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Real Estate Briefing - Archive | August, 2008

Asia Pacific property market next to be hit

Posted on 29 August 2008 by Laxman  |  Email |Print

From Telegraph: Property investment and estate agency Savills has warned that the credit crunch is beginning to hit the Asia-Pacific real estate markets.Australia and Japan have already seen falls in the number of sales, with Hong Kong and Singapore suffering from “some slowing”, the group said. The once-booming property market in China is now “finally moderating”, Savills said, as it revealed that overall underlying profits - stripping out a one-off disposal gain of £17m - slumped 41pc in the six months to the end of June.

The company said that the developed Asia Pacific countries have export-led economies which are suffering amid weakening global demand.Savills was unable to give a clear outlook for the stumbling property markets of the UK and the United States. The company said: “It continues to depend on how quickly confidence returns to financial markets, which currently show no sign of improvement.”Indicating gloomy prospects for the UK’s ailing property market, Savills said transaction volumes in London alone are down 45pc year-on-year, with prices falling around 7pc in central London for the first half of the year….. Full Article: Source

Israel’s commercial property slowdown relatively moderate

Posted on 29 August 2008 by Laxman  |  Email |Print

From Globes: The global credit crunch and economic slowdown halved sales of commercial real estate in the first half of 2008 compared with the first half of 2007, when neither were a factor, according to a report by Real Capital Analytics on global capital trends. The report notes that sales in Israel fell by just 6%.Real Capital Analytics operates a database of property sales, and is the source of data for the National Council of Real Estate Investment Fiduciaries (NCREIF) in the US. The report examined 84 countries worldwide. In the first half of 2008, there were 9,000 property sales for a total of $306 billion.

The latest report states, “Dramatic shifts in the capital flows for commercial property became evident in the first half of 2008. Tokyo overtook London and New York as the most active sales market as investors began favoring Asian markets.” There were 43% fewer property sales in developed markets in the first half of 2008 compared with the corresponding half of last year, whereas sales in emerging markets rose by 60%. Property sales in emerging markets accounted for 25% of all property sales in the first half of 2008, compared with 10% in the first half of last year….. Full Article: Source

Central Europe performs best in commercial sector

Posted on 29 August 2008 by Laxman  |  Email |Print

From Central Europe is the only region worth continuing with speculative development according to a leading European property investment and development company.UK based Segro has reined in development in the UK and Western Europe due to the credit crunch. It is now concentrating on countries like Poland and the Czech Republic where it is experiencing good gains.’In the UK we are concerned that we’ll see values continue to fall, and we don’t see any sign of the bottom yet,’ said chief executive Ian Coull. ‘We’re focusing on Central Europe as that is where we are seeing good returns, but in the UK there will be good value at this point in 2009,’ he added.

This is a direct result of the global downturn. The value of the company’s European Portfolio has risen 0.7% to £1.2 billion, whereas the UK portfolio dropped in value by 10% to £3 billion, an initial yield of 6.3%.But the company, a leading provider of Flexible Business Space in Europe, does not expect a huge impact on its business. …. Full Article: Source

Demand not short for tallest building in China

Posted on 29 August 2008 by Laxman  |  Email |Print

From FT: Fallout from the global financial crisis will not depress demand for office space in China’s tallest building, the 101-storey Shanghai World Financial Centre, according to Minoru Mori, the Japanese real estate tycoon who built the landmark skyscraper.The building, which is 492 metres high, opened this month with an occupancy rate of 45 per cent, higher than had been predicted.According to the building’s management, the occupancy rate is expected to reach 90 per cent within a year, given the strong demand for premium office space in Shanghai.

The tower, which took more than 10 years to build, has the world’s highest observation deck.Construction of the SWFC was delayed on two occasions, first by the Asian financial crisis and then by Sino-Japanese political tension, which led to fierce Chinese criticism of the original design.A large circular hole that was meant to house a ferris wheel near the top of the structure was viewed as reminiscent of the sun at the centre of the Japanese national flag….. Full Article: Source

UK: House prices falling at fastest rate in nearly 20 years

Posted on 29 August 2008 by Laxman  |  Email |Print

From Telegraph: Property values have dropped by 10.5 per cent in the last year, the first time they have dropped by double figures since 1990, according to Nationwide Building Society.The average property has seen just under £20,000 wiped off its value and now stands at £164,654.House prices have now fallen for 10 months in a row, they have fallen by 10.3 per cent since the beginning of the year.

The rate at which homes are losing value also accelerated in August to 1.9 per cent, from 1.5 per cent and 0.9 per cent in July and June respectively.Fionnuala Earley, Nationwide’s chief economist, pointed out that the longer view was less severe. “While the pace of monthly falls picked up during the month, the less volatile three month on three month measure eased very slightly in August to 4.5 per cent from 4.6 per cent in July,” she said…. Full Article: Source

Real estate investors invade California

Posted on 29 August 2008 by Laxman  |  Email |Print

According to an analysis of current California real estate statistics, residential real estate investors are the most rapidly growing population of buyers in California.RightNow Consulting announced today the results of a research project analyzing purchasing activities of California residential real estate buyers. Preliminary July 2008 residential property data reveals that the percentage of residential purchases by investors has risen from 6.74% to 11.41% since July of 2007. This represents a 69% increase in year over year proportional activity.

Despite fewer financing options and lots of bad publicity, investors are taking an aggressive stance. “We wondered whether investment activity might have increased in California given current market dynamics, but were truly surprised by these results,” says Dan Miller, CEO of RightNow Consulting. By any measure, the increase is an encouraging nod to the perceived long term value of California real estate. Despite the doom and gloom, for investors and home buyers still sitting on the sidelines, favorable interest rates and price declines might push the California real estate market towards a recovery a bit sooner than expected. …. Full Press Release: Source

New Zealand island defies global property downturn

Posted on 29 August 2008 by Laxman  |  Email |Print

From A tiny island off the coast of New Zealand is outperforming the current property market downturn.It is predicted that property, especially waterfront property, will continue to grow in value on Waiheke Island which has just 8,000 inhabitants and is a 35 minute ferry ride from Auckland. According to the latest Waiheke Island report from estate agents Bayleys the market has outperformed New Zealand real estate trends for over 20 years.

