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Real Estate Briefing - Archive | September, 2008

Realty: A $1 trillion milestone

Posted on 30 September 2008 by Laxman  |  Email |Print

From Pionline.com: Scott Farb called real estate a desirable asset class and a ‘safe haven’ from other market risks. Real estate managers’ total assets, excluding real estate investment trusts, crossed the $1 trillion mark for the first time in Pensions & Investments’ annual survey of the largest real estate managers, but overall asset growth ebbed slightly from the previous year.

The $1.006 trillion in assets reported by 103 real estate managers for the 12 months ended June 30, was up 24% from the same date last year. That growth rate is six percentage points more than the previous survey period. The top 50 managers of U.S. institutional tax-exempt assets saw an increase of just 7.3% to $425 billion 23% growth rate two years earlier. Overall, tax-exempt assets grew but moderated to 6% to almost $468 billion, nine percentage points less than the 21% and 20% growth rates of the last two years’ surveys….. Full Article: Source

Russia to be avoided, warns JP Morgan

Posted on 30 September 2008 by Laxman  |  Email |Print

From IPE: Investors should avoid Russia as a potential area of growth as its property markets will be the hardest hit if the world’s largest country is drawn to the impending global recession, JP Morgan Chase has claimed.

The warning comes as several property companies across Moscow and Russia saw their share values sink to record lows recently, and experts are predicting there could be worse to come. JP Morgan said property development companies in Russia could see their already stretched finances suffer if global economic contracts dry up, causing the Russian economy – as one the world’s most rapidly expanding developing nations – to slow to 4.5%….. Full Article: Source

Analysts worry about more French property damage

Posted on 30 September 2008 by Laxman  |  Email |Print

From Reuters: French property developers have been hit hard by the real estate and financial crises and with several bankruptcies already among regional players, analysts are worried about the potential for more damage to firms in the sector. While the big players are not expected to become insolvent, a slowdown in new building programmes could force them to attack cost levels in order to prevent margin erosion.

“This is a sector that is worrying us. Adapting to the crisis can be very difficult, and the potential for bankruptcies is much higher than it was before. It is all going to depend on the ability of groups to reduce their exposure,” said Nicolas de Buttet of credit insurer Euler Hermes. After a 34 percent year-on-year drop in new house sales in France in the second quarter, market conditions remained “very poor” in July and August…. Full Article: Source

Chinese cities go it alone with housing measures

Posted on 30 September 2008 by Laxman  |  Email |Print

From FT: Local governments across China have begun intervening in their housing markets in the latest indication that the country’s property market is slowing down. In recent weeks more than 10 large cities and provinces have announced measures that either give incentives to house buyers or provide relief to cash-strapped property developers.

The activism by local governments follows a series of warnings that the property market, a large contributor to the country’s high growth rate, faces a sharp slump, even though official indicators show only a modest slowdown. “The only real way out is for prices to fall sharply or for the government to bail out developers,” said Shen Minggao, a former Citigroup economist now working at Caijing magazine in Beijing. A weak property market is of particular concern to local governments because many have close links with property developers….. Full Article: Source

Singapore property investors confident and increasingly looking abroad

Posted on 30 September 2008 by Laxman  |  Email |Print

From Propertywire.com: Almost half of property buyers interested in investing in Singapore expect prices to increase and regard the market as an attractive investment, according to a new survey. The Asia Property Trends Survey 2008 from iProperty.com also found that 42% expect prices to decrease but they still regard it as a good investment because of the potential longer term capital appreciation.

The recent stabilisation of property prices is encouraging more investors and 85% of those surveyed said that they may purchase property within the next 12 months. Attractive loan packages are also encouraging investors, it found. A majority, 73%, said they would be looking for 60 to 99% finance to buy. Residential properties are the most sought over by investors, especially completed apartments and property with land….. Full Article: Source

Cyprus property market: crisis expands

Posted on 30 September 2008 by Laxman  |  Email |Print

From Cyprus-property-buyers.com: A new StockWatch survey among twenty developers and real estate agents carried out last week shows that the crisis in the Cyprus property market has expanded. It has started to affect the value of shops and offices as well as plot prices.

The crisis is exceptionally intense on housing properties, where prices have declined up to 25%. Although in the previous survey crisis focused on tourist areas only, the new survey shows that it affects all housing properties in the market. Sixteen of the total twenty developers support that prices fall. Only one sees that prices will go up and three expect that they will stabilize. Two developers stressed that conditions in Limassol differ due to the interest on behalf of the Russian businessmen. All twenty developers and estate agents are actively involved in all cities of free Cyprus….. Full Article: Source

Oil-rich nation facing property crash threat

Posted on 30 September 2008 by Laxman  |  Email |Print

From Theherald.co.uk: Fears are growing that one of the richest regions in the world is on the brink of a property crash. Dubai’s once-buoyant property market is in danger of sinking as lenders in the oil-rich region become more cautious. Despite a £7.39bn emergency lending fund issued by the Central Bank of the United Arab Emirates, investors remain sceptical.

