Tim Murphy IP Global

Here is How a Leading Property Investment Manager Assessed New York & San Francisco

2012-02-08T23:04:00.000-08:00

By Guest Blogger:

Charlie Rosier

Senior Investment Manager,

IP Global - Hong Kong

Following my trip to US I thought I would give you an insightinto the various markets and a sneak peak as to what IP Global would soon be looking into.

The Big Apple – New York

Views from 1280 Fifth,Manhattan

Alistair Auty, Jonny Morgan and a host of others dragged meacross NYC, looking at projects in Jersey City, Queens, Brooklyn, Harlem and ofcourse Manhattan. I visited developments from USD $500psf up to USD$4,000psf. In general sentiment seems to be positive, sales are tricklingin slowly and December/January seems to have been a strong month for mostdevelopers. In terms of new construction, there is not a great deal goingon, most projects have been launched and the concept of “off-plan” sales diedin 2008. That said for the right project, with small number of units,sales are happening quickly with much appetite from overseas – in particularmainland China and Malaysia.

I saw almost all our existing projects and have to say that Iwas most impressed with 77 Hudson. The views are stunning and the commuteacross on the Path train is literally one stop from the new WTC (which is alsoa phenomenal building similar to the Shard in design). Finishes andamenities are of a high quality – Here is a video highlighting the project from an owner's perspective:

I wastreated to lunch at a local “pub” – Monday and the place was full. Thereis a new Whole Foods in the building as well which, as I learnt in NY is thecatalyst for any up-and-coming neighborhood.

Next project….given all your feedback, there was obviously ademand for some more “prime” product. I am pleased to say therefore thatwe should have a fantastic project on Fifth Avenue over-looking Central Park –due to launch later this month. Prices from USD $742 psf. There isdefinitely still a strong investment case for Lower Manhattan however and allbeing well we will have an off-plan project to compliment in Q1.

The City by the Bay – San Francisco

Views from The Madrone,Mission Bay

San Francisco is a great city, unlike Manhattan you can get great sky-line views without having toleave the City. I was fortunate enough to have a Chinese tour-guide forone day, who gave me an insight into the Chinese culture and the “pull” forAsians – there has been a 50% increase in the Chinese population in past 30years. Unsurprisingly the main reason is education - many Chinese want tosend their children to Stanford University and so relocate here so that theyare in the right catchment areas etc.

Whilst there is a strong financial hub in downtown, SF is hometo more than 30 international financial institutions, the biggest economicgrowth area is technology. Twitter, Google and salesforce.com are thelargest employers and occupiers of commercial space. In terms ofresidential market – rental growth is phenomenal (64% population rent) howeverpsf values are still under their peak – some 15-20%. Everyone I spoke toindicated that the market has now hit the bottom which makes it the idealinvestor’s market. However there are almost no condo projects, developersare turning their projects into rental buildings to take advantage of thestrong rental market and also because this is the only way for them to secureconstruction finance. There is only one project “off-plan” which we arehopeful of securing, with a view to launch in March….Prices from USD $553 psf. This is a fantastic project by one of the largest developers in US andshould have serious “China Appeal.”

Interested in hearing your perspectives & questions on SF & NY? Would be happy to answer them.

Feel free to email me directly at charlie.rosier@ipglobal-ltd.com or sign up for our newsletter at IP Global's Website to recieve the latest investment insights.

Best,

Charlie

Avoid the Eurozone Property Market Until Situation Becomes More Clear

2011-11-02T21:29:00.001-07:00

The turmoil in the Eurozone countries continues to command centre stage, with principal players such as France and Germany still grandstanding about how best to solve the region’s debt problems. Against that backdrop, we would caution against investing in “euroland” until there’s some indication of a resolution to the crisis.

That’s not to say Europe is entirely out of the question when it comes to real-estate investment. Non Euro cities such as London still look worthy of attention and is one of the most attractive property plays, with the relatively weak pound making the British capital the most attractive city in Europe for property plays. For investors with slightly more risk appetite, we would also throw Prague and Istanbul into the mix.

Assuming the debt crisis in the euro zone is resolved without a major national default, and with certainty rather than a long, lingering drip-feed of debt extensions, we favour Germany as the most attractive euroland play. Major cities such as Munich, Hamburg and Berlin offer the best opportunities, with robust market fundamentals. There’s also the long-shot possibility of currency appreciation if Germany elects to bail out of the euro and return to the Deutsche Mark.

Perhaps surprisingly, investment in the euro zone remains active. However, the market has been dominated by local investors, while international investors remain on the sidelines, waiting for resolution of the sovereign-debt crisis in Greece and spillover into the banking sector.

According to DTZ, France saw commercial real-estate transactions rise 33 percent in the second quarter, 2011. The pace was even more hectic in Scandinavia, with Nordic countries posting a 79 percent increase in activity.

On average, investment activity across Europe rose 14 percent in the second quarter. Investment into Britain was up 16 percent, while Germany saw only a 5 percent gain.

Cross-border investment however all but dried up, down to €7.5 billion, or 29 percent of all commercial deals. That was the lowest level of international interest since 2002. Investors from outside Europe remained on the sidelines, with investment volumes down 14 percent.

