The world’s wealthiest may look at expanding their real estate portfolio as they may use sub-orbital space travel to reduce travel time, believes Knight Frank.

More than 70 wealthy individuals, with a combined wealth of over $200 billion, are investing in space research projects, which includes asteroid mining to sub-orbital space travel, the global real estate consultancy said ahead of the March 5 release of its Wealth Report 2014.

“By travelling outside the Earth’s atmosphere, gravitational forces will allow spacecraft to travel at over 4,000 miles per hour, so breakfast in Mayfair could easily be followed by lunch overlooking Sydney Opera House,” says Knight Frank’s Head of Research Liam Bailey.

The consultancy believes that space travel will have impact on global luxury property markets, with ultra high net worth individuals (UHNWIs) will grow their luxury property portfolio.

Though the Wealth Report’s Global Cities Survey confirms, London currently wins over New York as a global wealth hub because it is more convenient for African, Middle Eastern, Russian and European UHNWIs.

But this convenience premium could be noticeably reduced if Richard Branson’s Virgin Galactic succeeds in making his vision for sub-orbital travel a reality.

Transcontinental travel – London to Sydney – a distance of 10,553 miles will be completed in 2.2 hours from the current 21 hours. Dubai to Vancouver, a distance of 7285 miles that currently takes a flight time of 14.5 hours, will be cut short to just 1.5 hours, says Knight Frank.

Talking to The Wealth Report, entrepreneur Richard Branson said: “New commercial space will be one of the most exciting investment sectors in the next 20 years, driven by the initial successes of companies like Virgin Galactic.

“There is already some good evidence that the leading players are receiving high levels of interest from the mainstream investment community and attracting valuations that reflect confidence in future growth and opportunity.”

In 2013, Virgin Galactic spokesperson told Emirates 24|7 that it expects thousands will take the suborbital spaceflight from Abu Dhabi.

“If approved, Virgin Galactic intends for the UAE spaceport to be the first international commercial spaceport, contingent on US regulatory approvals. The UAE spaceport will be a very desirable destination attracting people from all over the world to experience the unique view of earth from above the UAE,” a spokesperson said.

Currently, over 600 people from more than 50 countries have placed reservations. Celebs including Angelina Jolie, Brad Pitt and Ashton Kutcher are among those said to have bought $200,000 tickets.

Ticket price will play a critical role in defining the impact on real estate.

“If this is a technology for billionaires only, then property market disruption might be limited to a wider choice of global lunch options. But if the price drops to allow the merely very wealthy to access sub-orbital flights, then every assumption about current property prices will have to be reconsidered,” Bailey said.

Knight Frank has rated Dubai among the most sought after real estate destination in the world. In 2013, over 140 foreign nationalities, which includes Americans, Canadians and Europeans, invested Dh116 billion in the Dubai real estate market.

Source: Parag Deulgaonkar, Emirates 24/7 News

Canada is seen as a “rebound” economy but overall prospects for the global real estate sector are looking “dismal,” with a downturn that could last eight years, the International Monetary Fund warned recently.

The IMF sees problems both in the “bust” countries, such as the United States, Spain and Ireland, and the “rebound” economies, such as the Asia-Pacific region, most Scandinavian countries and Canada.

In the US, residential investment remains severely depressed compared with past cycles, which the report said could be partly explained by the pattern in house prices and outstanding household debt. Making matters worse, the U.S. states where the house price bust was more pronounced are also where unemployment has increased the most.

“This relationship likely reflects the importance of the construction sector in these states’ economies as well as lower labour mobility resulting from problems in the housing sector,” the IMF said. Tax incentives in both the U.S. and the U.K. only temporarily increased activity.

“Especially in the United States, given the limited success of mortgage modification programs and the shadow inventory from foreclosures and delinquencies, this has renewed fears of a double dip in real estate markets. A lot will depend on the path of economic recovery: if employment creation remains low, risks of a double dip in housing naturally increase,” the IMF said.

There are other threats too, like record high delinquency rates on commercial mortgage-backed securities, and the $566 billion in commercial real estate debt due this year and next, according to data the IMF cited from Foresight Analytics.

