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Real Estate Briefing 08.Oct 2008

Posted on 08 October 2008 by Laxman |  Email |Print

From WSJ: The bailout of Hypo Real Estate Holding, Germany’s second-largest property lender, may have averted the bank’s certain collapse, but the damage done to the European financing market will likely be felt for years.

Even before the credit crisis pushed Hypo to the brink, financing was getting more difficult to obtain and more expensive for commercial-property investors and developers. Now financing is almost impossible to obtain and is limited to smaller deals and selected properties….. Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From AME Info: Middle East real estate markets will outperform other regions of the world over the next two years, according to a new survey by Jones Lang LaSalle, the commercial property broker.

Based on respnses from over 350 developers, sovereign wealth funds and high net worth investors, the survey also found that almost half of all respondents believe the UAE will offer the best performing real estate market in the Middle East…. Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From Property Showrooms: The booming Brazilian economy is helping to create a property hotspot where prices will grow healthily, it has been stated. Chintan Mahida, an overseas property expert with Nubricks.com, said the emergence of a strong economy in the South American nation was mainly due to its membership of the Bric group (Brazil, Russia, India, China) of emerging economies, which are actively encouraging foreign investment.

This will help the property market in the country, she added, stating: “Rising real estate prices are a side effect of an economy on the up. Investors seek out markets where rental returns are good and properties provide good cash flow.”…. Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From FT Adviser: The Chesterton CEBR House Price Poll of Poll revealed the average price of a residential property in England and Wales fell to £184,333 in September. Prices have now fallen for 13 months in succession, with the annual price drop reaching 5.9 per cent since September 2007.

The fall has been across all UK regions. Prices decreased by 1 percent in London and the South West in September. However, the largest year-on-year falls occurred in the Midlands, where house price deflation reached 6.1 per cent and 6.3 per cent in the East and West Midlands respectively….. Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From IPE: BP’s pension fund real estate arm Ropemaker Properties has formed a £100m UK investment fund called Cubemaker Partnership with London-based property company Cube Real Estate, that aims to take advantage of the economic downturn and acquire cheap assets.

The fund is looking to buy cheap, commercial property that offers asset management potential to try and increase their value, but will also target smaller properties in all asset classes that need repositioning or redevelopment. Cubemaker Partnership will begin with an initial £52m of equity, which according director of Cube Real Estate Stuart Loggie, they will “look to build up to £100m in the future.” …. Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From Inman.com: Mortgage companies lost an average of $560 on every loan they originated last year, compared with the $50 per loan they lost in 2006, continuing a downward trend that began in 2004, according to the Mortgage Bankers Association’s annual cost study.

While loan origination and ancillary fees grew on a per-loan basis, they did not keep pace with increases in production operating expenses, which grew 7 percent to $3,663 per loan, the study found…… Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From Estate Agency News: The average value of homes in Britain has been falling by £43.84 every day since the beginning of the year, wiping a staggering £300 billion in value off the housing market since January.

As the property market continues to battle against the fallout from the global credit crunch, the figures from house prices website zoopla.co.uk show that property values in England have fallen £11,343 — or £46.49 per day — on average since the beginning of the year…… Full Article: Source

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From Money Week: Worried about the housing market? Well you shouldn’t be. Or so says Graham Norwood in The Observer. Why? Because we aren’t building enough houses to meet government house building targets. Gordon Brown’s plan was to make sure that 240,000 to 297,700 houses were to be built every year until 2016.

Yet this year, a mere 110,000 will end up being built and next year we can expect to see no more than a “dismal 55,000.” The result? “Supply has fallen so far behind demand that an upturn is inevitable.” So convinced of this is Norwood that he quotes without question a forecast from – who else – The National Housing Federation, that suggests the average house price will rise 25% from its current levels by 2013. “Demand is going up while the supply of new houses is going down,” says NHF chief executive David Orr….. Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From Inman.com: The real estate industry must rethink the market fundamentals, the long-held demographic and economic beliefs that experts argued would drive the housing demand into the future.

