BIG INVESTORS MASSIVELY BUY VACATION HOMES IN THE NETHERLANDS

According to statistics by Kadaster and Financieele Dagblad, big investors are massively buying real estate to make vacation homes for rent in the Netherlands.

German real estate company Aroundtown, which has just appeared in the Netherlands for 3 years, bought Center Parcs from American company Blackstone for 1.1 billion euros, then rose to the first place with nearly 3,000 holiday village under the above system.

Big investors are massively buying real estate to make vacation homes for rent in the Netherlands. / ph: Center Parcs

American company KKR takes the 2nd place with more than 2,000 vacation parks in the Roompot system.  The 3rd place belongs to investor Vos (Europarcs) with the controlling shareholder is Waterland Private Equity Investments of the Netherlands with about 1,400 vacation homes.  The Bergervoet family (formerly Vos partners) also owns about 1,400 homes.

According to Kadaster, the whole Netherlands has about 140,000 holiday homes appearing on 4,700 transaction network addresses, of which 89,000 are privately owned.  The average house price of about 145,000 euros in 2017 has increased to about 182,000 euros in 2021.

Statistics show that the Netherlands has 600 people with more than 5 holiday homes. Particularly, Mr Arend. V in Groningen owns 147 properties.

The amount of money spent to buy vacation homes has reached 1.6 billion euros. / ph: Roompot
 

The reasons for this boom are low interest rates and the Covid-19 epidemic that has stalled investment activities and high housing demand in the past few years.  In the past two years of the epidemic, the amount of money spent to buy vacation homes has reached 1.6 billion euros.

In fact, tenants include not only vacationers, but also regular tenants and migrants.

WHAT TO DO WHEN HOUSING MARKET CRASHES?

The rapid increase in house prices over the past two years has brought many benefits to real estate investors.  But the economic downturn is causing the property market to slow down, accompanied by many possible risks.  However, overall, these are not bad because they are helping the real estate market to become balanced and stable.

Jason Oppenheim {Chairman and Founder of Oppenheim Group, a real estate brokerage firm with offices in West Hollywood and Newport Beach, California, USA} offers some tips to help homebuyers and sellers adapt to a rapidly changing market and possibly improve subsequent real estate transactions.

I- What to do when housing market crashes?

1- Real estate market has local and time characteristics 

During the pandemic, there has been a the great migration from the city to the suburbs in many countries around the world.  People look for a more spacious living and working space at home at a lower price when they no longer have to go to the office.  This has caused demand for homes in the suburbs to skyrocket, pushing up prices in the context of tight supply.

At the present time, when the pandemic is temporarily under control, people begin to return to the city.  They seem to realize that the city is still the place that offers the most favorable living conditions with many jobs and a developed infrastructure system.  As a result, housing prices in the city gradually increased again, even exceeding pre-pandemic levels.

As a property buyer or seller, in this volatile context, you can wait and see how the real estate market will perform before putting money down or selling.  This waiting is extremely meaningful which helps many real estate investors avoid losses and bring better profits.

2- Real Estate transaction must be based on personal financial situation

Whether you're interested in buying a house closer to the city center or considering more space in the suburbs, according to Oppenheim, the choice to buy or not to buy a house in these uncertain economic times must be based on personal financial situation.  He also said that the real estate market is slowing down because some people decided to stay on the sidelines to wait for the next developments.

However, for those with a strong financial background, buying a house now can help preserve equity when the purchase price is gradually decelerating, especially for those who buy to live in.

3- Improve knowledge and seek advice

Real estate buyers and sellers should update information about the real estate market regularly and continuously through a variety of sources, including information on the internet, groups and field surveys.  Having a full understanding of the property market helps you to be more confident and not worry about making a mistake when buying a house or being forced to sell it.

A real estate agent will also give you lots of helpful advice on the housing market in each area.  Choose an agent that is not only savvy about the property market but also understands your needs and matches your personality.  These will help the real estate Transactions go smoothly and meet expectations in reality.

II- Notes when trading houses

1- Give your house a makeover

Paint the house, retrofit it, replace the windows and doors, remove the furniture, or do whatever it takes to make the house come alive and worth buying in the eyes of buyers. That's how your house appreciates which can sell faster for a better price.

2- Don't worry about demand going down

A more balanced real estate market is a good thing, although you may not feel the same way when trying to sell a house.  While the number of interested buyers is less than before due to increased supply and reduced demand, it does not mean that homebuyers have completely disappeared and you have to sell off your home.

3- Buying house now is still a good choice  

Homebuyers tend to get mortgage loans instead of waiting to accumulate enough money, so they prefer low interest rates.  However, if you can afford it, just buy a house at the moment.  Because the house is not only a place where you live for a long time, but also a shelter against inflation chosen by most real estate investors.

6 KEY FACTORS IN RESEARCH PROCESS FOR RESORT REAL ESTATE PROJECT INVESTING

Resort Real Estate is a pretty hot keyword in the past few years with real estate brokers and real estate investors, but not everyone understands the process and factors to choose a worthy Resort Real Estate project. Below are 6 key factors in research process for resort real estate project investing. 

Resort Real Estate are real estate products built in vacation resorts.  Products are resold to individual and corporate investors. 

Resort Real Estate built for the purpose of serving tourists, providing commercial and accommodation services etc. to increase the experience and convenience for visitors.

This resort real estate type is for secondary investors who are in need of ownership villas, shophouses, townhouses, hotel apartments... with big brands associated with products which helps to upgrade and increase the value of real estate. Resort Real Estate is an investment channel with sustainable profits over time.

Investors can also choose to run their own resort real estate business or lease it back to the project owner to operate the business and then divide the profits earned from that business process.

Here are 6 key factors in research process for resort real estate project investing.

1- Resort Real Estate project’s Tourism market 

The first key factor in research process for resort real estate project investing is the project’s tourism market.

Research about tourism market of Resort Real Estate project as geography, local history, population, tourism characteristics, climate, coastline... of that locality.

For Resort Real Estate, in order to be able to exploit it well in the long term, in addition to the factors of service and management, location plays an important role. Project location that is located adjacent to the sea, just crowded enough for business but also quiet enough for rest will ensure the profitable potential for a resort real estate project.  The fact also proves that, in any market, Resort Real Estate projects possessing seafront locations, especially beautiful and rich beaches, are attractive.

2- Resort Real Estate project owners and the projects that have been and are being implemented

The second key factor in research process for resort real estate project investing is project owners and the projects that have been and are being implemented. 

Prestigious project owner is the leading factor determining the effectiveness of resort real estate project investing projects.  A reputable and capable project owner reflected in the following factors: financial potential, project development experience and brand value.  The project owner capacity will ensure the commitments with customers in terms of profit sharing, construction progress, quality, project legality, exploitation and business capabilities.

You should find information carefully about project owners, the advantages of each project owner in the local real estate business, especially owner of the project that intended to invest (about development history, main business fields, experience in implementing resort real estate project investing projects especially in real estate, stock code, project owner’s reputation in market.

3- Resort Real Estate operator

The third key factor in research process for resort real estate project investing is the project operator. 

Finding out about who is the Resort Real Estate operator, how big and reputable the company is, hotel standard, design style, main idea, designer, construction contractor, handover progress, property ownership.

The participation of a reputable operator will help increase the recognition and value of the Resort Real Estate project for investors as well as tourists.  Usually, for first time luxury tourists, they will look for reputable hotels and resorts owned and managed by a familiar international brand because the service quality has been experienced and recognized by global tourists.

With these resort real estate project investing projects, investors will not only inherit a large number of international customers from the operating brand, but also the prestige of the business will help the project easily attract international tourists.  Therefore, a Resort Real Estate project operated by a famous international brand will determine the exploitation ability as well as the long-term profit of the project.

4- Resort Real Estate project’s strength and weak points 

The fourth key factor in research process for resort real estate project investing is understanding the resort real estate project’s strength and weak points. 

You should understand key points such as What’s outstanding about the location? How are reputable the resort real estate project owner and operator? How is experience in the project implementation? How good is the timeshare? How good is the tourism exploitation capacity there?

In short, you need to know about how good the project is, why you should buy it and why you should buy it now.

5- Resort Real Estate project’s financial and payment policy 

The fifth key factor in research process for resort real estate project investing is the project’s financial and payment policy. 

- Learn about financial issues: Which banks support loans, how to support, cash flow problems when they invest and use financial leverage

- Learn carefully about the project's insurance policy, payment schedule, outstanding terms in the sales contract or other rental contracts.

6- Resort Real Estate project comparison

The sixth key factor in research process for resort real estate project investing is finding information about other available competing projects. 

As a Resort Real Estate project investor, you should find and compare many projects with each other, analyse the advantages and disadvantages of projects to choose the best investing project.

Hopefully, these 6 key factors in research process for resort real estate project investing will be useful and help you achieve maximum profit.

THE US REAL ESTATE COOLS DOWN DUE TO RISING MORTGAGE INTEREST RATES

High interest rates and inflation are weighing heavily on the US homebuyers’ psychology.  The number of available housing contracts in the US signed in June 2022 decreased by 20% over the same period.

On July 27, the National Association of Realtors (NAR) said that the number of available housing contracts in the US signed in June 2022 decreased by 20% compared to the same period last year.  The lowest available house sales since September 2011 (excluding the first 2 months of the COVID-19 lockdown).

On a monthly basis, the number of pending home purchases (contracts signed but not yet completed) decreased by 8.6% compared to May. 

Demand for available house buying in the US fell at the same time as bank mortgage interest rates rose sharply.

The average interest rate on a 30-year fixed loan rose above 6% in mid-June which doubles the average rate applied at the beginning of the year.  High interest rates and inflation are having a heavy impact on homebuyers’ psychology.

The Fed's rapid interest rate hikes have restrained the housing market in the country.

Higher interest rates are driving up borrowing costs for credit cards, some auto loans and other loans that don't have a fixed interest rate which force many families to rebalance their spending.

AUSTRALIANS ARE CAUTIOUS WITH REAL ESTATE TRANSACTIONS

Australians tend to be hesitant to make decisions about buying and selling houses which shows a more cautious attitude towards the real estate market. 

This is the conclusion drawn from a survey conducted by one of the largest banks in this country. 

According to data recently released by National Australia Bank (NAB), only 18% of consumers surveyed between April and June 2022 think that it is a good time to enter the real estate market.

This is the lowest level since the bank started collecting this data in 2020.

Survey results also show that only about 24% of Australians are interested in investing in home renovation, down from 32% recorded in the previous quarter.

People are also hesitant about getting a mortgage, when only 19% of participants supported, compared with 27% recorded previously.

One of the reasons is that the Central Bank of Australia has tripled interest rates to 1.35% since May, increasing the cost of mortgage loans amid escalating inflation, putting pressure on household spending.

The survey found that approval ratio vary from state to state which reflects the different realities of the real estate market in each region during the pandemic period.

Particularly, Western Australia was less affected by the COVID-19 epidemic in the first 2 years than the eastern states of Queensland, New South Wales (NSW) and Victoria.

According to NAB statistics, just 24% of people surveyed in Western Australia feel optimistic about the housing market - down from 32% recorded the previous quarter, while the proportion in Queensland dropped from 20% to just 14%.

CHINA MOBILIZES $148BN TO RECOVER REAL ESTATE MARKET

China is seeking to mobilize 1 trillion yuan ($148 billion) to support unfinished property development projects to realize its ambitions to revive an important pillar of the economy and cooling down the wave of boycotts on mortgage payments.

The real estate sector contributes about 30% of China’s GDP.  The decline of the real estate market is one of the main reasons in addition to the blockade order to prevent the Covid-19 epidemic, causing this country's growth to plummet to 0.4% in the second quarter.

Initially, the People's Bank of China will provide low-interest loans (1.75%/year) worth 200 billion yuan to the state-owned commercial banking system - According to a media source.

Under a plan approved by the Chinese government, banks will use borrowed money from the PBoC, along with their own sources of credit, to refinance unfinished real estate projects.

The Chinese government hopes that the initial loan source can increase 5 times to about 1 billion yuan and partly help relieve the thirst for capital of real estate businesses, in order to soon complete unfinished projects. 

Real estate businesses with high debt ratios have been forced to suspend construction of many projects, with millions of apartments nationwide, raising concerns about social unrest and financial crisis if the debt-paying boycott movement spreads.  

According to estimates by Everbright Bank, the number of real estate products that are under construction has increased to about 8 million units and needs about 2 trillion yuan to complete.

Some real estate businesses even defaulted on many debts at home and abroad after Beijing tightened loan conditions in the real estate sector.

However, experts warn that the PBoC's refinancing plan will only work if the supported real estate projects are able to generate cash flow through sales and leasing channels, thereby minimizing the risk of bad debt formation.

CHINA REAL ESTATE MARKET SHOWS RECOVER SIGNALS

The China Banking and Insurance Regulatory Commission pledged to lending support to help property developers complete stalled projects and stimulate domestic demand.

The agency also urged banks to provide more mortgage loans to qualified homebuyers to stimulate demand and boost the property market. 

Accordingly, mortgage lending increased after the Central Bank of China cut mortgage rates by 0.2 percentage points in May for first-time homebuyers.  As a result, up to 90% of mortgage loans went to first-time homebuyers.

Chinese regulators are now urging the country's banks to extend loans to qualified real estate projects and meet developers' financial needs if reasonable.

Financial news outlet REDD reported on Monday that China's State Council last week approved a plan to set up a real estate fund worth up to 300 billion yuan ($44.4 billion) to help at least 12 real estate groups, including China Evergrande Group, solve the debt crisis.

The news pushed the Hang Seng Mainland Properties index, which tracks China's 10 biggest Hong Kong-listed real estate companies, up 5.4% in the opening session of the week on Monday July 26. Stocks of real estate developers Country Garden and Longfor Group, rose 8.3% and 9%, respectively.

Meanwhile, stocks of China Evergrande Group, Shimao and Sunac, have been suspended from trading in recent months due to the group's liquidity crunch.

Accordingly, China Construction Bank and China's central bank will pour 80 billion yuan into a new fund to help troubled real estate companies complete stalled development projects.

The fund, which will support at least 12 real estate conglomerates, was approved by regulators last week and could be expanded to 300 billion yuan ($4.4 billion).  In addition to reviving stalled real estate projects, the fund could be used to buy property developers' bonds, issue loans or receive shares - added the source.

Furthermore, Beijing is also reviewing a national policy on issuing special bonds to redevelop slums.

WHY DO WEALTHY AMERICANS CONTINUOUSLY GET REAL ESTATE LOANS DESPITE RISING INTEREST RATES?

Wealth management units at Morgan Stanley and Bank of America Corp.  announced double-digit loan growth in the second quarter.  The increase came from customers with the advantage of mortgages and loans secured by assets such as portfolios of stocks and bonds.