We are of the view that London will continue to command the attention of international investors. The United Kingdom has evolved into a two-tier market, with the capital behaving very differently from the rest of the nation. London’s property market is up 11.4 percent year to date, while average prices nationwide are down 6 percent, and off 20 percent from their 2007 peak.

Overseas buyers have spent just under £6 billion in the capital over the last 18 months, seeking London properties as a safe haven at a time there are few certainties in the real-estate outlook.

The Czech capital is also seeing relatively stable growth, and should continue to attract interest from property investors and developers alike. Property investment is up 3.7 percent compared with last year. Rents, though, continue to struggle, down 7 percent last year.

Istanbul has also been drawing significant international interest. The main supportive factor being the rising affluence of the city’s residents. Istanbul prices are up 7.4 percent compared with last year, driven by high demand and limited supply. The annual demand for new property in Turkey’s largest city is estimated at 250,000 homes or more, but only 180,000 units are due to come on the market this year. This gap is expected to remain for a number of years. Rents are edging ahead, up 1.1 percent in September.

It’s best to wait before exploring any investment in the euro zone. But Germany’s low unemployment and robust labour market, combined with relatively healthy economic prospects compared with other parts of Europe, make it the most attractive euro zone market.

Berlin, Frankfurt and Munich all featured in Ernst & Young’s ranking of the top 10 cities in Europe for new investment. Germany as a whole has the highest proportion of rented property, at 57 percent of the country’s stock.

Property prices and rents are on the rise in Munich, the country’s most expensive market, where prices are up 12 percent since the first half of last year, to €3,440 per square metre. Rents are averaging €12.10 per square metre per month, an increase of 3 percent compared with last year.

France has so far bucked the trend of deteriorating property markets seen in the rest of the euro zone. But slower growth is weighing on consumer sentiment. Together with consumers who are growing ever more cautious, it suggests recent price rises won’t be sustained.

Other euro zone markets such as Spain and Ireland continue to suffer horribly. Spain has seen a price correction of almost 25 percent since 2007, but there’s no relief in sight. There’s also no sign of a light at the end of the tunnel in Ireland, where prices are down more than 40 percent from their 2007 peak. That’s the deepest slump in Europe, and one that shows no signs of letting up.

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Investing in Super Prime London and the Importance of Leveraging Your Investments

2011-06-08T20:43:00.000-07:00

Over the last 2 years, our clients have enjoyed some of their highest returns from their investment properties in London. This is why it has remained one of our key investment markets over the last 2 years. Extreme under supply and high rental yields are just some of the reasons why we favour this market.

First and foremost the London property market has continued to perform well over the last 12 months with property prices forecasted to grow 29.1% in the next 4 years. Secondly, the exchange rate continues to favour foreign investors with the pound currently undervalued making it relatively cheap for foreign investors to purchase London real estate. Thirdly, rental values are at high levels and have increased by 16% over the past 12 months. It is likely that interest rates will increase in 2011, which will have an impact on rental yields, however we are still seeing a very strong uptake of rents with an average of 5 tenants competing for every property in the UK. This demand-supply disequilibrium in the market means you will be able to demand higher rents to offset the higher interest rates. The final confidence factor on the London market is how attractive it is compared to the rest of the other real estate investment opportunities around the globe. Real estate in Singapore, Hong Kong and China is inflated and over regulated which makes purchasing in these markets difficult and very expensive. London has shown consistent capital value growth and good levels of leverage which has not always been present in Singapore, Hong Kong and China.

Leveraging your property investment especially in London can really push up your returns. Take this example: over the last 11 years property prices in London have increased 109%. If you were to leverage your investment at 70% in 2000 i.e. took an average loan of 70% of the property value, then you would have made a 376% return on your investment compared to the price growth of 109%. This indicates the importance of leveraging assets to optimise the returns on your investment. Leverage is always sensible for a point of using your capital wisely and generating better returns but also for reducing any tax liability. For instance your monthly rental is offset against mortgage costs, if you have GBP 1,000 rent and GBP 800 mortgage you only pay tax on net income of GBP 200 and of course that is not taxable because of this low band of income.

With so many London products in the market, one can be forgiven to be somewhat overwhelmed or confused as to where or what to invest in. Keep it simple: focus on super-prime. Over the past few years super prime London property has performed better than the general London market and there are a few boroughs which outperform the rest. The likes of Kensington, Chelsea and Westminster are examples of super prime London. Even during the recession, if you were to have leveraged your investment property in Kensington and Chelsea in 2006, you would have seen a return of 189% compared with 55% unleveraged. This shows you the kind of return in super prime London and how leveraging your property can more than double your ROI.

Super prime London is a perceived as a store of wealth with investors turning to these markets as a safe haven in the midst of ongoing global political and economic uncertainty. If its investors in the Middle East trying to get political security or Asian investors wanting to buy in Europe or investors from Russia looking for top quality product in an under supplied market, Super prime London ticks all these boxes with a forecasted growth of between 5 and 10% for this year.