The Gulf’s property boom has succumbed to a reality check, according to analysts. Richard Rodriguez, the former chief executive of Emaar Properties in Dubai, said: “Either the pace will drop or the prices will. Both cannot be sustained in these conditions.” The Gulf’s property boom makes it particularly vulnerable to a credit crunch, with massive development projects funded through loans. With a decrease in the amount of foreign speculative money going into the UAE, lending cash between banks has dried up, sparking the same clamour for liquidity that has affected the UK market….. Full Article: Source

Munich: Emerging from Berlin’s shadow

Posted on 30 September 2008 by Laxman  |  Email |Print

From Nuwireinvestor.com: For so long, Berlin was Germany’s unrivaled beauty that attracted immense amount of attention from visitors of all stripes. In recent years however, Munich has quietly made its debut as one of Europe’s must-see places. Munich’s resurgence as a cultural center and tourist destination have made it a rising star in the German real estate market.

Buyers who are looking for safer and long term bets are investing. Compared to other similar markets in Europe, prices in Munich are relatively low, giving the impression that a property boom is around the bend. Munich is the third largest city in Germany and is the capital of Bavaria, the country’s largest state, which is located in the southeastern portion of the country…. Full Article: Source

High and dry in Saudi property boom

Posted on 30 September 2008 by Laxman  |  Email |Print

From FT: “Getting a bank loan was virtually impossible. Looking for a place to rent was not much easier,’’ says the 26-year-old lawyer. He struck up a friendship with a real estate broker handling a building and visited him every day for a month to ensure he did not lose the opportunity.

Oil-rich Saudi Arabia may be the biggest construction market in the Middle East today, as it uses petrodollars to build whole cities and accompanying infrastructure. Luxury apartment blocks throng even the holy city, Mecca . But, for young Saudis, who make up the majority of the population, finding affordable housing, and financing it, is a struggle. Much of the construction is beyond the reach of the average Saudi in a country where people at the start of their career earn only SR5,000 ($1,300) a month. Many projects are gated communities, luxury hotels and villas, or involve the expansion of infrastructure….. Full Article: Source

RREEF makes first Chinese investment

Posted on 30 September 2008 by Laxman  |  Email |Print

From Propertyeu.info: RREEF’s acquisition of an office building in the Chinese city of Dalian for its grundbesitz-global fund marks the first property deal in China on behalf of one of the German group’s open-ended funds. The office property was acquired from Hong Kong property group Shui On Group for EUR 105 mln. The 40-storey ‘Xiwang Tower’ has around 68,000 m2 of office space as well as parking facilities for 400 vehicles.

‘Dalian is an important business hub with strong growth prospects. We consider Xiwang Tower to be an attractive long-term investment and one of just two buildings in the city that meet our international investment criteria. We don’t think there will be any buildings of comparable quality coming to market there before 2011,’ said Holger Naumann, head of RREEF in Germany….. Full Article: Source

NAREIT’s Grupe: Is the REIT market at the bottom?

Posted on 30 September 2008 by Laxman  |  Email |Print

From Commercialpropertynews.com: Even as financial markets were imploding recently, a spokesman for the real estate investment trust sector was calm and knowledgeable in explaining why REITs are weathering the storm comparatively well. CPN caught up with Michael Grupe, executive vice president for research and investor outreach at the National Association of Real Estate Investment Trusts, Washington, D.C

“There’s a large amount of residual uncertainty in the market,” Grupe acknowledged, but added, “we’re reasonably encouraged by this year’s performance” among REITs, despite the volatility in the financial markets. At that point, Grupe said, year-to-date the Dow was down about 16 percent, the S&P 500 was down about 16 percent and the NASDAQ was down about 17 percent, while equity REITs were up about 2 percent. …. Full Article: Source

Falling house prices means the price of the average London home is now selling for 30, 000 GBP less than its asking price

Posted on 30 September 2008 by Laxman  |  Email |Print

From Thelondonpaper.com: The average London home is selling for £30,000 less than its asking price, according to figures released today. Slow property sales and falling prices have contributed to the trend. And surveyors have warned that prices could drop even further in the coming months as the economic crisis deepens.