Morgan Stanley said that mortgages in its corporate asset management business grew 30% from a year earlier to $50 billion, while loans secured by securities and other loans grew 23% to $93 billion.

Why do Wealthy Americans continuously get Real Estate Loans despite Rising Interest Rates? / ph: Bank of America

At Bank of America, wealth management loans jumped 12% from a year earlier to $222 billion, outstripping the bank's 4% increase in consumer lending.

The growth is another sign that consumers in the US - even the affluent - are not mentally prepared for a recession.  Leaders of America's largest banks say that their customers are spending at a steady rate and keeping up with all their debt payments without draining their bank accounts.

Rich people are exploiting line of credit secured by securities to buy cheap real estate in today's volatile market.

In an environment of rising interest rates and a declining stock market, banks are offering less favorable loans.  Borrowers with portfolios of stocks that have lost value are likely to qualify for smaller lines of credit.

Interest rates on loans through these channels have increased, but are still lower than what banks apply to credit card. Interest rates on loans secured by current securities are typically between 3.75% and 5.75%. Others borrowers can use it to ease payments on new properties by switching to borrowing money from banks before interest rates increase. 

The wealthiest borrowers can mortgage more properties to get lower interest rates which make borrowing costs to be the lowest.

One reason that wealthy clients borrow against their portfolio is to pay their tax bills.  Personal income taxes are likely to set a record in the fiscal year ending September 30, 2022.

The richest Americans are even richer during the pandemic thanks to the stock market and real estate boom boosting their net worth.  According to Moody's Analytics, Americans saved an additional $2.7 trillion between January 2020 and December 2021. The top 10% of earners hold more than half of that.

HOW CAN HOUSE BUYERS AVOID RISKS FROM INFLATION?

The housing market in most countries is witnessing hot flashes and skyrocketing prices because the number of buyers exceeds the number of sellers. To decide to buy a house, experts advise customers not to ignore the following 6 extremely important questions.

1- How long will you live in this house?

If the answer is 5 years or more, you can save a lot of money and time as well as benefit from an increased house value.  The reason is because you often have to spend a lot of money right after buying a house including repairs, interior decoration and furniture purchases.  Under normal market conditions (not what it is today), it will take you a few years to recover these costs.  Therefore, the longer you keep the house, the higher the return on initial investment and the greater the profit.

2- How much are your monthly housing costs compared to your total income?

The golden ratio between housing costs and monthly income is 30% or less.  Although you can get a mortgage up to 70-80% of the house value, you need to consider your income level to know how much you can afford to repay.

Unless you can share the home loan with others, the golden ratio should be maintained to ensure financial security.  If this ratio exceeds 30%, you are prone to risks, even having to sell off your house to pay off bank loans in the event of unemployment (which could be very likely happen in the current context) and have no other source of income to repay the debt.

3- How much % of the house value can you pay in advance?

Homebuyers will pay at least 30% of the house value, then get a mortgage and pay off the loan monthly.  However, the bigger the advance payment, the higher your financial security, and the better the mortgage interest rate you will enjoy.  Ideally, you have enough money to pay 70% of the house value upfront.

4- What would you do if your house valuation fall?

No one is happy when their house value is lower than at the time of purchase.  However, if you adhere to the above tips, i.e. living in the house for 5 years or more, having 70% of the house value in advance, and a monthly payment of no more than 30% of your income, then you can ensure financial security for yourself.

Furthermore, usually after a plunge, the housing market rebounds more strongly than in the previous cycle including lower interest rates and higher house prices.  This will be a great opportunity for you to increase your equity.

5- Do you need to buy a house right now?

This question depends on the individual's condition and circumstances. For today's market, you may have to buy a house at a higher price than usual.  But on the other hand, interest rates will gradually increase in the coming time as the government reduces stimulus packages and preferential policies to recover the economy.  At that time, house prices will increase and homeowners will get benefit.

6- Does the house need a lot of repairs? 

The supply chain is stalled which causes the price of raw materials to skyrocket, greatly affecting the cost of house repair.  Therefore, consider the house carefully before buying to make sure you have enough money for the renovation, furnishing or buy more necessary furniture.

Overall, owning a house is considered as a wise financial move in the long term.  However, there are also many other ways to get rich.  So, you don't have to buy a house right now if you don't feel ready and safe. You should consider these six questions carefully to find the best financial strategy for you.

ASIAN HOUSING MARKET COOLS DOWN CONTINUOUSLY

According to Financial services firm S&P Global, the normalization of monetary policy in the Asia-Pacific is driving down prices and activity in the housing market.

Accordingly, real estate transactions are slowing and prices are falling down in South Korea, New Zealand and Australia.  This trend is spreading to other countries due to the rising household credit burden and the skyrocketing house prices during the pandemic.

Meanwhile, regional emerging markets take less risk about house price volatility thanks to recent government restrictions and lower financial depth.  However, the situation in Thailand and Malaysia is more complicated due to the high household debt burden and the Thai economy's slower recovery than other countries.

The shortfall in supply has reduced the risk of falling house prices.  However, even a brief correction in house prices can have a significant impact because the housing market plays an important role in the regional economy.

A sharp drop in house prices is unlikely to happen in Asia due to strong demand for property, especially during the pandemic as people seek more spacious living space, combined with the still limited supply and the economy is recovering.   The attractive profit potential has caused the demand to buy for living and investment to increase while the supply cannot meet it which pushes up prices.

Meanwhile, urbanization and weak infrastructure have pushed up house prices in emerging markets in the region.  The influx of people into cities increases the need for new housing.  At the same time, the planning and transport infrastructure is not effective enough which make it difficult for urban areas to expand and limit people living in the suburbs to move to the city to work.

As a result, Asian housing prices are among the most expensive in the world.  According to the Asian Development Bank (ADB), the average house price-to-income ratio in Asia is about 15.8 times which means it takes about 16 years of income to buy a home.  According to data firm Numbeo, 17 of the 20 most expensive housing markets globally are in Asia.

Over the past few years, risks have emerged in the Asia-Pacific housing market across multiple dimensions including the growth rate of household credit, the ratio of household credit to GDP and house price growth.

However, the risk is not evenly distributed.  Only New Zealand and South Korea are simultaneously at risk from all three of these dimensions.  Thailand, Hong Kong, South Korea, New Zealand and Australia have higher household credit-to-GDP ratios than the global average; While India and Indonesia have low rates because of poorer households' access to finance.

To control inflation, governments are tightening monetary policy and mortgage conditions, so interest rates could rise further.  This cost potential buyers and investors more money to pay off the home loan.

In previous cycles of monetary tightening, high-income markets such as Australia, New Zealand and South Korea have been more sensitive to interest rate fluctuations.  The Reserve Bank of New Zealand and the Bank of Korea were also the first major central banks in the region to begin normalizing monetary policy after the pandemic, partly due to concerns about financial stability when housing prices are too high.

In emerging Asian countries, the impact of interest rates on the housing market is somewhat less.  Households have less access to formal finance and are less affected by changes in interest rates from the financial sector.  However, the Malaysian and Thai markets are facing many risks because of high household credit, although house prices have not increased much.  Too strict epidemic prevention measures have reduced the confidence of households and restrained the increase in house prices in these two markets.

Typically, financial instability occurs when home prices fall and mortgage market strains increase as during the previous global financial crisis.  But in Asia, macro-monetary policies have helped reduce financial risks including in a housing market downturn.  Loan limits are considered the most popular tool across Asia to ensure the stability of financial markets against fluctuations in house prices.

However, S&P forecasts that economic drag will arise as house prices slow down, because the real estate sector has a strong influence on the regional economy as well as the finances of individual households.  On the other hand, the economic downturn causes a drop in buyer confidence including spending less when inflation is high.  Fewer house purchases, in turn, led to slower investment activity and put back pressure on economic growth.

DOES WELLNESS REAL ESTATE A GOOD OPTION FOR GLOBAL INVESTORS?

Wellness tourism is forecasted to be the trend in the next 5 years which will have a strong impact on the resort real estate market.

If in the past, tourism was simply associated with experience and discovery, but now, the behavior of tourists has changed - They tend to combine hanging out with regeneration, health and beauty care.  Therefore, the wellness real estate sector related to health and beauty is increasingly interested by investors.

According to a survey by American Express, 70% of participants said that they have more goals tied to health than in pre-pandemic years.  At the same time, 76% want to spend more on travel to improve their health, 55% are willing to pay more for healthcare in future vacations.

Given the significant change in travel habits, according to GWI forecast, the average annual growth rate of wellness tourism will be at 20.9% (from 2020 to 2025) which is bigger than health-related fields such as beauty business, spa...

In fact, resort real estate is always closely associated with the development of tourism.  Therefore, when tourism taste has reversed, this type of real estate product must also adjust to catch the right trend, especially when targeting middle and upper-class customers.

The development of wellness tourism also makes investors interested in opportunities from this new real estate product.  According to data from HotStats, in 2019, hotel revenue with diversified healthcare services was 43% higher on average.  According to research by SRI International, domestic tourists spend 2.5 times more on health and wellness tourism and international visitors 65% spent higher than regular visitors.  This is the basis for investors to put their faith in the wellness real estate.

As one of the new investing trends, wellness real estate is focused on developing by investors to meet the sustainable health care needs of modern residents.

According to the Global Health Institute, the pandemic has spurred a shift in the real estate industry towards healthcare.  In the period of 2019-2020, wellness real estate continues to grow by more than 22%, even if the housing market in general is somewhat quiet.

Also according to this organization, the pandemic changed the concept, function and value of the house.  House encapsulates everything from the workplace to practicing sports.  Many people want the living space to meet more safety criteria, bring relaxation and create real community.  They look for living places where there are many benefits to both physical and mental health.

The demand for healthy living space spurred wellness real estate to emerge stronger after the pandemic.  By the end of 2021, research firm GWI estimates that more than 2,300 healthcare projects worldwide are in development and completion, up 740 projects from three years earlier.

Global wellness real estate is estimated to grow at 23% annually between 2017 and 2019, and in the two years following the pandemic, the growth rate will remain at 22%.  The wellness real estate market size also increased rapidly from 148 billion USD in 2017 to 275 billion USD in 2020. The estimated number in 2025 even reach 580 billion USD which doubles in the next 5 years.

The wellness real estate market is growing rapidly.  The elites began to hunt for coastal villas capable of balancing modern amenities and serving the needs of relaxation, health care and spirituality for themselves and their families.

US HOUSING MARKET IS RAPIDLY COOLING DOWN

The US housing market is rapidly cooling off as new record home prices and higher mortgage rates weigh on house sales which cause many potential buyers temporarily leave the market.

Activity in the real estate market slowed down, the period of strong house sales of real estate businesses ended.  This can be seen as a sign that the economy is slowing down, according to economists.

The median price of house in use rose to an average of $416,000 in June 2022, the Association of American Realtors (NAR) announced on Wednesday.  House prices in the US thus increased 13.4% over the same period and at the highest level since the figures were calculated in 1999.

Meanwhile, used house sales fell for the fifth consecutive month, a 54% decline in June 2022 to 5.12 million units.  This level of house sales is lower than the average for all months of 2019 before the COVID-19 pandemic became severe.

Despite high house prices, many houses are still being sold quickly which shows a fact that demand for house is still strong.  According to calculations, real estates are usually for sale on the market for an average of 14 days - the shortest period since 2011.

The stock of unsold houses has increased but remains at a low level, the supply of unsold houses in the market is estimated to last for 3 months.  The total number of unsold houses at the end of June 2022 was estimated at 1.26 million units - An increase of 9.6% compared to May 2022.

THE US HAS A SEVERE HOUSING SHORTAGE

Research result of non-profit organisation Up for Growth recently announced that the US real estate market is shortage of 3.8 million houses which is not meet the needs of both buying and renting house.

According to Up for Growth, house prices in the US have increased more than 30% in recent years which makes the dream of home ownership increasingly remote for millions of Americans.  Meanwhile, house rental prices are also increasing sharply.

The US is facing an unprecedented shortage of housing supply in its history - According to the chief economist at Moody's Analytics.  The high demand for housing in the context of low supply has pushed up the price of buying or renting house.

According to statistics, the pace of housing construction in the US has slowed for the past decade which contributes to the record high house prices and lead to an increase in consumer prices in the US, among other reasons. Besides, inflation in the US is increasing at the fastest rate since the early 1980s.

The US announced an action plan to reduce housing shortages over five years, including increasing federal funding and renovating hundreds of thousands of houses, among other measures.  The plan also encourages local governments to build new cities with more affordable houses.

INVESTMENT VALUE IN ASIA PACIFIC HOTEL REAL ESTATE EXPECTS TO REACH $10.7B IN 2022

According to JLL's report, the recovery in the hotel sector in Asia Pacific region continues to be positive with investment value in the first half of 2022 reaching $6.8 billion, up 33% over the same period last year and up 11.9% compared to 2019,  and is expected to reach 10.7 billion USD in transaction value for the whole year.

This show that capital invested into the hotel sector in Asia Pacific region has returned to pre-pandemic levels.

According to JLL’ statistics, in the first half of 2022, a total of 75 transactions were recorded, down 20.2% year-on-year and 33% compared to the first half of 2019. However, the total number of rooms transacted in the first 6 months of 2022 is 19,822 rooms - An increase of 29.9% compared to the first half of 2021 and 9.4% in the pre-pandemic period of 2019.

Japan market has witnessed a significant recovery in the first half of 2022. Investors remain steadfast in purchasing hotel properties in Japan on expectations of strong domestic and international tourism demand due to the recent devaluation of the Japanese Yen.  Against the backdrop of rising interest rates globally, Japan's debt financing environment remains attractive to investors.

Singapore was one of the first countries to lift most of the travel restrictions in Asia, transaction value in the hotel market also recovered the fastest, reaching nearly $900 million, surpassing pre-global levels.  Transactions are most active in the mid-range market where investors identify opportunities to convert real estate into co-living products to increase investment efficiency.

While in the Thai market, more and more hotels are entering the market as sellers are under increasing pressure.  Although buyers are actively looking, these sellers are taking advantage of the opportunity to set prices and become more cautious in their buying and selling transactions.  There are many private equity funds and family offices operating in the Thai hotel market.  JLL forecasts the transaction value will reach nearly 300 million USD for the whole of 2022.

Maldives has proven its resilience in 2021 as a global resort destination.  The hotel business was largely better than it was in 2019, despite a significant absence of Asian guests for most of the year.  This momentum has continued into 2022 and continues to attract the interest of investors from Asia, the Middle East and Europe.

HOW DOES INFLATION AFFECT REAL ESTATE INVESTMENTS?

