Pick of the bunch: W/E 1st November 2024

Highlighting a selection of our latest opportunities across each of our disciplines, alongside global market insights for real estate professionals, weekly.

Residential Real Estate

The UK Autumn Budget 2024 introduces mixed signals for the residential sector. With a 2% increase in stamp duty on second homes, investment in additional properties may slow down, as this surcharge poses a hurdle for investors and buy-to-let landlords. However, the retention of the current capital gains tax rate for residential properties offers some relief. The government’s ￡5 billion commitment to boost housing supply through the Affordable Homes Programme aims to address the market’s supply shortage, which could support property values in the long term. This investment could improve affordability for first-time buyers and ease rental pressures as more properties enter the market, albeit gradually.

The Scottish Government has endorsed the Propertymark Qualifications SCQF Level 6 Certificate in Property Agency (Lettings), confirming it meets the necessary standards for letting agents within the new regulatory framework. This qualification allows aspiring and current property agents to tailor their learning to specific roles in sales or lettings by completing four units focused on essential property knowledge, regional law, and a specialty, with recognition for prior qualifications to streamline the certification process. This comes at a crucial time, as the controversial 3% rent cap and eviction moratorium were lifted on April 1, 2024, allowing landlords to propose rent increases of up to 12% and resume evictions, thereby navigating a market under significant demand, especially in Edinburgh. While the average rent increase has been around 5%, many landlords are cautiously resuming evictions after nearly two years of restrictions, contributing to a market still recovering from the impacts of the Cost of Living (Tenant Protection) Scotland Act 2022.

Hong Kong has witnessed a surge in home purchases by mainland Chinese buyers, who acquired 8,133 new and second-hand homes in the first nine months of the year, accounting for 24% of total sales and representing a record high for both transaction volume and value, with sales totalling HK$90.6 billion (S$15.5 billion). This 68% increase in volume and 43% increase in value from the previous year comes as the Hong Kong government seeks to revitalise the struggling residential market by lifting additional stamp duties for foreign buyers, relaxing down-payment requirements, and including luxury homes over HK$50 million in its investment immigration scheme.

In the third quarter of this year, luxury property prices experienced an annual growth rate of 2.9% across 44 global cities, according to Knight Frank ’s Prime Global Cities Index. This is the lowest growth rate recorded this year and falls short of the 10-year average of 4.6%. While central banks are anticipated to cut rates into next year, potentially stimulating the luxury housing market, the current slowdown highlights the need for additional economic support before prices can recover robustly. Among the tracked cities, 29 reported annual price increases, and 31 experienced quarterly gains. Notably, Manila stood out with a remarkable annual growth of 29.2%, driven by strong economic growth. Dubai maintained a substantial annual increase of 16.9%, although its quarterly growth slowed to just 0.5%. Tokyo saw a 12.8% annual increase but faced a quarterly decline of 2.8%. In the U.S., Los Angeles and Miami recorded strong annual price growth at 7.9% and 7.1%, respectively, while New York experienced a slight annual decrease of 0.5% but showed a quarterly increase.

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Property Management

In the property management sector, operational costs are expected to rise following the UK Autumn Budget 2024’s increase in employers' National Insurance contributions from 13.8% to 15%. This change could stretch property management firms already navigating a competitive labour market, as added payroll costs may affect hiring and retention strategies. Additionally, the freeze on inheritance tax thresholds may indirectly benefit property managers by allowing more homeowners to retain properties across generations, potentially maintaining a steady demand for management services. Planning reforms emphasised in the Budget remain essential for supporting property management firms dealing with an influx of new developments and tenants in a changing landscape.

In his recent Policy Address, Hong Kong Chief Executive John Lee Ka-chiu outlined plans to establish the city as an international tertiary education hub, building on its existing appeal to students, particularly from mainland China. Drawing lessons from Australia, which has successfully positioned itself as a major education center, Hong Kong aims to implement a comprehensive 10-year strategy that addresses key challenges such as student welfare, accommodation shortages, and academic standards. With its high-ranking universities, strong international partnerships, and a strategic location poised to benefit from China’s Belt and Road Initiative, Hong Kong offers unique advantages as an educational destination. Despite ongoing negative media portrayals, the global academic community increasingly recognises Hong Kong as a vibrant and attractive place to study, highlighting its potential to become a leading education hub.

International students in Australia struggle to find housing due to limited options in both the private rental market and purpose-built accommodations, often facing resistance from local councils and institutions. A report from the Property Council of Australia indicates that international students make up only about 4% of the rental market, suggesting they are not the primary cause of the broader housing crisis. To address these challenges, the government plans to incentivise universities to provide student housing by allowing them to exceed their international student caps if they do so. However, the construction of new student accommodations can be complicated, as seen in the opposition faced by a proposed development near the 悉尼新南威尔士大学 (University of New South Wales). This situation raises broader concerns about housing policy and the welfare of international students in Australia.