The report shows that beachfront property on the island has grown by approximately 19% per annum every year since 1982, and while this rate has slowed in recent years, the long term view was for further gains.Bayleys research analyst Sarah Davidson said Waiheke’s positive property future as both a permanent residence and holiday home resort was underpinned by an excellent ferry transport system which compared favourably against road routes for similar holiday destinations in the Coromandel and Rodney districts….. Full Article: Source

Beijing Centergate cancels $2.6 bln property plan

Posted on 29 August 2008 by Laxman  |  Email |Print

From Reuters: Beijing Centergate Technologies , developer of the city’s Zhongguancun technology district has cancelled its plan for an 18 billion yuan ($2.6 billion) share placement to obtain real estate assets. Centergate said tight monetary policy this year had seriously affected China’s real estate sector.

“It’s unclear how profitable the real estate assets that were to have been injected into Centergate would actually be,” the company said in a brief statement.Centergate said in early May that it would place as many as 1.23 billion new shares at 14.67 yuan each with its controlling shareholder, Beijing Pengtai Investment Co, and related parties. In return, it would have taken over Beijing Pengrun Real Estate Development Co, obtaining a range of real estate assets including some in the western Chinese city of Chongqing. ($1 = 6.828 Yuan) …. Full Article: Source

Real estate agents concerned over Cyprus property prices

Posted on 29 August 2008 by Laxman  |  Email |Print

From According to the Pancyprian Association of Real Estate Agents the slump in Cyprus property prices has now spread from Paphos to other parts of the island.Interest rate increases, inflation and other factors have pushed demand from the domestic and foreign markets down resulting in severe problems across the island.

Chairman of the Pancyprian Association of Real Estate Agents, Solon Kourouklides, is reported as saying that in Paphos: “Sales have dropped significantly and the number of unsold properties has increased drastically. In the past three months, the external market has dropped by 30-40% while the internal market has dropped by 5%. Forecasters say that the situation will continue until the end of the year - early 2009“.The slump not only affects the number of properties being sold, but their prices too. “Comparatively, Paphos had the highest prices. …. Full Article: Source

South Africa: Property Buyers ‘Back in Market’

Posted on 29 August 2008 by Laxman  |  Email |Print

From Auctioneers say investor sentiment has improved significantly over the past two weeks following the Reserve Bank’s decision not to hike interest rates, with buyers pouring into residential and commercial property auctions.Rael Levitt, CEO of The Alliance Group, says trading on the group’s auction floors this month throughout the country has seen the strongest investor appetite in more than a year.”And our success rates and bidding activity has literally changed overnight.”

He believes the decision not to raise rates has made many investors and property owners “breathe a sigh of relief, realising that the country is most likely at the top of the interest rate cycle”.As far as commercial property is concerned, Levitt says they are seeing a “definite increase in prices and bidding activity with more registered bidders”.At a multiple auction held by The Alliance Group in Sandton last week, a record 350 people were in attendance….. Full Article: Source

London luxury homes register first annual price fall in 5 years

Posted on 29 August 2008 by Laxman  |  Email |Print

From Bloomberg: Luxury-home values in central London, the world’s most expensive location for prime real estate, registered their first annual fall in five years as buyers were deterred by signs the economy may enter a recession.The average value of houses and apartments in London’s nine most expensive neighborhoods dropped 1.6 percent from August 2007, broker Knight Frank LLP said today in a statement. Values fell 1.3 percent from July, the fourth consecutive monthly decline.

Luxury homes in London, except those costing more than 10 million pounds ($18.4 million), have followed the slide in prices already experienced elsewhere in Britain as banks curb lending, shed staff and cut bonuses. Average U.K. home values dropped 10.5 percent this month from a year earlier, the largest decline since the final quarter of 1990, according to a report released yesterday by lender Nationwide Building Society….. Full Article: Source

Walton plans $1 bn fund in India

Posted on 29 August 2008 by Laxman  |  Email |Print

From Walton Street Capital India, the Indian arm of the US-based private equity (PE) real estate investment company, Walton Street Capital, is in the process of raising a country-specific, realty-focused India fund. The fund, whose corpus is expected to be close to $1 billion, is likely to close by March next year, with the first closure expected within the next couple of months.The global PE fund is raising an India-specific, real estate fund for the first time. Walton Street, which had earlier raised a $2.5-billion global fund, had invested a significant part of it in India. Walton Street has investing in the US, Mexico, the EU and India. It has real estate assets worth $14 billion across the globe.

The PE major is rethinking its investment strategy. “The slowdown you see today or the crash in the real estate prices you hear of so often today is happening only at the micro level,” said Amber Malhotra, executive director, Walton Street Capital India.Walton Street entered India about a year-and-a-half ago with investments in Shriram Properties. It will now look at investing in the affordable housing segment. The Indian real estate market is still positive, believes Walton Street….. Full Article: Source

Phnom Penh’s real estate boom

Posted on 29 August 2008 by Laxman  |  Email |Print

From Phnom Penh is being heralded by many as SE Asia’s latest property hotspot. The real estate market appears to be growing exponentially, but can the country’s fledgling market economy sustain such rapid expansion? For three decades Cambodia has struggled to recover from the legacy of the genocidal Khmer Rouge regime. The country has only recently achieved a moderate level of political stability, but with double-digit growth and rapidly rising land and real estate prices, international investors are already heralding Cambodia as Southeast Asia’s latest property hotspot.