According to experts, if inflation exceeds expectations, it will lead to different chain reactions, negatively affecting real estate.  This will cause many risks for real estate investors.

In the context of high inflation, which channel to invest in is a headache for many investors. For the real estate channel, experts say that if inflation increases, the pressure to increase real estate prices will also be big.

Inflation is like a reference level related to the increase in the price of goods on a daily basis.  Those materials are used to build real estates.  If the prices of things like wood, bricks, cement, sand, gravel, etc. and equipment go up, the construction company or the real estate seller will solve the problem by increasing the selling price of the real estate.

Recently, many people do not want to keep cash and tend to move into assets.  Particularly, real estate is considered as a safe haven and anti-slippery investing channel. However, Will real estate prices definitely increase when inflation is high and Will liquidity at that time still be good?

If inflation increases, the prices of materials will rise which causes real estate prices also increase.  For those who are holding assets, the more inflation and price increases, the more they increase the selling price to prevent price slippage.

For real estate projects formed in the future, when opening for sale they will also be calculated the future price of 2-3 years after handing over the real estates, and they certainly also included the inflation price.  This invisibly also pushes the current price of entire area up accordingly.

It is predicted that in the next 1-2 years, a paradox may appear, real estate prices will continue to increase high but liquidity is slow or everyone owns property but no one has money.

However, experts also predict that in case inflation exceeds expectations, it will have a negative impact on real estate, ie prices do not go up, they go down instead.

Real estate is correlated with inflation.  Inflation increases, investors pour money into real estate because in the long run, real estate prices increase accordingly.

But when different inflation rates happen. there are two types of inflation that need attention: Expected inflation, real estate prices will increase;  If inflation exceeds expectations, it will lead to different chain reactions, negatively affecting real estate.

When inflation exceeds expectations, real estate prices will not increase but even decrease.  Therefore, investors must have a strategy and are prepared for that.

According to experts, real estate investment opportunities are always available, but the most important thing is that investors must assess their risk tolerance. Particularly, investors must have the right investment strategy with risk.

In the real estate market, there are many different types of risks but are mainly divided into two main types of risks.  The first risk is the risk of the project itself and project investor.  The second risk is the market risk.

The earlier you enter the period, the lower the market risk.  Because when a new project comes out, project investors and brokers must do the market for us, liquidity is not a concern.  But right now, the biggest risk is legal. Do the project have legal documents? What is the legal capacity of the project investor?

What is the legal history of the project investor?  How is the sales ability of the project investor?

The more slowly investors buy after the project launched, the lower the liquidity and the higher the risk.

Besides, when participating in the real estate market, it is necessary to carefully consider whether the market is in a normal state or not.  If the condition is normal and the price increases then that is good.  If the situation is not normal, investors must be careful because of the high decrease potential.

WHICH STRATEGY SHOULD GLOBAL REAL ESTATE INVESTORS CHOOSE?

The trend of de-globalization is emerging in the real estate market as big investors consider appropriate and safer strategies in current unstable world situation. So Which Strategy should Global Real Estate Investors choose?

Rising geopolitical tensions all contribute to concerns about de-globalization in the real estate sector.  Business cycles can become inconsistent which cause huge differences in real estate stock and bond markets across countries.

Increased political polarization and supply chain disruptions due to the pandemic could prompt investors to return to domestic markets and neighboring countries to preserve capital.  These changes in turn affect the transaction volume, location and type of real estate being built with different levels depending on the demand in each market.

Meanwhile, transparency, governance and stability are always things that investors on a global scale must carefully consider, because real estate is an an opaque and illiquid asset class, with an asset-investment lifecycle lasting years.  As a result, local real estate markets with greater transparency, better governance, and stronger institutions offer better opportunities and larger trading volumes.  According to MSCI, more than 91% of the $2.3 trillion in assets it tracks are invested in transparent and democratic markets.

As the market is still existing many factors which help to promote or reduce de-globalization, international investors involved in real estate bond and stock trading may reallocate their portfolios by country or property type, while paying more attention to external risks and hazards.

Real estate is a distinctly localized industry.  However,  the world's biggest institutional investors often pursue a global strategy to diversify their portfolios and increase opportunities.  Over the past decade, Morgan Stanley Capital International (MSCI) indexes have shown that the share of cross-border real estate on a quarterly basis has remained relatively stable, accounting for between 19% and 26% of total transaction volume.

In terms of post-pandemic recovery, the real estate market is being globalized faster.  Specifically, the dispersion of profits between types of real estate has increased in all markets due to changes in technology (especially e-commerce).  At the same time, the pandemic has caused a slump in retail and office properties, but brought opportunities for industrial and logistics real estate.  These trends show that investment decisions at the moment must be based on the type of real estate rather than a specific market or country.

3 TIPS FOR INVESTING IN REAL ESTATE WITH LITTLE CAPITAL SUCCESSFULLY

Investing in real estate with little capital is one of the ways to get rich fast but like other businesses nothing is easy.

For investing in real estate with little capital successfully, you need to have a solid understanding of real estate industry as well as economics, society,..

Business models in this field are extremely diverse.  From investors who have capital to those who have little capital but want to involve in real estate investing. 

Investing in real estate with little capital helps people from empty hands to owning billions of dollars in real estate, but with that, this is also a fiercely competitive environment, if you want to win you have to be the strongest player.  Therefore, for investing in real estate with little capital successfully, you must have a good investing strategy. 

As everyone knows real estate investing is always one of the most attractive investment.  Its relative stability makes it a good choice for capital appreciation and when executed well, it can generate exponential returns.

People often think that they must have a large capital source to be able to do real estate investing and stick with this business for a long time.  In fact, you can still do business and investing in real estate with little capital successfully.  So, how can that be done?  Here are 3 tips for investing in real estate with little capital successfully.

Experts advise to use loans from the banks to invest rather than use your own capital. This is true for most sectors, not just the real estate sector, as long as you know business secrets and practical experience, you can still get rich with little capital. 

And of course, you must be a person who really loves this field, has enough relationships and bravery in the real estate market, then you should not hesitate to fulfill your passion even with a small amount of capital in hand and investing in real estate with little capital successfully.

1- Get a Bank loan to buy Real Estate and then use rental money to pay 

You need to have a cool head and a real bravery because the real estate investing with little capital game is not for the weak person.

You can get a bank mortgage with 70% of the value of the real estate, so you can do business and invest in real estate without having to invest all your own capital.

After you own the real estate or the house, you can sell it for a higher price or rent it for a good rental fee.

You can wait for property prices to peak and then sell, and during that waiting time, you can fully lease it and get that profit to pay bank interest.  If you do not have experience in this matter, you should find a consultant. 

2- Become a Real Estate broker

A way of investing in real estate with little capital is that you can do as a real estate broker, acting as an intermediary between real estate buyers and sellers and enjoy  earnings from the commission when successfully trading a real estate project or product.

As a real estate broker you just need to be active, work hard to find buyers. If you have many relationships you will be easier to successful with it.

With a career as a real estate agent, you have complete freedom to be your own boss.  You can have your own way of working, find your own customers.  Real estate brokerage profession does not need capital, you just need to be flexible with a little ability to grasp customer psychology, quick in finding information about buyers and sellers and real estates that need liquidity... This can be a your side job. 

3- Rent a Real Estate and then sublease

Renting a real estate and then subleasing it is also a good option that you can think of when you want investing in real estate with little capital successfully.

This method of investing in real estate with little capital is also quite popular.  This method is very simple, you just need to rent the whole house or apartment at a cheap price with many rooms or you can divide the room and then sublease it to others at a higher price to earn a difference profit.

For this way of renting and subleasing, you should only rent houses and apartments that the landlord agrees to give full authority to decide the sublease to avoid troubles that may arise in the subleasing process.

However, you should note that any real estate investing activities has certain risks, so it is very necessary to be flexible and have a good investing strategy.  Hopefully the above 3 tips will help you grasp investing opportunities and investing in real estate with little capital successfully.

AMERICAN PARENTS ARE INVESTING IN REAL ESTATE

The economic crisis because of Covid-19 has made many American parents invest in real estates to inherit to their children which very few Americans did before.  And the number of states in the US that require students to take a course in personal finance has doubled in the past three years.

OnePoll, a well-known market research company, conducted a survey of 2,000 Americans.  Accordingly, 6 out of 10 adults in the US believe that they can build a decent life for the next generation in different ways.  74% said that they have accumulated assets to pass on to their descendants.  More than a quarter (26%) have established wealth for their children by improving their property to increase future value.  This is the first time that this figure has been recorded.  Additionally, 38% of those who don't own a house and now live in student areas have switched to savings and investment plans such as financial freedom, early retirement and personal property rentals.

However, the impact of rapid inflation, the cost of food, transportation and other sectors is also putting pressure on young people's ability to manage money.  According to a survey conducted by consulting firm Willis Towers Watson, with 9,658 full-time employees from large and medium-sized private businesses, 36% of people with a salary of $100,000 or more a year are living frugally, not dare to spend heavily, twice as high as in 2019.

According to president of real estate statistics platform HomeLight Homes, early homebuyers can take advantage of many benefits on tax, repayment, and interest that come from lending. Particularly, this helps to reduce the fees for improving the added value of the house.  “Despite changes in the market, buying a house remains one of the surest ways to build family wealth.  The number of Americans owning houses rose to a record in the first quarter, reaching $27.8 trillion.  However, rising interest rates and cost of living are also starting to limit demand.”

60% of young people confidently understand about the housing market while less than half of people born in 1946-1964 (49%) are interested in this issue.

Another study by the Federal Reserve Bank of St. Louis pointed out that the group of young people owns 35% less wealth than previous generations in a similar age group.  Nearly half of 18-34 year olds are spending more than 30% of their income on monthly housing payments.  Besides buying a house, they have many other ways to get rich quickly.  Those who live with their parents or family, and do not need to pay house rental fees (83%) are more likely to have a better life than the group trying to buy a home.

From this trend, more and more young students in the US are encouraged to take money management courses at school.  The number of states in the US that require students to take a course in personal finance has increased from five to eleven in the past three years.  As of the middle of the second quarter of this year, about 20 states considered more than 40 bills promoting personal finance education.

LUXURY YACHT VACATION ARE COMING BACK

Singapore, Malaysia and Indonesia are the first Southeast Asian countries to resume luxury cruises, after this type of travel was halted since March 2020 because of the pandemic.

The number of booking for boat tours increased when operators announced that many seaports would reopen since the beginning of June.

Royal Caribbean company announced that it will continue to tour many countries from the end of June, Resorts World Cruises also made the same announcement after only a few days.

In early July, Royal Caribbean's Spectrum of the Seas cruise ship docked at Port Klang (Malaysia), while Resorts World Cruises' Genting Dream arrived at Bintan and Batam ports (Indonesia) at the same time.

It is said that international tourism demand is increasing rapidly. The most obvious increase came from countries in the region, especially from India, Malaysia and Indonesia. The number of bookings for cruise tours has doubled.  The majority of passengers are local and international from these three countries.

GLOBAL REAL ESTATE FEVER COOLS DOWN

In the context of central banks around the world aggressively raising interest rates, the rising cost of borrowing means that those who are inherently difficult to buy a house having a harder trying to realising this dream. The adverse effect of rising interest rates on real estate is being evident in countries such as Canada, the US and New Zealand, where the "high fever" real estate market has suddenly "cooled down”.

This is a sharp reversal after years of relentlessly rising house prices thanks to super-low interest rates and government stimulus measures as well as the Covid-19 pandemic promoting the trend of remote working and encouraging the search for more spacious houses.

The risk of a slide in house prices is increasing as economies around the world race to raise interest rates to combat inflation.  This year, more than 50 central banks have had at least one rate hike with a 0.5% point jump.  In the US, the Federal Reserve (Fed) in mid-June raised interest rates by 0.75% points - the strongest since 1994.

According to report by Goldman Sachs in June, signals from house sales usually 6 months ahead of house prices which means that many countries are likely to see house prices continue to fall in the near future.  According to this report, the cooling down of real estate market is an important reason to believe that developed economies are more likely to decelerate.

Central banks have also warned. The Bank of Canada (BOC) said in June that high property debt level is a particular concern as interest rates rise.  The Bank of New Zealand (RBNZ) says the threat of a downturn in the property market to the financial system as a whole is limited, but house prices are likely to fall sharply which poses the risk of a decline in assets and leads to a decline in consumption.

Economists predict that New Zealand house prices will fall by about 10% this year and could eventually drop by as much as 20% from their peaks set at the end of 2021.

In Canada, in April 2022, national house prices fell for the first time in two years.  This decline was initially concentrated in the areas where house prices had previously increased the most, namely Toronto and surrounding areas, and then spread to other localities such as Vancouver.  The market turned so fast that some homebuyers lost money before they even closed the deal.

Like in other countries, fluctuations in the Canadian real estate market are mainly caused by the tightening monetary policy of the country's central bank.  Canada's prime interest rate has increased from 0.25% at the beginning of the year to 1.5% today.  Whether a rate hike is within expectations, some analysts still think that house prices could fall as much as 20% in some of Canada's hottest areas.  This is a reversal after house prices in the country increased by more than 50% in the two years since the pandemic began.  House prices increase faster than wages, so many people can only rely on low interest rates to buy a house, but interest rates are now increasing sharply.

In the US, house prices are also on a downward trend.
U.S. house mortgage interest rates have risen this year at a rate not seen in half a century - According to data from Freddie Mac.  The average interest rate of 30-year house loans rose to 5.78% at the end of June - the highest level since 2008. This caused the "fever” of house buying demand to suddenly cool down which forces construction companies and house sellers simultaneously reduced the selling price.

In the four-week period ending May 22, about 20% of house sellers in the US had to cut their prices, the highest level since October 2019, according to data from Redfin Corp.

After rising about 18% in 2021, single-family house prices in the US are forecasted to slow to 10% growth in 2022 and only 5% growth in 2023, according to Freddie Mac.

The Czech Republic stands out in Europe for its high house ownership rate, high inflation and low unemployment rate, according to Vit Hradil Senior Economist at the Prague-based Cyrrus Investment.  Coupled with a rather unique building permit system and rising demand from expats working in the Czech capital, the country has seen house prices rise at a faster rate than incomes.

Quarterly figures show that house prices in the Czech Republic rose 26% in December last year compared with the same period a year earlier.  The gap between house prices and the average income of people in this country is among the highest in the European Union (EU) which raises concerns about a real estate bubble.

To contain inflation at 16% in May, the Czech central bank launched a tightening monetary policy campaign that brought interest rates to their highest levels since 1999.

Hungary is looking to encourage house ownership to boost the birth rate.  House prices in Hungary in the fourth quarter of last year increased by 20% year-on-year, according to the European Union (EU) statistics agency Eurostat.  The house price craze intensified as the escalating energy prices and construction labor scarce.  At the end of June, the Hungarian central bank unexpectedly raised the basic interest rate by 0.5% points.

