The Real Deal New York

International briefs

March 31, 2009

Swiss market stays stable in face of recession

Switzerland may be one of the few markets in the world where home prices are on the rise, particularly for luxury homes, and where real estate is still considered a sound investment.

With limited inventory, prices for homes near ski resorts have increased as much as 20 percent over the past year, the International Herald Tribune reported, especially in the popular Vaud and Valais areas in southwest Switzerland. Average prices in the country overall rose nearly 4 percent between 2007 and 2008, according to Wüerst & Partner, a Swiss firm that follows home prices.

The country also restricts home purchases and resales by foreigners. Foreign buyers — most of whom are from the U.S., Britain, Germany, Italy and France — aren’t allowed to resell their homes for five to 10 years after purchase, making quick flips impossible and keeping the market stable, said Andrew Maude of Alpine Specialist, a Britain-based property agency.

Toronto real estate suffers, but less than in U.S.

The real estate market in Toronto is seeing a downturn, but it is not being felt as sharply as it is in the U.S., thanks to strong immigration and subprime mortgage protections.

Prices have fallen about 15 percent in the last several months, the International Herald Tribune reported. Homes with selling prices over $2 million are taking an average of 37 days to sell this year, compared to 31 days last year.

About 100,000 foreigners immigrate to Toronto every year, with the most affluent foreign buyers coming from Iran, Pakistan, China, South Korea and Russia. Brokers estimate that 5 to 20 percent of the city’s homebuyers are non-Canadians. In the last decade, an influx of well-heeled immigrants has spurred the construction of about 100,000 new condominium units, with more than 40,000 of them sold in 2007 and 2008.

While subprime mortgages were available in Toronto beginning in late 2007, buyers still had to offer proof of income and guarantors in order to get loans. As a result, credit is still available today to qualified buyers, and only 14 of the developments proposed during 2007 and 2008 have been taken off the market.

Allegations of nepotism surround Afghan projects

Mahmoud Karzai, older brother of Afghanistan’s President Hamid Karzai, has been heavily involved in the country’s most significant real estate development, the International Herald Tribune reported.

Critics grumble that Mahmoud Karzai has too much influence, has risen too fast and benefited from insider deals.

Two companies with connections to Karzai got more than $5 million worth of loans for a real estate development in the city of Kandahar and an apartment complex in Kabul, according to officials at the Overseas Private Investment Corporation, a government agency that gives financing to U.S. businesses in other countries.

The Kandahar project, called Aynomina, is a 10,000-acre new residential development. Karzai has built more than 200 homes, with another 60 under construction, on the controversial site once owned by the Afghan army and reportedly turned over to Karzai for development at little cost.

Karzai and his investment partners also have control of Afghanistan’s only cement factory, for which they paid $25 million in cash. Karzai also sits on the board of Kabul Bank, the country’s largest commercial bank.

Compiled by Sara Polsky

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