UK construction industry flat as economic uncertainty bites
WEDNESDAY, 23 NOVEMBER 2011
http://www.propertywire.com/news/europe/uk-construction-industry-flat-201111235817.html
Construction levels in the UK were broadly flat during the third quarter, according to the latest Royal Institution of Chartered Surveyors Construction Market Survey.
Expectations were increasingly gloomy ahead of the government's announcement earlier this week outlining its plans to kick start the housing market.
Some 1% more chartered surveyors reported workloads fell rather than rose, the lowest reading since the fourth quarter of 2010. Over half of all respondents reported no change in workloads from the previous quarter, as the industry continued to face difficulties.
The main issues for surveyors are the increasingly uncertain economic outlook, the cutbacks in government's capital spending programme and a continued lack of finance for development projects. Chartered surveyors report they are continuing to provide quotes for work, but many of these projects are not going ahead.
This quarter, surveyors were asked to provide the main factors they felt were inhibiting the construction industry. Economic uncertainty and lack of confidence were the most commonly cited, with 80% of surveyors stating this as a reason, followed by cutbacks in government spending at 66% and lack of finance 63%.
The private commercial sector was one area which recorded rising workloads in the third quarter of 2011, but even this was subdued at a net balance of +7%. Given the contraction in government spending, public sector workloads continue to show the largest falls, with public housing and other public works retreating further into negative territory. Public housing was the sector which saw the biggest fall, as 20% more surveyors reported they fell rather than rose, the most negative reading since the fourth quarter of 2009.
Those questioned during the third quarter were gloomy about the prospects for the next 12 months. However, this could soon change with the government recently announcing its £400 million investment fund to boost house building projects across the UK. Prior to the announcement, all three of the expectations indicators, that is workloads, employment and profit margins, not only recorded negative net balances in the third quarter but they also all hit their worst levels so far this year. Profit margins took the sharpest tumble, down 42%, as surveyors noted contractors are competing for work with fewer projects, which is impacting heavily on profit.
‘The construction sector suffered in the third quarter of this year, as a combination of economic uncertainty, large cuts in public sector programmes and a lack of available finance for development impacted on the industry,’ said RICS chief economist, Simon Rubinsohn.
‘The government's housing announcement should gradually provide some much needed help and we are particularly attracted to the provision of funds for small and medium size developers. However, it remains to be seen whether the scale of the package really is sufficient to counter the negative factors depressing activity and profits across the sector,’ he added.
WEDNESDAY, 23 NOVEMBER 2011
http://www.propertywire.com/news/europe/uk-construction-industry-flat-201111235817.html
Construction levels in the UK were broadly flat during the third quarter, according to the latest Royal Institution of Chartered Surveyors Construction Market Survey.
Expectations were increasingly gloomy ahead of the government's announcement earlier this week outlining its plans to kick start the housing market.
Some 1% more chartered surveyors reported workloads fell rather than rose, the lowest reading since the fourth quarter of 2010. Over half of all respondents reported no change in workloads from the previous quarter, as the industry continued to face difficulties.
The main issues for surveyors are the increasingly uncertain economic outlook, the cutbacks in government's capital spending programme and a continued lack of finance for development projects. Chartered surveyors report they are continuing to provide quotes for work, but many of these projects are not going ahead.
This quarter, surveyors were asked to provide the main factors they felt were inhibiting the construction industry. Economic uncertainty and lack of confidence were the most commonly cited, with 80% of surveyors stating this as a reason, followed by cutbacks in government spending at 66% and lack of finance 63%.
The private commercial sector was one area which recorded rising workloads in the third quarter of 2011, but even this was subdued at a net balance of +7%. Given the contraction in government spending, public sector workloads continue to show the largest falls, with public housing and other public works retreating further into negative territory. Public housing was the sector which saw the biggest fall, as 20% more surveyors reported they fell rather than rose, the most negative reading since the fourth quarter of 2009.
Those questioned during the third quarter were gloomy about the prospects for the next 12 months. However, this could soon change with the government recently announcing its £400 million investment fund to boost house building projects across the UK. Prior to the announcement, all three of the expectations indicators, that is workloads, employment and profit margins, not only recorded negative net balances in the third quarter but they also all hit their worst levels so far this year. Profit margins took the sharpest tumble, down 42%, as surveyors noted contractors are competing for work with fewer projects, which is impacting heavily on profit.
‘The construction sector suffered in the third quarter of this year, as a combination of economic uncertainty, large cuts in public sector programmes and a lack of available finance for development impacted on the industry,’ said RICS chief economist, Simon Rubinsohn.
‘The government's housing announcement should gradually provide some much needed help and we are particularly attracted to the provision of funds for small and medium size developers. However, it remains to be seen whether the scale of the package really is sufficient to counter the negative factors depressing activity and profits across the sector,’ he added.
Small rise in property sales in Dubai
WEDNESDAY, 23 NOVEMBER 2011
http://www.propertywire.com/news/middle-east/dubai-property-sales-up-201111235816.html
Property sales in Dubai are 70% less than they were at the peak of the market in the middle of 2008 but a small rise in transactions is being hailed as a good sign.