According to an expert from Knight Frank, in the UK, the property market is starting to decelerate after two years of historic rising.  One of the UK Government's economic stimulus measures during the Covid-19 pandemic is a stamp duty exemption for properties priced at £500,000 ($614,000) or less between July 2020 and June 2021.  The measure pushed house prices up even more and made the property market seem detached from the rest of the economy.

The Bank of England (BOE) has raised interest rates 5 times since December last year and is expected to continue to raise more rates in the near future.  This string of rate hikes could signal a cooling down of the UK property market for the rest of the year, as the supply of house becomes more plentiful and those who have houses for sale will find ways to speed up the sale to get the best price.

However, high-end real estates in London are still in high demand, because foreign investors still see this as an attractive address.  Some secondary cities such as Birmingham, Liverpool and Manchester are still seeing house prices rise faster than in London. 

Newly approved home loan applications in the UK have fallen to a two-year low.  The number of house buyers in May fell after eight consecutive months of increase, according to a survey by the Royal Institution of Chartered Surveyors.  The BOE recently decided to cancel the test on the ability of home borrowers to repay loans.

4 SAFE REAL ESTATE INVESTING TIPS IN VOLATILE MARKETS

Real real estate market often encounters many fluctuations.  Especially, after the Covid-19 epidemic occurred, the real estate sector in the world was severely affected.  Investing in real estate brings great profit opportunities but also have many risks. Particularly, amid market fluctuations, real estate investors with small capital have more potential risks.  For smart real estate investors, they are always looking for effective ways to get profits fast from their investments.  However, there are also many real estate investors who follow the trend of the crowd, so they face many risks and are easy to lose. Here are 4 Safe Real Estate Investing Tips in volatile markets.

1- Clearly define Real Estate Investment goals

The volatile property market requires real estate investors to research and learn to determine the type of real estate they want to pour money into.  There is a small note that financial leverage should not be used too much, as it will be easy to take serious risks and lead to losses.  It is necessary to determine the type of real estate that is most suitable for you from time to time, thereby planning an investment strategy.

Simultaneously, you shouldn’t follow the crowd effect which is very risky.  Instead, you should choose a direction that suits your needs and finances effectively.

2- Always keep a close eye on Real Estate Market movements

For a real estate investor, monitoring the market regularly, every day is never lacking.  Many young real estate investors today are often only interested in price, utilities and location, but do not have a clear understanding of the market situation and legal factors.

Most young real estate investors today are only interested in real estate prices, locations and utilities, but often do not really learn about the law and the market.  Meanwhile, it is extremely important to accumulate knowledge of real estate investment and related legal documents.

Because the real estate market often has to receive many waves, there is also an unusually quiet period.  So, you shouldn’t just be interested in following the rising waves of real estate without thinking about the down times.  In fact, besides the rising waves, real estate market always has quiet periods.  When the waves are rising, don't be too hasty to follow because it might lead you to losses. 

3- Limit bank loans to over 25% of Real Estate Investment value

Most professional real estate investors can fully borrow 100% of the value to buy and sell real estate as well as turn it around quickly to make a profit.  However, unprofessional real estate investors should only borrow no more than 25% of the value of the house when investing in real estate.  Experts said that this moderate ratio helps real estate investors not to be pressured by interest rates.  Some investors have to sell their real estates quickly because they have a lot of loans to pay off their debts.

This is considered the perfect ratio so that you do not have to bear too much pressure from interest rates, as well as make it easy for investors to find ways to save to earn other incomes to fill the loan easily.  Especially, when the loan payment is complete, real estate investors can easily get a good amount of accumulation to look for effective next investment opportunities.

4- Avoid joining Capital Share Investments 

In fact, there are many young real estate investors who choose to co-invest in real estate.  The advantage is that it is possible to quickly raise a large amount of money to buy and sell real estate, but experts say that this option is only suitable for professional real estate investors who like to re-sell quickly.

According to experts, unprofessional real estate investors should decide on their own to buy, sell and invest in real estate to avoid the collision of legal procedures and avoid conflicts about personal interests between co-owners as well as ensure the autonomy in real estate purchase and sale in accordance with their financial situation.

COLLECTING LUXURY PROPERTIES BECOMES A TREND OF THE WORLD’S ELITE

The world's elite collect real estates in expensive locations.  These places are called “power markets” because they are the only investment playground for professional luxury players.

The demand for luxury real estate investment has skyrocketed since 2020 despite the raging COVID-19 pandemic.  Unpredictable fluctuations due to the epidemic and a long stay at home due to the blockade have prompted the super-rich to hunt for more safe assets which are luxury real estates.

Notably, in Australia and the UK, the COVID-19 epidemic caused the number of transactions of villas in the suburbs to skyrocket compared to real estate in the inner city.  Explaining this phenomenon, it is explained that the rich are tending to look for more spacious and environmentally friendly living places after the blockades as well as because remote working is becoming a clear trend.

This property investment trend is expected to continue, According to research from Knight Frank, from 2022, the world will witness a long-term luxury housing boom, with more cross-border transactions as the  conditions return close to their pre-pandemic state.

It is understandable for the elite that owning many properties at the same time is still a passion, besides collecting supercars or yachts.  Holding a lot of real estates has always been a symbol of status and wealth over the decades. Furthermore, owning a million-dollar villa also has a high level of profit growth, which is considered a "million-dollar savings book" of the rich.  The founder of Microsoft is a typical example of this property investment trend, when he and his wife own a real estate collection of more than 130 million USD.

In the context of complicated developments in the world, affecting the financial and investment world, it can be seen that high-end real estates still attract investors and hunts;  become a safe and attractive hoarding channel in addition to enjoying the owner's physical and mental health living space.

DUBAI PROPERTIES ATTRACT RUSSIAN INVESTORS

The fact that the rich Russian and surrounding countries are interested in real estate in Dubai has made brokerage firms profitable in the first half of 2022.

In the first half of 2022 alone, the number of buyers from Russia and neighbouring countries made property transactions in Dubai with Mira Estate has doubled compared to the same period last year.  Revenue from this group of buyers has exceeded 2 billion dirhams, equivalent to 500 million USD.

Cash flow from rich Russians and neighboring countries has strongly boosted Saudi Arabia's real estate sector.

According to Mira Estate’s CEO, “money from the rich poured into the UAE at a record speed, leading to a surge in demand for real estate.  Most homebuyers are looking for finished homes with ocean views."

Currently, the Dubai property market is being described as "the hottest" in years with sales up 45% in April compared to the same period a year ago.  In May, this number was 51%.  After the difficulties of the early pandemic, the UAE real estate market has recovered especially when the flow of cheap money appears around the world.

Rich Russians especially like sea-view villas.  Therefore, the artificial island of Palm Jumeirah as well as the high-class resorts Emaar Beachfront and La Mer located along the coast of the city become extremely popular.

It is said that real estates near the sea with a beautiful view are always in high demand.

Besides those who buy for personal needs, most are for investment.  They even bought many apartments or whole floors.  A floor of a luxury apartment complex usually costs from 7-10 million USD (although the actual price will vary by apartment location and floor area).

ASCOTT ACQUIRES OAKWOOD WORLDWIDE

The Ascott Limited, a subsidiary of CapitaLand Investment Limited (CLI), has announced the acquisition of Oakwood Worldwide, a global provider of serviced apartments, from Mapletree Investments Pte Ltd.

Ascott's global portfolio includes 81 properties and approximately 15,000 apartments.  Approximately 8,500 Oakwood operating units are expected to immediately contribute to Ascott's recurring fee income stream upon completion of the expected transaction in the third quarter of 2022.

Ascott acquires Oakwood Worldwide / ph: Oakwood

Ascott's acquisition of Oakwood will boost Ascott's global presence to more than 150,000 apartments across approximately 900 business premises in more than 200 cities in 39 countries.

The deal will also add Ascott's new markets including Cheongju in South Korea;  Zhangjiakou and Qingdao in China;  Dhaka in Bangladesh as well as Washington D.C.  in the United States.

Ascott's strategic investments over the years include the acquisition in 2017 of Quest Apartment Hotels, one of the biggest serviced apartment operators in Australia, to develop its franchise branch.  At the same year, Ascott invested in Synergy Global Housing, a leading corporate housing provider in the United States.  

In 2018, Ascott acquired TAUZIA Hotel Management, one of the leading hotel operators in Indonesia, to enter the rapidly growing mid-sized business hotel segment.

By Oakwood acquisition, Ascott is confident of hitting its target of 160,000 units globally by 2023.

Founded in Los Angeles in 1962, Oakwood is a leading global provider of serviced apartments with a presence in more than 15 countries.  The company pioneered and built its reputation in the United States as a leading provider of corporate housing, before evolving as a hospitality company with more than 80 branded properties managed by the company worldwide.

5 GOLDEN RULES WHEN INVESTING IN RENTAL REAL ESTATE

Rental investment property is not a new investment channel, but it has never ceased to be attractive to investors.  However, whether you have ever participated in this real estate investment channel or just intend to, rental real estate investors should be careful and pay attention to 5 following golden rules.

1- Rental investment property creates a future income stream/cash flow 

In other words, what you pay for a property now is an investment decision for the future, the most accurate expression of investment value is the cash flows generated from the rental property. One wrong choice in that first step will cost you later.  Therefore, you must have a long-term vision to make an informed investment decision.

2- Golden location creates golden value

The location of the property will be a decisive factor for your success in finding a return on your rental property investment.  Owning plots of land with golden position or potential golden land such as good locations in areas with potential for rapid development in the future mean that you are taking a big and positive step in improving the value of rental investment properties.

The good location of the rental investment property must first be in an area with convenient transport infrastructure connections, close to hospitals, schools, supermarkets, markets, entertainment and commercial areas...

Of course, in cities, where the demand for housing is high, the ability to buy a rental house in a densely populated area is always high, but you need to take into account the rental housing price.  If the rental investment property is a townhouse or a villa, you should consider the size of the existing residential area.  The higher the population density of the area, the better the rental potential. A prime location determines the success of rental real estate investment.

For rental investment property located in a large-scale project or an area with high population density, it should be noted that  the larger the project in which property is based, the easier to rent out that property because it is easy to attract services formed in the building.  You should choose finished real estate that can be rented immediately to increase investment efficiency.  You can also choose to buy an apartment under construction, but you can't choose projects that are behind schedule, give priority to projects that are close to handover and are late payment.

If you are going to invest in townhouses, villas for rent, you should not choose properties that need to spend more capital to repair, adjust or rebuild, because this prolongs the time, misses the opportunity to rent out and get profit.  As for row houses or villas, you should also choose those located in a crowded area.

3- Use financial leverage

Don't underestimate the importance of financial leverage in rental real estate investing.

Financial leverage means that you borrow more money, along with what's available, to invest.  High percentage loan means that you use a large financial leverage.  If you know how to seize the opportunity and make the right decision, the financial leverage will help you own rental investment properties with high profits in the future;  otherwise, this will become a debt burden.

This is a borrowing problem, so if you use the method of raising loans, you have to find a solution for yourself in each specific case. Financial experts recommend to borrow no more than 30% of the total value of your rental investment property.

4- Invest in residential real estates

The best and safest strategy to start is to invest in residential real estate for rent Residential real estates can be apartments, mini-apartments, townhouses, etc., which have relatively lower value compared to other property types as commercial, industrial, and resort real estates,.. and its purchase procedure is quite simple.  More importantly, the problem of managing real estate and customers is easier than most other types of rental investment properties which is an attractive rental real estate investment type. 

5- The bigger value of property, The higher attractiveness of return

As the size and complexity of the rental property increases, the returns become more attractive.

Financing options for large buildings, commercial, industrial, tourist real estates... require a large capital source and accept other pressures such as management, maintenance, customers...

The result that professional real estate investors get from investing in these projects is a high overall profit, because the rental value from these properties is quite high and stable due to the because the rental period are usually long-term.

Like all investments, don't invest in fields that you don't understand well.  Knowing well is a safe strategy for investors, so make sure you own a good knowledge to make wise decisions.  Or just investing in case you have a expert in that sector and you have a great property manager.

WHICH COUNTRY HAS HIGHEST PROPERTY TAX?

Many countries around the world have or are considering applying a property tax to prevent speculation and help low-income people have more opportunities to own houses.  Singapore is the country that applies the strongest property tax with the highest increase, nearly double the previous tax rate.

Recently, Singapore has drastically increased taxes on real estate in an attempt to curb the housing boom.  Meanwhile, China planned to expand the pilot property tax application to many major cities, but eventually had to postpone it to support the housing market which was already collapsing due to the debt crisis.  In Germany, the property tax is mainly targeted at home buyers with speculative intentions (reselling within 10 years of purchase).

1- Germany: Buying and selling houses within 10 years is subject to a speculative tax

In Germany, if you buy and then sell a house 10 years later, you will be taxed a property tax, also known as a speculation tax, in addition to the cost of brokerage and notary services.

Which Country has highest Property Tax? / ph: pexels 

However, this is not a stand-alone tax but a subcategory of income tax.  Therefore, the amount of speculative tax to be paid is not only based on the selling price of the home sold, but also on the tax bracket and other income of the house seller.

Speculative taxes will range from 14% to 45% depending on the tax bracket and the house seller's annual salary.  Even if you inherit a house from a recently deceased relative, a 10-year speculative tax cycle still applies which counts from the time that relative buys the home.

If you sell the house 10 years after buying, you won't have to pay this tax. Furthermore, if you buy a house and then live continuously in this house for the 3rd year, you can sell it without the speculative tax.

If you own a lot of properties and sell more than 3 properties within 5 years, then in addition to paying the speculative tax, you also have to pay a trade tax equivalent to 3.5% of the profit earned from the sale of the house.

2- Singapore increases taxes on investment and high-value properties

Private housing prices (a term used to distinguish them from social housing) in Singapore increased by 10.6% in 2021 thanks to falling interest rates, limited supply and increased demand.  To cool down the market, at the end of December last year, Singapore issued a notice that said that from December 16, 2021 foreigners buying real estate in Singapore will have to pay an increased registration tax of 10% (from 20% to 30%).

Singapore citizens and permanent residents, who are eligible to buy social housing, will not be subject to an increase in registration tax when buying their first house.  However, they will be subject to an additional 5% registration tax if they buy a second and third house in Singapore.

This tax rate will increase from 25% to 35% for companies including real estate developers purchasing condominium projects in Singapore.  The announcement also introduces a new regulation allowing Singaporeans to borrow up to 85% of the selling price of social housing, compared to 90% before.  The percentage of monthly income that Singaporeans are allowed to use to pay off home loans will be reduced from 60% to 55%.

