FEBRUARY 2012 |
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Paris property boom starts to wilt Best of the Blogs
BEST OF THE BLOGS | 21
By Nicholas Vinocur on
www.reuters.com Even by the breakneck standards of London and New York, the trend for property in Paris has been remarkable: since fears of a default by Greece hit headlines in mid-2009, prices per square metre are up nearly 40%. The world’s major cities have all seen property prices spike, but the Paris boom is in a league all of its own. Both in terms of strength and duration, it has outpaced average prices in France and across the euro zone. Parisian estate agents are reluctant to depart from the bullish script when it comes to predicting where prices will go next - and they have plenty of arguments to back their case. Paris remains the world’s top tourist destination. Most important to investors, a chronic supply shortage is seen as locking in long-term value. But even now, with prices holding above €8,300 per sqm, alarm bells are ringing and the FNAIM real estate group has warned that prices will drop by at least 5% to 10% in 2012. A key factor pointing to a correction next year is the pressure on French banks, whose ability to write mortgages is squeezed both by the need to raise €7 billion in new capital and by higher interest rates on government debt. Lending to home buyers, meanwhile, has fallen steadily even as Paris prices headed skyward, dropping to €158.9 billion nationally in October from a high of just under €180 billion in July, Bank of France data shows. “You get the impression that banks are recapitalising on the backs of home buyers,” said David Amanou, an estate agent who heads the District-Immo agency in Paris’s swanky eighth district. The tax break that helped to infl ate prices expires this month (February), but the glut of property transactions that estate agents had expected before that date never materialised. Instead, they dropped suddenly. According to the Paris Chamber of Notaries, transactions fell 9% in the third quarter over the second, hinting at a shrinking buyer pool. Three agents said buyers from crisis-hit European countries as well as Brazilians, Indians and Chinese will pull the market upward from the top. But notary statistics show that foreign buyers, despite an increase, still account for less than 10 percent of the total. French buyers make the market, and they are getting nervous. (The market is) entering the unknown.
Algarve needs to be proactive Best of the Blogs
By Paul Rouse on
www.businessnewsalgarve.com Residential tourism in the Algarve faces a number of challenges this year - falling occupancy levels, the diminishing spending power of tourists, rising prices, struggling companies, and calls for a major restructuring of its tourism promotion. Where did it all go wrong? And what can be done to improve matters quickly? It’s probably fair to say that 2011 wasn’t exactly a vintage year as far as tourism in the Algarve goes. One of the mainstays, if not the mainstay, of the regional economy, a vibrant tourism industry is vital to the Algarve. The ongoing fi nancial crisis however, not only in Portugal but in the country’s key feeder markets such as the UK, Ireland and Spain,
hasn’t helped. Hotel and residential tourism occupancy levels are down, those tourists who are coming have been spending less, and recent price increases - from higher VAT/IVA levels to the ludicrously short-sighted tolls on the A22 - have not helped the Algarve’s cause. There have been business casualties too, across the spectrum, and whilst the woes of the likes of CS Hotels and Monte do Casal may have made the headlines, 2011 also saw other businesses struggling to make ends meet, including many restaurants, small hotels and guest houses, and those shops and service providers who in the past have relied heavily (perhaps too heavily) on the tourist and/or holiday property market. Today, senior hoteliers and politicians are calling for a change in the way the Algarve is promoted, with the private sector taking more control. If that ever happens - and don’t hold your breath - it will take some time before any positive eff ects manifest themselves. Changing the structure of leviathan entities such as regional or national tourist boards can be a painstaking process. And any initiatives the new body might be able to implement won’t bear fruit overnight. So, to coin a phrase, if you want a job doing well, do it yourself. The Algarve’s tourism industry can’t aff ord to sit and wait for somebody else to wave a magic wand. It has to show more initiative itself. Recessions are supposed to produce leaner, fi tter organisations. Not to mention (awful management-speak alert) more thinking outside the box.
Another crash around the corner? Best of the Blogs
By Robert Frank on wsj blogs Three years after the 1929 crash and an anaemic recovery, American voters rose up in a wave of populist anger and sought to bring down the powerful cartels and plutocrats that they blamed for the country’s ills. The year 1932 was the year Huey Long became a U.S. senator and launched his “Share Our Wealth” crusade, announcing that 4% of the American people own 85% of America’s wealth (today it’s closer to 60%). The same year, Franklin D. Roosevelt (FDR) was elected President and pushed through a tax increase on the wealthy that included a hike in the top rate to 63% from 35%. The year 1932 was also the year that many of the wealthy recorded their biggest losses: in 1929, there were 413 Americans earning more than $1 million a year. In 1932, there were only 20, marking a 95% decline. It was, in short, the annus horribilis for the American rich – both politically and financially. It’s unlikely 2012 will mark a replay in politics, but financially, anything is possible. Obama is no Huey Long, of course. His proposed tax hikes on the rich are more Clinton than FDR. Yet the big fear among the wealthy is that the election-year political rhetoric will fan the flames of the Occupy Wall Street movement and create another historic assault on the wealthy, where the rich are universally vilified by the public, taxed more by Washington and targeted in the broader culture. But the likely reality is that when it comes to policy, 2012 won’t come anywhere near 1932. Americans care more about growth than inequality. The real risk of a return to 1932 lies in the stock market – not in Washington.
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