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Real Estate Briefing 03.Oct 2008

France plans EU 5 bln property market support
US: Hardest and easiest places to sell a home
Russian developers 'most vulnerable' to credit crunch
Dubai: Developers hit by cost overruns
Russian real estate market bubble will burst but not now
Indian real estate firms face a reality check
Finerman raising $3 bln to make property loans
A guide on where to buy property abroad
EU clears Germany's bailout for Hypo Real Estate
Dubai enters world top ten office price index for the first time
House prices: What next?
Crisis brings Russian, Arab investors to Bulgaria's real estate market
Mortgage rates hover above 6%
Emirates NBD’s EIS to launch third real-estate fund
UK house prices: a regional breakdown
REITs, REMFs make realty dream a reality
English land prices fall putting end to spectacular rise
S.Africa house prices up, but problems remain
Bank warns of rising loan defaults as house prices fall
Singapore private residential property prices fall in Q3
DLF targets foreign funds
Soft landing for housing market in Korea
Housing may be down, but some REITS are raising the roof
Indian realty firms immune to takeovers
Australian agents remain hopeful over real estate market
The solid construction of the Brazilian real estate market
New Zealand: Commercial property deals slump
ING eyes new property derivatives drive
Thailand 'looking at relaxing foreign ownership rules'
SA: Long-term outlook positive for property
Housing downturn reaches Scotland
South Korea's housing market buckles under economic pressure
WTC rebuilding delayed as plans get scaled back and costs mount

Posted on 03 October 2008 by Laxman |  Email |Print

From Bloomberg: France will spend more than 5 billion euros ($7 billion) to support the property market under a plan that will see the government buying 30,000 unfinished homes at a discount.

Jean-Francois Gabilla, head of the Federation of Property Developers, said the number of unfinished properties to be bought by the state is half the number scheduled to be built. The plan may be funded by the Societe Nationale Immobiliere real-estate arm of the state-owned Caisse des Depots et Consignations….. Full Article: Source

Posted on 03 October 2008 by Laxman |  Email |Print

From Forbes: As the dismal U.S. housing market slides further downhill–home prices in July posted a 16.3% annual drop–some sellers are unloading their homes to bargain-hunters.

But in cities like Seattle, Jacksonville, Fla., and St. Louis–the hardest major cities in which to sell a home–even sellers who have substantially lowered their prices aren’t finding it easy to move their houses. In others, including Philadelphia, Sacramento, Calif., and Las Vegas, plummeting home prices spurred by high foreclosure rates have added more reasonably priced houses and condominiums to the market and sparked a rise in buying and selling….. Full Article: Source

Posted on 03 October 2008 by Laxman |  Email |Print

From Propertyeu.info: Russian property development companies are likely to be among the worst hit by the deteriorating financing environment, Fitch Ratings said this week. ‘This is because of a large share of short-term debt in their liquidity profiles, their often significant operational cash outflows, limited cash-on-balance sheet and a virtual absence of meaningful committed undrawn facility headroom,’ the rating agency said.

Although the state-owned bank VneshEconomBank (VEB) is to provide up to $50 bln to help refinance Russian corporate debt, the ratings agency remains sceptical, saying that this will simply provide short-term support rather than a long-term solution to liquidity risks in Russia….. Full Article: Source

Posted on 03 October 2008 by Laxman |  Email |Print

From Gulfnews.com: Volatile prices of building materials are causing strained relationships between contractors and developers, industry experts say. The construction boom has created a huge amount of work in Dubai and while developers struggle with increasing prices, contractors have been the ones calling the shots.

“The last six months has seen a lot of volatility in the local market, especially with steel and cement. Contractors have been able to negotiate,” said Riad Bsaibes, chief operating officer of Amana Contracting….. Full Article: Source

Posted on 03 October 2008 by Laxman |  Email |Print

From Regnum.ru: According to analysts of Unicredit Aton, the “bubble” in the real estate market of Russia will burst. First of all within next half year prices on the real estate in Russia will fall down at least by 10%.

The reason for it are financial problems of developers: the single combined debt of Mirax Group, Systems-Gals, PIK, AFI Development, OPIN, needed to be repaid by the end of 2008, totaled over $1.8 billion. Banks practically do not grant credits even taking into account that they increased rates from 10% to 25% annually….. Full Article: Source

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From Knowledge@Wharton: As credit and finance markets around the world tumbled like ninepins, so did stock markets in India, with the Bombay Stock Exchange Sensitive Index (Sensex) falling 3.35% or 469 points on September 15. The worst affected was the realty index which dropped 7.6% on the same day.