Singapore aims to raise taxes on investment properties and high-value properties from 2023.

Specifically, for owner-occupied residential property, the tax rate on the annual value (AV) portion exceeding S$30,000 of that property will increase to 6-32 % compared to the current 4-16%.

The AV of a residential property is defined as the estimated total annual rental income that a homeowner would receive if they leased the property after deducting the costs of furnishing and maintaining it rather than on actual income. The Singapore Internal Revenue Service will be responsible for calculating the AV.

For unoccupied residential real estate, including investment properties, the tax on its annual value will increase to 12-36% per year from the current 10-20%.  This means that the more valuable the properties are, the more taxes the owners will have to pay.

3- China is cautiously piloting property tax

Before the real estate market fell into a debt crisis last year, house prices in China continued to rise and outstripped the reach of the low-income and middle-income classes.  As of last year, China's urban median home price has increased by more than 2,000% since the country privatized the housing market in the 1990s.

China has long managed to control the housing market including piloting a residential property tax.  In 2011, the two municipalities of Shanghai and Chongqing conducted limited tests of property taxes mainly targeting investment properties and high-value properties.

China wants to act cautiously for the fear that the property tax will negatively impact the market, destabilizing financial markets and the country's economy.

In Shanghai, only some apartments purchased after 2011 are subject to tax.  In Chongqing, only luxury properties and villas are taxed.  Accordingly, residents in Shanghai who buy a second house with an area of ​​​​more than 60 square meters will be subject to an annual tax rate of 0.4-0.6% of the fair value of the property, calculated on an area exceeding 60 square meters.

Chongqing, located in southwestern China, has a progressive property tax that starts at 0.5%, and can go up to 1.2%.  This tariff applies to owners of villas as well as new apartments that cost more than double the average price of new urban houses.

However, there is little evidence that property taxes effectively restrain house prices.  Since 2011, the average house price in Shanghai has increased 155% to 54,428 yuan/m2 by 2021, according to China E-House Consulting.  In Chongqing, the average house price rose 108% during the period to 14,501 yuan/m2.

Last October, China launched a five-year pilot program to expand the real estate tax to 10 other major cities including Shenzhen, Haikou and Hangzhou. However, in March 2022, China's Ministry of Finance said that the current conditions were not suitable for expanding the real estate tax pilot program.

China's apartment market is cooled by tighter restrictions on real estate loans.  The average price of new apartments in 70 major cities has decreased month by month for six consecutive months, as of February 2022. Property taxes could further reduce demand, slow the pace of housing projects and put pressure on the economy.

SINGAPORE: PROPERTY RENTAL PRICES ARE SKYROCKETING

Expats in Singapore are facing soaring house renting price as they compete with locals in the city's hot housing market.

House renting prices are skyrocketing in Singapore, especially in prime locations favored by expats, as rising demand from locals and newcomers compounding supply delays caused by the pandemic.

Singapore: Property Rental prices are skyrocketing / ph: pexels 

It is reported that property rental prices for expats are increasing by an average of 20% to 40%.

Foreigners living in Singapore are paid well above average wages and have not been hit hard by the skyrocketing cost of living. But the sharp rise in house prices makes the city less competitive than other financial and business hubs for attracting talents to the city.

Singapore's hot property rental market is giving rise to rental scams in which people posing as agents use fake online listings to attract deposits from home seekers.  According to Singapore police, at least 547 victims to these schemes this year until the end of May, with loss amount to at least S$1.6 million.

Property renting prices are also increasing in London and Dubai.  In New York's Manhattan, the average offer price rose 36.9% in the first quarter from a year earlier - According to real estate portal StreetEasy.

According to real estate firm Knight Frank, cities in Southeast Asia had the biggest increase in the Asia-Pacific region in the fourth quarter of last year.

This is in sharp contrast to Hong Kong where property rental prices are falling as expats and locals emigrate from here. Property rental prices fell in May to their lowest level since March last year - According to a rental index compiled by Hong Kong real estate agent Centaline Property Agency Ltd.

There are several reasons for Singapore’s property rental price increase.  One of them is that the locals,who often work from home, are moving into properties usually rented by expats as they look for larger living spaces and wait for the completion of the new houses - According to real estate services firm Cushman & Wakefield Plc in Singapore.

The second reason is also due to strong rental demand from expats when the city reopened its borders to fully vaccinated tourists in April.  Part of that is people moving from Hong Kong, although it is difficult to determine how many, some agents said.

And finally, supply continues to tighten due to the delay in construction caused by the pandemic.  This year, Singapore has between 7,000 and 8,000 new apartments that could hit the market, according to estimates by two property analysts.  This is lower than the average level of 10,750 new units from 2012 to 2021.

Cushman & Wakefield Wong said that the situation is unlikely to improve until next year when the delayed construction projects are nearing completion.

TOTAL GLOBAL VENTURE CAPITAL VOLUME IN THE CONSTRUCTION & REAL ESTATE INDUSTRY FELLS SHARPLY

The $200 million venture capital for Inversiones MCN was the biggest venture capital investment in the global real estate & construction industry in May, according to GlobalData's transaction database.

According to data on global real estate & construction industry transactions recently published by data research company GlobalData, the total value of transactions in May reached US$562.6 million (only public transactions are counted).

This is down 52.7% from the previous month ($1.19 billion) and down 25.6% from the 12-month average ($756.11 million).

Total Global Venture Capital volume in the construction & Real Estate industry fells sharply / ph: pexels 

Comparing the value of venture capital deals in different regions of the globe, North America comes in first place with the total value of deals announced in May reaching 289.4 million dollars.

In terms of country, the US is also the market that tops the list when the total value of construction & real estate transactions in this country in May reached 285.2 million USD.

In terms of volume, North America emerged as the top region for construction & real estate ventures globally, followed by Europe and then Asia-Pacific.

The leading country in terms of venture capital activities in the construction & real estate industry globally in May was the US with 10 deals.  Standing in the next positions are Italy and Korea respectively with the same 2 deals.

Accumulating the first 5 months of 2022, the construction & real estate industry venture capital contracts announced globally reached a total value of USD 3.94 billion, marking an increase of 118% over the same period last year. 

According to GlobalData, the 5 biggest venture capital deals in the global construction & real estate industry accounted for 70.9% of the total value of all deals in May. Specifically, the total value of the 5 biggest deals is up to 398.7 million USD, compared to the total value of all deals is 562.6 million USD.

Here is a specific list of the top 5 most valuable venture capital deals in the global construction & real estate industry in May, according to data from GlobalData.

1- Banco Ahorro FamsaInstitucion de Banca Multiple, Banco Mercantil del Norte, Clocktower Ventures, Endeavor Catalyst, Grupo Financiero Banorte SAB de CV, Henry Kravis, Homebrew and Tiger Global Management reach an agreement to invest $200 million in Inversiones MCN

2- Andreessen Horowitz, Battery Ventures, Dan Wenhold and GGV Capital invest $80 million in Belong Home

3- ANIMO Ventures, Blitzscaling Ventures, Canaan Partners, Capital One Growth Ventures, Citi SPRINT, Citi Ventures, Cross River Digital Ventures, First American Title Co, JLL Spark, NFX Capital Management, Parker89 and StepStone Group reach an agreement to invest 70 million USD for LEV

4- Bezos Expeditions, Core Innovation Capital, Forerunner Ventures, Good Friends Venture Capital, Neo (US), PSL Ventures and Spencer Rascoff invest $25 million in Arrived Homes 

5- Korea Development Bank, Korea Investment & Securities, KTB Network, Reverent Partners and Shinhan Financial Group reach an agreement to invest 23.7 million USD in capital for Apart:mentary.

GLOBAL HOUSE PRICES IN Q1 RISE AT FASTEST PACE

Recently, the global real estate consulting firm Knight Frank has published a report on the global housing price index which recorded many notable changes.

The latest global housing price data based on the recently released Knight Frank Global Cities Home Price Index indicates that most cities around the world have seen house prices rise in the past 12 months.

Global House Prices in Q1 rise at fastest pace / ph: pexels 

Specifically, Knight Frank tracked 150 cities globally for this metric.  Accordingly, up to 94% of cities in this index saw house prices increase in the past 1 year.  This increase has been calculated by Knight Frank including the fluctuations of the local currency of each country as well as other factors such as inflation, interest rate hikes, etc. Thus, the number of cities witnessing an increase in house prices in  this year is higher than the same period last year (85%).

Housing prices in major cities are outpacing the average house price by country which recorded 10.3% compared to the same period last year.  During the pandemic, people rushed to find housing in the suburbs and countryside which caused the real estate market in big cities to fluctuate greatly. However, everything seems to have reversed, returning to the right trajectory as the pandemic is gradually under control and people begin to return to the cities.  Pressure from inflation as well as rising borrowing costs make it more difficult for homebuyers.

In the context of the global economy is unstable, increased taxes and more regulation in the real estate market (For example, Canada has enacted a ban on foreign buyers).

Knight Frank expects home price growth to slow globally but a trend reversal will make it difficult for house prices in major cities to record negative growth this year.

Among the cities tracked by Knight Frank, Turkey's Istanbul has seen the biggest increase in house prices.  Turkey is also the country that regularly tops the Knight Frank index.  High inflation is part of the reason for this price increase.

Besides Turkey, cities in North America also witnessed a rapid increase in house prices in the first quarter. Specifically, up to 12/20 cities witnessing the fastest increase in house prices in the world came from the region.  At North America, the leading city is Halifax (Canada, up 34.7%).

Behind cities in Turkey and North America are Australian cities with an average growth of 18.3%/year - In which, Brisbane was the place to witness the fastest increase in house prices in the first quarter with an increase of 28.4% over the same period last year.

Meanwhile, countries implementing tight monetary policy such as New Zealand witnessed a downward trend in house prices.  In the first quarter, house prices in Auckland city increased only 5.1% compared to the same period last year.  Meanwhile, in the first quarter of 2021, house prices in Auckland witnessed an increase of 22.7% compared to the first quarter of 2020.

Besides, Knight Frank also made a remarkable note that the increase in interest rates has affected homebuyer psychology which leads to home sales in major cities globally in the first three months of this year has halved compared to the same period last year.

PROPTECH BOOSTS THE GLOBAL REAL ESTATE MARKET VALUE TO $4.9 TRILLION BY 2028

Digital transformation is forecasted to help the global real estate market to reach an estimated value of USD 4.9 trillion by 2028. 

The real estate industry is going through a period of rapid transformation, driven by the Covid-19 pandemic, a change in consumer trends and especially technology.

Real estate conglomerates see new avenues for business as other trends begin to emerge.  Investors also see new ways to put their money into the real estate market with decentralized systems.  Ultimately, buyers see increased accessibility and transparency through modern proptech platforms.

Proptech boosts the Global Real Estate market value to $4.9 trillion by 2028 / ph: pexels 

With modern technology, solutions for the real estate industry are gradually appearing.  It is now easier for investors to search for industrial properties through specialized industrial real estate platforms or websites.  The steps that used to be handled manually by paper can now be replaced by technology.

The global real estate market is forecasted to grow at a compound annual growth rate (CAGR) of 4.9% over the next 6 years, reaching a market value of USD 4.9 trillion.  Currently, the North American real estate market is enjoying the highest price growth in the world.  Rising house prices are good news for those in the real estate industry.  According to The Globe and Mail, the huge income of real estate brokers is a concrete illustration of the impact of inflation.

However, all of that growth also comes with its fair share of conversions.  According to Finance Online, millennials (those born in the early 1980s to mid-1990s – early 2000s) have exploded to become the biggest buyers of real estate by 2022. It is the change in the main buyer group that has pushed real estate companies to have newer approaches, change marketing strategies to be more suitable for this generation.

Besides, Blockchain technology is slowly creeping into many fields including industrial real estate.  According to Deloitte, emerging technology (often associated with cryptocurrencies) could revolutionize the industry, speed up the appraisal process, improve asset discovery, enables fast funding and facilitates real-time data analysis. 

THE US AND EUROPEAN REAL ESTATE PRICES ARE DROPPING

According to Hines, one of the world's biggest real estate investors based in Houston, Texas which manages approximately $90 billion in real estate assets in 27 countries, the US and European real estate markets are experiencing a decline in prices as buyers are no longer interested in the context of high inflation.

The US and European Real Estate prices are dropping / ph: pexels 

House prices have fallen about 5 to 10% from a year earlier in some parts of the US.  Europe is also moving along this trajectory of the US. Loan costs increase which is reducing buyers and investors’ demands. Higher inflation impacts on the real estate industry and making investment returns lesser. 

The office real estate market in the US is the hardest hit compared to other types of real estate.  Not only that, the house rent demand has also begun to decrease.

Real estate is seen as a hedge against inflation because some lease contracts take into account rising prices and inflation.  But over the past decade, bottoming interest rates and plummeting yields in the bond market have pushed property prices to record levels in many regions, making this market more vulnerable to rising borrowing costs.  Investors are having some difficulty in raising capital, this alone has reduced the investment size as well as the winning bid price.

HEALTHCARE REAL ESTATE - AN ATTRACTIVE SUSTAINABLE INVESTMENT TREND?

Projects with high health index or Wellness Investment are being sought by investors around the world and considered as a guideline in the real estate industry.

Healthcare Real Estate - An Attractive Sustainable Investment Trend? / ph: pexels 

According to Wellness Real Estate: Looking Beyond Covid-19 study by the Global Wellness Institute (GWI), the number of healthcare real estate projects worldwide has tripled from 740 projects in 2017 to more than 2300 projects in 2021 - The highest growth rate is 22.1%/year.

The reason why Wellness Investment has become the mainstream in the real estate market is because since the pandemic, people have been forced to change their habits, trends and mindsets to adapt to new circumstances. We begin to pay more attention to a fresh, airy, close to nature living environment along with diverse and self-contained utilities and services.

Wellness Investment is a model that combines real estate investment and investment in your health and your family health.  In other words, investors are looking for products that not only bring high instant profits, profitable potential and safe financial accumulation but also towards sustainable living values, benefits both physically and emotionally.

IS THE GLOBAL HOUSING MARKET HEADING FOR A RECESSION?

Higher interest rates are slowing house price increase around the world especially in Europe and the US. 

A series of interest rate hikes by many central banks around the world is causing a significant halt to the two-year continuous increase in house prices.  However, this does not mean that the housing boom caused by the pandemic is over.  For example, real estates in London are still attracting many potential buyers and often sell for much more than the offer prices. 

Is the Global Housing market heading for a recession? / ph: pexels 

Similar pressures are happening in other markets.  In the US, house prices rose at an annual rate of 20.6% in March, the fastest in 35 years.  In the final quarter of 2021, real house prices in the 38 OECD countries, considered the club of the richest economies in the world, has increased 16% compared to the previous 2 years and the fastest in 50 years.