Resets on adjustable-rate loans are looming, with limited refinance options because many of the loans are underwater.

Renewed strains on credit conditions may materialize from loan losses due to delinquencies and tougher capital rules, the IMF added.

In Asia, the IMF frets that even though fundamentals appear to provide support for price increases, the econometric estimates are less reliable given their short track record, and anecdotal evidence of speculative activity, rising vacancy rates in commercial property, sizable mortgage credit growth, and massive capital inflows could be signs of overheating – particularly in Beijing, Nanjing, Shanghai and Shenzhen in China.

For more on this topic, please see global house prices.

Two years of global recession have made villas and apartments in some of the world’s most desirable locations dramatically more affordable – but still way higher than Vancouver’s comparable sales – according to figures researched by UK estate agency, Savills, and published in the Daily Telegraph.

[To provide a comparison with Vancouver, I have converted all sterling figures into CAD and changed the price per square metre (the preferred calculation in Europe) to a price per square foot. According to the May 2010 figures from the Real Estate Board of Greater Vancouver (REBGV), the average apartment price in Vancouver Westside is $510,885. If the average apartment size is approximately 600 square feet, that equates to $851 per square foot.]

The results of Savills’ survey shows Marrakesh as the best-value location with riads and apartments in prime parts of the Moroccan city costing $588 per square foot thanks to the city’s low land and construction costs. In central Europe, Montenegro offers beautiful countryside and some of the world’s most unspoilt coastlines and costs $1,507 per square foot with recent improvements to its air links with Britain and its own transport infrastructure.

Likewise in the Middle East, the Sultanate of Oman, which has avoided the blingy excesses of Dubai and is regarded as an elegant low-rise location, costs $776 per square foot. Also good value is the Seychelles, where prime property is $993 per square foot.

The league table also shows which locations have held their values well, despite the recession. Italy, the Balearics and parts of France stand out in this regard. “Majorca has a large gene pool of buyers. This gives it a very resilient market,” says Charles Weston-Baker, director of Savills’ international department, who adds that purchasers come from Britain, northern Europe and the USA. He contrasts that with mainland Spain, which is these days almost wholly reliant on British buyers, who are now stepping back. The country also has a serious oversupply of new homes.

The data also shows that some of the world’s most expensive international hot spots have been relatively recession-proof. “It’s not a surprise that key financial hubs such as Paris, Moscow, Hong Kong or Shanghai generate high values. But it’s clear that traditional world-renowned ‘lifestyle’ destinations such as Cannes and Courchevel continue to attract high-spenders, as does Monaco,” says Savills’s researcher Rebecca Gill, the author of the survey.

The agency sold an apartment in Hong Kong for $29,763 per square foot late last year, about 20 per cent above the top-price London property it sold, while Monaco and Manhattan have seen sales at or above $24,650 per square foot. Paris, the Cote d’Azur and Sydney had one-off top-dollar sales that were close behind.

What costs what, where – Prime apartment property, price per square foot

* Monaco $20,649
* Cannes $10,325
* Courchevel, France $8,262
* Moscow $7,534
* Hong Kong $6,003
* Sydney $5,348
* Paris $4,649
* Manhattan $4,521
* Shanghai $4,470
* Singapore $4,219
* Milan, Italy $4,128
* Sardinia $3,714
* Majorca $3,300
* Geneva $3,195
* Auckland $2,928
* Cape Town $2,528
* Nice $2,478
* Lisbon $2,064
* Warsaw $1,883
* Dubrovnik, Croatia $1,859
* Istanbul $1,813
* Zell am See, Austria $1,650
* Ho Chi Minh City, Vietnam $1,580
* Budva, Montenegro $1,507
* Dubai $1,390
* Algarve, Portugal $1,239
* Sotogrande, Spain $1,239
* Nevis, Caribbean $1,197
* Sarasota, Florida $1,148
* St Lucia, Caribbean $1,083
* Seychelles $1,105
* Hanoi, Vietnam $904
** Vancouver Westside $851
* Muscat, Oman $776
* Cairo $604
* Marrakesh $588

By Stephen Harris of Overseas Property Professional.

Fears over Europe’s economy are set to make property cheaper for foreign buyers if the euro keeps sliding, with some firms hoping for a surge in sales.