Since then, while stocks prices in India have seen massive swings, shares of real estate firms have remained depressed, falling a total of 20% as of October 1.In addition to housing stocks, home prices are taking a beating. By some estimates, prices have dropped by 25% in certain urban markets….. Full Article: Source

Posted on 03 October 2008 by Laxman |  Email |Print

From Bloomberg: Mark Finerman, who left as head of commercial real estate lending at RBS Greenwich Capital in May, is raising about $3 billion for a fund to make senior property loans, people familiar with the matter said.

Finerman’s LoanCore Capital LP wants to help fill the void in commercial property lending since banks stopped making new loans in the collapse of the U.S. subprime market. LoanCore will provide cash for acquisitions and refinancings, earning profits from the wider credit spreads spurred by the crisis….. Full Article: Source

Posted on 03 October 2008 by Laxman |  Email |Print

From Times Online: Never mind the property slump in the UK. What about a villa in Thailand, a beachfront apartment in Venezuela, a safari lodge in Botswana or a house in Florida?

Falling house prices may be deterring buyers over here but to some property investors, unstable politics, rioting, economic downturn and long-haul charter flights are no obstacles to purchasing the ultimate holiday home. If you are looking for something beyond the usual villa in Spain or France, consider these: Thailand is in the news after the anti-government riots there. And yet it remains one of the most popular emerging property markets….. Full Article: Source

Posted on 03 October 2008 by Laxman |  Email |Print

From IHT: Germany won European Union approval Thursday for a €35 billion (US$51.2 billion) bailout of Hypo Real Estate Holding AG. Monday, the bank became the first German blue-chip company to seek government rescue in the global financial crisis, as European governments rushed this week to shore up financial groups that risked collapse after share prices plummeted on fears they could not cover debts.

The European Commission said it had cleared the financing package for Germany’s No. 2 commercial property lender until April 2009. EU Competition Commissioner Neelie Kroes said the case showed that EU regulators could move fast when needed….. Full Article: Source

Posted on 03 October 2008 by Laxman |  Email |Print

From Propertywire.com: Dubai has entered the top ten list for the world’s most expensive office market with London’s West End remaining number one. The latest Global Market Rents survey from CB Richard Ellis shows a number of changes as commercial property undergoes turmoil resulting from the credit crunch and Asia emerges as a major player.

Moscow has moved into second place with Paris is the only other non Asian city in the top ten at number eight….. Full Article: Source

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From Telegraph: After another fall in house prices, buyers and sellers are wondering whether the slump will last for weeks, months or years. Six experts give their views. House prices fell at an annual rate of over 12 per cent in August, the latest figures from Nationwide Building Society show.

They fell by 1.7 per cent compared with July. The revelation that the average house price has fallen for the 11th consecutive month is not a surprise. The ramifications of a slowing economy and the banking crisis have been filtering through to the housing market for a year now….. Full Article: Source

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From Novinite.com: The global financial crisis will serve to attract more Russian and Middle Eastern investors to Bulgaria’s real estate market. The reason for that is that the financial crisis is forcing the investment companies in Bulgaria to freeze or delay the execution of a number of real estate projects.

The lower prices are expected to attract primarily Russian and Arab clients. In addition, the Bulgarian Land Development firm is reported to have postponed two of its projects in the Black Sea town of Kavarna and the mountain resort of Borovetz….. Full Article: Source

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From Inman.com: Mortgage rates barely budged this week, with rates on long-term loans rising slightly and those on short-term loans dipping, Freddie Mac reported.

According to Freddie Mac’s weekly survey, the 30-year fixed-rate mortgage inched up to 6.1 percent from 6.09 percent last week, compared with 6.37 percent a year ago. The 15-year fixed mortgage rate averaged 5.78 percent, up from 5.77 percent a week ago, but is still below 6.03 percent a year ago. Points that borrowers paid to attain these rates averaged 0.6….. Full Article: Source

Posted on 03 October 2008 by Laxman |  Email |Print

From Khaleejtimes.com: An official of Emirates NBD Group’s investment arm said his company is preparing to launch a third real-estate fund as soon as the negative market sentiment dies down, as he calls for a self-regulating body for fund managers.

“We’ll wait for the market to settle down because the sentiment now is negative,” said Deon Vernooy, the senior executive officer of Emirates Investment Services (EIS) Ltd.“Otherwise investors may pull their money out and wait for stability.” Market conditions have to be conducive for investments and fund managers must be able to convince investors about potential returns before a product is launched, he added, saying the crackdown on corruption has affected investor confidence….. Full Article: Source

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From Guardian: Nationwide’s latest quarterly house price index showed a mixed picture in England: there was bad news, and really bad news. Price falls were largest in the south, with all areas except London seeing a 5% drop between June and September.

House prices in southern England fell by 10.4% in the 12 months to the third quarter of this year while those in the north recorded a 9.4% drop. Nationwide said it was not clear why the north was “performing better” than the south, but there were “some plausible hypotheses”…. Full Article: Source

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From Indiatimes.com: At the time when the global capital market is going through a crunch, real estate trusts and real estate mutual funds (REITs/ REMFs) could be the
answer to the need for uninterrupted cash flow in real estate development, while offering an opportunity to own property.