Home owners in the capital are having to give an average discount of 8.5% when they sell, according to the figures. A Royal Institution of Chartered Surveyors spokesman said today: “With housing transactions currently at a 30-year low, many vendors are being forced to lower their asking prices to achieve a sale in an ever shrinking market. …. Full Article: Source

Lack of UK investment plunges Cyprus market into recession

Posted on 30 September 2008 by Laxman  |  Email |Print

From Propertywire.com: The Cyprus property market is in recession with sales down 40% and the second homes and holiday homes sector hardest hit. A lack of property investment from the UK is regarded as one reason for the fall, especially in around Paphos, one of the most popular areas for foreign property investors.

The decline in property sales will affect the island’s revenue as it means a reduction in Capital Gains Tax. The country’s finance minster has announced that it may have to take measures to correct this. ‘The downturn in the market is expected to affect public revenues. The government is taking this into account and if recession continues it will take additional measures,’ said Charilaos Stavrakis. He said the income from capital gains tax had fallen by 18% this year….. Full Article: Source

London rentals feel jolt

Posted on 30 September 2008 by Laxman  |  Email |Print

From WSJ: Rental growth has long been propping up a weak London commercial-property market, providing investors with steady income streams even as their capital investments have dropped in value. But now that prop looks shaky. The turmoil in financial services looks as if it will lead to a glut of vacant space across the capital, pushing rents lower, as banks merge or go under.

The turmoil in financial services looks as if it will lead to a glut of vacant space across London. Lehman Brothers’ 80,000-square-meter headquarters are now vacant. Bank of America’s acquisition of Merrill Lynch could free up its 45,000-square-meter building. More than 500 job cuts at HSBC could see more vacant space hitting the London market. These are just the most high-profile casualties of the continuing credit crunch….. Full Article: Source

Giant property entrepreneurs sign South African deal

Posted on 30 September 2008 by Laxman  |  Email |Print

From Propertywire.com: Property entrepreneur Donald Trump is now looking to South Africa for his organisation’s latest property developments. It will be his first venture on the African continent. His Trump Organisation has signed an exclusive ten year deal with Cape Town’s property developer Devland whose chairman Neill Bernstein is often referred to as South Africa’s Donald Trump.

They are looking at developing residential and hotel projects worth millions of dollars in the next three years. It is expected to cover some 300,000 square metres but further details have not yet been released. Bernstein said there would be no mad rush to push the projects forward and the companies had no intention of using the 2010 football World Cup as a springboard for the projects….. Full Article: Source

Invesco takes Asia real estate fund to Austria

Posted on 30 September 2008 by Laxman  |  Email |Print

From Citywire.co.uk: Invesco has made its Asian real estate securities fund available to Austrian investors for the first time. Launched into many countries at the end of July, the Invesco Asia Pacific Real Estate Securities fund has now also been registered for sale in Austria.

The fund, managed by Joe V. Rodriguez and Ping-Ying, invests in stocks from the property sector in countries such as Australia, New Zealand, China, Japan and India. The firm believes such stocks offer attractive returns in the long term as well as valuable diversification for an investors’ portfolio….. Full Article: Source

Indian realty investors take equity route to offset tax burden

Posted on 30 September 2008 by Laxman  |  Email |Print

From Economictimes.com: Though the realty sector has been hit by the general economic slowdown, smart property investors, who raked in the moolah when the going was good, made use of the equity markets to reduce the tax they paid on those gains.

According to tax consultants, people whose income is derived from other sources, say a salaried employee, can and have in the past offset derivatives losses against short-term capital gains made in property transactions to reduce tax incidence on the property gains. Gains from property are deemed short-term if they are held for less than three years. Once a derivatives loss is offset against the gain, the balance short-term capital gain is clubbed with the salary income and taxed at the normal rate. …. Full Article: Source

Scottish housing can ‘ride crisis’

Posted on 30 September 2008 by Laxman  |  Email |Print

From Propertyweek.com: The Scottish housing market is still in a much better position than the rest of the UK to ride out the current financial crisis. Reg MacDonald, who owns the Scottish franchise of estate agents Remax, said sellers were still achieving good prices but warned that further tightening of lending could have a severe impact.

‘I am optimistic, but banks need to get lending again,” he said. “The system needs to be freed up.’ Amid the continuing crisis in worldwide financial markets, some mortgage providers increased rates last week despite a fall in inter-bank lending rates. Figures also showed that the number of mortgage approvals in the UK had dropped by 64% on the same period last year. But the picture is different in Scotland. The most recent Council of Mortgage Lenders figures show that 18,500 Scots took out a mortgage in the last quarter — an 18% rise on the previous three months. …. Full Article: Source

Don’t waste your cash on REITs

Posted on 30 September 2008 by Laxman  |  Email |Print

From Thestreet.com: As the credit crisis that started over a year ago enters its next phase, and Wall Street bankers look to Washington, D.C., and taxpayers to rescue them from their own mistakes, the world of commercial real estate has just begun to recognize what is happening and how it will change the industry.