Major new residential developments are sprouting up across the capital, and the country is increasingly the target of private equity funds, but this new inflow of capital has so far been of little benefit to Cambodia’s poverty-ridden population. As deprived communities are evicted from their homes to make way for new high-rise developments, it remains to be seen whether there will be a genuine demand for luxury apartments and penthouses in Phnom Penh, or whether the city’s construction boom is being fuelled more by speculation and the lure of short-term profit….. Full Article: Source

Boston’s biggest property owner going all green

Posted on 29 August 2008 by Laxman  |  Email |Print

From The city’s largest property owner - spurred by high energy prices and rising demand from tenants - is seeking “green” certification for all of its office buildings, marking a major milestone in Mayor Thomas M. Menino’s push to make Boston the nation’s most environmentally friendly city.Equity Office Properties Trust, which owns 20 structures in and around Boston, is outfitting its buildings with features ranging from energy-saving heating and cooling units to new bike racks as part of a multimillion-dollar effort to stamp its buildings with the green label.

“We’re doing this from a social responsibility perspective, but it’s also become necessary to maintain tenants,” said Greg Shay, president of Boston operations for Equity Office. “It’s gotten to the point where not taking action is somewhat foolish.”Equity Office, which was acquired by Blackstone Group last year, operates office towers across the country, but it is installing the green technologies only in its Massachusetts properties, beginning what could become a national effort, executives said. The company’s marquee addresses include One Post Of fice Square, Rowes Wharf, and 60 State Street….. Full Article: Source

Buy-to-let lending falls 15 percent in H1 2008 in UK

Posted on 29 August 2008 by Laxman  |  Email |Print

From Reuters: The number of new buy-to-let mortgages fell 15 percent on a year ago in the first six months of 2008, a survey showed, as the lending squeeze continues to depress the housing market.The Council of Mortgage Lenders said new buy-to-let mortgages fell to 144,600 in the first half of the year from 176,500 in the final six months of 2007 and 169,500 in the first half of last year.

“The shortage of mortgage funding is creating similar problems for buy-to-let landlords as it is for other borrowers,” said Michael Coogan, director general at CML.”However, we expect the rental market to remain underpinned by strong demand, partly because some people who would like to buy a home are being forced to carry on renting for now.”Lenders have toughened up their terms in the wake of the global credit crunch, putting pressure on demand in the housing market and contributing to a sharp fall in house prices….. Full Article: Source

Taxation regime for REITs in Malaysia

Posted on 29 August 2008 by Laxman  |  Email |Print

From Streamlining and reducing the withholding tax could provide a boost to the domestic real estate investment trust industry.Would a tax regime in a country be able to promote the real estate investment trust (REIT) industry? Malaysia currently has 13 REITs in the market (compared with 19 in Singapore and seven in Hong Kong).The following are the overriding salient features of the tax regime in Malaysia for REITs.

Tax transparency:This refers to the REIT not being subject to income tax and in Malaysia, this applies so long as the REIT has distributed at least 90% of its taxable income to investors for the year. This lessens the administrative burden at the REIT level since tax is not paid by the REIT.Taxing investors directly at the tax rates applicable to them also leads to a more efficient method of taxation….. Full Article: Source

Top 10 tips on keeping hold of your home

Posted on 29 August 2008 by Laxman  |  Email |Print

From Times Online: Double-digit increases in gas and electricity prices and rising fuel and food costs are exacerbating the financial difficulties faced by homeowners with mortgages. High inflation has reduced the likelihood of base rate cuts, while the persistence of the credit crunch means that, even if the Bank of England were to cut rates, there are no guarantees that mortgage lenders would pass on those cuts to borrowers. There could not be a worse time to default on a loan: anyone with a less than perfect credit record will find it increasingly difficult - and expensive - to borrow money. So what should you do if you are struggling to meet your mortgage repayments?

Speak to your lender immediately. Under the Financial Services Authority’s treating customers fairly initiative it must attempt to work with borrowers who are suffering financial hardship. You could also speak to the Citizens Advice Bureau, which provides free advice.“If you miss a mortgage payment, this will be recorded on your credit file and may make it more difficult to get a mortgage, or to remortgage, in the future,” says Melanie Bien, of the mortgage broker Savills Private Finance. …. Full Article: Source

UK: Tax refunds for overseas holiday home owners

Posted on 29 August 2008 by Laxman  |  Email |Print

From Worries of holiday home owners who have bought overseas property with a company can finally relax as promised tax exemptions came in to force today.The enactment of Section 45 Finance Act 2008 inserts sections 100A and 100B into the Income Tax (Earnings and Pensions) Act 2003.These new sections allow UK residents who were advised to acquire a holiday home overseas through a company because of the laws of the country where the property is located.

As a result, they paid Income Tax before 2008-09 on the benefit of that living accommodation when they have not used the company other than to hold the property for their personal use and letting. Now, the new rules allow the property owners to claim exemption from the living accommodation tax charge outlined in the Income Tax (Earnings and Pensions) Act 2003 and to apply for a refund if they can show that they have paid such tax.Qualifying conditions for exemption,The new legislation provides for an exception from the living accommodation tax charge where living accommodation overseas is provided by a company for a director or other officer of the company or a member of director’s family or household where all of the following apply….. Full Article: Source

Commonwealth Bank of Australia to buy a 33 percent stake in Aussie Home Loans.

Posted on 29 August 2008 by Laxman  |  Email |Print

From CBA chief executive Ralph Norris says the minority stake was a strategic investment and will give the country’s largest home loan lender a stronger foothold in the mortgage market.”As Australia’s largest home loan provider, it makes good strategic sense to look at alternative investments in this industry that will continue to bring benefits to shareholders and consumers,” Mr Norris said.