London is a tried and tested market year in and year out. Although the market is cyclical, like most real estate markets, over time even with natural peaks and troughs, London will give you very strong and generous returns without significant risk. This is why we have invested over GBP100 million in London on behalf of our clients.

Kind Regards

Tim Murphy

To find out more about Tim Murphy and investing in global real estate click here or contact IP Global.

Where To Invest In Q2 2011?

2011-05-17T20:15:00.000-07:00

We recently published the second edition of our property barometer, a quarterly report that offers a summary and analysis of the key property markets around the world for foreign investors. We have identified several markets to watch for this quarter and have made some suggestions on which ones you should avoid.

In Q2 2011 we still remain optimistic about the London property market with mortgage financing becoming more competitive. Although interest rates are likely to increase in the second half of the year, there is still a huge under supply of real estate in London and overseas investors are now accounting for 48% of all prime central London property. Rents are at an all time high and supply levels are at and all time low, so it still makes for a very interesting market to monitor over the coming months.

Moving on to the US, we remain very confident about the New York and Jersey City market. Capital values in Jersey City are still 50% below their peak in January 2007. In Jersey City, just across the water from Manhattan, property is trading in the region of 25 – 30% of New York prices, with very strong rental yields, great transport infrastructure giving speedy access to Wall Street and downtown Manhattan. We have had lots of interest from our clients in Jersey City with properties selling faster than in Manhattan, inventory levels continually low and high yields of 6%.

Closer to home in Asia, I am still very confident about the Kuala Lumpur market as the government continues to implement economic stimulus packages, and forecasts capital value growth rates of between 7 to 10% this year. The Malaysian property market is also benefiting from a somewhat ‘lack of regulation’ compared to Singapore, Hong Kong and China.

Heading to Europe, the volume of sales to foreigners was up 40% in 2010 in Turkey. There has also been massive growth in the construction sector and the property market in Turkey has rebounded significantly compared to the rest of Europe. Property prices are set to increase with over 400,000 people immigrating to Istanbul every year which has created a housing shortage of 250,000 per annum. Turkey has the fastest growing economy in Europe, a trend that is likely to continue after Istanbul won European City of Culture in 2010 which is expected to spur a huge amount of investment in the coming months.

The regulations certainly slowed up the Singapore market significantly in the first quarter of the year. GDP has slowed from incredible growth in 2010 and developers are now releasing considerably less residential projects. We are still very favourable on the Singapore economy and we are looking for value in the real estate market but in the industrial sector rather than the residential. Industrial property is capable of achieving high rental yields of 4 – 6% with the cost of borrowing low at just 1% making it a very attractive investment market. We believe the Singapore industrial real estate sector to be one of the key markets to watch this quarter.

Further afield, Australia is having a tough time with a 30 plus year high for currency, interest and inflation which are challenging home sales. As such we are starting to see a slight correction in the market as property becomes quite expensive to hold given the cost of funding. As a result I think we will see quite sluggish second half of the year in Australia.

During the remaining months of this quarter I would advise seeking out investment opportunities in London, New York and Malaysia whilst keeping an eye on the up and coming real estate markets of Turkey and the Singapore industrial sector. For the reasons stated earlier, I advise to avoid the Australian property market during this quarter.

Kind Regards

Tim Murphy

To find out more about Tim Murphy and investing in global real estate click here or contact IP Global.

Take A Bite of the Big Apple

2011-03-28T01:38:00.000-07:00

We recently did a ‘cost-of-housing’ measure to compare property prices and the rebound from the recession between London, New York, Moscow and Hong Kong. It was really interesting to see the correlation between these countries and the speed with which Hong Kong, as a barometer of Asia, has bounced back. Having peaked and then troughed in mid 2008, Hong Kong has come back with a vengeance over the last 12 months. In comparison, London, a market we at IP Global are very fond of, came off in mid 2007 and started to rebound slowly in late 2008. Contrast that with Moscow that dived earlier and returned to some strength in late 2009, the New York property market just looks like the best value. It is still coming out cheaper on average for a city centre apartment than London, Hong Kong or Moscow. Interestingly the supply levels in New York are tightening with no new developments built in the last 2 years. The large amount of capital available and diminishing supply levels makes New York a very attractive market. That’s why we have been bullish on New York for a good six months now. The economy and property market have reacted positively to the economic stimulus programs and there has been substantial recovery during 2010 and already an increase in the volume of purchases in New York and New Jersey.

Jersey City, located across the Hudson River from Manhattan, is also an interesting proposition because it’s an alternative play on New York with a lot less money required to invest. Many of our clients want to back the US as a housing market, particularly the major commercial capitals, but they are nervous of spending USD 700,000 or USD 1 million in New York. Consequently if they get into somewhere like Jersey City, which is a stone’s throw from Manhattan’s city centre, they are in for a lot less money allowing them to gain a foothold in a market they previously could not afford to invest in. You’re talking about property prices of mid USD 300,000 for a one bed apartment in a new build with incredible amenities. One such development is The Saffron, which is situated just 7 minutes from the World Trade Centre. In New York this type of development would be selling for north of USD 1 million and the commute from The Saffron is quicker to the World Trade Centre than from Central Park. The yields are also better than New York, up to 7%, and it’s a good play on a currently undervalued market without having to worry about investing a large amount of capital.