Commercial real estate, which is broadly defined as income-producing properties such as office buildings, malls, industrial parks, hotels and apartments, is a fairly simple business to understand. The value of income properties is determined by the demand vs. the supply of space by tenants, the demand for properties by investors, and the availability and cost of credit to purchase these properties. The most common way to evaluate earnings multiples in commercial real estate is referred to as a capitalization rate (or cap rate), which is basically the inverse of a price-to-EBITDA ratio….. Full Article: Source

ING real estate opens Brazil office

Posted on 30 September 2008 by Laxman  |  Email |Print

From Reuters: ING Real Estate, one of the the world’s biggest property fund managers, has opened an office in Sao Paolo, Brazil, the company said on Monday. “We have been analysing the Brazilian market for a while now and believe that the time is right to begin building a presence,” said Florencio Beccar, who will head the office.

In a statement, ING Real Estate — a unit of Dutch financial services group ING Groep said it wanted to tap into the resource-rich country’s growing middle class and improving infrastructure. It said Brazil, with its young population and large crop of big cities, offered compelling opportunities for real estate investors across the main housing, office, retail, and industrial sectors. ING Real Estate has more than 100 billion euros ($146.3 billion) in property assets and loans under management or under development…. Full Article: Source

Vietnamese property developers aim for US market

Posted on 30 September 2008 by Laxman  |  Email |Print

From Thanhniennews.com: Two Vietnamese real estate companies in Vietnam have recently announced plans to expand their businesses in the US. Duong Chi Thien, deputy general director of Neoland real estate company has been granted an investment license to develop residential areas and apartments for rent as well as to trade apartments on installment in the US

It will operate in the US as a fully-owned Vietnamese company, with a capital of US$30 million, he said. The company’s target customers will be overseas Vietnamese and Vietnamese citizens who study or livein the US It will also provide real estate products in Vietnam to foreign customers in the US, Thien said. Meanwhile, Le Chi Hieu, general director of Thu Duc Housing Development Joint-Stock Company, said his company has been applying for a license to invest $6 million in property projects in California and Mississippi….. Full Article: Source

Alfa Bank sees major real estate drop in Russian realty

Posted on 30 September 2008 by Laxman  |  Email |Print

From Themoscowtimes.com: Inflated values, the worldwide financial crisis and softening demand will cause real estate to fall to “West European levels,” said Tatyana Orlova, the chief economist at Alfa Bank, in a report.

Russian real estate is extremely expensive by world standards, with the average price for 100 square meters of luxury real estate equal to 156 times per capita GDP, while West European real estate sells at 30 times per capita GDP, the report said. “Considering that a sharp decline in worldwide real estate prices recently occurred, we are expecting a major contraction in demand and a drop in prices for the Russian real estate market,” the report said….. Full Article: Source

Dubai Group acquires 51 percent Acacia stake

Posted on 30 September 2008 by Laxman  |  Email |Print

From Gulf-daily-news.com: Dubai Group, the diversified financial services company of Dubai Holding, has acquired 51 per cent of Acacia Real Estate Limited (Acacia), a real estate investment company of which Bahrain’s TAIB Bank is the principal founding shareholder, through a capital increase.

Dubai Group made the $76.9 million equity injection through its subsidiary, Dubai Ventures Group, to become the largest shareholder of Acacia. Dubai Ventures Group holds four seats on the company’s board of directors. The investment will provide the group access to real estate deals and knowledge in structuring real estate financial products aimed at retail and institutional investors, as well as a network of partners across developed markets….. Full Article: Source

Aviv REIT sees IPO of 14.7 mln shares

Posted on 30 September 2008 by Laxman  |  Email |Print

From Reuters: Aviv REIT Inc on Monday registered its initial public offering of 14.7 million shares. In an amended filing with the U.S. Securities and Exchange Commission, the real estate investment trust said it plans to sell 11.6 million shares while stockholders will sell an additional 3.1 million shares.

The filing did not reveal the expected price of the IPO. The Chicago-based company said it applied for a New York Stock Exchange listing under the symbol “AVI.” …. Full Article: Source

Bailout’s failure bad news for housing market

Posted on 30 September 2008 by Laxman  |  Email |Print

From IHT: The recession in the U.S. housing market is expected to be deeper, longer and scarier if lawmakers continue to be deadlocked in their effort to pass a $700 billion bailout of the financial industry. “If they don’t do something, they’re going to shut down real estate completely,” said a real estate agent.

The situation is dicey enough to make anyone thinking of buying a home queasy.U.S. home prices have already fallen about 20 percent since their peak in early 2006 and are expected to sink another 10 percent over the next year, according to Mark Zandi, chief economist with Moody’s Economy.com. New data for July out Tuesday from the Standard & Poor’s/Case-Shiller home price index will likely show more price declines in cities coast to coast….. Full Article: Source

Survey: Obama better for housing?

