 45% were ready abandon refrigerators, deep-freezers and washing machines. In second half of the year, when prices began to fall, only 35% of sellers were ready to include these subjects in the price of the house, and now this figure has decreased to 24%.

Former owners took away the things, which can’t be taken without damaging of the house. For example, according to the rules lamps can be dismantled, only if they do not spoil a ceiling. “Certainly, everything can be taken away, even bulbs,”- say in Convex.

The question about profitability of hotels in Switzerland is not correct. Hotel business is subject to influence of external factors (for example, weather conditions, mood and solvency of the population) which essentially affect fillability, and consequently, profitability of hotels.
Also the big influence on profitability is exerted with professionalism of the manager, organization of the control of hotel’s activity.

If foreign investor does not have experience or special education in hotel and restaurant business, he is not recommended to buy hotel or restaurant in Switzerland.

Inexperienced investors frequently ask: “I want to buy hotel what will be the profitability?” Or: “What are the dues of the hotel in percentage from the turnover?” All these questions are not absolutely, because the sum of annually paid taxes, for example, depends on the art to minimize taxable base by means of various allowances.

Switzerland has the law, which restricts purchase of the ground areas by foreigners-non-residents. It concerns only an inhabited real estate. For example, the foreigner can get no more than 200 sq. m of living space, and no more than 1000 sq. m of the ground area.

There are some restrictions on terms of resale: not earlier than in 5 or 10 years in order to prevent gamble in the market. There could be exception, if the proprietor will prove, that his state of health has worsened or he has got in a difficult financial situation, and that it has happened after the purchase of the real estate.

Annually Switzerland gives out about 1500 quotas - sanctions for real estate purchase by foreigners. These quotas are distributed mainly among the cantons with advanced tourism. A lot of sanctions get cantons of the French Switzerland, German Switzerland and Italian part of Switzerland. Zurich and Geneva are not in the list.

It is connected to the certain timetable. The bank will ask for the personal meeting with the future borrower, during which will ask questions concerning the family status, occupation, size of the annual income.
According to the law, Swiss banks are obliged to check up a source of money resources of the buyer to make sure that the money does not go from the business connected to traffic in arms, drugs, terrorism, etc. Banks check presence of money resources and ask to give the documents, which can confirm the income.

The bank can also ask granting guarantees in the size of about 20 % from cost of the real estate object. It can be any assets of the buyer (money resources on the account, securities, real estate, etc.). The question is, whether the buyer can give such documents. If not, the bank asks to set up a separate account and deposit money for payment of interest on the mortgage credit.

What real estate is chosen in Switzerland?

In 80s Switzerland have experienced so called “Arabian wave”, when Arabian sheikhs bought up a lot of elite real estate on lakesides. Now Switzerland experiences - “Russian wave”, that is the keen demand for real estate from the side of the Russian buyers. In the nearest future experts expect fort the “Chinese wave”. In addition to it, real estate in Switzerland is stably popular among Englishmen and Dutch.

The few have known about advantages of investments into the Swiss commercial real estate. Now the tendency has appreciably changed, and more and more people want to buy commercial real estate (approximately 40 % of all inquiries) which brings guaranteed income, though not fabulous. In fact, investment in real property in Switzerland helps to keep the capital in economically and politically stable country.

At the end of 2007 some large world building companies have declared erection of high-rise buildings. Some of these projects should become the highest buildings in the country.

By 2013 in Seoul, South Korean capital, will be constructed the 150-storied skyscraper 620 m in height. Its total area will make 442 thousand sq. m. At present the highest building in South Korea is 261-meter skyscraper Tower Palace, writes Varianti.lv.

China does not lag behind the neighbors: on December, 25 there began construction of a building which will rise up on 350 meters. Ending of construction is planned for 2013, and the area of a complex will make 458 thousand sq. m. This skyscraper, except for international standard offices, will have modern shopping centers, five-star hotel and elite dwellings.

One more news about construction of a skyscraper has come from the Russian capital: corporation Mirax Group has signed the agreement with the head of Dynamic Architecture architect David Fisher about erection of rotating skyscraper in Moscow. The building will total more than 60 floors.