New York and Jersey City both present strong cases for investment achieving different investment objectives. Jersey City appeals to investors seeking a high yielding investment and who would like to gain a foothold in the New York Greater Metropolitan Area. Whilst New York is a capital investment play attracting investors who would like to capitalise on the rebound of the New York property market. It is important that you seek expert help before embarking on any investment. Please contact one of IP Global’s expert Sales Consultants at 39659300 for more information.

To find out more about investing in New York visit www.ipglobal-ltd.com or email IP Global at info@ipglobal-ltd.com

Kind Regards

Tim Murphy

Founder and CEO of IP Global

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Edinburgh - The UK’s Best Kept Secret

2011-03-08T18:41:00.000-08:00

Edinburgh is one of the UK’s best kept secrets. Although London continues to attract the majority of foreign investors with 50% of buyers in London from overseas, Edinburgh has grown in stature for international investors. Driven by huge tourism numbers, 13 million tourists visit Edinburgh every year and superb education facilities with 7 universities, the property market is expected to go from strength to strength. Edinburgh’s strong economic fundamentals and high capital growth potential have really put it on the map for overseas investors.

If you are Scottish and a property investor, of course you would have always been buying in Edinburgh, the prime property market of Scotland. However more and more international investors are looking to Edinburgh as a cheaper alternative to London but one with great stability. Savills have forecasted 19.2% increase in prime prices over the next 4 years and already prices are starting to pull back up from September 2009. The prime housing market in 2010 saw a 41% increase in the number of properties sold compared to the previous year. With prices trending upwards, it is clear that investors are starting to buy back into the Edinburgh property market.

There is a huge amount of regeneration going on in Edinburgh and the West End. In 2012 St James Quarter will undergo a GBP 850 million regeneration scheme creating 7,000 new jobs and 160,000 sq ft of office space. Waverley Station is undergoing a GBP 130 million upgrade and there is a proposed GBP 100 million development in Fountainbridge.

The primary driver to Edinburgh remains its stable market and high rental value with rents increasing by 2.2% last year. I believe Edinburgh to be the next hot spot in the UK with the property market continuing to become attractive for overseas investment.

Click here to read our full market update.

Kind Regards

Tim Murphy

Founder and CEO of IP Global

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The Malaysian Property Market - Where To Next?

2011-02-28T23:55:00.000-08:00

I read a report recently about ‘the world in 2050’ and I found it very interesting. Everyone keeps talking about a global shift in economic power, yet in 2050 it is forecasted that many of the major economies are still very powerful; this just shows you how long it takes for the new order to establish itself.

The report asserted that the UK will still be the fifth biggest economy in 2050 and the US will fall to second as China claims the top spot with Japan and Germany remaining in the top ten largest economies in the world claiming fourth and sixth place respectively. What I found most interesting was that the power of the Malaysian economy will grow substantially over the next decade and if you look where Malaysia has come from and where it will be in the next 10 years, it’s pretty incredible. Malaysia is currently the only developing market in the world that will have a developed status by 2020 and will be in the top 20 economies in the world by 2050.

Over the next decade Malaysia’s GDP is expected to average 7.1% per annum and by 2050 it will be the world’s 20^th largest economy with a total value of USD 1.16 trillion. Its economic transformation program will drive 3.3 million new jobs with 4.3 million urban inhabitants expected to commute in the next 10 years, primarily to Kuala Lumpur. In China that is small, but in a city like Kuala Lumpur that is phenomenal! Basically what this means it that the power of the economy will be driven primarily to Kuala Lumpur.

The Malaysian economy is extremely diverse and not reliant on one type of export, you’ve got palm oil, health care, electronics, tourism, education, oil and gas and financial and business services not withstanding agriculture. In terms of the Malaysian economy, over the next 10 to 20 years you’ve got a country that’s finally, starting to punch above its weight. Furthermore, 84% of Malaysians will be urbanized by 2025, remember these are people who used to be farmers back in the day, and the population will grow by 17% over the next 10 years. Fascinating and exciting, and in terms of the property market very powerful and positive. Supply will be taken up over time and there will be a long term under supply of real estate in the market with more money and urbanization being driven to Kuala Lumpur, making it an excellent market for investment over the coming years.

Find out more about investing in Malaysia.

Kind Regards

Tim Murphy

Founder and CEO of IP Global

Visit the IP Global website.

New York Bouncing Back

2011-01-19T22:16:00.000-08:00

I am really excited about New York this year and it’s been a long time coming. Most people think that the recession in the US started in August 2008, when the Lehman Brothers collapsed, however the recession began much earlier and in particular in the property market, which was underwater a year prior to the collapse. In terms of real estate, we have always said that New York would recover more quickly than any other area in the US and also that the market would face a lower recessionary trough – and we have been correct. Over the past 18 months we have been waiting for the right opportunity and to see momentum in the US market which is what we are starting to see now.

