Property in the Emerging Markets

Markets in Asia, Latin America and the Middle East are experiencing booming real estate sectors, fueled by a growing middle-class and strong economic performance. Southeast Asian cities are seeing the fastest increase in apartment, condominium and commercial property prices across Asia, according to property consultants Knight Frank.

The company’s Prime Asia Development Land Index - analyzing property prices across the continent - reveals that over the past two years, prime residential and office development prices in Asian increased by 50.4 percent and 38.3 percent respectively.

The high-end property segment in Southeast Asia, Latin America, the Middle East and Africa is growing, and is forecast to continue this expansion in the coming decade. Over the past two years, house prices in Jakarta have grown by 184 percent, fuelled by Indonesia’s fast-growing middle class and the increasing demand for high-end property in the city. Furthermore, capital cities Manila and Yangon have also been highlighted by experts as cities with property markets to watch, in terms of residential, industrial and commercial real estate.

With a strong economy and improvement in areas like transparency and governance, more investors have turned their attention to the Philippines’ capital. Manila has a young demographic, receives a significant amount of capital from Filipinos working overseas and a similar workforce culture to the west. Its residential, retail and office sectors all have strong investment prospects. Global bank HSBC last year named Mexico the “the safest bet for investors in the region”.

In a study of the top emerging markets from 2013, the bank chose Mexico ahead of Brazil and Argentina as Latin America’s investment hotspot. Investors see signs of change in Mexico, with drug-related violence and crime on the decline and businesses benefiting from reforms enacted since the 2012 elections. Foreign investors are attracted to Mexico due to perks such as value for money, which is more favorable than in the US and Europe, and appealing exchange rates.

A number of countries, expected to become economic powerhouses of the future, have been grouped into the so-called MINT – Mexico, Indonesia, Nigeria and Turkey – and PINE countries - the Philippines, Indonesia, Nigeria and Ethiopia. The young populations, increasing wealth and economic stability and attractive geographical locations make these particularly good options for investment, infrastructure development, and construction.

CURRENT MARKET SENTIMENTS CONCERNING PROPERTY PRICES IN LAGOS

Many people still believe property prices are too high 

Market sentiments the world over is never static but statements like “when would property prices come down?” has been prevalent in the Nigerian property market for a long while.

Although In the past 12 months, a gauge of sentiments concerning property prices showed some improvement, it still remained solidly in the negative territory, against a backdrop of a fall in the buying power of many. This can be seen in the fact that although property prices did not rise astronomically (A 3 bedroom luxury flat that sold for N45million in early 2012 has increased in price by just 6.7% to sell for N48million at present), many people are still of the view that prices are way too high. This attests to the fact that this is a perception problem that needs to be worked on by Estate Agents.

Mr Titus Oludaisi of Jide Taiwo & Co believes that some buyers generally do not really consider the value of the house before saying the price is too high. He is of the opinion that convincing buyers that prices are fair by looking at it from the rental returns they would be making from a property is a good strategy. “When you break down values in terms of facts and figures, they begin to reason that the price is fair,” he explained further.

Mr Chiedu Egbuonu, a partner with Country Home Real Estate has a contrary experience. At the times he had tried to do some arithmetic by calculating the rental return on investment, he finds that the property is not as attractive. So basically, he resorts to telling buyers that the price he is offering is the going rate. “I also tip in the fact that the property appreciation is high in locations were I sell and I project what the property would likely sell for in a few month’s time,” he added.

He opines that buyers in the medium and low income property market segment hold greater negative market sentiments. 

In another interview, Mr Gbenga Shodunke, an Estate Agent  with Ubosi Eleh & Co. is of the opinion that Estate Agents can reduce such sentiments by telling prospective buyers of the number of properties that have been sold and how much they were sold for. 

International Sales Expert Alen Mayer Explains that price objections could be viewed from three categories: 

Those that object mainly because the prices are higher than they can afford to pay. These customers desire a cheaper grade of products. 

Objections that are made solely for the sake of argument. Many customers think it is their duty to make many objections in the course of buying, and their most frequent objections are to price. 

Those objections which are made with all sincerity. The customers object because they sincerely believe that the prices are too high for the products. They are sincere in their objections, and believe in what they are saying.

He advises that when you encounter a price objection from your prospects; try to understand to which class of this three this objection belongs and then try to handle it properly.

 Original copy found here: Current Market Price

Should Building Plan Approval process be regulatory or revenue generating?

“Kindly refer to the above subject matter on your Building Plan application for a Development Permit which is under processing in this office. Kindly be informed that the Lagos State Internal Revenue Service (LIRS) has adjudged that your income tax status is not up to date. You are therefore requested to make additional payment of …….”

