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Two Markets to Watch in 2013

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Two Markets to Watch in 2013

By - Monday 15 October 2012

It's that time of the year again; the time when we stop worrying about this year, and start planning for the next, even if the continued volatility out there makes planning seem almost impossible at times.

America

The revival of the US housing market continues apace, with sales rising, inventory falling and the combination of the 2 causing undeniable price growth. The latest release of the Case-Shiller index for August showed not only the second monthly year on year growth in a row, with prices up 1.2% compared to August 2011 but also marked the third month in a row that prices in all 20 cities in the main 20-city composite index had recorded month on month growth.

Meanwhile according to the National Association of Realtors, August was the sixth straight month on month growth, taking the annual increase in the median price to 9.5% compared to August 2011. The last time the US' largest real estate association recorded 6 straight months of growth in the median house price was between December 2005 and May 2006, before the market crashed. Likewise the annual growth of 9.5% recorded in August is the biggest recorded by the NAR since January 2006 when prices rose 10.2% from a year earlier.

This revival has started even against the backdrop of a weak economic outlook, and even with the so-called shadow inventory looming large (millions of homes in arrears awaiting repossession), and it has done so without any government assistance whatsoever. It has done so because after almost 6 years of decline, prices have fallen far enough, and with mortgage rates still at record lows Americans are ready to start buying again. With the economy gradually and continually improving it is logical that the US housing recovery will intensify in 2013.

Istanbul

Istanbul is a city almost without limits in its potential. It has amongst the fastest growing populations in Europe, due both to natural growth, and also to people migrating from across the country to find better job opportunities and a better way of life.

Around the world, so called primary cities are separating from the rest, becoming magnets for the world's rich, successful and best. London, Paris, Hong Kong all fit into this category as the world's wealthy buy up properties in their safe-havens, and the biggest and best companies attract the best and brightest staff to come and work there. As a result property prices in these cities are soaring to record levels.

Not everyone can afford to invest at the level of these primary cities. However, arguably an even better opportunity is to invest in the primary cities of tomorrow, today. Istanbul certainly fits into that category. A population growing rapidly in affluence and in numbers, growing employment, rising wages, increasing access to credit, and growing desire for the finer things in life.

Rental yields on Istanbul property were found by a recent study to be 6-8 per cent, and property in the city was found to be grossly undervalued. Although having said that, according to a recent report by Sotheby’s wealthy safe-haven buyers are already creating a prime niche in certain districts of the city, where prime properties are changing hands for over a million Euros.

In August STR recorded a 29.3% growth in hotel occupancy in Istanbul, while Revenue Per Available Room increased by 39.8%, making it one of the strongest cities in the entire Europe region.

The retail sector is equally impressive, with a slew of new malls opening in 2011, and recently a new mall opened by Donald Trump. Retail spending grew by about 7% in Istanbul last year and is growing strongly again this year. The industrial sector is also thriving off the back of the retail growth. The office sector is also doing incredibly well, as more and more companies make Istanbul their regional hub, companies including BT, Vodafone, the International Finance Corporation, and many more.

Across all sectors, Istanbul is certainly a city worth watching in 2013 and beyond.

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*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.


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