Dubai Property Blog

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The origins of the city of York in the UK can be traced back almost 2,000 years. We see evidence of that from around AD 71 when the Romans in top colonial form conquered the Celtic tribes known as the Brigantes and founded Eboracum which, by the fourth century, was the capital of lower Britain. The ‘Middle Ages’ saw York develop into a kicking commercial centre and with the arrival of the railways, its industrial future was assured. I have felt for some time now that York is a sparkling location for property investment. Awash with visitors all year round, either in pursuit of its endless layers of history, education and business opportunities or feverishly putting their shirts on potential equine winners at its famous race tracks. The place is fairly galloping from strength to strength as a commercial centre and is a great place to live as well. Work on a dhs25.5 million   office development will start  this spring, marking a big vote of confidence in the future of this historical city. The two-storey, 14,500 sq ft development, dubbed The Edge, is being built by the York-based Shepherd Group. Another project, the York Science Park, at Heslington, adjacent to the University of York, just south-east of the city centre, has also attracted a lot of research and development, which can be a catalyst for technology transfer through direct business links. That makes for a booming local economy, I would say. There are some attractive residential opportunities in the area fresh from the agent’s window. Bearing in mind the legions of history tourists and new executive blood en route, there is short and long term rental potential. For example, consider this offering: “The Homestead is a spacious, period four-bedroom country house with outbuildings, stores and paddock. The property is situated in the village of Huby with easy access to the market town of Easingwold and York. In need of cosmetic upgrade, planning permission granted to extend the structure to a spectacular five bedroom property.” Price - dhs2.26 million. Rose-tinted investor spectacles anyone? Andy McTiernan is editor-in-chief at Property World Middle East magazine. Contact him at pworld@eim.ae www.propertyworldme.com

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Many Americans dream of owning a beachfront home with ocean views, but big home insurance firms are retreating from the Atlantic coast amid fears that climate change will unleash more dangerous hurricanes.  The insurers say the risk of a ‘perfect storm’ causing vast damage to communities along the Atlantic coast has simply become too high since Hurricane Katrina obliterated New Orleans in 2005.

As a result, the country’s largest home insurers, State Farm and Allstate, have decided not to seek new business along wide stretches of the US East Coast. Tens of thousands of US home-owners may thus find it more arduous to obtain new insurance for coveted coastal properties in coming years. The insurers point out, however, that beachfront property prices have skyrocketed in recent years, coastal populations have boomed and building codes in some areas are not vigorous enough.

State Farm, the United States’ biggest home insurer, has decided not to write any new homeowner’s insurance policies for coastal communities stretching south from Delaware to North Carolina, according to spokesman Dick Luedke. “Our maxim is, we don’t want to make new promises that would in any way compromise the promises that we have already made,” Luedke said.

Allstate, the nation’s second-largest home insurer, is also not writing new insurance policies for homeowners in some Maryland and Virginia coastal areas. “We've looked at this ... to look at what our risk is on this coastline, and in some areas, it’s just too great for us to insure anymore,” Allstate spokeswoman Debbie Pickford said. Allstate is also not issuing new homeowner policies for all five boroughs of New York, where millions of people reside just above sea level, and Long Island. It will also not seek new business for the entire state of New Jersey from February 5.

Both insurers, however, are continuing to renew existing homeowner policies and stressed that coverage is not being cancelled. Smaller companies, meanwhile, are continuing to seek new business. The big insurers started rethinking their oceanfront exposure in the wake of the record-setting US hurricane seasons of 2004 and 2005, and especially after Hurricane Katrina ravaged the Gulf Coast city of New Orleans, Louisiana and Mississippi, killing over 1,000 people. “All the risk-modeling professionals and all the risk-management specialists out there are looking ten to 20 years down the road and saying, and scientific evidence, as well, and everyone is saying that you’ve got a perfect storm or catastrophes that could potentially affect the coastal areas,” Pickford said.

Allstate had to swallow a loss of $1.5 billion in the third quarter of 2005 due to Katrina and three other large storms as thousands of homeowners filed insurance claims. Pickford said Allstate also needs to ensure it has enough cash on hand to meet potential damage claims. Still, Patricia Campbell-White, a real estate broker,  says wealthy individuals are still buying multimillion-dollar oceanfront homes, and they are prepared to pay higher insurance premiums to live steps from the beach.

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I had an inkling that Germany would take off again as a property market following the euphoria of the build up to the World Cup. The construction industry was, of course, booming in anticipation of a warm welcome to Jules Rimet and his entourage and around that time, the Dubai Investment Group had  bought a 55,000 square metre shopping mall known as the MZ Centre in suburban Berlin for the princely sum of dhs380 million.

Now Germany is not the first destination that leaps to mind for second home seekers despite the accessibility and value for money.  However, the intuitive investor shrewdly tends to shy away from the beaten track. Of course, if you are in search of a period piece, then  you might be disappointed because the majority of German property was built post-1945, for obvious
reasons.

So then, why do new waves of investors think that Germany is the next big thing? As far as the European Housing Review 2006 is concerned, it is the only European country where residential property prices actually fell last year. We could also quote the wise owls at property analyst Merrill Lynch, who comment that the country, ‘has conspicuously failed to join in the global housing boom of the past ten years’. 

Now the plus point of entering a market when it is at a trough means that you stand a very good chance of  improving your yields even if the market turns remotely buoyant. And this market definitely looks set to rise; in some areas, it has already done so to the tune of 15 per cent in the past 18 months. Berlin, for a start, is well worthy of focus. The price of a central apartment in one of Europe’s most dynamic cities, which has become a magnet to artistic souls bailing out of London, Paris and Barcelona to avoid advancing penury, is 50 to 60 per cent cheaper than its London equivalent.

Now Friedenau is an affluent district in Berliner terms, but here a fully renovated, turn-of-the-century, six-room ground floor apartment with garden will reduce your bank account by no more than dhs1.4 million. Also, a fully refurbished city centre apartment block on Karl-Marx-Strasse with ten residential and three  commercial units will set you back dhs4.3 million - roughly the cost of a five bedroom villa in Dubai. Further afield in Frankfurt a four-bedroom, two-bathroom top floor apartment in Bornheim, built in the early 1900s and fully renovated  you back by dhs1.27 million.

With those kind of prices, Germany is definitely calling.

Andy McTiernan is editor-in-chief of Property World Middle East. Contact him at pworld@eim.ae
www.propertyworldme.com

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