Much of the impetus for housing prices to rise has come from the fact that central banks were quickly adjust interest rates to record lows to mitigate the economic damage caused by the pandemic.  This move reduces the cost of mortgage loans, as households accumulate more money when just staying at home due to social distancing.  Besides, the trend of working from home also promotes the demand for ownership and increases the price of housing.

However, in recent months, consumer price inflation, the highest in decades, has prompted many central banks to raise their operating rates, raising the benchmark interest rate ceiling for the macro-financial system which makes home loan interest rates also increase accordingly.  In the US, Freddie Mac bank has applied an interest rate of 5.23% since May to home loan customers for 30 years, the highest level since 2009. In the UK, the average interest rate on new loans grew by 1.82% in April, 32 basis points higher than last November when home loan applications remained low.

There are some signs that downward pressure on house prices is intensifying.  In the US, construction market sentiment fell in May and single-family transactions fell 17% in April from a month earlier, the lowest level since April 2020. In the UK, loan applications approved in April fell to the lowest level in nearly 2 years.  As a result, annual UK house price increase slowed markedly to 9.8% in March from 11.3% in February.

The fact that central banks continue to raise interest rates is likely to push house loan interest rates even higher.  Central banks are forecasted to raise interest rates by at least 100 basis points later this year or early next year in the euro area, Canada, Australia and New Zealand.

Most experts believe that these rate hikes will cause a sharp drop in house price increase.

In May, the European Central Bank warned that a sudden rise in real interest rates could adjust house prices next time.

In addition to rising home loan costs, factors including falling real incomes due to inflation and lower households' ability to save money due to the previous boom in house prices also weakens house price inflation. Consulting organization Oxford Economics forecasts that house prices will rise more slowly in 2023 than in 2021 in most countries. Some countries will even see house prices fall completely.

Very few experts believe that house prices would fall as sharply as during the 2008-09 financial crisis at that time when economic activity and incomes have also fallen sharply around the world. That crisis caused house prices to fall for five years in all of the OECD countries, led to a series of property confiscations especially in the United States.

The popularity of fixed-rate loans is helping many people avoid the impact of rate hikes.  In the US, a 30-year fixed-rate home loan has become the most popular product.  The improvement in the quality of mortgage loans brought optimism to the market.  More than two-thirds of those granted new loans have high credit scores, more than double what they were before the financial crisis - According to data from the Federal Reserve Bank of New York.

On top of that, record low unemployment and supply shortages are driving demand for housing in most advanced economies.  Number of homes for sale is down to near the record low for 10 years in the US and 40 years in the UK.

While rising commodity prices and inflation are expected to push real incomes low in most economies, many households, especially the richest, have amassed a large sum of money during the pandemic.

HOUSE PRICES COULD DROP BY 2023 IN SOME COUNTRIES

The results of a recent Reuters survey of real estate experts show that the global property market has positive features during the pandemic as people try to buy more living space.

According to analysts in nine key real estate markets around the world, the rate of huge house price growth of up to 50% in the past few years may be coming to an end.  House prices could drop by 2023 in some countries.

However, experts say that even with house price falling, the global average price is still relatively high especially for young people buying a house for the first time due to pressures from the cost of living and inflation.  

 House prices could drop by 2023 in some countries / ph: pexels 

Most experts believe that house prices will not drop suddenly, instead rising inflation will slow down the rate of house price growth. Furthermore, according to analysts, base wages will find it difficult to keep up with current inflation rates, thus significantly affecting affordability.

Even in property markets like India and Dubai where panic and fear of factors destabilizing the global economy are not happening like in the US, Canada and Australia, analysts still agree that affordability will also be affected.

First-time homebuyers will be under pressure from soaring production costs due to supply chain disruptions faced by businesses around the world, with the same way that consumers are paying more for everything they buy.

In fact, according to analysts, the increase in house prices is most likely due to the psychology of fleeing from big cities during the epidemic season. Currently when it all comes back, house prices are once again pushing up.

For the foreseeable future, there seems to be little reason to predict that existing homeowners will struggle in the real estate market.  This means the pressure will be pushed on the buyers who have to compete fiercely to own the property which is likely to continue even if house price increase slows down. 

Many homebuyers especially young people, are actively looking to buy land instead of renting.  However, the lack of availability housing supply also drives up renting price in many places.

When asked what would happen to affordability of the rental market in the next two years, more than 80% of analysts gave negative predictions.  The remainder said that affordability would be improved. 

10 MOST EXPENSIVE HOUSING MARKETS IN THE WORLD

Buying a house has become increasingly difficult for middle-class families globally over the past few years, and the pandemic has only made things worse.

According to Demographia's Housing Affordability Report 2022, the number of housing markets in the world rated as "most out of reach for buyers" has grown by 60% compared to 2019 before the pandemic happened.  This report examines the disparity between house prices and median household income in 92 cities in 8 countries with the most expensive house prices in the world including Australia, Canada, China, Ireland, New Zealand, Singapore, United Kingdom and United States.

The 10 most expensive cities in the world, based on the ratio between house prices and median household income as follow: 

1- Hong Kong

2- Sydney

3- Vancouver

4- San Jose

5- Melbourne

6- Honolulu

7- San Francisco

8- Auckland

9- Los Angeles

10- Toronto

All of these cities are at the top of the list of extremely difficult houses to buy. Particularly, Hong Kong continues to be the world's most expensive housing market for the 12th consecutive year, with prices of 23.2 times more than household income.

10 Most Expensive Housing Markets in The World  / ph: pexels 

The increase in house prices in Hong Kong is mainly due to a lack of supply and a lack of land fund for housing development which accounts for only about 7% of the total land area.  For comparison, high-priced cities like New York City have 75% of their total land area planned for housing.

Sydney has moved up one place this year, becoming the second hardest city to buy a house on the list and hitting a rate of 15.3.  Over the past 18 years, only Hong Kong has ever achieved this ratio.  According to experts, house prices skyrocketed in Sydney due to insufficient supply to meet demand.

In fact, middle-income people globally were already under great pressure to buy a house before the pandemic.  And Covid-19 has made the problem worse.

As people start working from home, high earners are looking for more spacious accommodation that doesn't have to be downtown.  This has boosted housing demand in suburban areas which were relatively affordable for middle-income people before the pandemic.

Additionally, supply chain issues that drive up raw material costs have also hit construction and creating a perfect house price storm.

However, according to experts, house prices will cool down in many markets in 2022 as interest rates rise and Covid-19 restrictions are eased.

 

PROFIT POTENTIAL OF REAL ESTATE IN ASIA - PACIFIC INCREASES BY 10% IN 2022

According to CBRE's forecast, real estate in Asia - Pacific can profit from 5-10% this year when the investment environment and psychology are more favorable. 

According to CBRE, commercial real estate investment in Asia-Pacific has diversified significantly over the past 15 years.  In the period 2006 - 2021, the total number of open-end funds participating in this field increased from 9 to 33 and the total capital increased from 8.9 billion USD to 112 billion USD.

Profit potential of Real Estate in Asia - Pacific increases by 10% in 2022 / ph: pexels 

The establishment of real estate investment trusts (REITs) in emerging markets such as Mainland China and India has also helped the region's general market mature and attract more investors.

If only counted for 5 years from 2017 to 2021, the amount of private capital poured into real estate reached a record high, both in terms of the number of funds and the volume of capital.  Total capital reached 104 billion USD, up 60% from 63 billion USD in the previous five-year period.

CBRE believes that the need to sell and rent back (leaseback) of organizations will continue to increase in 2022, as the large amount of investment capital poured in will cause many owners to consider the benefits of owning or leasing.  Investors will offer attractive prices to buy back properties or more suitable leaseback terms to promote successful deals.

The profitability potential of properties also increased this year both for sale and leaseback contracts and sell to divest, particularly in the industrial, logistics and data center sectors. More property owners will benefit from a more optimistic investment environment and increased property valuations.

In the longer term, sale and leaseback activities in the Asia-Pacific region is likely to follow trends seen in the United States and Europe, the Middle East and Africa regions.  CBRE forecasts that the profitable potential of real estate investment businesses in the region can increase by 5-10% by 2022. 

HOW TO MAKE PROFITABLE INVESTMENTS IN REAL ESTATE?

Real estate is always an attractive investment channel.  However, not everyone knows how to make profitable investments in real estate. 

1- How to be profitable in real estate investment?

It is advised that investors should not buy real estate just because it is cheap.

Investors should boldly pour money into first-class properties in the market, in the most beautiful locations.  Beautiful plots of land may be expensive at the moment but will increase in value over time with a sizable profit margin.

Moreover, investors shouldn’t buy properties that are too small.

Finally, if buying for investment, you should be prepared to manage that property to make it profitable. 
 

How to make Profitable Investments in Real Estate? / ph: pexels 

Investors should focus on areas near the city that are trending.  Then, buy land at the main roads.

Choosing a good location is considered half successful when investing in real estate.

2- How to negotiate in real estate purchase?

During the negotiation, remember to stop at the important details.  The seller probably won't like the silence and assume you're hesitant.  You keep quiet until the seller has to speak up and concessions.

Additionally, real estate investors should also find out the minus points of property to create more advantages when negotiating.

If a negotiated result has been reached and real estate is owned, investors remember to hold and keep - don't sell if you don't need the money.

5 REAL ESTATE INVESTMENT SECRETS FOR NEW INVESTORS

Real estate is a big market that is attracting a lot of investors.  However, if you do not know the secret of real estate business, it is easy for investors to go down the path of loss even bankruptcy. 

If you are looking to start investing in real estate, here are 5 real estate investment secrets for new investors that you should know.

1- Choose real estate with high liquidity

If the real estate you buy don’t have high liquidity, it is very dangerous because it shows that the real estate is difficult to resell. Particularly, if you borrow money to buy, it is even more dangerous.  Every month you still have to pay interest on the loan to buy that real estate, but the real estate does not increase in price nor can it be sold.

This is an extremely dangerous mistake that you need to avoid whether investing in real estate in the center or suburbs, residential or townhouses, villas, apartments, etc. When investing in any type of real estate you need to pay attention to liquidity.

An example of choosing a liquid real estate investment for your reference.

Real estates located far from the central areas or busy places about 5 km is considered as real estate with good liquidity which is because with this distance people will be easier to move, but real estate prices are significantly lower than the central area.

If the real estate market goes down, the demand for investment will disappear, but the demand to buy for living will still be existing.  Thus, the possibility of reselling real estate without incurring losses is still quite high.

Real Estate Investment Secrets for New Investors / ph: pexels 

In the case of buying real estate that is too far from the center, demand to buy for living is low or nonexistent, or real estate prices are too high, when the market goes down, both investing and buying to live demands disappear.

Therefore, the first profitable real estate business secret is to determine whether its liquidity is high or not.

2- Make a profit as soon as you buy

It can be understood that making money as soon as you buy means that you can buy real estate at a lower price than the market price and can immediately resell the property at a higher price to make a profit. 

However, most people often buy real estate at market prices and hope that after a period of time real estate prices will increase.  However, there are many cases that go against your expectations.  Therefore, a smart real estate investor is whom has the mindset of making a profit as soon as he buys.

So, whether the real estate market goes up or down, you still make a profit.  And choose real estate with good liquidity and make profit quickly.

3- Become a passive real estate investor

Becoming a passive investor is a real estate business secret that is very suitable for new investors who do not have much experience.  This is a form of investment that is both simple and easy to implement and does not require too much capital.  You can generate passive income by renting out land, houses or investing in REITs – real estate investment trusts.

4- Learn real estate investment secrets from experts

Like many other investment industries, real estate investment also requires knowledge.  When you have knowledge, you will have a reasonable investment plan.  Start your education by taking some real estate courses - This is a way to invest for yourself in the long run, helping you limit investment risks as well as get a better perspective on potential real estate projects.

Or you can also consult with experienced and qualified real estate brokers with one-on-one coaching sessions.

5- Collaborate with experienced real estate investors

Collaborating with experienced real estate investors is also an effective real estate business secret that can help you reduce risk and bring great value.  Good real estate investors will make reasonable investment decisions based on their knowledge and experience.

WHICH MARKET HAS THE HIGHEST GLOBAL PROPERTY INVESTMENT VOLUME IN Q1?

Investment volume in the global commercial real estate market in the first quarter increased by 34% year-on-year.

According to new data from real estate firm CBRE, global commercial real estate investment volume grew 34% year-on-year to $282 billion in the first quarter of 2022 in which investment volume increased by 47% in the Americas, 25% in Europe and 5% in Asia - Pacific.  The value of all transactions converted by CBRE to the same unit is USD.

Which Market has the Highest Global Property Investment Volume in Q1? / ph: pexels 

The housing market remains the most interested sector with the 6th consecutive quarter leading the total global investment volume.  A total of $76 billion was poured into this segment in the first quarter, an increase of 18% compared to the first quarter of 2021.

Meanwhile, the office real estate segment overtook the industrial & logistics real estate segment in terms of volume in the first quarter with a total value increase of 44% year-on-year.  The retail real estate segment also saw signs of recovery with a total of $33 billion invested by investors - up 65% compared to the first three months of 2021.

1- Americas (47%)

Despite pressure from inflation and rising interest rates in the US, the volume of real estate investment in the Americas region still increased by 47% year-on-year which reaches a total value of $160 billion in the first quarter of this year.

Real estate transactions reached a total value of $58 billion, up 40% over the same period last year in which the three markets witnessing the largest investment volume in this region are all located in the US including Dallas ($4.9 billion), New York ($4.1 billion) and Los Angeles ($3.7 billion) respectively.  

The industrial and logistics real estate segment saw a total of $36 billion in inflows in the first three months of the year - up 50% year-on-year.  Investor demand remains strong which is why CBRE predicts total investment volume in this segment in the Americas will increase in the second quarter.

The office real estate segment accounted for $35 billion - up 52% ​​compared to the first quarter of 2021.  However, excluding entity-level transactions, the office real estate segment actually overtook the industrial and logistics real estate segment to take the second place among the most invested segments in the Americas in the first three months of the year.

The retail real estate sector received a total of $18 billion in investment capital in the first quarter - up 79% year-on-year.  This number proves that investors are more interested in retail properties after two years of being affected by the pandemic.  As a result, the outlook for this property sector in the region is somewhat brighter.

2- Europe (25%)

The total investment volume in the European real estate market in the first quarter of the year reached $93 billion - up 25% year-on-year in which investment volume in the office real estate segment increased by 73% to $34 billion.  Investors are particularly focused on key assets that meet sustainability standards.