In USA, UK, Europe, Canada, Japan, Hong Kong, Singapore, REITs and REMFs are the way to invest in real estate. In India too people are looking forward to these products for investments. More so as these offer benefits of owning and liquefying properties. Humongous amounts of money are required for development….. Full Article: Source

Posted on 03 October 2008 by Laxman |  Email |Print

From Propertywire.com: The spectacular value of farmland in England has been brought to a halt by a wet harvest, falling commodity prices and increased costs, according to the latest research.

The value of farmland fell by just under 1% in the third quarter of 2008 following growth of 11.9% and 10.4% in quarters one and two respectively, the Knight Frank Farmland Index shows. This means that overall annual growth has fallen to 27% from a peak of almost 38% last quarter….. Full Article: Source

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From Reuters: South African house prices rose by 3.6 percent year-on-year in September, the first increase in 10 months, pointing to renewed activity after a difficult year, a survey showed.

The monthly Standard Bank property gauge ticked up last month, with the median price at 580,000 rand. The five-month moving average remained in negative territory, but improved to -5.5 percent year-on-year after several months of declining prices — house prices have been falling since March….. Full Article: Source

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From Guardian: The Bank of England warned of rising defaults on loans amid signs that a worsening credit crunch is prompting sharp falls in house prices and a squeeze on consumer spending power.

In a quarterly health check of credit conditions conducted before the recent market turmoil, Threadneedle Street said lenders had reduced the availability of credit by more than had been expected and anticipated an even tougher environment in the next three months. The report which fanned City speculation about a cut in interest rates next week coincided with a report from the Nationwide showing that house prices dropped by 1.7% in September - the 11th successive monthly fall….. Full Article: Source

Posted on 03 October 2008 by Laxman |  Email |Print

From Rttnews.com: Singapore’s Urban Redevelopment Authority, or URA, announced in a flash estimate that private residential property price index decreased 1.8% to 174.3 points in the third quarter, in contrast to the 0.2% rise recorded in the previous quarter.

In the third quarter, prices of non-landed private residential properties fell 2% in core central region and dropped 2.1% in rest of central region. At the same time, prices of non-landed properties rose 0.1% in outside central region….. Full Article: Source

Posted on 03 October 2008 by Laxman |  Email |Print

From Financialexpress.com: DLF, India’s largest real estate company by market capitalisation, is eyeing more funds from foreign investors including private equity funds after its share buyback in the next 12 months. The company is going ahead with the buyback at up to Rs 600 ($14) for each share, even though the current price is much lower.

Shobhit Agarwal, joint MD, capital markets, Jones Lang Lasele Meghraj said: “Through the buyback, DLF will not only make money but will also portray the company’s strength. If it has a successful buyback, it will attract lots of investments, even from FIIs.” …. Full Article: Source

Posted on 03 October 2008 by Laxman |  Email |Print

From Donga.com: The real estate market remains stagnant. Housing prices in the “Bubble Seven” areas, including the affluent Gangnam and Bundang districts around southern Seoul, are declining fast.

Prices have dropped 30 percent after reaching a high in 2006, but no buyers have come forth. The average price of apartments in Seocho-dong in Gangnam fell below one billion won for the first time since November 2006. The market capitalization of old apartments to undergo reconstruction in four affluent areas is 77.55 trillion won (62.9 billion U.S. dollars), down four trillion won (3.2 billion dollars) or five percent. Moreover, around 160,000 units of new apartments remain unsold nationwide….. Full Article: Source

Posted on 03 October 2008 by Laxman |  Email |Print

From Seekingalpha.com: Even with the downturn in the residential housing market, and credit issues that continue to make front page news, as of the end of September REITs have generated total returns including dividends of about 1.8 percent year-to-date.

During the same time the S&P 500 was down 19.3 percent, the Nasdaq was down 21.1 percent, and the DJIA was down 18.2 percent. The REITs that are outperforming include the self-storage REITs, which are up 33.8%, health care REITs, which have risen 18.5 percent, and apartment REITs, which are up 17.4 percent. Not surprisingly, the worst-performing REITs are those tied to mortgages, with returns down 31 percent….. Full Article: Source

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From Business-standard.com: The downturn has drastically lowered valuations of Indian real estate firms but the promoters face virtually no threat of takeovers as they are sitting on stakes in excess of 70-80 per cent of equity.

At the same time, the fall in the share price has severely crimped their ability to raise funds through stake sales to private equity and strategic investors. The real estate sector, which was doing well till January, is in the midst of what many feel will be a prolonged downturn….. Full Article: Source

Posted on 03 October 2008 by Laxman |  Email |Print

From News.com.au: The weekend after the AFL Grand Final is typically a bumper one for the real estate market - and agents say they expect no less, despite a week plagued by share price turmoil and interest rate uncertainty.