Posted on 30 September 2008 by Laxman  |  Email |Print

From Inman.com: A new survey conducted online by Harris Interactive on behalf of real estate Web site Zillow.com — found that between the two major presidential candidates, 58 percent of Americans think Sen. Barack Obama will better address the current state of the housing market than Sen. John McCain (42 percent).

According to the survey of 2,016 U.S. adults, the perception of who is better to address the housing market is heavily influenced by whether respondents own a home, which represents approximately two-thirds (64 percent) of U.S. adults. Among non-homeowners, some 67 percent think Obama will better address the housing market than McCain (33 percent). Among current homeowners, 52 percent of homeowners think Obama will better address the market versus the 48 percent who think McCain will….. Full Article: Source

Another Estonian real estate developer goes under

Posted on 30 September 2008 by Laxman  |  Email |Print

From Balticbusinessnews.com: Harju County Court declared bankrupt another Estonian real estate developer Askas Ehitus. Askas Ehitus was the same developer that promised to give a new compact car to the buyers of its housing in spring 2007. More specifically, a buyer of its 3.4 million kroons house would have received a new Toyota Auris that costs around 230,000 kroons.

When the company failed to attract any buyers, it then reduced the price of its housing by half a million kroons. The company was developing housing areas in Patika and Karla villages. Although the company managed to sell most of its houses in Patika 13 it ran into problems with finding buyers to its another development, an area of row houses that cost 1.3 million kroons and were not finished….. Full Article: Source

Perth property dip defies eastern rise

Posted on 30 September 2008 by Laxman  |  Email |Print

From Thewest.com.au: Perth house prices fell 0.8 per cent in August, defying a solid upturn in the rest of the country, according to new figures. But experts said the local market was reaching a turning point and would begin to post moderate price rises towards the end of 2009 on the back of lower interest rates, more affordable housing and strong population growth.

Figures from property market analyst Australian Property Monitors show Perth is still suffering the hangover of 2006’s property boom, with prices falling 5 per cent over the past year. In contrast, house prices in the rest of Australia jumped 2.2 per cent in August and 2.5 per cent over the previous year. Sydney and Melbourne property markets led the charge, with house prices in both cities posting 3.1 per cent gains in August….. Full Article: Source

UAE: Mid-priced property would fare better in correction

Posted on 30 September 2008 by Laxman  |  Email |Print

From Ameinfo.com: If a correction in the UAE real estate market is imminent, it will be high-end property values that suffer most rather than mid-range, according to Mohammed Nimer, CEO of MAG Group Property Development.

With increasing warnings of a downside correction, it will be the luxury properties - which were and still are more attractive to speculators - that will be hardest hit, he says. ‘In comparison, the mid-range market will be more stable if and when the downturn comes, as people buying mid-range apartments are owner-occupiers, doing so in the main to live in them as homes rather than looking for short-term gains,’ he added….. Full Article: Source

Builders’ woes lead to fall in land prices

Posted on 30 September 2008 by Laxman  |  Email |Print

From FT: Residential development land has dropped by a third in value over the past year, and by up to 15 per cent in the past quarter, as problems among housebuilders have accelerated the devaluation of increasingly fallow land banks. The losses in land values around the country are worse than many had feared, according to Knight Frank’s first annual development land index.

The property consultancy expects values to continue to fall, predicting that 10 per cent could be further wiped off prices over the next 12 months. However, there are signs that so-called vulture investors are entering the market to snap up bargains among the numerous forced sales of distressed builders. “Speculators” now represent a fifth of buying activity nationally, and half in London, where development sites are traditionally in short supply….. Full Article: Source

Secured to raise $1 billion for real estate in Japan

Posted on 30 September 2008 by Laxman  |  Email |Print

From Bloomberg: Secured Capital Japan Co., backed by clients including the California Public Employees’ Retirement System, is raising $1 billion to buy properties from distressed sellers as Japan’s real-estate market weakens. Secured Capital, with 550 billion yen ($5.2 billion) of real-estate assets, has already raised half of the new fund, Chief Investment Officer John Paul Toppino said.

The company sees opportunities in the residential market, which is undervalued, Toppino said. Liabilities at bankrupt property companies in Japan more than doubled in August from July as banks curbed lending to the industry after bad debt losses rose, causing failures to soar. Toppino, who came to Tokyo a decade ago to compete with Morgan Stanley and Goldman Sachs Group Inc. for distressed real estate assets, said conditions now are similar to then….. Full Article: Source

Union seeks growth through Axa CEO

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From IPE: Hamburg-based investment management firm Union Investment Real Estate (Union) has appointed Karl-Joseph Hermanns-Engel to its management board with specific responsibility for the €14bn firm’s international asset management operations.