A Euro 750 billion deal announced this week to halt the debt crisis affecting the eurozone has been greeted with scepticism by currency traders and fund managers. And stockmarkets in Asia and Europe have fallen as initial enthusiasm for the bailout wears off.

The UK’s slow progress in forming a government after its election last week has also shaken the pound but brokers believe sterling is still likely to rise against the euro later this year.

“The euro is overvalued at current levels and we will tend to see it move back to its long-term average against the pound and the dollar,” said Jeremy Cook, chief economist at World First currency broker.

“The Eurozone has a very inflexible system and another shock from somewhere like Spain or Greece is still a possibility. We could see the pound reaching €1.21 or €1.22 in the next three months.”

Magic number
Agents and brokers have claimed many UK buyers are waiting for the pound to rise above €1.20 before they spend their money abroad.

“We’ve already seen interest in buying property start to increase,” said Cook. “Some people have been putting off buying for a year – they have the finance and are all ready to go but want to get the best rate they can.”

But others in the market are sceptical this will make a real difference. “The same people are still looking for excuses – they’re waiting for something but they’re not sure what,” said Martin Sadler of UK-based agent Assetz.

Mark Bodega of currency broker HiFX said the investment aspect is secondary for most of the firm’s property clients. “There will always be those clients who will be holding off for a better rate but exchange rates are not driving buying decisions,” he said.

Fund Investment
Institutions and funds are also looking to take advantage of a weak euro, according to Oliver Georg, managing director of Behringer Harvard Europe.

“We’ve seen increased interest from North America as any US-denominated fund investing in property in Europe can get a substantial discount at the moment,” he said.

According to the second annual Expat Experience survey commissioned by HSBC Bank International, expats in Canada have the best quality of life and found it to be one of the easiest places in the world to integrate with the local population.

If you’re looking to work overseas, head to Canada, Australia or Thailand, as recession-hit Britain was found to be one of the worst locations to live for expatriates.

Australia and Thailand also came in the top three in the survey of 3,146 people working in 30 different industries and 50 countries, even though Thailand was one of the countries worst-hit by the recession for expats.

“We have seen that there is a distinct trade-off between income and overall quality of life, as many of the top performers … scored toward the bottom of this report’s league table (of the best places to make and save money),” said Betony Taylor, spokeswoman for HSBC Bank International.

“What is clear is that the locations where salaries may not be as high, such as Canada and Australia, are where expats are really enjoying not only an increased quality of life but are also finding it easy to fit in to their new communities.”

Last year Germany, Canada and Spain were the top three countries deemed to have the best lifestyle for expats.

This year Britain was one of the lowest ranked locations when it came to lifestyle after being named as one of the most expensive places for expats with the recession taking its toll.

About 44 percent of expats in Britain are considering returning home, compared with only 15 percent of expats overall.

About 41 percent of expats in Britain find it difficult to find somewhere to live, most find the quality of their accommodation drops after moving to Britain, and a third claim their health has deteriorated since moving there.

“Despite this, the UK does hold the crown for being expat entertainment capital of the world, with over half (58 percent) of expats in the UK saying that the quality of entertainment had increased,” said Taylor.

She added that 62 percent of expats also said that employment prospects were the main reason keeping them in the region.

Results from a different section of the survey, which was conducted by research company FreshMinds, released earlier found Russia was home to the highest proportion of expats earning more than $250,000 with 30 percent of international workers there banking that amount, followed by Hong Kong and Japan.

The lowest-paid expats live in Australia and Belgium with the majority — 63 percent and 61 percent respectively — earning less than $100,000.

Source: Reuters

The cost of emigrating to the USA has increased by almost a fifth in the past six months alone, according to research from Foreign Currency Direct.

Currency fluctuation has increased the cost of living in Canada by only 3 per cent in the last six months which means that with sterling strengthening against the Canadian dollar, British expats living there are enjoying more for their pound.

The average cost of a property in Canada has risen by only £5,599 in six months, a long way from the £32,303 increase in the US.

The average Spanish property now costs £31,576 more to a British buyer than it did in November last year, yet the cost of living in Canada has gone up by just 3 per cent, representing the smallest change of all expat hot spots.