The total investment volume in the industrial and logistics real estate segment reached $20 billion, up 41% compared to the first quarter of the previous year.  Norway ($1.8 billion), Spain ($1.1 billion), Germany ($5 billion) and Italy ($752 million) were the markets with the highest growth in the first three months of the year.  Investor interest in the sector is being fueled by rising rents as well as a booming e-commerce market.

Investment volume in retail real estate sector increased 56% year-on-year to $11 billion.  Particularly, Norway and France became the two markets with the highest retail property investing volume ever.  Consumer spending has increased thanks to the easing of restrictions related to Covid-19, thereby becoming the driving force behind this segment.

In contrast, investment volume in housing market fell 23% year-on-year to $18 billion.  The main reason for this decline is the supply shortage in Europe.

3- Asia Pacific (5%)

Investment volume in the Asia-Pacific region increased 5% year-on-year to $29 billion - According to CBRE. Of which, investment volume in the office real estate segment fell 7% to $15 billion, but is expected to increase later this year as occupancy begins to recover.  Australia, Singapore and South Korea accounted for 57% of total investment in this segment in the region in the first quarter.

Investment volume in the industrial and logistics real estate segments also fell 2% year-on-year to $5 billion. Market fundamentals and high rates of competition are expected to reduce basic logistics yield in the coming months.

On the other hand, the total investment volume in retail space reached $4 billion in the first three months of the year - up 46% year-on-year.  The fact that many Asian countries (except China) eased restrictions on Covid-19, began to welcome foreign tourists, made investors begin to show interest again in this market.

CBRE forecasts that total global investment volumes this year will fall by around 2% from the record volume in 2021. Europe is forecasted to see the largest decline (down 5%), but this is partly offset bygrowth in Asia-Pacific (up 5%).  According to CBRE's conclusion, investment volume in the Americas will decrease by about 1% compared to the total investment volume in 2021.

 

CHINA CUTS LENDING RATES TO REVIVE REAL ESTATE SECTOR

China cuts lending rates, seeks to revive real estate sector to support the economy.

Senior officials have pledged further measures to combat the slowdown in the world's second-largest economy, impacted by the COVID-19 outbreak, which has resulted in strict measures and restrictions on travelling which causes major disruption to economic activity.

Shanghai Composite Index, which rose about 1% at the start of the session after the rate cut on Friday, but real estate stocks are flat.

China cuts Lending Rates to revive Real Estate sector / ph: pexels 

China, in a monthly fix, lowered its five-year loan prime rate (LPR) 15 basis points to 4.45%, the biggest drop since China revised the mechanism in 2019. One-year LPR was unchanged at 3.70%.

Many private-sector economists expect China's economy will shrink this quarter from a year earlier, compared with 4.8% growth in the first quarter.  Indicators from credit lending, industrial output and retail sales show that stringent COVID-related measures and travelling restrictions have caused heavy damage.

The main drag on growth is the real estate sector that policymakers are looking to turn around.  Real estate and related sectors such as construction account for more than a quarter of the economy.

LPR is the reference lending rate set by 18 banks on a monthly basis and published by the People's Bank of China.  Banks use the 5-year LPR to price mortgages, while most other loans are based on an one-year interest rate.  Both rates were lowered in January to boost the economy.

Since late last year, Beijing has taken steps to help revive the real estate sector including making it easier for large and state-owned real estate developers to raise capital, loosening of margin account regulations for pre-sale funds and allowing some local governments to cut mortgage rates and lower down payment rates.

This week, financial authorities allowed banks to cut mortgage rates for some homebuyers.  But that measure alone and the rate cuts will not alleviate the financial strain on developers, many of whom are struggling to refinance debt.

Real estate stocks have bounced back recently, but the muted reaction to Friday's cut show that some investors think it may not be enough to revive the struggling sector.

Which Housing Markets are most affected when Interest Rates rise?

Houses in the US and UK are selling faster than ever, while house prices in Canada have increased by 26% since the onset of the COVID-19 pandemic, and the median property price in New Zealand has increased by nearly 46% compared to 2019.

For more than a decade, homeowners benefited from extremely low interest rates.  Now, however, change is happening.  On May 5, the Bank of England, with its forecast that inflation could exceed 10% by the end of 2022, raised interest rates for the fourth time to 1%.

A day earlier, the US Federal Reserve (Fed) raised its benchmark interest rate by 50 basis points (0.5 percentage points) and hinted that there will be more rate hikes.  Investors expect interest rates in the US to rise above 3% by early 2023, more than triple current levels.  Most central banks in other rich countries, from Canada to Australia, have already begun tightening monetary policy or are preparing to do so.

Which Housing Markets are most affected when Interest Rates rise? / ph: pexels 

Many economists believe that a global collapse in the real estate sector like that of 2008 is unlikely.  The financial situation of households has strengthened since the financial crisis and lending standards have been tightened.  A tight supply of houses coupled with strong demand, high household net worth and a strong labor market will also support property prices.

However, growing financing costs can make it difficult for homeowners to manage an existing debt burden as they increase their repayment amounts, and make it difficult for some potential buyers.  If demand is hit hard enough, house prices could start to fall.

Homeowners' vulnerability to sharp increases in mortgage payments varies from country to country.  In Australia and New Zealand, where house prices have risen by more than 20% over the past year, house values ​​have risen too high to become the subject of any modest interest rate hike.

In the US and UK, where markets are less extreme, interest rates may have to hit 4% for house prices to fall, according to analysts at consulting firm Capital Economics.

There are three other factors that will determine whether the housing market simply slows down or stagnates.  It is the extent to which the homeowner borrows the mortgage (instead of owning the property outright);  popularity of floating-rate mortgages instead of fixed-rate loans and household debt.

The fewer people who own the property outright, the greater the impact of rising interest rates will be.  Denmark, Norway and Sweden have relatively high mortgage rates.  The loosening of lending standards during the COVID-19 pandemic further increased borrowing.

In Sweden, tax cuts for homeowners have further boosted the trend of buying a mortgage home, while the unusually active Rental market characterized by high rents has pushed many tenants into owning houses.

All of this puts Nordic banks in a difficult position.  In Norway and Sweden, home loans account for more than a third of total bank assets.  In Denmark, the rate is close to 50%.  As a result, a sharp drop in house prices can cause losses.

In contrast to the Nordic countries, where home ownership is driven by the growth of the mortgage market, many households in the Central and Eastern Europe bought houses without borrowing in the 1990s because real estate was so cheap.

In Lithuania and Romania, more than 80% of households are wholly owned.  Mortgage-free households are also more common in Southern Europe, particularly Spain and Italy, where inheritance or family support is a common way to own a house.  Germans tend to rent rather than own.  Therefore, an increase in interest rates will have little direct impact on house prices.

Secondly, the structure of mortgage debt is also important.  Rising interest rates will be felt almost immediately by floating-rate mortgage borrowers, while for fixed-rate borrowers, the issue will be delayed.

In the US, mortgage rates tend to stay fixed for two or three decades.  In Canada, nearly half of home loans have a fixed interest rate of 5 years or more.  In contrast, lending in Finland is almost entirely priced at floating rates.  In Australia, about 80% of mortgages are floating rate.

However, in some countries, mortgage rates tend to be fixed, but only for a period that is too short to protect borrowers.

In New Zealand, fixed-rate mortgages make up the majority of loans available, but nearly three-fifths are fixed-rate for periods of less than a year.  In the UK, almost half have fixed interest rates for up to two years.

The third factor, the resilience to rising interest rates also depends on the amount of debt of households.  High debt became the focus of attention during the global financial crisis.  As property prices fall, households with high mortgage payments will face difficulties.

Today, households are richer, but more households are saddled with more debt than ever before.  Although Canadians added $3.6 trillion CAD ($2.8 trillion) to their total savings during the pandemic, bringing their net worth to a record CAD 15,900 billion by the end of 2021, but the desire to buy a home has pushed household debt to 137% of income. The share of new mortgages with exceptionally high loan-to-income ratios (above 4.5 times) has also increased, prompting the central bank of Canada to issue a warning about high debt levels last November.

Financial regulators in Europe are equally worried.  In February, the European Systemic Risk Committee warned of unsustainably high mortgage debt levels in Denmark, Luxembourg, the Netherlands, Norway and Sweden.  In Australia, the average homeowner's debt-to-income has risen to 150%.  In all of these countries, households will face higher monthly debt payments at a time when rising food and energy costs are eating away at their incomes.

Summarily, it can be seen that some housing markets seem to be more difficult than others.  U.S. real estate, which suffered the aftermath of the subprime crisis, appears to be better protected than in many major economies.  Borrowers and lenders here have become more cautious since 2009 and fixed rates are more common.

Meanwhile, the housing market in the UK and France, despite having a positive outlook in the short term, will be affected if interest rates continue to rise.  Real estate in Germany and Southern and Eastern Europe appear to be less vulnerable.  In contrast, house prices are likely to be most sensitive to rising interest rates in Australia, New Zealand, Canada and the Nordic countries.

In most countries, demand still far exceeds supply.  The job market is strong, Millennials (those born between 1981 and 1996) are approaching home-buying age, and the shift to telecommuting will increase the need to own a living space.

New real estate remains scarce, which will keep houses competitive and help keep prices high.  In the UK, the number of properties listed in February 2022 was 36% less than at the beginning of 2020, while in the US, the number of properties listed in March 2022 was 62% lower than the previous year.

In that context, the alternative to owning a home to rent seems particularly appealing.  However, average rents across the UK in April were also 15% higher than at the start of 2020. In the US, rents are already up 20% in 2021, with hotspots like Miami up almost 50%.

As you can see, when the era of cheap money ends, the demand for housing will not collapse.  However, lenders and landlords will face an increasing trend of lending squeeze.

ASIA PACIFIC REAL ESTATE ATTRACTS A US$40.8B OF CAPITAL

According to the JLL Capital Tracker report for the first quarter of 2022, $40.8 billion of capital was deployed through direct real estate investment in the Asia Pacific real estate region during the quarter.

Investment volume increased most markedly in Singapore, South Korea and Australia.  Retail and office real estate are two active sectors while logistics and industry real estate have an average growth rate of 3.5% year-on-year.

In which, Singapore commercial real estate recorded the largest investment growth in the region with an increase of 134% over the same period last year.  Transactions mainly come from office building and retail space.

Asia Pacific real estate attracts a US$40.8B of capital / ph: pexels 

Korea continued to record an 89% year-on-year growth in investment volume to US$8.2 billion thanks to a diversified investment portfolio in the office, retail, logistics and industrial real estate sectors.

Meanwhile, Australia announced the third largest annual investment growth with a 49% increase as investors deployed $4.7 billion of capital into this market focusing on the office real estate sector.

Japan remains the region's largest investment market with an investment volume of US$8.5 billion, although a 26% decrease year-on-year.  China with a transaction volume in the first quarter of 8.3 billion USD.

The Asia Pacific retail region recorded the largest growth in the first quarter of 2022 with investments up 39% year-on-year.  More than $8 billion in capital was deployed to retail properties during the quarter as customers returned following the easing of pandemic management policies in most markets.

Office real estate remains the most popular sector in Asia Pacific by total volume. This sector grew 9% year-on-year and ended the first quarter with $17.3 billion in direct investment.

Notable transactions include AlphaDom City Alpharium Tower ($846 million) in South Korea, Cross Street Exchange ($600 million) in Singapore and Darling Quarter ($453 million for 50% stake) in Australia - This clearly shows the optimism of investors.

While capital inflows into the commercial and office real estate sectors increased impressively, the logistics and industrial real estate sectors increased by 3.5% year-on-year, but this average growth rate only collected $8.3 billion in capital deployed in Q1.

The absence of large portfolio deals as well as a limited number of transactions have slowed investment growth in this sector despite receiving widespread attention from investors.  Notable deals include the sale of the DLJ Greater Shanghai Portfolio ($717 million) in China.

A NEW TREND IN THE REAL ESTATE RENTAL MARKETS: SHORT-TERM RENTALS

The Covid-19 pandemic and the emergence of short-term rental companies like Airbnb gave birth to a new type of real estate - short-term residence rental.

This new wave blurs the lines between the hotel and residential segments, sparking developments designed from the ground up to serve dual purposes.  On the one hand, they cater to the needs of buyers looking for a getaway.  On the other hand, this trend helps investors or homeowners to earn passive income when they are not using the property.

A new trend in the real estate rental markets: Short-term rentals / ph: pexels 

The CEO and founder of Miami, US-based short-term rental company WhyHotel, Jason Fudin believes the telework trend could change the way we approach the real estate market with a young generation around the globe. “Consumers demand short-term accommodation that combines apartments and hotels, especially when they can work anywhere they like.  For example, people travel for work and stay for pleasure, especially in Miami, New York, and Nashville.  Therefore, they are looking for apartment-style amenities plus hotel-like services to enjoy that lifestyle.”

According to Nicholas Perez, vice president of a well-known real estate corporation in the US, flexible living allows people to generate income even while having fun or eating.  That's what short-term rentals can do.

At many locals, especially a new generation of young people who love to move as well as foreign buyers are grabbing the opportunity to own a property in one of America's fastest growing areas: Downtown Miami.

Some will choose to live here, while others see it as an opportunity to enter the booming short-term rental business without the challenges of independently managing these properties.

According to Harvey Hernandez, CEO of Newgard Development Group, a real estate developer operating in the North American market, teleworking also motivates people to move more which creates a sense of freedom to experience different lifestyles in many places - An unprecedented thing. 

This freedom provides people with a great opportunity to utilize their homes to their advantage when they are traveling or exploring other places for short periods of time rather than leaving them alone.

The birth of short-term property management and rental agencies has helped many people both travel and earn money, thereby promoting many people, especially young people to join the short-term rental market.  

The length of stay for short-term rentals skyrocketed, up to 30 days or more.

In the coming time, more clearly designed additional changes and developments will help lift the short-term rental market to a new level that offers a huge pie attracting both investors and tenants.

WHAT CITY HAS THE MOST AFFORDABLE HOUSING IN THE WORLD?

Home prices have exploded during the pandemic, but in many cities around the world there are still affordable houses.

The Institute for Urban Reform (USA) and the Frontier Center for Public Policy (Canada) have released the 2022 edition of Demographia's International Housing Affordability.  Based on a survey of 92 cities in the third quarter of 2021, the report published in Bloomberg Quint shows that the US is the most affordable country.

What city has the most affordable housing in the world? / ph: pexels 

In the context of the increasing cost of buying a house globally, Pittsburgh (USA) was named the most affordable city to buy a house.

Discounted housing programs are quite popular in the US, especially for uninhabited lands.  The condition to buy a house is to become a legal citizen of the city, commit to live in the new house for at least 3 years and have to invest a significant amount of money in renovations.

Oklahoma City and Rochester (USA) ranked second and third place on the list of cities with the most affordable housing prices.  Sydney (Australia) and Vancouver (Canada) are also ranked in the list of cities with the most affordable living costs.