Hermanns-Engel is being brought in to replace Michael Montebaur, who is leaving to set up his own business, but has extensive experience in international property asset management. He was recently chief executive officer of French group AXA Investment Manager’s German subsidiary which specialises in open-ended real estate funds and was global head of management of regulated real estate fund products within the wider AXA Group…. Full Article: Source

Commercial-property players find their pressures growing

Posted on 29 September 2008 by Laxman  |  Email |Print

From WSJ: For the commercial-real-estate players that were in hot water before the capital-markets crisis of the past two weeks, the temperature is rising. They are now facing an even rougher ride in the wake of Lehman Brothers Holdings Inc.’s bankruptcy, the collapse of American International Group Inc. and the buyout of Merrill Lynch & Co. by Bank of America Corp.

After these and other market crises, cash-flow projections for properties are being scaled back in anticipation of a greater economic slowdown. The sales market — long considered the last hope of many distressed players — has virtually ground to a halt. Even creditors that were willing to make real-estate loans before the upheaval are pulling back, having witnessed the spectacle of some of the biggest names in finance and banking vanishing in a period of days…. Full Article: Source

House prices fall 6.2 percent in September

Posted on 29 September 2008 by Laxman  |  Email |Print

Reuters: House prices fell for a 12th month running in September to stand 6.2 percent lower than they were a year ago, a survey by property consultants Hometrack showed on Monday. The drop of 1.0 percent on the month to 165,300 pounds was bigger than the 0.9 percent decline in August and suggests the government’s decision to raise the threshold for stamp duty has done little to support the housing market.

In August, prices were 5.3 percent lower than a year ago. On Sept 2, the government raised the threshold above which tax is paid on a home purchase to 175,000 pounds and announced measures to help first-time buyers and those struggling to make mortgage repayments .Since then, strains in the banking sector have intensified, dealing a further blow to confidence and prompting a number of lenders to raise their mortgage rates….. Full Article: Source

Reality bites for Dubai property market boom

Posted on 29 September 2008 by Laxman  |  Email |Print

From Times Online: Fears are growing that Dubai’s once-buoyant property market will be hit by the global liquidity crisis, as lenders in the oil-rich region become more cautious and a $13.6billion (£7.39billion) cash injection by the Central Bank of the United Arab Emirates failed to ease worries of a housing market slowdown.

The Gulf’s property boom has succumbed to a reality check, according to analysts. Richard Rodriguez, the former chief executive of Emaar Properties in Dubai, said last week: “Either the pace will drop or the prices will. Both cannot be sustained in these market conditions.” Most analysts agree that the slowdown will be gradual. Global market turmoil and negative sentiment will dent property demand in Dubai and in neighbouring, oil-rich Abu Dhabi, Credit Suisse said. Morgan Stanley has predicted a correction of at least 10 per cent by 2010….. Full Article: Source

KBC Securities: Property Fund assets worth 4.4 billion euros

Posted on 29 September 2008 by Laxman  |  Email |Print

From Zf.ro: KBC Securities, the biggest brokerage firm on the Bucharest Stock Exchange by traded value, has assessed the Property Fund (Fondul Proprietatea) at 16 billion RON (some 4.4 billion euros) or 1.13 RON/share, 88% more than the price at which the fund’s shares are currently trading, approximately 0.6 RON/share.

This is the first valuation of the Property Fund ever done by a brokerage firm given that its floatation is expected for the first half of 2009. The report comes at a time when a series of major foreign investors have expressed interest in this business. US investment firm Cartesian Group bought 2.85% in the Property Fund a little while ago, and thus became its most important minority shareholder. …. Full Article: Source

Minerva deal falls though

Posted on 29 September 2008 by Laxman  |  Email |Print

From Financialadvice.co.uk: It was billed as the deal which turned the property sector, it was seen by many as the start of a wave of substantial investment by Middle East investors but the takeover deal has turned sour.

It seems as though the deal broke down when Dubai world was unable to come to a satisfactory agreement with Minerva’s banks. Quite what the issue(s) was remains to be seen but no doubt we will hear more this week. However, it has also been revealed that Minerva has enough money to continue trading in its own right and all of its projects are fully funded. That is not to say that times will not be difficult for the group, but the offer by Dubai World was not a rescue offer by any means….. Full Article: Source

Qatari wealth fund acquires stake in Chelsfield

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From Times Online: The sovereign wealth fund of Qatar acquired a 20 per cent stake in Chelsfield, the London property group, in the latest UK foray by wealthy Gulf investors. Chelsfield, which owns Camden market in North London, declined to say how much the Qatar Investment Authority (QIA) had paid for the stake, although it is thought to be less than £80million.