New York is the largest city in the US with a population of 8.3 million and it houses the headquarters of eight of the world’s top ten security firms. While people are understandably concerned about the banking crisis, people forget that New York is a major global financial hub, 790,000 companies operate in New York, and you can see this by how quickly the city’s economy has rebounded. In 2010 property prices increased by 10.2% and we are now seeing green shoots of recovery and finding fantastic opportunities. Nouriel Roubini and John R Taylor, better known as the "Dr. Dooms" of the finance, and John Paulson, the hedge fund manager who made massively successful bets on when the housing bubble would burst, are some of the Wall Street heavy weights who have recently purchased New York residential property. This is perhaps the most positive sign for Manhattan property since the financial crisis.

What we have been looking for, for some time now, is a distressed opportunity, yes the market has been in distress but where have the opportunities been? Most opportunities in the US have been in over supplied areas like Miami, Las Vegas and Florida. These are not the kind of opportunities we are looking for. We are continually searching for prime residential real estate; when there is blood on the streets you buy property and not just any property but the best you can find.

I would advise investors to strongly consider the New York market with several distressed opportunities now available at substantial discounts located in the centre of Manhattan. For example a 3,000 square foot luxury apartment in London would be priced at about USD 7.5 million, while in Hong Kong it could be USD 5.1 million. By comparison, a New York apartment of that size would set you back USD 4.5 million.

There are opportunities appealing to every investor from those seeking to gain a foothold in a market which they could previously not afford to seasoned investors seeking to invest in prime residential properties at a highly discounted price point. We believe our latest project, The Sheffield, ticks all these boxes. Located in the centre of Manhattan and just steps from Central Park, we have managed to secure this remarkable development at a 28% discount with a 3 bedroom unit on the 42 floor in 2006 priced around USD 3.42 million now selling for USD 2.44 million with financing up to 70% LTV.

The Sheffield includes fantastic facilities such as a private gym swimming pool, outdoor roof terrace, and exclusive spa, just round the corner from Central Park and 5^th Avenue. I am really excited about this project with units already flying off the shelves we expect this development to sell out very quickly.

I believe that over the long term The Sheffield will offer investors high capital growth coupled with strong rental yields. My outlook for the New York market is very positive. This viewed is share amongst New York’s elite with hedge-fund manager Paulson, who earned USD 15 billion for his company in one year by successfully predicting when the housing bubble would burst, stating "If you already own one, now's the time to buy another one. If you already own two, it's time to help your children buy a home."

Supply of property in New York is exceptionally tight and there is a lot of money still floating around the market. I believe it will outperform Hong Kong, Singapore, London, Beijing and Shanghai, making it my top market for 2011.

Kind Regards

Tim Murphy
Founder and CEO of IP Global

To find out more about The Sheffield click here.

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Will Brazil Follow in China’s Foot Steps?

2010-11-23T00:03:00.001-08:00

When I think about global growth and the most exciting markets in the world for the next 10 to 20 years obviously people talk about China and Asia. But second to that, you can’t ignore the increasing impact and importance of South America.

South America is considered to be an enormous area of growth on a commodity, farming and manufacturing basis. Over the next 10 to 20 years it is predicted to follow China in becoming a consumption based economy. If you think about China 20 years ago it was very much an export and manufacturing based economy. However over the last decade domestic demand has become increasingly important due to the substantial creation of wealth in the domestic population. The same can be said about Brazil, which has a population of about 200 million people of which just half are active consumers. Brazil was traditionally a very poor economy but is increasingly becoming wealthier as domestic wealth increases. Brazil is becoming a major player on the global stage; it is currently the second largest economy in the developing world after China, and is set to become one of the world’s top 5 economies in the next 20 years.

Mortgage lending in Brazil is traditionally low, which is why I am particularly bullish about the property market. Low levels of mortgage lending reduce the number of speculators and encourages stability in the market. If you look at the US, Spain, and the UK, mortgages were available of up to 130% LTV. In Brazil, the government has set a conservative rate of 60% LTV, so the mortgage market is well regulated and the banks tightly managed. As a result you can’t borrow enormous sums of money, keeping the market in kilter. In terms of foreign investment, access to financing for foreigners remains extremely challenging. Mortgage lending grew by 77% in 2010 but this growth is pretty minute if you compare it to the growth of the economy, which grew by 8.8% Y-O-Y and is expected to expand by 7.5 – 8% this year.

The big thing about Brazil, is huge under supply. 30 million people don’t own a property and currently rent, there is therefore an enormous requirement to build property over the next 10 to 20 years. We know, from what we have seen from places like Beijing and Shanghai, the more money people earn the more the economy grows and the more people want to invest in real estate. That’s clearly the case for Brazil, with consumers increasingly aspiring to purchase property, increased availability of financing and strengthening of the economy.

I am very confident about Brazil’s property market and I think it’s the most exciting real estate market outside of Asia.

Kind Regards

Tim Murphy

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Why London Property Investment?

2010-10-28T02:26:00.000-07:00

While I certainly don’t think that the UK property market will rebound significantly in the next 12 months there is currently a small window of opportunity for foreigners to gain a foothold in the UK market. Severe undersupply of rental properties, coupled with low interest rates and a weak pound exchange rate have created the ideal environment to invest in distressed property. With current rental yields the highest in 20 years and 5.5 tenants competing for every property, investors cannot afford to miss out. Mortgage borrowing continues to be difficult for domestic Brits and it is expected to remain over the coming 12 months, further exasperating the high demand for rental properties.