Real Estate Institute of Victoria chief executive Enzo Raimondo said there was no indication the financial volatility has scared off buyers. There are 460 auctions scheduled across the state tomorrow - the start of the spring selling season - down from 761 on that day last year and 633 in 2006….. Full Article: Source

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From Brazilcham.com: The Brazilian real estate market has experienced massive development over the past few years, with a record number of constructions, sales, and financing. This growth has not been restricted to big cities such as São Paulo, Rio de Janeiro, or Belo Horizonte, but instead has spread all over the country.

Although some might consider such growth to be a significant risk for a mortgage bubble, similar to what has happened in the United States, the truth is that the situation is quite different in Brazil. Considering the positive perspectives for 2008, one could expect that the country will undergo a long growth period in this market. The growth of the Brazilian real estate market has occurred due to a number of factors….. Full Article: Source

Posted on 03 October 2008 by Laxman |  Email |Print

From Businessday.co.nz: Deals in the commercial property sector have slumped to 20 per cent of last year’s levels as Australian institutional investors, who had propped up the market since 2004, bail out of New Zealand.

Deals in the commercial property sector have slumped to 20% of last year’s levels as Australian institutional investors, who had propped up the market since 2004, bail out of New Zealand. John Goddard, a director of Colliers International, estimates up to 30 Aussie institutions _ many of them players in the A$1.4 trillion (NZ$1.7 trillion) Australian Superannuation Fund _ bought about $5 billion worth of Kiwi property between 2004 and 2007 in their global search for yield, injecting a much-needed liquidity base to the market….. Full Article: Source

Posted on 03 October 2008 by Laxman |  Email |Print

From Reuters: ING Group is plotting a new push into Europe’s young real estate derivatives market after hiring two of the sector’s most experienced market-makers.

ING has recruited Rawle Parris from ABN AMRO and Jose-Luis Pellicer from Goldman Sachs to help it develop coverage of the burgeoning market and promote property swaps as hedging tools for external and internal clients. Although part of ING’s financial markets division and therefore separate to ING Real Estate, the appointment of Parris and Pellicer could persuade ING - one of the world’s biggest bricks and mortar investors - to increase use of property derivatives within its 100 billion euro ($139.5 billion) plus portfolio….. Full Article: Source

Posted on 03 October 2008 by Laxman |  Email |Print

From Propertyshowrooms.com: Thailand is considering relaxing the rules on foreign ownership of property to make it easier for non-Thais to invest there. Another factor that could make it easier for investors to buy in Thailand is the price itself.

Global Property Guide figures supplied to the Seoul Times have revealed that while prices increased by 5.6 per cent in the year to the end of the second quarter of 2008, this represents a real terms drop of 4.18 per cent as the house price rise is lower than overall inflation….. Full Article: Source

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From Busrep.co.za: The residential property market is expected to improve once disposable income and interest rates improve in the country, Standard Bank said.

Releasing its residential property gauge, Standard Bank said its median house price index recorded a rise of 3.6 percent in September following a 1.8 percent decline in August. “We do not see this however as a trend reversal, but rather the result of the volatility of the data,” a statement said….. Full Article: Source

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From BBC: The slowdown in the housing market has started to bite in Scotland, according to Nationwide Building Society figures. The lender said average prices fell by 5% between July and September, compared to a 4.6% decline across the UK.

The figure was down 7.1% in Scotland over the last year - the slowest rate of decline in the UK. The quarterly figures showed Scotland, which had seen prices rise in the second three months of the year, was moving closer to the rest of the UK….. Full Article: Source

Posted on 03 October 2008 by Laxman |  Email |Print

From Asianewsnet.net: Mask ExoticaHome prices are plummeting and unsold new houses are piling up as the country’s real estate market showing no signs of improving amid the worsening financial turmoil.

The average price of apartments in Seocho-gu, an affluent residential area in southern Seoul, fell below 1 billion won (US$840,000) for the first time since November 2006. The price of nearby Gangnam-gu’s apartments slated for redevelopment has also fallen by more than 200 million won since January 2007….. Full Article: Source

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From WSJ: The owners of the World Trade Center site announced a delay in the completion of a multibillion-dollar transit hub Thursday but pledged to open a nearly finished Sept. 11 memorial by the 10th anniversary of the terrorist attacks.

They set no firm schedule for the completion of the entire site, which includes four office towers and a performing arts center. In a 70-page report on ground zero’s tortuous rebuilding process, the Port Authority of New York and New Jersey said the elaborate rail hub will cost $3.2 billion, $700 million more than planned, and should open in 2014, five years after the original projected completion date….. Full Article: Source

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