“The Australian mortgage and housing industries are the backbone of the economy and the purchase of a home remains the largest single investment made by many consumers.”Mr Norris noted that many consumers sought the advice of mortgage brokers when choosing a home loan.”As this market continues to develop, a strategic investment in one of the market leading providers in this industry is a natural fit for the group,” he added. CBA said it expects Aussie to maintain and build on its existing position in the mortgage supply and broker markets.Aussie will continue to be an independently managed and run by its founder, John Symond.CBA will have a minority representation on the Aussie board and management involvement in the day to day running of the company….. Full Article: Source

Major development boom in Dublin despite economic climate

Posted on 29 August 2008 by Laxman  |  Email |Print

From Times may be hard in the property industry but a major Irish developer is undertaking Ireland’s biggest single property investment with a €1 billion expansion to a north Dublin shopping centre.Chartered Land has applied for planning permission for a major expansion of its Swords Pavilions shopping centre in Fingal. If approved it will see the building of two anchor department stores, expected to be Marks & Spencer and House of Fraser, more than 100 smaller units, 200 apartments and four office blocks with car parking.

The plans also include more than 40 restaurants, a medical centre, creches, community rooms and a day-care centre.Designed by architects Newenham Mulligan & Associates and O’Mahony Pike, completion is envisaged for 2013 and up to 3,000 jobs will be created during construction.The current centre attracts more than 200,000 visitors a week and this part of North Dublin is expected to see significant population growth in coming years….. Full Article: Source

Asia-focused infrastructure funds raising $18 billion

Posted on 29 August 2008 by Laxman  |  Email |Print

From This year some $18 billion is being raised globally for investments into infrastructure funds aimed primarily at Asia, with India receiving the lion’s share, according to data compiled by Preqin, a London-based consultancy that focuses on non-listed investments.How much of that money will actually be raised, let alone deployed, remains to be seen, but Tim Friedman, head of publishing at Preqin, says global fund managers are likely to close $3-5 billion in 2008.

This represents a notable jump on 2006 and 2007, which each saw around $1 billion of funds raised for Asian infrastructure. “We’ve seen an increase in demand for infrastructure investments worldwide but this focus on Asia is recent,” Friedman says.Both JPMorgan and Macquarie Funds Management are raising $2 billion funds for India: the JPMorgan Chase India Infrastructure Fund and the Macquarie India Infrastructure Opportunities Fund….. Full Article: Source

Real estate and construction in India—confusion and turmoil prevail!

Posted on 29 August 2008 by Laxman  |  Email |Print

From As India continues its scorching pace of economic growth, many sectors that were not historically favoured by the government are gaining prominence. One such sector is real estate, which has a large employment generation potential and is a significant source of tax revenue. Additionally, this sector has attracted a large amount of foreign investment in recent times. Therefore, the government would do well to address the many complexities and ambiguities—on the indirect tax front—that the sector is facing.

Historically, the key indirect taxes that applied on the construction and real estate sector were works contract tax (now VAT) and stamp duty. With the expanding service tax net, various construction activities have been brought within the service tax net, notable among them being construction of commercial and residential complexes and renting of immovable property. The latest addition to this list was service tax on works contract, which was introduced in the last budget….. Full Article: Source

London offers good buy-to-let property investment opportunities

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From A leading South African property investment company believes the UK is one of the best places to buy property at the moment. The current global economic environment has left investors wary about where to put their money due to lingering subprime concerns and high inflation, according to Scott Picken, chief executive of the International Property Solutions company.’I think the most important thing with the UK is there’s a lot of uncertainty at the moment. Mortgages have come down 70% in the last 12 months, and they expect transaction values are going to decrease from 2007 to 2008 to as little as 17%.

The most important thing with the UK market is the fundamentals are in place and demand outstrips supply. I’d say if someone is taking a medium to long-term view they can make good and wise and studious investment for the future,’ he added. Picken, who heads up the company’s London office, said that speaking to others in the industry it is clear that a lot of foreign investors are talking advantage of the uncertainty in the UK. ‘A third of the property transactions in the last quarter in London have actually been foreign internationals investing in London,’ he said.He believes the UK capital is a good buy-to-let opportunity as long as investors take into account the transport system. …. Full Article: Source

Oaktree launches tender offer for Japanese REIT

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From The private equity firm aims to acquire up to 48.4% in Re-plus Residential Reit through an investment package that will also provide the Reit with fresh capital.US-based private equity firm Oaktree Capital Management yesterday officially launched a tender offer for an additional 10.79% stake in Japan’s Re-plus Residential Investment Inc, taking advantage of a severely depressed unit price. This is the first ever tender offer for a Japanese real estate investment trust (Reit), and also the first major investment by an institutional investor in the sector since the beginning of the credit crisis and the correction of the stockmarket 12 months ago.

The earlier flagged tender offer comes two weeks after Oaktree bought 38% of Re-plus through a new share issue and if successful it will leave the US firm with a 48.4% stake. Oaktree has also bought a 35% stake in Re-plus Reit Management, which is responsible for the day-to-day business of the Reit. If the entire tender offer is taken up, Oaktree’s total investment will amount to ¥15.72 billion ($144 million) – a sum that it will handle without taking on any new debt. The acquisition is being made through AppleRingo Holdings, a company owned by Oaktree-managed funds….. Full Article: Source

NYC property tax breaks more than double in 10 yrs

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From Reuters: New York City’s tax breaks to spur commercial property projects more than doubled over the last 10 years, rising to about $500 million in the last fiscal year, according to a report.Growth in the tax incentives, however, is expected to slow due to reforms the state enacted at Mayor Michael Bloomberg’s request, the Independent Budget Office said in the report.The city’s economic development arm had found that only about one out of every four projects would not have been built without the benefits, which offer tax breaks to property developers for as long as 25 years.

The cutbacks could be a bitter pill for developers already struggling to get financing from banks that have become much less enthusiastic about real estate loans.The Independent Budget Office said its study “provides strong evidence that (the) Industrial and Commercial Incentive Program benefited a far broader group with more generous benefits than might have been necessary to meet the policy goal.”…. Full Article: Source

Redevco moves into Asia with shopping mall plans

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From IHT: The Dutch property investor Redevco has set up shop in Asia, hiring the former regional head of ING Real Estate to start a push into China and India.The property arm of Cofra Holding, a privately held company that owns the retailer C&A, wants to raise its assets under management to €10 billion, or $14.8 billion, from €7.6 billion over the next couple of years. And much of the growth will be in Asia, according to the firm’s Asia managing director, Robert Lie.