If you put in an application for Building Plan approval in Lagos State, it is an invitation for the State to review your tax affairs. So virtually all parties who put in an application, get letters with content similar to the opening lines of this article. The result is that the application suffers delays as tax issues are sorted out and no building plan application can be concluded in the 30 day period, the State Government has indicated as the maximum time for such applications.

When the CASTLES Lifestyle correspondent asked the Commissioner of Physical Planning and Urban Development, TPL ‘Toyin Ayinde, at a recent FIABCI seminar if Building Plan applications should be regulatory or revenue generating, the Commissioner’s answer was brief and to the point: “both”. TPL Victor Emdin, at the same event, however argued that by its revenue generating and administrative duties, the Town Planning authorities are compelled to delay the approval process.  He argues that the Building Plan application review is a technical process but when the applicants have to sort out tax matters and proof of title, delay is inevitable.

A commentator sitting beside our correspondent grumbled beneath his breath that his own grouse was that the tax authorities seized on the size of the project to come up with a ‘Best of judgement’ assessment of what the project owner’s tax should be. This is assessed on current values despite the owner buying the land several years ago when the prices were low and speculatively putting forward a building plan in the hope that sometime in the future, he would have some funds to start the project. He also recollected another instance where Government levies Infrastructure Development Charge (IDC)  but does not provide any infrastructure.

While TPL Ayinde indicated that the Government was reviewing IDC, the consensus around the table where our correspondent sat was that until the Government separates the revenue generation duties from the technical assignment of vetting the applications, building plan applications will always be delayed.

Original copy found here: Should Building Plan Approval process be regulatory or revenue generating?

4 Truths to Remember During Your Home Search

Keep these mantras in mind during your hunt for the perfect abode.

Everyone said it was going to be tough, even grueling, and that defeat was definitely possible — but I wasn’t going to let that stop me.

Last fall, I was dead set on finding the apartment of my dreams. Armed with a notebook, pen, and a list of exactly what I wanted, I took off into the concrete jungle of Los Angeles real estate.
And I’ll admit it was a struggle (I cried once or twice), but I kept thinking and repeating to myself, “Don’t settle for less,” and “It’ll be worth the wait and effort.”

“House hunting isn’t just a financial expedition,” says lifestyle expert April Masini of AskApril. “It’s a relationship journey. Many emotional decisions are made, and they have to do with the relationship you have with your own past, your current spouse or partner, and family.”
Ultimately, I found a home that I absolutely adore — and if I can do it, you can too. Because just like my mantras, there are certain truths we have to keep in mind when shopping for that ideal home to buy or rent.

1. Don’t settle for what you don’t want
I had a clear vision of what kind of living space I wanted: a one-bedroom (not a studio) with a dishwasher, a parking spot, and a refrigerator (not commonly included in L.A.). After seeing a bunch of apartments, I realized that was going to be a hard combination to hunt for, but I knew I wouldn’t be happy unless I had it.

And real estate experts agree — a checklist is key.
“Make a list of your needs and stick to them,” suggests Monica Fry of the Minneapolis/St. Paul–based Fry Group. “For example, if you need three bedrooms, do not look at two-bedroom homes. You do not want to get emotionally attached to something that does not meet your needs.”
Dallas-based real estate agent Clayton Collins advises to categorize your list using the three N’s: “Need to have, nice to have, and nope.”

2. Location, location, location
Yep, it’s true, even if it has turned into a shopworn cliché. Christopher Rither owned a home inspection company for 12 years in scenic Hawaii and worked with many folks moving to the islands, who then departed about a year or two later.

“After some time my employees and I came up with this saying: ‘Paradise is only paradise to those visiting paradise,’” he says. “Make sure the house you buy is in a place you want to live in for quite some time into the future. The location of a home is just as important as the home itself.”

3. It’s strictly business
Home is where the heart is, but you have to remember to keep those emotions in check when going through the house-hunting process.
After all, at the end of the day, it’s all one big business transaction, says Washington, DC–based real estate agent Craig McCullough.

“There are many things that can go wrong and change during a home search, but keeping a business mindset has helped many of my clients work through the stresses,” he says. “For example, in an urban market like Washington, DC, many properties are escalating over ask price. I remind all of my clients to keep a focus on what price the property is worth, not what price will this property escalate to.”

4. It ain’t over ’til it’s over
For Tracy Bobbitt, editor of thehollywoodmomblog.com, and her family, their third offer was a charm as they searched for a house in the Atlanta area last fall.

The first offer fell through because the property turned out to be the former residence of a well-known celebrity/murderer — yikes! The second house had a lovely view of the water, but it was falling apart, to the point that the home inspector strongly warned the Bobbitts against buying it.

“Needless to say,” says Tracy, “we’re still anxious about this third home because — as another saying goes — ‘It ain’t over ’til it’s over.’”

Original Copy found here: 4 Truths to Remember During Your Home Search