US property prices soaring

LOW interest rates and soaring consumer confidence have created record demand for commercial and residential property in the United States.

In highly sought-after areas like Manhattan, residential property prices have risen 10 to 20 percent during the past 12 months - nearly seven times the inflation rate.

Commercial property prices across the nation rose more than 14 percent as companies upgraded or expanded operations.

Commercial property specialists Cushman & Wakefield executive managing director John Coppedge said: “The US property market is up and as active as it ever has been, particularly for investment properties.” Property experts say strong demand for space in central business district sites is reflected in rising prices across the country.

But Cornerstone Properties investor relations vice-president Karin Maas said the outlook varied widely between commercial centres.

Ms Maas said: ‘Overall, most markets are quite tight in central business districts, most are experiencing rent rises. But new construction is causing prices to taper off in some areas.’

Demand remained tight in New York, Boston, Seattle and downtown San Francisco, where limited space tended to restrict big new developments, she said.

Cushman & Wakefield investment research director Janice Stanton said business districts had rebounded during the past four years.

San Francisco vacancy rates have fallen from 11,4 percent to 4,1 percent during the past five years while rents have jumped from $23,70 per square foot to $41,40.

New York vacancy rates have dipped from 14.3 per cent to 8,1 percent and rent has jumped from $35.05 per square foot to $41,50.

In these cities investment returns on commercial property have jumped an average 33 percent.

But in other cities, such as Dallas, Houston and Atlanta, huge construction projects could make rents level off.

Commercial property demand would remain buoyant as long as the economy was strong, Mr Coppedge said. - South China Morning Post.