Lie, who gave up a 12-year career at ING Real Estate in May, said that Redevco wanted to work with Indian and Chinese developers to build new shopping malls, and would later look at other emerging markets like Vietnam.”We want to make Asia our second market, because we all know growth in Europe will be limited,” Lie said in a sparsely furnished harborside Hong Kong office he has been filling with new hires….. Full Article: Source

Foxtons eyes review amid property downturn

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From FT: Foxtons, the estate agents, and BC Partners, its private equity owner, are considering appointing NM Rothschild, the investment bank, to review the business amid the credit squeeze and the downturn in the property market.The Foxtons board is scheduled to meet this week to make a decision on the brief, which is expected to include a restructuring of the financing.

BC Partners bought the UK estate agency group in May last year for about £360m ($666m) in a deal 75 per cent funded by debt.The review will come as the number of property transactions – the source of revenue for real estate agents – has fallen sharply amid the weakening market.Savills, whose share price has halved over the past 12 months, is expected to reflect a sharp fall in sales volumes. In a trading update in June, Jeremy Helsby, chief executive of Savills, forecast house prices in London to fall 25 per cent by the end of next year, while the effect of the credit squeeze on property spreads across Europe and into Asia. …. Full Article: Source

Dubai shares decline on real estate gloom

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From Dubai shares declined on concern that developers may take further measures to curb property speculation, damping share prices. Deyaar Development led property stocks lower. Qatar National Bank retreated after buying a stake in a UAE bank. DP World jumped after reporting first-half profit almost doubled, beating analysts’ estimates.

The Dubai Financial Market General Index retreated 0.3 per cent to 4,789.81.The Abu Dhabi index added 1.3 per cent, ending three days of declines. It rose to 4,416.08.”The lack of any positive catalyst, with the summer holidays and Ramadan, is leaving the markets vulnerable,” said Ali Khan, head of equity trading at Dubai-based Arqaam Capital. …. Full Article: Source

Australia: Fear ingrained in property market

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From It is going to take more than a couple of interest rate cuts to shake the fear out of Brisbane’s property market, an expert says. The Reserve Bank of Australia will meet on Tuesday and is widely tipped by pundits to cut rates by 0.25 per cent.Another rate cut is also expected in November, but it will do little to stimulate Brisbane’s sluggish property prices, Tim Lawless of RP Data has warned.”A drop in interest rates is not going to do any harm to the market but we’ll have to have at least a few falls in rates before there’s any noticeable improvement,” Mr Lawless said.

“I think the main effect will be a pick-up in consumer confidence, as this is currently at 15- to 16-year lows.”Mr Lawless said despite predictions that house prices across the nation would fall by up to 10 per cent this year, new data out today showed the value of housing nationally had fallen by 2.2 per cent in the first seven months of this year. He said one or two interest rate cuts could help to stem further drops in the market….. Full Article: Source

Property investors to look to Indian property

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From India’s “crunch-proof” property market brought to London by Navyroof.comAs house prices in London and surrounding areas are in freefall, some selling for over £50,000 less than originally purchased, London property investors are looking to India for profitability where Merrill Lynch has predicted a 700 per cent increase in property prices by 2015.

A seminar at the City Hotel, Brick Lane, London, at 7pm on September 17th will give London property investors valuable information on how they can benefit from investing in India’s thriving property sector…… Full Article: Source

In Brussels, French elite find favorable real estate values

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From IHT: In much of the French-speaking world, the acronym SDF refers to the homeless - Sans Domicile Fixe. But in Brussels, the letters have come to refer to a certain sector of the city’s expatriate French population, those who are Sans Difficulté Financière, or without financial difficulties.Belgium’s tax system favors those with inherited wealth or anyone trying to limit capital gains taxation. So local wisdom has it that the fastest way to find out who is planning to sell their company is to hang out on the platform of the Brussels-Paris train on a weekday morning and look for any French who have suddenly opted for a long-distance commute.

It was, appropriately, on platform 9 of the Gare du Nord in Paris that the relocation agent Olivier Meens met his future business partner, Edouard Martin. They now operate Quai Neuf, offering a turn-key service for wealthy French families moving to Brussels.”Most of the time they have never been to Belgium,” Meens said of his clients….. Full Article: Source

Retailers demand rental flexibility

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From FT: Many of the country’s biggest retailers are threatening to pay landlords monthly, rather than quarterly, rents without prior agreement in an escalation of tension between companies in the two struggling sectors.In a recent letter to landlords, seen by the Financial Times, Sir Philip Green, the owner of BHS and Arcadia asks for “an open and honest conversation … regarding the existing archaic leasing and rent review structure that currently exists in the United Kingdom”.

The letter claims the support of 33 retailers on top of Sir Philip’s BHS and Arcadia, the large portfolio of stores that ranges from Topshop to Burton. In addition to the proposed switch to monthly rents, Sir Philip has asked to discuss service charges and insurance.Landlords have agreed typically to shift to easier terms when a retailer is in serious danger of running out of cash but now less stricken tenants are calling for change. …. Full Article: Source

Investing in real estate phuket

Posted on 29 August 2008 by Laxman  |  Email |Print

From Everyone is aware of the fact that Thailand property is a big business and a large number of people are looking to participate in the action by searching valuable Thailand homes to invest upon. Being an immensely popular tourist destination and easily accessible from almost every part of the world, many people are interested in buying Thailand homes for residential purposes as well as for venturing there during holidays. An interesting thing about Thailand property is that foreigners are allowed to own Thailand homes and buildings in the area but not land.