A spokesman said that the funds would allow the group to capitalise on opportunities as property prices fall. Elliott Bernerd, who co-founded Chelsfield with Sir Stuart Lipton, said: “They are long-term investors and we both believe that there are considerable opportunities that will become available due to the present market conditions.” Chelsfield said that the Qataris would gain two seats on its management board. … Full Article: Source

Abu Dhabi investment house eyes $1.5 bn China fund

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From Economictimes.com: Abu Dhabi Investment House, a Gulf Arab bank, is planning a $1.5 billion private equity fund to invest in real estate and manufacturing in China with a Chinese partner, a senior executive said on Sunday. An agreement to launch the fund will be signed within two months, said Rashad Janahi, ADIH’s managing director.

The Gulf firm is eyeing China at a time when a raft of tightening measures have chilled its real estate market, with sluggish transactions and falling prices in major cities. China’s manufacturing sector, especially export-oriented and labour-intensive firms, are being hit hard by weakening demand from the United States as well as Europe. However, Janahi said: “We find the correction is an opportunity.” Janahi, speaking to a Chinese newspaper on the sidelines of the World Economic Forum in the northern Chinese port city of Tianjin, did not say how much ADIH would invest. Nor would he name the Chinese partner….. Full Article: Source

The American dream takes hold in China

Posted on 29 September 2008 by Laxman  |  Email |Print

From Thenational.ae: Hao Menhui said she feels she is late in entering China’s booming housing market. All of her friends have at least one house to their names, if not two. But one month ago she joined China’s growing club of homeowners and bought a spacious 200 sq m apartment in Beijing. “The price was right,” she said proudly, “and we have been looking for a long time.”

Finding the home was harder than buying it. China’s real estate development cannot keep up with the booming consumer demand, particularly in such large urban centres as Beijing. Moreover, the Olympics was a catalyst for a property buying spree. “People thought prices would go up so they bought, bought, bought,” said Li Qin, another proud homeowner. Ms Li, 35, knows the value of a good investment. In 2001 she bought a small apartment in Beijing for nearly 500,000 yuan. Four weeks ago it was evaluated at nearly three times what she paid….. Full Article: Source

Indian Property market to pick up soon

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From Thehindubusinessline.com: The downward trend in the property development market is expected to reverse as soon as interest rates become reasonable, a top industry official said. “The property development market is down today. It has seen a strong growth and continues to grow at 20 percent per annum.

As soon as interest rates become reasonable, it will pick up,” the Godrej Group’s Chairman, Adi Godrej, said. People were willing to take mortgages which was growing rapidly. The mortgages market increased by 100 fold during the 1999-2008 period. The growth of the Indian middle-class was driving the property development sector, he said….. Full Article: Source

German mortgage bank near bankruptcy

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From Economictimes.com: Germany’s Hypo Real Estate, a mortgage bank, is on the brink of bankruptcy, the daily Financial Times Deutschland reported in an advance copy of its Monday edition. Private German banks have been trying “feverishly” to find a way to rescue the institution, which was already hit hard by the US subprime loan crisis that began in August 2007, the FTD said.

The report said the Munich-based bank, which is listed among Germany’s 30 blue chip Dax companies, had fallen victim to speculation by its German-Irish unit Depfa. FTD said Depfa had pursued long-term projects with heavy loans and generally ensured refinancing only at the last minute, which due to the current global credit crunch is no longer possible….. Full Article: Source

Doosan aiming to be top three global player

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From FT: Doosan Infracore, the world’s seventh-largest construction equipment maker, hopes that, with a helping hand from Bobcat, the US company it acquired last year, it will become one of the top three global players by 2012.

Following its $4.9bn acquisition of Bobcat and two other units of Ingersoll-Rand, the US conglomerate, the South Korean company has faced mounting concerns about its financial health in recent months especially as business at Bobcat deteriorates amid the deepening US economic slowdown. Shares of Doosan have fallen more than 30 per cent this year on investors’ fear that it overpaid for the Bobcat deal, which could create problems funding further acquisitions. To calm investor jitters about its financial problems, the company has announced a $1bn rights offering through the first half of next year to pay back part of the $2.9bn it borrowed to fund the Bobcat acquisition….. Full Article: Source

Bank-owned property new golden buys in Spain

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From Propertyinspain.net: Spanish bank repossessions are the new “Golden Buys” for British and other north European families and investors as property values slump below EUR 1,500 a square metre for a 2-bed holiday apartment with secure underground parking and communal swimming pool.