Over the coming year, interest rates are expected to remain low which gives great yield opportunities for foreign investors. However, the biggest factor for me is that we are still able to purchase at significant discounts to 2008 prices at least for another year. Nevertheless investors need to act fast as these distressed properties are being snapped up quickly and as a result there are fewer and fewer distressed investment opportunities.

We have an outstanding investment opportunity in the Tower Hamlets which is the best performing district in London recording a 18% increase in rents over the last 12 months. Tower Hamlets is currently undergoing an enormous regeneration project and investors have the opportunity to purchase from just GBP400 – 600 per sq ft. Our development is a short 5 to 10 minute commute to London’s Square Mile and is exceptional value with the properties already tenanted, providing investors with an income earning property from day one of ownership. Tenants include doctors, lawyers and architects who earn an individual income in excess of GBP30,000 providing a stable rental income and strong yields. These are the kind of properties which generally get bought up very quickly by domestic investors; however the current market climate has created a small window of opportunity for foreigners to invest in decent stock at a reasonable price point.

I am particularly bullish about this area of London, this is not Canary Wharf where there is a massive over supply with thousands of units on offer, this is the real heart land of central London and a short commute to the city centre. This is the type of property investors should be purchasing in during the current fragile economic climate.

Kind Regards

Tim Murphy
IP Global Founder and Managing Director

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London and New York Market Review

2010-10-21T19:41:00.000-07:00

London

London is the world’s leading financial and trading hub, home to 65% of Fortune’s Global 500 companies. London remains the preferred investment destination for investors seeking out markets providing stability, established property laws and mortgage financing. Current market conditions in London have created a favourable environment for property investment. Severe undersupply coupled with low interest rates and weak pound exchange rate make it the ideal time to invest in prime London property.

Over the last 12 months property prices have increased by 11.4% marking the 11^th consecutive month of positive price growth and the strongest annual growth experienced by any other region in UK and Wales. From July to August prices increased by 0.9% indicating strong and stable price growth. Although prices have increased substantially over the last 12 months, there is room for growth with prices still lower than their 2008 peak. The latest report from the UK’s land registry has shown that Brent was the borough with the highest annual price rise, recording an increase of 16.3%. The borough of Redbridge experienced the highest monthly price increase, with a rise of 1.7%. Bexley experienced the smallest annual price rise of 5.5%.The borough of Islington also performed well registering an annual 12.4% increase in house prices and a 0.2% increase from July to August 2010.[1]

Over the last quarter stock levels in London have fallen by 15% marking the lowest level of supply since July 2008. As a result of the severely under supply, rents in London increased at the highest rate of any region, recording a 5.1% rise between June and September 2010. Over the last 12 months, rental prices in London have increased by £208pcm to £1,818pcm or an increase of 12.9%. Rental prices are now the highest since the index was started in January 2008. [2]

The UK's largest letting company also noticed the supply shortage registering 50,480 prospective tenants during April, May and June 2010. This is the highest level that has been recorded since they started collecting data in 2003. As a result there are now an average 5.5 tenants competing for every property. This news may be very beneficial to investors with analysts revealing that people would prefer to purchase a home than rent in 74% of locations around the UK. This indicates that investors should see strong capital growth and health returns on their capital invested.[3]

Oxford Economics, a leading forecast consultancy, have predicted that London’s GDP will grow by 3.8% (inner London 4.2%) per annum between 2010 and 2012, compared with 3.0% for the UK. This strong GDP growth indicates that the property market will continue on its upward cycle over the long term.[4]

Key to the UK market is the interest rate remaining extremely low; this bodes very well for the property market. I don’t see a particularly steep recovery but there are great deals to be had because developers are still desperate to offer stock to overseas investors. I think that with low interest rates and high rental yields the UK will still offer strong value over the next 12 to 18 months.

New York

Property prices in New York gradually increased by 197% from May 1991 to June 2006. Prices subsequently fell during the global financial crises by 20% from January 2007 to April 2010. However from April to July the property market begun to recover with prices increasing by 3.5%.[5]

According to research conducted by Trulia, a real estate research engine, the median sales price from homes in New York from July to September 2010 was $1,125,000. This represents an increase of 8.3% or $86,000 when compared to Q2 2010. The average price per square foot has consequently increased by a year on year 1.9%, making it $1,189. This indicates that New York is a prime market for investment with stable and steady price growth expected over the long term.[6]

Foreclosures in New York are some of the lowest in the US with just 1 in every 2175 housing units receiving a foreclosure filing in September 2010. This is considerably lower than the US average of 1 in every 381 housing unit receiving a foreclosure filing. This illustrates that as a global financial hub, the New York economy and property market are more robust and thus bounced back quicker than other markets in the US.[7]

According to the latest rental market report on Manhattan, rents in from August to September 2010 increased by 0.2% representing a 4.84% year on year increase. The condominium (condo) market performed well during Q3 2010 as the length condo’s where listed on the market fell from an average 134 days in Q2 2010 to 106 days in Q3 2010. This is as a result of median sales price of a Manhattan condo which increased by a year on year 10.3% and by 1.8% from Q2 2010, to $1,120,000.[8]

Recent reports from Trulia, has shown that New York City ranked first as being cheaper to rent than to own, however over the last few months rents have started on an upward trend indicating that this rank might change in the near future. New York has seen positive house price growth of 12.4% from Q3 2009 to Q3 2010 according to Prudential Douglas Elliman Real Estate, New York’s largest real estate service company.[9]

The outlook for New York is extremely positive with increased mortgage availability and positive growth trends expected to translate into strong rental yields and solid returns on investment.

