Mumbai to curb soaring prices with more development
Mumbai is trying to put a lid on soaring real estate prices by allowing more development.
The state legislature is considering changing a law that limits the amount of land available for development in the Indian city of more than 17 million people. The current law limits individuals to developing no more than 5,400 square feet.
The increase in developable property is expected to help lower spiking rents and prices for offices and homes by adding supply.
Office rents in Nariman Point, Mumbai’s financial district, for instance, rose 40 percent in the first nine months of 2006, more than three times as fast as those in New York, the International Herald Tribune reported. The district’s average office rents were $8.65 per square foot as of March, the highest price in 11 years.
Mumbai is home to India’s biggest companies and is the main trading center for stocks, gold, diamonds and oil. It may house as many as 22 million people by 2015, making it the world’s third-most-populous city after Tokyo and Dhaka in Bangladesh, according to a United Nations report.
Morgan Stanley to buy largest office landlord in Australia
Morgan Stanley last month agreed to buy Australia’s largest publicly traded office landlord, Investa Property Group, for $3.9 billion in cash. The move is the largest foreign acquisition of Australian real estate to date, the International Herald Tribune reported.
Investa was valued at $3.08 a share in the deal, 14 percent higher than its closing price one day earlier. It has a stake in more than 33 office buildings throughout Australia. Before the buyout, the company had switched its focus to commercial real estate as the residential market was slowing down.
A shortage of commercial development and decreasing unemployment allowed Investa’s real estate earnings, 85 percent of which are from office space, to more than double in the second half of 2006.
Office vacancy rates in Australian cities have fallen each year since 2004. In Sydney, Australia’s biggest city, office vacancy rates are expected to decline to 6.5 percent by the end of next year from 9.4 percent currently, according to a forecast by the Australia and New Zealand Banking Group.
Post-communist real estate boom ends in Prague
The real estate boom that followed the 1989 overthrow of communism in Prague is over.
The Czech Republic’s capital city is giving investors lower returns — albeit at lower risk — than it did in the past.
Capital appreciation on investments is now running about 5 percent on average, compared to closer to 8 percent only a few years ago, according to a story in the International Herald Tribune.
The reduced returns are due mostly to a larger supply of apartments, at least in the lower and middle ranges of the market. In 2005, a record 33,000 apartments were completed in the Czech Republic, almost 20 percent of them in Prague.
Prices are still rising in the city’s much smaller luxury housing market, which currently includes only a few hundred apartments. High-end residences now go for around $260 per square foot and include new projects like Central Park Praha and River Diamond.
While Prague’s stability and established system of mortgages and legal advice is a draw, speculators looking for greater potential upside are heading to cities like Bucharest, Istanbul and Marrakech, investors say.