Which Country Will Falter in The Race of Real Estate Stocks?

April 26, 2007	(1 votes, average: 4 out of 5)  Loading ...
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An unexpected poor selling of Spanish real estate stocks has sent warning signals to property market worldwide. Industry connoisseurs are predicting the end of Spain real estate boom that has sustained itself for the past 10 years.

Outline below are the real estate stock trends of some major countries which boasts to have bullish realty stock market. Let’s scout who emerges as a true winner and who falters in the long run?

Spain

Spain realtors who were earlier making a killing in the wake of booming real estate seem to be worried these days. After five years of growth, prices of residential property in Spain were believed to go through the roof in 2006 but are likely to be moving at snail’s pace this year.

Foreign buyers seem to be loosing confidence in Spain properties, while relatively high prices and competition from cheaper destinations like Morocco and Bulgaria has shattered demand.

However, a few realtors in Spain still believe the prices to hold their value in the short term and deliver healthy returns in the long run. As far as mediocre property in over developed areas is related, they cannot be optimistic now.

UK

UK’s booming residential segment has so far not shown any signs of a sharp slowdown, but there are tentative signs that higher interest rates and stretched affordability have begun to take their toll. For residential properties in UK, the prices are still climbing. The average rates of a home in UK have shot by 2.8% in the first three months of the current year as compared to 4.2% in the previous quarter.

Indeed, some peripheral locations in UK are doing amazingly well whereas others are struggling.  The prices of houses in South of England have been twice as much as those in the North UK. Although, the market has slowed down its pace but experts do not forecast a crash. There are still a few doom-mongers out there, but most experts see bright prospects.

US

US Realty especially the residential segment has been showing dramatic swings for the past few months. A year ago, house price inflation was running at mere more than 13 per cent and then slipped to 4 per cent. At present, the prices have not shown any significant rise.

First-time home buyers in US were unable to go by traditional financing options. The situation encouraged them to take out interest only mortgages and buy expensive home loans which eliminated any need for deposit. Prices of residential property in US continued to rise for a while. It as being made possible by the relaxation of lending norms to help first-time buyers stretch their finances.

However, an increase in defaults in sub-prime mortgage market which hold proficiency in lending to borrowers with patchy records was the final straw.

Mumbai, India

Known as the financial capital of India and a place witnessing technology boom, Mumbai has certainly gained the status of the country’s property hotspot. The demand for residential colonies in Mumbai is both investment and residential driven. The prices have doubled over the last two years. Mumbai real estate is drawing quite large interests from businesspersons and entrepreneurs, many of them are foreign players.

However, the property market in Mumbai is not fully mature. There is a feeling among industry watchers that the market is on the brink of a collapse.

The last time a property bubble burst in India - between 1995 and 2001 - prices slumped by up to 70 per cent. This time, a fall of 30 to 40 per cent is on the cards.

Dubai

With tax free salaries and an array of shopping and leisure facilities, Dubai can woo and invite anyone to thrive in. The large availability of large chunks of land for development, the city has set itself on course to emerge as a property paradise.

With property projects in Dubai developing at a fraction of the price a similar property would fetch in Europe, the real estate appeal in Dubai is obvious. In addition, the investors who largely invested in Dubai properties a few years back are now reaping high profits. It would be baseless to comment on future sustainable popularity of Dubai real estate.

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