Purchasing of Thailand property also depends upon the type of visa you have. You can also treat Thailand homes as vacation homes only. For those who are willing to invest their money and make a profit, Thailand property is the perfect choice for them. Phuket is the biggest island of Thailand and is located in the south of Bangkok. With Phuket islands being such an attractive and beautiful place drawing tourists from around the world, much of the phuket property can be purchased at discount prices and it can be easily seen that real estate phuket is continuing to grow. It can also be easily seen that people who invested their money into phuket hotel resorts, phuket islands, phuket villas and phuket private islands will see huge profits on their early outlays….. Full Article: Source

Scottish housing market shrinks but prices rise

Posted on 28 August 2008 by Laxman  |  Email |Print

From Scotland’s housing market shrank by nearly £900m in the second quarter of this year, official figures have revealed.Registers of Scotland yesterday said around 7500 fewer houses were sold in April-June 2008 than a year before, a drop of 19%. The total value of the market fell from £5.729bn to £4.830bn over the same period, a fall of 15.7% But the Scottish Government body, which records every property transaction in the country, reported those houses which did find a buyer were doing so at higher prices.

The average house price rose 3.6% in the second quarter to £155,691, bucking the downward trend firmly established elsewhere in the UK.John Boyle, of consultants DTZ, yesterday said the increase in prices was “surprisingly high” but the surest evidence yet that Scotland is to avoid a much-hyped crash.Mr Boyle, like most other analysts, still expects prices to fall this year, but by nothing like the declines seen in England. “I’m forecasting a small fall in house prices in Scotland by summer 2009, but probably less than 5%,” he said….. Full Article: Source

The short view: US housing

Posted on 28 August 2008 by Laxman  |  Email |Print

From FT: For a very pleasant change, this week’s data on US housing is ground for some relief. The supply of unsold houses is reducing, sales have stopped falling and prices are falling less swiftly than they had been.As far as they go, all of these factors are positive. House prices are crucial to the fate of the dubious collateral held by financial institutions which has driven the credit crisis. If prices recover, defaults should be lower, and the ultimate damage to mortgage-related securities should be less.

But it is too soon to call an end to the housing crisis. Housing is seasonal, and prices and sales usually look healthiest in the spring months. These trends must be sustained for some more months before much weight is put on them.Further, demand for houses depends on their affordability. For this to improve without falls in house prices, either incomes must rise or mortgage rates must fall. Americans’ real incomes are not increasing. Mortgage rates are thus critical….. Full Article: Source

Turkey: to buy or not to buy?

Posted on 28 August 2008 by Laxman  |  Email |Print

From EU membership has proven to be massively beneficial to property markets, as we have seen in places like Estonia, Romania and Bulgaria. But there is a lot of opposition to Turkey’s membership within the EU most notably from France, Germany and Austria. Although talks are on-going an actual date for membership is several years away.But the truth is Turkey’s property market is growing in leaps and bounds even without EU membership.

One of the great advantages of Turkish property I have found is that despite reported price rises of between 30% and 40% over two years in popular areas prices are still relatively low. This is especially so when compared to what could be called its regional rivals; places with similar climates and attributes like Spain and Italy. You can buy a two bedroom apartment in popular Dalaman for a little over £40,000. Another advantage Turkey has over the two mentioned above, is that it is a much larger country and the government is acting early in its boom cycle to try and prevent over development and crowding in the most popular areas.. ….. Full Article: Source

More Japanese developers to fail, says Daiwa house chairman

Posted on 28 August 2008 by Laxman  |  Email |Print

From Bloomberg: The list of Japanese real estate companies filing for bankruptcy will grow this year as banks cut lending, said Takeo Higuchi, chairman of Daiwa House Industry Co., Japan’s second-biggest home builder by market value.Developers and construction companies dominated the ranks of failures in July, accounting for a third of 1,131 bankruptcies in the month, the largest number since April 2005.“It’s hard to see any light at the end of the tunnel,” said Higuchi, who last September predicted Japan’s property market was set to slow. “Banks will take an even tougher stance on providing loans to property firms after the bankruptcies and we will probably see more failures this year.”

The Topix Real Estate Index tripled in the four years through 2006 before stalling last year when revisions to building codes delayed approvals and banks tightened lending to developers. Some foreign funds that invested in the market since 1997 also pulled back after the collapse of the subprime market in the U.S., said Junko Miyakawa, a credit analyst at Shinsei Securities Co…… Full Article: Source

Real estate industry in the UK will never be the same again

Posted on 28 August 2008 by Laxman  |  Email |Print

From Estate agents in the UK lack the experience to deal with the current depressed market conditions, according to market research. The housing market has been on a roll for 13 years so a sizeable proportion of estate agency staff have not worked in conditions as difficult as they are now facing, says the Estate Agents Market Report 2008.As a result, they lack the experience required to survive in such a market, and some of the younger estate agents might well withdraw from the market.

‘There are already suggestions that the market as we know it today will not exist in 10 years’ time, given the currently dire state of the property market and the opportunities for developments on the Internet,’ it also says.The report examines the UK market for estate agents, focusing on the residential property agencies. It excludes property services such as auctioneers, valuers, estate managers, property companies and property consultants. Countrywide remains the largest estate agency, followed by Connells Residential, LSL Property Services and Halifax Estate Agency. However Halifax has just announced the closure of 53 of its offices and the downturn means that the industry continues to restructure.Strutt & Parker has merged with Lane Fox and Foxtons has been sold to a private equity firm. ….. Full Article: Source

China central bank says to tighten loans to property developers

Posted on 28 August 2008 by Laxman  |  Email |Print

From The People’s Bank of China, the central bank, said it has called on commercial banks to tighten loans to property developers in what it described as an effort to encourage more efficient land use.The central bank said in a circular released jointly with the banking regulator that landbanking loans, where already acquired property is used as collateral for bank financing, should not be extended for more than two years.It also restated its curbs on bank loans being used directly for land purchases by developers.