Find out more about investment opportunities in London and New York.

Kind Regards

Tim Murphy

Founder and Managing Director of IP Global

[1] http://www.landregistry.gov.uk/

[2] http://www.findaproperty.com/media/rental-index/FindaProperty_Rental_Index_Q3_Sep_10.pdf

[3] http://www.telegraph.co.uk/finance/personalfinance/investing/7899775/Buy-to-let-demand-for-rented-accommodation-at-record-levels.html

[4] http://www.savills.com/research/global-research/emerging-from-the-crisis-london.pdf

[5] http://www.macromarkets.com/real-estate/MSA/new_york.asp

[6] http://www.trulia.com/real_estate/New_York-New_York/market-trends/

[7] http://www.realtytrac.com/trendcenter/

[8] http://assets.prudentialelliman.com/NYCPhotos/retail_reports/manhattan_q3_2010.pdf

[9] http://assets.prudentialelliman.com/NYCPhotos/retail_reports/manhattan_q3_2010.pdf

Kuala Lumpur - Asia's Most Stable Property Market

2010-10-07T03:41:00.000-07:00

Stable Property Market
Malaysia is increasingly becoming the preferred investment destination in Asia due to its stable property market and relative affordability. Malaysia is a sensible market and tends to perform more steadily than the rest of Asia, the property market is well regulated, such that speculators can’t buy and sell quickly so it doesn’t tend to create a boom and bust scenario. That’s why we’ve seen 5.3% growth in the past 19 years. The reason for this is because Malaysia’s property market is driven by owner occupiers and domestic consumption and not pure rampant speculation like the rest of Asia. However the market is still priced as the second cheapest residential capital city in the region which is superb when you think that the only market which is cheaper is Jakarta which is very difficult for foreigners to purchase in.

Strong Currency
The underlying strength of the Malaysian Ringgit has also aided investor’s confidence in this secure market. The Ringgit has been Asia’s best performing currency in 2010 appreciating by approximately 9% against the US dollar, 23% against the euro and 15% against the British pound. Although the Malaysian ringgit has performed exceptionally well this year it is still considered extremely undervalued. This strength has been gained on the back of strong economic fundamentals and higher interest rates which has risen gradually to 2.75% in August 2010.

Limited Supply
Although Kuala Lumpur continues to attract international investors and property developers there remains a lack of supply especially in the mid to luxury condominium market. In June 2010, of the total supply of residential housing in the Klang Valley, just 25% was located in Kuala Lumpur. Due to the limited supply we have experienced strong take up rates in Malaysia with 85-90% of units sold in KLCC and Mont Kiara and 96% of our units currently tenanted.

Affordability
Unlike the property markets of Singapore and Hong Kong, Kuala Lumpur remained relatively stable during the Global Financial Crisis. Over the last 12 months prices in Hong Kong have increased by approximately 25% Singapore by 38% and in comparison Kuala Lumpur has lagged with prices increasing by only 3%, this makes Kuala Lumpur an even cheaper option.

Outlook
The property market is expected to remain stable with prices on an upward trend. The International Monetary Fund (IMF) confirms the country's Gross Domestic Product (GDP) forecast for 2010 has now been revised to 6.7% from an earlier estimate of 4.7%. The IMF also expects the Malaysian economy to grow 5.3% in 2011.

Kuala Lumpur remains one of my preferred investment destinations; IP Global has invested USD800 million alongside its clients since 2005 with over USD250million of that invested in Malaysia. Malaysia makes for a nice steady, safe but equally exciting property market where you can own a property as a foreigner with low taxes and strong economic fundamentals.

Find out more about our properties in Malaysia.

Kind Regards

Tim Murphy

IP Global's Managing Director

Singapore Property Regulations To Slow Down Market?

2010-08-31T02:16:00.001-07:00

Regional Property Update
Hong Kong and China have implemented measures to curb speculation in the property market, Singapore is following suit with the recent announcement of new property regulations.

Market Update
The Singapore government introduced a new set of property regulations yesterday in an attempt to cool the property market after prices soared 38% during Q2 2010, exceeding their 1996 peak. During the last quarter, Singapore led 36 markets around the world in property value changes and recorded a GDP growth rate of 15% in March making it the world’s fastest growing economy. During the remainder of 2010 GDP is expected to grow by 13% - 15%.

According to the Urban Redevelopment Authority of Singapore, there was a total supply of 61,831 uncompleted units of private housing from projects in the pipeline, at the end of second quarter. Of the 61,831 units, 37,910 units were expected to be completed between the third quarter 2010 and 2013.