Hong Kong has long been the most expensive city in the world for housing, ranked last out of 92 housing markets in the Demographia study.  New York ranks 73rd while London ranks 79th.

A sign of growing tensions in many markets is that Canada is barring most foreigners from buying houses for two years and offering billions of dollars to boost construction activity in an effort to cool down the surging real estate market.

[TRENDING NOW] THE COST OF RENTING AND BORROWING TO BUY A HOUSE IN THE US IS NEARLY EQUAL

The difference between the rental cost and the average monthly mortgage payment in the US has narrowed to $30. This record small gap makes the decision between renting or borrowing to buy a house has become difficult for Americans.

Specifically, the average monthly offer price increased 17% year-on-year to a record high of $1,940 in March. While the average monthly mortgage payments increased 34% - reached $1,910.

The cost of renting and borrowing to buy a house in the US is nearly equal / ph: pexels 

Historically, the average monthly home loan cost has been much lower than the rental cost mainly because rental apartments are concentrated in expensive cities like New York and San Francisco.  Meanwhile, houses purchased are often of low value due to their location in suburban and rural areas, but the disparity has evaporated after borrowing costs skyrocketed.

The difference between rental and borrowing costs in March 2020 was $322, but it has begun to narrow since the housing market surged due to the pandemic, especially in urban areas.  It is worth noting that if getting a home loan, the owner will also have to pay other costs such as property taxes and utilities.  This could push the cost of ownership even higher - According to Redfin chief economist Daryl Fairweather.

Many first-time homebuyers are forced to choose between renting or moving to a city with a lower living cost.  For cities like Miami, Austin, Texas, and Portland, Oregon, real estate buying demand is boosted by the wave of remote labor came to look for housing.  For traditionally expensive areas like New York, this become more serious by people flocking back to the city after the pandemic.

METAVERSE REAL ESTATE INVESTING MARKET EXPECTED TO GROW 31%/YEAR

According to investors and analytics firms, the value of Metaverse real estate investing amounted to $500 million last year, and could double this year.

If you've been following the flurry of buzzwords that have taken over the tech world lately, you've almost certainly heard of the metaverse.  And if you've heard of that, then you probably know some people buying real estate in Metaverse in that technology, using non-fungible tokens (NFTs) in the digital universe. 
 

Metaverse real estate investing market expected to grow 31%/year / ph: Cryptovoxels

From Metaverse land plots value of $450,000 in the rapper Snoop Dogg's "Snoopverse," to video game giant Atari's crypto casino in Decentraland - where a buyer recently shelled out $2.43 million  for a plot of Metaverse land - more than hundreds of millions of dollars have been poured into Metaverse real estate investing - according to predictive analytics firm NWO.ai.

According to MetaMetric Solutions, the value of Metaverse real estate investing across the four main Metaverse platforms reached $501 million by 2021. Metaverse data provider says that the value of Metaverse real estate investing in January 2022 have reached $85 million. MetaMetric Solutions estimates that at this rate, the value of Metaverse real estate investing could reach close to $1 billion by 2022. So far, Metaverse real estate investing have focused on the "Big Four" platforms -  Sandbox, Decentraland, Cryptovoxels and Somnium.

The recent spike in Metaverse real estate investing was sparked by Facebook's October 28 announcement that it had rebranded itself as Meta to focus on the metaverse.  Also a report from BrandEssence Market Research shows that the diversified Metaverse real estate investing market is expected to grow at a compound annual rate of 31%/year from 2022 to 2028.

Recently, a series of companies, big brands and investors have been flocking to the new Metaverse real estate investing craze, hoping to get into the ground floor of Manhattan or the next digital Monaco.  Metaverse land value will be determined by what the owner does with a Metaverse property - like designing a famous attraction, museum, or place, in addition to the location of that Metaverse land.

A major factor driving Metaverse real estate investing is the growing popularity of metaverses and NFT digital assets.  People join the metaverse like Decentraland and can use the ecosystem's digital assets to buy plots of Metaverse land.  They can then buy, sell, or rent out the space.  

There are two main things that are said to bring profits to Metaverse real estate investing: scarcity and location, two fundamental elements of Metaverse real estate.  However, experts say that the Metaverse real estate investing is risky because the very scarcity is artificially built. That's why potential investors should be aware that their Metaverse real estate may not increase prices as they expect.

IS VIRTUAL REAL ESTATE INVESTING PROFITABLE?

A wave of blockchain-related technologies that aim to simplify the real estate buying process, primarily by eliminating procedures such as title insurance and legal documents.  Some of the same technological changes we've seen in other industries like transportation and communications have eventually spread to virtual real estate investing.

These are not the only changes driven by global Internet connectivity.  People now spend most of their time on screens, and the virtual world that existed only on computers is now changing.  In these places, people can use profile pictures to gather and have interactive social experiences that is completely virtual.  These online communities are called Metaverse.

In many ways, the structure of the Metaverse resembles that of a "real-world" city - characterized by town centres, communities, residential areas, and commercial districts.  They are simply virtual.  Recently, individuals well versed in this Metaverse market have discovered that these virtual communities can sell  Metaverse land for real-world money. Virtual real estate investing has thus become very real.

IS VIRTUAL REAL ESTATE INVESTING PROFITABLE?

1- Is virtual real estate investing an opportunity?

Many people ask: Is virtual real estate investing an opportunity? The answer is Yes! This is an empty space where you can build anything you want.  The important thing is that this is a real investment.

Is virtual real estate investing profitable? / ph: The Sandbox

At the real real estate environment. Real-world transfers of real money, real money exchanged for real estate, and transactions involving banks, financial firms, attorneys, and real estate companies.

In a similar way, virtual real estate investing is also exchanged, often with virtual currency, in the form of a non-fungible token (NFT).  NFTs vary and are limited in number.  These virtual real estate investing transactions are enabled by the blockchain which is a digital ledger that is replicated and distributed in a database.  What you get is not a house key or pink book, but a password, and you are free to use whatever you imagine to develop your Metaverse land.

Besides the development of virtual currencies, the blockchain technology behind them is also evolving and now it is guaranteed that the tokens have an identifiable value.

Just as the number of tokens is limited (and monitored by the entire blockchain), the number of Metaverse land plots is also limited.

The skepticism of virtual real estate investing is entirely justified.  One question is “Who can benefit from virtual real estate investing?”  Before 2020, the answer might be “nobody”.  However, the covid-19’pandemic has changed the way humans interact.

Humans are social animals, and they have an innate desire to interact. Virtual real estate investing allows people to securely socialize and interact with others, and it also has commercial value for Metaverse, especially for large scale businesses and even medium enterprises.  Metaverse land allows these companies to market their products to new audiences in the new space and it also provides important CRM functions.

In this sense, the digital economy is taking shape in the Metaverse, because in this environment you can really attract tourists and turn them into powerful brand ambassadors in the real world.

This Metaverse space is especially valuable to digital artists who can safely exhibit their works in virtual museums and virtual galleries where visitors can become  buyer.  As digital real estate becomes more and more popular, the line between physical and virtual is becoming increasingly blurred.

2- Is virtual real estate investing profitable?

As with all investments, nothing is guaranteed, but it has been shown that virtual real estate investing might be a source of profit for individual investors.  There are several Metaverse platforms and each Metaverse platform has its own cryptocurrency.  But, basically, they work the same way.

Virtual real estate investing is highly speculative.  But so far, we have seen a large number of institutional investors entering the crypto market and making huge profits.

The high volatility makes crypto-currency-based investments attractive, as significant increases in value can happen very quickly.

Currently, despite a lot of controversy and mixed opinions, the macro trends that seem to be in favor of cryptocurrencies and digital real estate provide a new way to approach these trends.  
 

WHAT IS FUTURE POTENTIAL OF METAVERSE REAL ESTATE INVESTING?

Metaverse real estate investing is a concern of many investors.  Hundreds of millions of dollars have been invested in this Metaverse real estate field, so what makes this unique Metaverse real estate sector so attractive? And  What is Future potential of Metaverse Real Estate Investing?

WHAT IS FUTURE POTENTIAL OF METAVERSE REAL ESTATE INVESTING?

1- What is Metaverse Real Estate?

Metaverse has caused a fever in the technology world especially when Mark Zuckerberg, changed the name of Facebook's parent company to Meta. To understand the concept of Metaverse we can imagine that it is a virtual world created to perfectly simulate the real world we live in.  This space is a combination of the physical and digital worlds to create a vivid and ideal universe.

In Metaverse, by effectively applying blockchain technology, participants can own the infrastructure right in the game.  They can spend money to own a Metaverse land and are free to build, trade, do whatever they want to do on that Metaverse land and make real profits.  This is a huge difference from traditional video games.  Specifically, Metaverse land owners can:

- Make Metaverse land purchase and sale transactions to make a profit

- Get an extra passive income by renting out Metaverse property

- Build your own building like a shopping mall or store or hire a Metaverse land developer

- Run and own a virtual business/store by yourself that generates real profits

- Gather together to form a society

2- The development of Metaverse Real Estate

Currently, many investors are seeing the promising future of the digital real estate market, so they accept risks and bets.  In the past time, we can easily "spot" many million-dollar deals that have been done on Metaverse.  This has made the digital real estate market hotter than ever.  Currently, many investors have recognized that the assets in the Metaverse virtual universe are real assets that can be profitable and that they really have value.

 What is Future potential of Metaverse Real Estate Investing? / ph: The Sandbox
 

Referring to the record deals in the digital real estate market, it is Republic Realm.  This company has invested 4.3 million USD to own a digital land plot on The Sandbox platform - a virtual universe game that helps people interact and participate in concerts.  This has made many experts increasingly believe in the further development of virtual reality technology.

In the game Axie Infinity, a piece of Genesis land in the world of Lunacia was sold for up to 550 ETH (worth $2.3 million).  Along with that, 9 pieces of land on ETH in February were also transferred for the equivalent of 1.5 million USD.

Not only that, selling and buying real estate in Metaverse universe is also extremely competitive.  Recently, a company Tokens.com in Canada did not regret spending up to 2.4 million USD to gain ownership of a prime plot of land on Fashion Street.  This Metaverse land is created by Decentraland platform thanks to the application of blockchain technology.  This company is aiming for a strategic goal that is to become a place to trade and sell products of luxury fashion brands in the future, and consider this as a long-term oriented plan.

In the Asian market, specifically in China, China's Metaverse real estate project called Rainbow Universe also resonates as it is on the rise and aims to successfully sell 350,000 virtual homes on "P planet P"  ".  The price will be spread over 13 different levels.

Although the prices listed are extremely expensive compared to real real estate in real life, these Metaverse real estate projects are still invested a huge amount of money.  Based on current analysis, early digital real estate entrants are transitioning to being sold and reassigned to latecomers.  And there were even old houses on the Rainbow Universe platform for sale for 9,000 yuan, much higher than many real-life real estate.  

Not only developing and becoming attractive to ordinary people, authorities of many countries have begun to pay special attention to Metaverse real estate investing.  Specifically, it is the small island nation of Barbados in the Caribbean that has widely announced its plan to create a virtual embassy on the Decentraland platform.  There people can freely play, meet many other people in the form of virtual incarnations.  They can even buy and sell Metaverse real estate and experience whatever experience they want.

3- Future potential of Metaverse Real Estate Investing 

It can be seen that the Metaverse real estate investing trend is receiving attention of many investors around the world.  This is a trend that can develop further in the future and they are gradually becoming a lucrative piece of cake.

According to data from Dapp, in just 7 days, about 6000 transactions related to Metaverse real estate investing took place.  And more than 100 million USD is the proceeds from Metaverse land plots successfully sold on the 4 largest virtual universe platforms today including Somnium Space, CryptoVoxels, Decentraland and The Sandbox.  In the opinion of many industry experts, with the current rate of development, Metaverse real estate investing can completely generate revenue of up to 1 trillion dollars a year thanks to Metaverse land plots.

It can be seen that today, Metaverse real estate investing is still a risky field.  But in the future, maybe this Metaverse real estate investing channel is a potential and promising sector for future profitability.

IS METAVERSE REAL ESTATE A GOOD INVESTMENT?

With the rapid popularity of Metaverse, more and more people are paying attention to the concept of “digital real estate”.  So should Metaverse real estate be considered as a potential investment channel?

IS METAVERSE REAL ESTATE A GOOD INVESTMENT?

1- What is the Metaverse?

In terms of etymology, Metaverse is a compound word.  Where the prefix 'Meta' means 'beyond' and the suffix 'verse' is derived from the word 'Universe' (meaning universe).  The word Metaverse was first mentioned by Neal Stephenson - an American writer in his novel Snow Crash published in 1992. Accordingly, he defined Metaverse as a computer-generated virtual universe, existing in parallel with real life and allow individuals to remove cultural and economic rigidities and rewrite social norms.

Is Metaverse real estate a good investment? / ph: pexels 

Until now, with the breakthrough appearance of the internet combined with supporting tools such as VR (Virtual Reality) technology, augmented reality (AR) technology, Metaverse is no longer a  literary concept that is widely known as a network of 3D virtual spaces aimed at encouraging social interaction.  To put it more simply, Metaverse is a virtual world that recreates real-life environments such as houses, shopping malls, amusement parks, schools, etc. Along with that, real people will create their own great characters look like real people, role-play and interact with each other in virtual space.  Living in the Metaverse world, users can buy, sell, perform other exchange transactions or even cryptocurrency mining.

2- How much does it cost to invest in digital real estate?

In its infancy, the Metaverse was simply a place for people to meet, explore cyberspace, and have fun.  Until there is a strong and popular development of the blockchain platform, players can build a virtual economy, using NFT (Non-Fungible Token, roughly understood as an asset encrypted with digital chain (blockchain) and non-fungible and cryptocurrency to buy and sell in-game features.  Typically games like Decentraland, Roblox allows users to purchase plots of digital real estate and design their own spaces.  Factors that determine the value of digital real estate will be similar to real real estate, including: location, lot size, ready-built infrastructure and the law of supply - demand.

3- Is Metaverse real estate a good investment?

Unlike real-world real estate, investors are not dependent on digital real estate.  They don't need digital real estate to build a house.  The buying and selling process is also simple, complicated documentation procedures are completely omitted. Additionally, according to the statistics, it can be seen that digital real estate on Metaverse is an investment that could generate super profits over time.

However, the "huge" return comes with an extremely high level of risk due to the erratic volatility of the digital space. No one can predict whether the game platform will continue to be hot, attracting more investors or not. If investors choose the wrong Metaverse platform, the risk of losing money will be huge.

Investing in digital real estate is very risky.  Investors should consider carefully before deciding to invest in Metaverse real estate.

Real Estate Investing

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