The circular on the central bank website, though posted today, was dated from late last month. The bank did not give an explanation.The circular also restates prohibitions on banks extending loans to developers that have developed less than one-third of the planned area of a project after one year or have invested less than one quarter of their proposed investment.The document also forbids banks from lending to developers that have allowed land to sit idle for more than two years…… Full Article: Source

German real estate climate noticeably cooling

Posted on 28 August 2008 by Laxman  |  Email |Print

From The mood on the German real estate markets has continued its descent though August. In the August issue of its monthly survey among 1,000 relevant market players, King Sturge clearly diagnosed a pessimistic note. For one thing, the survey-based Real Estate Climate dropped down to 77.5 index points, reflecting the macro-economic downturn. This means that last month’s figure of 90.8 was undercut by 14.6%. The Real Estate Economy index, which is based on hard macro-economic data, plunged to 158.8 points (down from 169.2 points last month).

“The mood in the real estate economy has cooled off further in August, and noticeably so. This comes as no surprise, as the macro-economic decline has become all too obvious,“ commented Sascha Hettrich, Managing Partner of King Sturge Deutschland. “There is the very real danger that Germany’s economy, following a negative growth phase in Q2, may continue to shrink in Q3. If so, you could say that Germany might slide into a recession, as the term is commonly understood.” The negative mood on the real estate market manifests itself most patently in the Investment Climate, which captures the willingness to invest. This index dropped from 69.2 down to 57.9 points, whereas the Rental Climate – the second sub-indicator of the Real Estate Climate – undercut the threshold value of 100 points for the first time as it plummeted from 114.1 down to 98.7 points……. Full Article: Source

Fannie, Freddie weigh on mortgage REITs

Posted on 28 August 2008 by Laxman  |  Email |Print

From Agency mortgage spreads (to swaps) have widened during the third quarter to 128 basis points compared to 110 basis points at the end of the second quarter and a 141 basis-point peak in mid-March.Funding stresses, a worsening outlook for credit performance, and “buyers” strike are the negatives affecting mortgage-backed securities (MBS). The “buyers strike” relates to both the government-sponsored entities (GSEs) being on the sidelines plus other investors waiting for some resolution to the GSEs’ issues. As a result it is unlikely that MBS spreads will tighten meaningfully until there is resolution around the GSEs.

While mortgage spreads have widened, dollar price of agency mortgages hasn’t changed nearly as much given the decline in interest rates. Hybrid prices have declined by about 30 basis points and fixed rates are unchanged. …… Full Article: Source

Super luxury real estate development in Mumbai

Posted on 28 August 2008 by Laxman  |  Email |Print

India, with a 20.5 per cent increase in the number of high net worth individuals (HNWIs) to 100,015 recorded the second-highest growth rate in HNWIs globally, said the annual World Wealth Report by Merrill Lynch and Cap Gemini. India trailed only Singapore, where the increase in HNWIs grew by 21.2 per cent. The HNWIs are keen to flaunt their wealth & acquire prestige assets. Realizing the market for super-luxury homes, more and more developers are coming up with million dollar homes in formats ranging from condominiums and suburban town houses to golf villas. These millionaires could be professionals earning in the excess of 1 crore per annum, industrialists and businessmen. Add to this list NRIs from the US and the UK and one can conclude that super premium housing in India is on a high-growth trajectory.

Along with high disposable incomes there are other trends that are fuelling the demand for super luxury homes. Members of the joint family who are breaking away invest money from their ancestral property in new super luxury developments. Besides the super rich are upgrading from old buildings (which no amenities to speak of) to new buildings which have a pool, a gym, liftmen and a concierge, not to mention enough parking for family’s many cars…… Full press release: Source

Quantity, quality vary at real estate search sites

Posted on 28 August 2008 by Laxman  |  Email |Print

From A report commissioned by property search company Roost found that property information can vary widely in volume and accuracy among online sites, with some sites showing a small fraction of the for-sale properties in a given market area.Prepared by WAV Group, a real estate consulting company, the report found that some online sites are missing a majority of the properties that real estate professionals have listed for sale in industry-operated multiple listing services, and that property information at some online sites is far less accurate or current than broker-shared property data derived from area MLSs.

The study focuses on a range of online sites that offer property search tools for consumers, including Google, Roost, Trulia, Yahoo and Zillow. Site comparisons in the study are based on searches conducted for single-family resale homes with exactly three bedrooms and two bathrooms in three market areas: Dallas, Miami and San Diego.Additionally, different price points were selected in each of the market areas in an effort to equalize sample sizes of search results within each market area to about 100 homes. Searches were performed on each site on the same day within “as short amount of time as possible,” WAV Group reported….. Full Article: Source

Home repossessions rise 26 per cent in mid-Essex

Posted on 28 August 2008 by Laxman  |  Email |Print

From The number of homeowners facing repossession in mid-Essex has risen to levels not seen since the troubled 1990s.Latest Government figures show the number of cases launched to take back homes at Chelmsford County Court by banks, building societies and finance companies soared to 354 during the first half of the year.That is 26 per cent more than in the same period a year ago.Chelmsford County Court deals with repossessions from the county town, Braintree, Witham and Maldon.

It can be compared with a 14 per cent increase at Colchester, which recorded 654 court claims, and a 28 per cent rise at Southend with 596 claims.However figures across Essex remain relatively low in comparison with Salisbury, up 95 per cent, Buxton, up 75 per cent, and Stafford, up 71 per cent.There are no figures for actual repossessions on a town-by-town basis – how many homeowners lost their property so far this year remains unknown.But nationally 28,568 repossessions were granted by county courts in England and Wales – a 25 per cent increase on the same period last year….. Full Article: Source

FSA may take lenders to court over fees

Posted on 28 August 2008 by Laxman  |  Email |Print

From The Financial Services Authority has found lenders are continuing to vary their mortgage fees, which may result in them being taken to court by the regulator.The FSA has reviewed a number of mortgage contracts to assess whether lenders were properly interpreting its January 2007 statement of good practice on mortgage exit administration fees.A statement from the FSA, says: “We found about a third of the sampled firms have terms in their mortgage contracts that allow them to vary their charges which, in our view, does not comply with the law and principles set out in the statement and so may be unfair.”

