US property is continuing to show why it is an attractive investment opportunity, recording growth in the first three months of the year once again.
The S&P/Case-Shiller Home Price Indices, by S&P Dow Jones, showed that all three composites posted double-digit annual increases. Ten-city and 20-city composites enjoyed rises of 10.3 per cent and 10.9 per cent respectively in the year to March. Over the quarter, the national composite rose by 1.2 per cent, while over the year, 10.4 per cent growth was noted.
According to a survey, despite a slower-than-normal real estate recovery track, U.S. property sectors and markets will register noticeably better prospects as compared with last year. Recent job creation should be enough to increase absorption and push down vacancy rates in the office, industrial, and retail sectors, helped by the limited new supply in commercial markets. Robust demand for apartments should hold up, survey respondents indicate, even as new construction ramps up – and even the housing sector makes progress in most regions. Additionally, improving fundamentals should help with rents and net operating incomes, building confidence about sustained growth and strengthening recent appreciation.
Among property sectors for 2013, a survey found that commercial and multifamily regain generally solid Emerging Trends investment ratings. Categories held their relative rankings from 2012 in the survey, with persistent leader apartments still on top, though noticeably leveling off, and retail continuing to lag, but recovering. Industrial/warehouse and hotels show the biggest survey improvements, trailed closely by downtown office. Power centers and suburban offices remain investors' least-favored subcategories. Except for apartments and industrial space, development prospects remain challenging. Interviewees show mixed concerns about apartment construction on a market-by-market basis, but generally concur that overdevelopment will happen, just not in 2013. They also anticipate more big-box industrial development.
The cities to enjoy the largest month-over-month gains in March were Charlotte, Los Angeles, Portland, Seattle and Tampa. Phoenix had the largest annual increase at 22.5 per cent followed by San Francisco with 22.2 per cent and Las Vegas with 20.6 per cent.
The upwards momentum of the US property market can't be denied. Research from the National Association of Realtors recently revealed activity is also on the rise, with sales of existing homes increasing by 0.6 per cent in April month-on-month. Compared to the same time in 2012, transactions are up an impressive 9.7 per cent.