Britons who are already overseas and receiving income from property or pensions in sterling have seen some serious price hikes.

The pound reached record lows against the euro in January, and living as an expat in Europe is now a fifth more expensive than it was in November last year.

Brits emigrating to or living in the USA have seen the average property price rise by £32,303 since November last year, and the cost of groceries, services, meals out and leisure activities has gone up by £373 over the same period.

In February, British expats were enjoying some cost of living reductions as the pound was stronger against the Australian and New Zealand dollar, but even these expats are now seeing their cost of living rise as sterling struggles against other world currencies.

How much impact these currency fluctuations has had depends on which country you are living in, with the USA and France now the most expensive expat destinations.

Peter S Ellis, chief executive of Foreign Currency Direct, said: “Recent exchange rate fluctuations have had a considerable impact on the cost of buying a property and living overseas.

“Despite the euro maximising exchange rates across Europe, the cost of living still varies considerably across the region, meaning that exchange rate fluctuations have a magnified impact in more expensive regions.

“When considering a move abroad it is important to consider not only current exchange rates, but also any likely future currency changes and the cost of living in your preferred country.”

Mr Ellis added: “In the last year Foreign Currency Direct has seen a 29.3 per cent increase in the number of our clients transferring funds to and from Canada and New Zealand, suggesting that Brits are taking advantage of the increasing affordability of these destinations.

“But many British expats are moving their money and their homes back to the UK from Europe as they can no longer afford to live in Europe and can currently take advantage of the strength of the euro when converting their money back to pounds.”

British expats in Europe and America are struggling to stretch their income to meet their needs as the cost of living abroad rockets on the back of the sterling slump but Canada’s attractiveness as a viable, affordable destination remains high.

The 2009 edition of The Wealth Report, the third such collaboration between the UK’s Knight Frank estate agency and Citi Private Bank, indicates that whilst luxury house prices have fallen around the world, the appetite of the super-rich for property remains undimmed.

There were wide variations in performance. Hong Kong saw the sharpest annual drop (-24.5%), but prices for residential properties in Bangkok rose 22.5%. Additionally, some previously buoyant markets have turned very quickly. Dubai, which recorded annual overall growth of almost 11%, saw prices fall by 19% in the last quarter alone.

According to PIRI, prime property in Monaco is the most expensive in the world costing an average of €55,000 per square metre for the best properties. London and Manhattan are placed second and third respectively.

The first Knight Frank World Cities Survey illustrates that New York and London are likely to remain the world’s leading financial centres, but Asian cities are catching up. In the same survey, London takes poll position for global influence by securing top-five positions in four key ranking criteria – “economic activity”, “political power”, “knowledge & influence”, and “quality of life”.

Despite house price falls, the Knight Frank/Citi Private Bank Attitudes Survey shows that almost 55% of High Net Worth Individuals (HNWIs) plan to increase their exposure to residential property over the next two years.

Investors who have purchased overseas property can now capitalize on a reduction in U.K. Capital Gains Tax (CGT) to 18% from April 2008 from the previous rate of 24% thus increasing profits on overseas property investment.

The changes will take effect in the new financial year beginning 6th April 2008 and will include a £9,200 CGT allowance. Overseas property investments will only be subject to 18% tax on any gains above £9,200 replacing the previous sliding scale of up to 40%.

Property investors could also reduce tax bills further by splitting the capital gains with their partner where a property is jointly owned, and in effect pool their threshold allowance of £18,400.

Additionally, owners will be entitled to up to £40,000 letting relief against any gains earned. And as with the CGT allowance, providing the overseas property investment is held in joint names, the letting relief is available to each owner effectively doubling the maximum letting relief to £80,000.

Other tax reductions can be made upon the sale of property if the investor has previously let the property and then lives in the property for any length of time, under the UK Principle Private Residence Relief (PPR). This allows the owner the last three years worth of gain, plus the period in which they have lived in the property, completely free from CGT.

Although PPR generally means CGT is not applicable when selling your main and only residence, if more than one property is owned, the PPR may be offset against any property in the UK or overseas.

(extracts taken from Obelisk Investment)