New Regulations
Singapore Prime Minister, Lee Hsien Loong, announced several property regulations during his annual National Day Rally Speech on Tuesday 30 August. The regulations included:

• Increased down payments for second mortgages from 5% to 10%
• Stamp duty imposed on property held for less than 3 years, up from 1 year
• Buyers who hold more than one mortgage can only borrow up to 70% of a property’s value, compared to 80% previously
• Up to 22,000 flats will be built next year, up from 16,000 this year

How Will This Affect the Property Market?
This is not the first time we have seen governments in Asia stepping up regulation in a bid to curb property speculation and rampant price escalation. Over the last 12 months there has been a wave of government regulation taking place throughout Asia notably in Hong Kong, Singapore and China. This is the third round of regulations in Singapore and the second in Hong Kong within the last 6 months.

While I believe the measures are necessary, I am not a fan of government intervention. Nevertheless, it would seem given a price escalation of 38%, it’s probably something that needs to be done to curb rampant speculation. Having said that, there are still low levels of supply in the market and it remains very attractive for overseas investors and Singaporeans alike. GDP performance during the first quarter was at an astonishing rate, cementing Singapore as a key investment destination as foreign investment continues to flow into the market.

I think these regulations will have an impact on the market in terms of slowing up investment and take up of new properties. However I’m not sure whether the secondary market will die down. I think the regulations are more likely to impact the buyers of new homes as they will only be able to draw on a 70% mortgage if they are buying a second property, meaning a down payment of 30% of the purchase price, which is quite significant. Although the government measures will seek to cool the market, until there are interest rates rises there will not be a significant impact on the market.

Kind Regards

Tim Murphy
Founder and Managing Director IP Global

Click here to find out more about IP Global

Source: http://www.bloomberg.com/news/2010-08-30/singapore-lowers-loan-limit-for-second-mortgages-to-cool-housing-market.html
http://www.rttnews.com/Content/ForexTopStory.aspx?Id=1404723&SM=1

Hong Kong Property - Too Hot to Handle?

2010-08-24T01:31:00.000-07:00

Last month the Hong Kong government sold a residential site in the city's luxurious Peak district for a whopping HK$10.4 billion ($1.3 billion).

Market Update
During the first half of 2010, the number of sale and purchase agreements for residential property received by the Land Registry reached 65 629, representing a sharp 26% increase over the low base a year earlier or 4% over the preceding half-year period. Overall flat prices rose by 8% between December 2009 and June 2010, and were 15% higher than the peak in 2008. With regards to supply, completions of private residential properties surged by 124% over a year earlier to 7,030 units in the first half of 2010.

New Government Restrictions - 13 Aug
Mortgages

Maximum loan-to-value (LTV) ratio of 60% to properties with a value at or above HKD12 million. For properties valued below HKD12 million, the 70% LTV guideline will continue to apply, but the maximum loan amount will be capped at HKD7.2 million.
Lowering the maximum LTV ratio for properties which are not intended to be occupied by the owners to 60%. Banks should require mortgage applicants to declare whether they intend to occupy the mortgaged property.
Standardising the limit on debt servicing ratios (DSRs) of mortgage applicants to 50%, instead of the current range of 50% to 60%. In addition, banks should stress-test mortgage applicants' repayment ability, assuming an increase in mortgage rates of at least two percentage points, and limit the stressed DSR to a cap of 60%.
The proportion of an average household income required to pay the mortgage on a 484 sq. ft flat reached 41.5% in Q2 2010.

Curbing Market Speculation

Government has banned confirmor deals on uncompleted flats (investors who buy a property and resell it before the transaction is completed)
All buyers forfeit 10% (raised from 5%) of price if they pull out of a sale.

Increasing Land Supply

Auctions to be held or tenders invited for 3 sites on land application list in Chai Wan, Hung Hom, and Fanling.
Application list for 2011-2012 will provide more than 9000 sites.
Further sites for flats to be evaluated (20 hectares of industrial land +public land to be made available)
Sites at Kai Tak to supply more than 4000 flats by 2015.

Where Are We Now In Comparison With 1997?
Prices in Hong Kong have surged more than 40% since the global credit crunch and recession. What started out as rises in the luxury sector has spread with some large housing estates back at or above 1997 levels.

One thing that stands out today is the property market continues to experience robust growth while the economy is recovering from the global financial crisis. This is in contrast to 1997 when property raced higher along with everything in the economy, from wages, the prices of car-parking spaces to the stock market. This again fuels suspicions the market is rigged.

As for the broader market dynamics, not everyone buys the bubble scenario. Ultra-low interest rates mean the average household spends less than 40 percent of its income to finance property, vs. 90 percent back in 1997. Also, a wave of new buyers willing to pay in cash from the mainland shows no sign of dissipating.

In Summary
Hong Kong property prices will continue to trend upwards as long as it remains cheap to borrow money. The recently implemented regulations will slow the market however in order to have a significant cooling effect interest rates will need to be increased.

To find out more about Hong Kong property visit our website.

Kind Regards
Tim Murphy
Managing Director, IP Global