International briefs

Despite World Cup fever, foreign buyers still chilly

While industry experts had been optimistic that the World Cup would boost real estate activity in Cape Town, long a favorite of international buyers, the reality hasn’t lived up to expectations.

Some in the industry point to financial woes in Europe for South Africa’s recent real estate downturn, according to the New York Times. The bulk of the country’s foreign buyers often come from Great Britain and Germany, where fiscal conditions have deteriorated, according to Laurie Wener, a managing director with Pam Golding, the biggest real estate agency in South Africa.

“In the old days we had people visiting Cape Town and the exchange rate was very favorable, and they would pop into our offices, and out of their holiday money, virtually buy spontaneously,” Wener said. But now, “foreign buyers have dwindled to the point where they are almost nonexistent.”

The lackluster market momentum in Cape Town comes on the heels of a rapid ramp-up in prices over the last decade, according to international real estate group Global Property Guide. In some sections of Cape Town, prices grew by as much as 430 percent over the last 10 years, according to recent statistics from First National Bank. Cape Town, with approximately 3.5 million residents, is the second most populated city in South Africa.

Concerns mounting over Chinese real estate

China’s key banking regulator spoke out last month over what he sees as an increasingly tenuous real estate market, due in part to rapid speculation, according to Bloomberg News.

In the China Banking Regulatory Commission’s annual report, the agency referred to real estate development loans as possibly causing a negative “chain effect” in the market, should they grow too unwieldy. In the last year, 9.59 trillion yuan (or $1.4 trillion) worth of real estate development loans were taken out.

Chinese officials have voiced concern in recent months about a real estate bubble. In April, a strict new measure requiring higher down payments and mortgage rates for homebuyers who already own one property was enacted.

Still, some real estate experts say there’s reason for optimism.

Edmund Ho, a managing director with Standard Chartered Bank and a specialist in Chinese real estate, said that the government’s latest measures to curb inflating property prices will show results in coming months. Ho told Reuters he “believes that it’s going to be a soft landing.”

Qatar spreads a wide net with international investments

Despite a global real estate downturn, Qatar is emerging as a key foreign player in several high-profile real estate markets, including London and the U.S., according to the Guardian newspaper.

The emirate made headlines this year when the investment arm of its sovereign wealth fund shelled out 1.5 billion pounds ($2.3 billion) for the U.K.’s famous Harrods department store. And Qatari investors have set their sights on other prime London parcels. A collection of investors and developers has planned a 2 billion-pound ($2.95 billion) office tower near London Bridge.

A recent report from commercial real estate services firm Jones Lang LaSalle put it bluntly: ” Cash-rich and with a strong appetite for splashy overseas assets, Qatari [investment] vehicles have lately outshone their counterparts from the region.”

Qatari sovereign wealth funds have also been eyeing New York City, according to Real estate attorney Edward Mermelstein said that the city’s investment opportunities “are probably as good if not better than they have been in the last 20 years.”

Compiled by Amy Tennery