Real estate experts are pointing out that no one wants a rush back to the heady days of speculative flipping which made the emirate one of the hottest markets on the planet, and that a steady recovery is better.
The latest figures from the Dubai Land Department show that it is certainly not going to be a quick recovery. Dubai saw 1,603 real estate deals in the first ten months of the year, a 70% decline compared with the height of the market when there were 5,363.
But the figures show a 37% increase in property transactions when compared to 2009 at the height of the financial crisis, suggesting that there are indeed signs of recovery in the city’s battered housing market.
The average number of monthly real estate sales is 160, up from 117 in 2009 but still a dramatic way from the average 536 property transactions seen a month in 2008, as off plan properties were flipped multiple times by speculators.
‘It reminds me of how truly extraordinary the market was from 2005 to 2008, and how regular it seems to be today,’ said Ryan Mahoney, chief executive officer of Better Homes, the largest real estate firm in Dubai.
‘We are operating in a market that has less than a quarter of the annual transactional value that it had in previous years and yet we are bus and we even excited by the small spurts of growth we see from month to month,’ he added.
According to Charles Neil, chief executive officer of Landmark Properties, the rise in sales was attributable to an increase in bank lending and the increasing number of Chinese and Indian investors entering the market.
‘There has been an increase in liquidity in the market. Banks are being more active in providing mortgages and interest rates on mortgages have come down from level of around 8 to 6%,’ he added.
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 the start of 2007 to the middle of 2008, prices soared almost 80% and billions of dollars worth of new projects were launched by local developers. But prices have fallen by 60% since the global economic downturn took a grip.
House prices in some parts of Dubai showed signs of recovery in the third quarter, with slight rises in prime projects such as Palm Jumeirah and Arabian Ranches, according to data from property consultants Jones Lang LaSalle.
But analysts remain concerned that the estimated 33,000 new homes scheduled to hit Dubai’s market by the end of 2012 could cause fresh declines in rental and sale prices. Renewed global financial woes and the European sovereign debt crisis are also likely to cause more pain, with Moody's last month predicting no price recovery before 2016.
Andrew Goodwin, Dubai director of real estate consultancy DTZ, said transactions remained subdued as landlords fail to match their asking prices to new economic realities. ‘We receive significant interest from investors looking at the Dubai market but in many cases there is a discrepancy between the purchasers and sellers valuations which keeps volumes low. Those sales that do go through are where the purchaser has a long-term confidence in the Dubai market,’ he explained.
WEDNESDAY, 23 NOVEMBER 2011
http://www.propertywire.com/news/middle-east/dubai-property-sales-up-201111235816.html
Property sales in Dubai are 70% less than they were at the peak of the market in the middle of 2008 but a small rise in transactions is being hailed as a good sign.
Real estate experts are pointing out that no one wants a rush back to the heady days of speculative flipping which made the emirate one of the hottest markets on the planet, and that a steady recovery is better.
The latest figures from the Dubai Land Department show that it is certainly not going to be a quick recovery. Dubai saw 1,603 real estate deals in the first ten months of the year, a 70% decline compared with the height of the market when there were 5,363.
But the figures show a 37% increase in property transactions when compared to 2009 at the height of the financial crisis, suggesting that there are indeed signs of recovery in the city’s battered housing market.
The average number of monthly real estate sales is 160, up from 117 in 2009 but still a dramatic way from the average 536 property transactions seen a month in 2008, as off plan properties were flipped multiple times by speculators.
‘It reminds me of how truly extraordinary the market was from 2005 to 2008, and how regular it seems to be today,’ said Ryan Mahoney, chief executive officer of Better Homes, the largest real estate firm in Dubai.
‘We are operating in a market that has less than a quarter of the annual transactional value that it had in previous years and yet we are bus and we even excited by the small spurts of growth we see from month to month,’ he added.
According to Charles Neil, chief executive officer of Landmark Properties, the rise in sales was attributable to an increase in bank lending and the increasing number of Chinese and Indian investors entering the market.
‘There has been an increase in liquidity in the market. Banks are being more active in providing mortgages and interest rates on mortgages have come down from level of around 8 to 6%,’ he added.
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 the start of 2007 to the middle of 2008, prices soared almost 80% and billions of dollars worth of new projects were launched by local developers. But prices have fallen by 60% since the global economic downturn took a grip.
House prices in some parts of Dubai showed signs of recovery in the third quarter, with slight rises in prime projects such as Palm Jumeirah and Arabian Ranches, according to data from property consultants Jones Lang LaSalle.
But analysts remain concerned that the estimated 33,000 new homes scheduled to hit Dubai’s market by the end of 2012 could cause fresh declines in rental and sale prices. Renewed global financial woes and the European sovereign debt crisis are also likely to cause more pain, with Moody's last month predicting no price recovery before 2016.
Andrew Goodwin, Dubai director of real estate consultancy DTZ, said transactions remained subdued as landlords fail to match their asking prices to new economic realities. ‘We receive significant interest from investors looking at the Dubai market but in many cases there is a discrepancy between the purchasers and sellers valuations which keeps volumes low. Those sales that do go through are where the purchaser has a long-term confidence in the Dubai market,’ he explained.