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Contact: Rose Lock, Emma Bradshaw

Business Support

Birmingham city officials are allocating nearly $500,000 to resolve a computer mainframe issue that has impeded both commercial and residential real estate sales for the past five months. Mayor Randall Woodfin plans to request $468,000 from the city council to address the problem, which has delayed cash payments and hindered the confirmation of routine records necessary for private sales. Real estate agents and lawyers require city verification to prove there are no liens or fees on properties, leading to escrow money being withheld from sellers until the city provides clearance. Some attorneys are currently holding up to $1,000 in profits per residential sale, with larger transactions potentially facing greater delays. The city is also dealing with ongoing concerns related to a previous computer hack, although officials state that this particular issue is separate. The council’s president expressed frustration over the recurring software issues and emphasised the need for transparency and accountability in resolving these problems, as they have significant financial implications for real estate transactions in Birmingham.

Contact: Anuradha Deb, Rose Lock

If you could choose a “personal branding” format, which would you use?

• ??Career highlight storyboard (40%)
• ??Career podcast or interview (20%)
• ??"In-the-Field" Video (20%)
• ??Visual career timeline (20%)

If you could redesign the job application process in real estate, what element would you add? ??

• Video pitch 'cover letters' ?? (33%)
• A virtual "day in the life" ?? (33%)
• AI-driven personality tests ?? (25%)
• Interactive assessments ?? (8%)

Candidates are leaning towards storytelling formats that let them showcase career highlights and a clear professional journey, with "Career highlight storyboards" leading in popularity. In job applications, interactive elements like video cover letters and virtual "day in the life" experiences are top choices, emphasising the value of personal connection and realistic job previews. Employers should consider incorporating these storytelling and interactive options to attract and engage top talent authentically.

Contact our team to discuss how we can help you attract the best talent, or find your dream job!

Built Environment

The UK construction sector benefits from the Autumn Budget 2024’s commitment to increasing housing supply, with ￡3 billion pledged toward the Affordable Homes Programme and incentives for housebuilders. This funding could stimulate growth within the industry, driving demand for new housing developments. However, the rise in National Insurance contributions will impact construction firms’ payroll expenses, challenging them to balance labour costs with project demands. Planning reforms emphasised in the Budget are also essential, as streamlined approval processes would help construction firms meet housing targets more efficiently, especially in affordable and age-specific housing. With targeted government support, the construction industry has the potential to navigate these fiscal pressures while continuing to address housing needs.

According to recent data from CoStar , the U.S. is experiencing a 9.5% increase in hotel construction, totalling 209,312 rooms under construction as of September 2024. In contrast, Europe reported a 1% decrease in hotel construction activity, with only 163,135 rooms currently being built. This disparity is further highlighted by Europe’s significant drop in final planning activity, which fell by 21.9% to 87,779 rooms, while the Americas saw a 10.6% increase in final planning, reaching 305,199 rooms. The overall hotel pipeline in Europe is down 5.4%, while the Americas enjoy a robust 20% growth in total rooms under contract.

In addition to regional construction activity, U.S. construction spending rose 0.1% in September to a four-month high of $2.15 trillion, surpassing expectations. This marks a 4.6% increase year-over-year, reflecting heightened economic activity. Notably, private residential construction saw a slight uptick of 0.2%, with single-family projects increasing by 0.4%. Meanwhile, public residential construction surged by 2.3%. As global construction trends diverge, the U.S. market remains resilient, driven by an expanding range of building projects, while Europe grapples with challenges that may impede future growth in the built environment.

The Royal Institute of British Architects (RIBA) has launched a complete digital suite of the 2024 editions of its Professional Services Contracts, updating the previous 2020 versions to incorporate legislative and regulatory changes, including the UK's new building safety regime. All updated contracts are accessible via RIBA Contracts Digital, an online platform designed for efficient contract management. This update introduces one new contract: the Building Regulations Principal Designer Professional Services Contract 2024, which is for appointing a Principal Designer under the new building regulations. This contract is applicable for commercial projects of any size, including those using design and build pre-novation, and can integrate with the existing RIBA suite of contracts, though it is not intended for domestic projects. Additionally, there is a revised version of the RIBA CDM Regulations Principal Designer Professional Services Contract 2020, aimed at clarifying the role of Principal Designer to prevent confusion stemming from overlapping terminology between the CDM and Building Regulations.