It adds: “Should it come to our attention that a firm’s terms do not comply, we will consider the extent of the breach and what appropriate regulatory action to take. This may include, if sufficiently serious, enforcement or court action.The FSA is writing to those firms whose mortgage contracts contain terms that, in its view, are unfair. It expects them to amend or delete the terms in new contracts and not rely on them in contracts with existing customers…. Full Article: Source

Leading Dubai developer closing offices in the UK

Posted on 28 August 2008 by Laxman  |  Email |Print

From Dubai developer Damac properties is closing four offices in the UK and Ireland and unveiling a new corporate identity as the firm repositions itself within the world property market.The developer’s offices in Dublin, Glasgow, Southampton and Birmingham will all be closed and their workload consolidated into expanded showrooms in Manchester, Leicester, and Chiswick and Canary Wharf in London, the company confirmed.It is planning to continue growing its presence in Europe and expects to boost its UK sales staff by 40% to meet additional demand. It is also looking for new headquarters in London as it is growing out of its existing Canary Wharf headquarters, CEO Peter Riddoch said.

‘This new structure will create more opportunities and better career progression within the organisation and will allow us to align ourselves to Damac’s global business model. Our new offices will have 30 to 40 sales staff to cater for the growing number of investors,’ he added.Along with the re-positioning comes a new brand which will be unveiled on the company’s website next week. It focuses on luxury and quality.’We are expanding aggressively into new markets and are growing at a very fast pace. We are associated with luxurious high quality construction and unique properties. Our new corporate identity is a significant step forward and the beginning of a new journey which will lead us to the top,’ said Riddoch….. Full Article: Source

Real deal in Spain

Posted on 28 August 2008 by Laxman  |  Email |Print

From Spain’s Costa del Sol is considered one of the most favoured holiday destinations by Britons for its superb climate, excellent infrastructure and first-rate access from the UK and the continent.Establishing itself as a prime property hotspot, the region has attracted its fair share of tourists and property investors. According to a Spanish property agent: “Investment in Spain’s real estate market remains a lucrative proposition, as long as buyers choose their Spanish property carefully.”

The property buyer has a wealth of areas to choose from allowing the Costa del Sol to hold its own in the world of overseas property.Sheltered by mountains to the north and enjoying warm winds from the African continent, the Costa del Sol lays claim to one of Europe’s best climates with well over 300 sunny days a year.The infrastructure is heavily oriented towards the tourist sector, with countless bars, restaurants, beach clubs and night spots to keep holidaymakers amused.There are also a number of theme parks operational along the coast and golf is big business with some of Europe’s most famous courses offering spectacular and affordable play…… Full Article: Source

Buy homes under repo threat, Liberal Democrats tell government

Posted on 28 August 2008 by Laxman  |  Email |Print

From Guardian: The government should intervene to save families under threat of repossession by offering to buy their homes, the Liberal Democrats said. A scheme allowing struggling homeowners to sell their property and rent it back should be part of a package of measures to prevent a repeat of the early-1990s housing slump. Vince Cable, the party’s Treasury spokesman, said the likelihood of further falls in house prices over the next 18 months made decisive action necessary. He said tens of thousands of families could suffer unless plans were quickly put into action. He urged Jack Straw, the justice secretary, to give guidelines to the courts so that homes can be repossessed only in extreme circumstances.

The government is considering proposals to suspend stamp duty on homes worth less than £200,000 to help first-time buyers. The Treasury has also come under pressure to support an expansion of mortgage lending by underwriting new loans. Cable said underwriting such loans would be a risky exercise that would let the banks, who were much to blame for the crisis, off the hook….. Full Article: Source

UK Bright spot: Office, industrial real estate market stay strong

Posted on 28 August 2008 by Laxman  |  Email |Print

From Through the first six months of this year, Bakersfield’s industrial space was only 3.9 percent vacant, which was close to last year’s year-end rate of 3.5 percent, according to commercial real estate brokerage NAI Capital. That rate represented a significant improvement over recent years, when industrial occupancy rates reached as high as 7.5 percent in 2003.

The city’s office space vacancies, meanwhile, edged up to 7.29 percent in the first half of the year, according to Grubb & Ellis/ASU & Associates. That’s a bit softer than last year’s 5.94 percent rate, which was somewhat weaker than 2006’s 4.87 percent.Current retail occupancy rates were not available Wednesday. But Vince Roche, a commercial broker at CB Richard Ellis, said Bakersfield’s retail space market has weakened along with the rest of the national economy, even as retail chains without a Kern County presence “continue to look at Bakersfield” for expansion opportunities….. Full Article: Source

The right REITs focus on rentals

Posted on 28 August 2008 by Laxman  |  Email |Print

From “Home prices are becoming affordable again, so the decline in prices is likely more than half over,” say Dr. Marvin Appel and Gerald Appel of Systems & Forecasts.Meanwhile, the technical experts believe that long-term investors can now look to get back into the real estate investment market and recommend two ETFs that are based on rental REITs.”Many analysts do not expect the financial markets to improve significantly until home prices stop falling. The pace of existing home sales remains low, and available inventory relatively high, both indicating that buyers are not yet able to step into the market at current prices.

“However, that could change within a year. Home prices are becoming affordable again, so the decline in prices is likely more than half over.”The median home price is now more affordable to the median household than at any time since the start of 2004. My analysis suggests that housing prices will have to fall a bit more, but the housing market is not far from being reasonably valued for the first time in five years.”Meanwhile, rental costs have remained stable, and apparently have not had any effect on housing prices independent of household income. Historically, there have been wide swings in the ability of the median household to afford an average house…… Full Article: Source

August 2008
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