That’s less than GBP 77,000 for a typically sized 60-65 square metre apartment with sunny balcony, fitted kitchen and sometimes even air-con. www.PropertyInSpain.Net the specialists in Spanish bank repossessions and Must Sell homes have a selection of bargains in fiesta village, Formentera del Segura, 10 minutes from La Finca Golf, one of the Costa Blanca’s best golf courses and Blue Flag beaches of Guardamar de Segura. The homes are bank-owned, carry current independent valuations and are offered with vacant possession, 80%-90% mortgages, easy-legal validation and deposits as low as £7,000…. Full Article: Source

Landlords plan to buy property

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From Channel4.com: Four out of 10 investment landlords plan to buy a property during the coming year despite falling house prices, research showed. More than three-quarters of buy-to-let investors also said they did not intend to sell any of their properties because of the current market conditions, according to the Association of Residential Letting Agents.

Instead they plan to keep their property portfolios for an average of more than 16 years, with a quarter of landlords planning to keep them for more than 20 years. ARLA’s third quarter review found that the average landlord buying a new property planned to borrow just 70% of its value, while they had loan to value ratios of around 57% on properties they already owned. During the past five years they had average rates of return of 10.92% on properties that they owned outright, and 21.07% on ones that they had a mortgage on….. Full Article: Source

UK property construction industry agrees to introduce voluntary code of conduct

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From Propertywire.com: House builders in the UK have agreed to form a body to deliver a code of conduct and redress for new home buyers. Responding to pressure from the Office of Fair Trading which has seen the number of complaints soar, they are working towards new rules that are expected to be introduced in March 2010.

An investigation by the OFT found that buyers of new properties are regularly facing problems such as delays in moving in, faults in new homes and issues over reservation fees.The investigation into the house building sector also found a lack of clarity in information provided to homebuyers and potentially unfair terms and conditions in contracts. ‘We have concluded homebuyers need more protection when buying a new home and we have worked hard with the industry to help it develop a new approach to self-regulation that will improve consumer protection,’ said John Fingleton, OFT chief executive….. Full Article: Source

UK: Homes sell for record discount

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From Channel4.com: Homes are selling for a record discount as house prices continue to tumble, figures have shown. The average seller in England and Wales got just 90% of their asking price during September, the lowest level since property intelligence group Hometrack first launched its index in 2001.

The figures were supported by research from the Royal Institution of Chartered Surveyors (RICS), which said sellers in some areas of the country were accepting discounts of 12.5% of their asking price. Hometrack said house prices fell for the 12th month in a row during September, losing a further 1% of their value, and it warned that transaction levels looked set to fall back to a level not seen since the 1960s. The latest drop helped to push up the annual rate of decline to a record level of 6.2% for the year to the end of September….. Full Article: Source

Last rites for B&B

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From FT: By any definition, Bradford & Bingley, the UK mortgage lender, has been badly run. Assuming it is wholly or partly nationalised, the bank’s demise can be blamed on the poor quality of its assets, rather than a Northern Rock-style funding crisis.

Most of its mortgage loans, including those purchased from other providers, were to landlords hoping to profit from a property boom or to people who gave no proof of their salary. Little surprise that its rate of arrears is well above that of other lenders. It was always a likely victim of any significant downturn in house prices, particularly in a global financial crisis. Systemic consequences of its widely anticipated collapse should not be far-reaching. …. Full Article: Source

Fallout from US financial crisis hitting rental sector in India

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From Propertywire.com: As the US moves towards securing its bailout plan for Wall Street financial institutions the fall out is hitting hard in India. In Mumbai commercial rentals are beginning to crack and deals for office space have slowed over 30% in the last three months, according to analysts.

Leading property brokers and consultants say things will be worse with prospective tenants asking for a 50% cut in rates and they put the blame firmly on the US financial crisis. This is because companies, mainly IT and BPO service providers and finance firms, with significant US businesses are cutting back expansion plans and, therefore, the need for prime commercial real estate. Meanwhile, tighter liquidity in the Asian markets is encouraging companies to defer their property bookings….. Full Article: Source

Mortgage choice in the UK for property investors poor

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From Propertywire.com: Choice in the UK mortgage market is lower than ever and the cost of arrangement fees rising, according to the latest information. With mortgage approvals at a record low in August the UK’s leading consumer watchdog is warning that low interest rates are masking escalating mortgage fees and urging people to shop around. But even so the number of products makes finding a good deal difficult.

First time buyers without a sizeable deposit are left with just 36 mortgage deals on offer. And overall there are 80% fewer mortgage deals than a year ago for first-time buyers wanting to borrow over 90% of the value of a property. To qualify for one of the best buy mortgage deals on the market, a 20% deposit is now required meaning first-timers have to have £37,000 in the bank, according to data from online mortgage company mform.co. Other figures back up the dismal picture. ‘This time last year, 74.2% of the mortgages were available for borrowers with a deposit of 10% or less….. Full Article: Source

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