Contact: Julian Murray

Commercial Real Estate

The UK Autumn Budget 2024 leaves the commercial property sector navigating potential challenges, with no direct relief measures announced but a notable rise in operational costs. The increased National Insurance rate may pressure British businesses renting commercial spaces, as firms weigh the added expense against potential returns on investments. This environment may cause some companies to reconsider expansion plans, particularly in high-cost areas, while others could explore alternative workspace models like flexible or hybrid office setups. Despite these constraints, the Budget’s focus on economic growth could indirectly support the sector if commercial demand stabilises, helping businesses and landlords align with evolving post-pandemic space needs.

The push for sustainability in commercial real estate has intensified, with approximately 80% of businesses implementing sustainability plans. This shift towards renewable energy not only cuts costs but also significantly lowers carbon emissions, as green buildings can consume up to 30% less energy and reduce waste by 90%. Renewable energy options like solar, wind, geothermal, and biomass are becoming increasingly popular for their cost-saving potential and market appeal among environmentally conscious tenants. Furthermore, governments are incentivising the adoption of these energy sources through tax breaks and stricter regulations, prompting property owners to integrate renewable solutions to comply with evolving standards and enhance the value of their assets.

China's six major state-owned banks, including the 工商银行 and 中国农业银行 , announced the implementation of a new pricing mechanism for commercial personal housing loan interest rates, effective Friday. This move follows the 中国人民银行 's recent guidelines aimed at enhancing interest rate marketisation, supporting the real estate market's development, and boosting consumption. Under the new mechanism, the previous one-year minimum repricing period for housing loans will be replaced, allowing borrowers to choose repricing intervals of three, six, or twelve months. Experts view this change as a positive step toward stabilising existing housing loan scales, enhancing market confidence, and potentially increasing home purchasing demand. The reform reflects the government's commitment to revitalising the real estate sector, crucial to China's economy. As the new mechanism rolls out, the PBC will cease uniform adjustments of existing housing loan interest rates.

Contact: Rose Lock

Investment, Finance & Accountancy

For property investors, the UK Autumn Budget 2024 brings some discouraging changes, particularly the increase in the stamp duty surcharge on additional homes to 5%. This new rate may affect investor sentiment in the buy-to-let and holiday home markets, leading some investors to re-evaluate portfolios. Additionally, stable capital gains tax on residential properties is somewhat offset by the increased rates on non-residential properties, which could cool transactional activity in the sector. Property experts caution that while the Budget doesn’t deter all investment, it may restrict supply in the rental market if fewer landlords consider expanding portfolios, potentially leading to tighter rental markets and higher rents.

Saudi Arabia's "Vision 2030," launched in 2016, aims to diversify the economy away from oil dependence, significantly impacting real estate investment. Since its inception, nearly $1 trillion has been allocated to major real estate and infrastructure projects, fostering substantial growth opportunities for developers and investors. The plan has relaxed foreign ownership laws, allowing foreign investors to fully own real estate without local partnerships, leading to a more than 50% increase in foreign investment in the sector. Initiatives aimed at boosting housing, tourism, and the establishment of regulatory bodies have further enhanced the investment landscape, creating a more dynamic and appealing market for stakeholders. Overall, Vision 2030 positions Saudi Arabia's real estate sector as a vital component in attracting both domestic and international investment, supporting the nation's long-term economic objectives.

Egypt is emerging as a key destination for Gulf investors, combining lifestyle benefits with promising investment returns. A recent report highlights that 73% of GCC investors prefer areas like Greater Cairo and New Cairo, drawn by modern infrastructure and development projects. Coastal regions such as the North Coast and Sharm El Sheikh are particularly appealing for holiday homes, with 94% of wealthy GCC investors interested in Egypt's second homes market. The government's focus on developing Alamein City as a year-round tourist destination, alongside ongoing infrastructure improvements, further enhances investor confidence. Despite challenges in the luxury housing supply and fluctuating economic conditions, the outlook remains positive for Egypt’s real estate sector, which is expected to grow with increasing local and international investments.

A recent survey by Paribu , a cryptocurrency exchange, indicates a growing preference for cryptocurrencies among Turkish investors over traditional assets like real estate and stocks. The "2024 Cryptocurrency Awareness and Perception Survey," which included 2,002 cryptocurrency-aware participants, revealed that 30% now favor crypto, up from 26% preferring real estate, marking a significant shift from the previous year. Gold remains the top investment choice at 56%, followed by foreign currency. While awareness of cryptocurrencies has soared to 99%, understanding of blockchain technology lags behind, with 72% of respondents unaware of it. Researchers attribute the increasing crypto interest to its perceived high return potential and accessibility, despite many investors lacking knowledge about the underlying technology.

Contact: Lee Riley

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