The world has turned upside down with old truisms now seeming trite. In January 2003, Inman News convened a conference on the “Housing Bubble,” during which some experts promised the boom would continue because of six “market fundamentals.” These were the mantra for the industry for more than 10 years….. Full Article: Source

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From Estate Agent Today: Confidence in the ailing property market is unlikely to improve, according to one expert. Weak demand from would-be buyers is driving house prices down and impacting on estate agents, claims Lawrence Smith of Decision Homebuyers.

On top of this, he states, the Halifax has seen an average of £25,000 knocked off the average property in the last year with many people likely to end up in negative equity….. Full Article: Source

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From Maktoob.com: Property developers in Dubai remain upbeat about the growth of the sector, which has seen prices rocket in recent years, despite warnings of overheating and the global financial turmoil.

With housing prices tumbling in the United States, Britain and other Western countries, real estate developers in the booming Gulf city state rolled out multi-billion-dollar projects this week…… Full Article: Source

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From CityWire: Hidden among the national figures for house prices, which are showing falls of around 12% over the past year, there are huge regional differences. With volumes low the sale of a few expensive properties at knock-down prices can seriously distort the figures.

In the last housing slump of the early 90s anyone who didn’t have to sell just sat tight – and that appears to be what is happening now, particularly in the London market, which acts as a barometer for the rest of the country….. Full Article: Source

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From Estate Agent Today: One of the US’s largest estate agents has asked sellers to drop their prices by as much as ten per cent to help restart the stagnant sector, it has been reported. Coldwell Banker Real Estate said 25,000 sellers will drop their prices in a ten day national price drop, states Reuters.

Kathryn Taylor, who listed her home for sale with Coldwell, told the news provider: “This is the first time we’re lowering it, and we really didn’t want to do that because we listed it to sell.”….. Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From Seekingalpha: ETF investors have long lamented the fact that there isn’t a vehicle for tracking the CBOE Volatility Index [VIX]. The fact that it has rocketed from 25 to 50 in 2008 only makes matters worse.

Every asset class, even bonds (ex treasuries), has been beaten to smithereens. Not the VIX- it has knocked itself a double off the outfield wall. Granted, the “fear index” is not an asset class per se. Nevertheless, its implications are astounding…. Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From Reuters: Government-owned Dubai Properties said on Tuesday it plans to almost double its projects portfolio to over 1 trillion dirhams ($272.3 billion) and could announce a development in the Indian subcontinent this year.

The developers current project portfolio is worth 565 billion dirhams and “with our five-year plan we are talking about reaching a trillion dirham figure,” Chief Executive Mohamed Binbrek told reporters. ….. Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From Property Wire: Property developers in the US are starting to sell land cheaply and reap tax benefits from selling at a loss, it has been revealed. Analysts expect these tax motivated sales to increase as builders try to survive the worst housing crisis in US history.

They are expected to sell off swathes of land in remoter areas and concentrate on smaller developments close to urban areas where property prices are expected to recover first. Tax law allows companies to apply losses from land and other asset sales to past profits and reap a tax refund. More sales are expected soon because the companies can apply losses only to profits earned as far back as two years and 2006 was the last profitable full year for most builders….. Full Article: Source

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From Business Week: The embattled German lender Hypo Real Estate AG announced Tuesday that its chief executive, Georg Funke, was stepping down, following intense pressure from Chancellor Angela Merkel’s government.

The announcement by the Munich-based mortgage lender came days after the German government put together a second rescue package for the distressed commercial property lender worth 50 billion euros ($69 billion). That added a 15 billion euro ($20.75 billion) line of insured credit to an existing package of government and private credit offered last week…… Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From Forbes: Home prices across Britain may be falling, but the residents of SW1X in London’s exclusive Knightsbridge can sleep soundly, knowing that, for now at least, their properties are still commanding top dollar.

Home to two of the city’s most exclusive residential complexes, One Hyde Park and the Knightsbridge, where units can go for over £4,000 ($7,000) per square foot, and Harrods department store, this area has risen from No. 2 last year to become Britain’s most expensive post code. Homes here fetched an average of £1,870,354 (about $3.4 billion) in the four quarters ending in June, slightly down from £1.91 million ($3.91 million) a year ago, as wealthy international buyers shrugged off the global economic downturn….. Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From Beatthatquote: Real estate investment trusts (Reits) remain unfamiliar to many investors, according to one expert. Dave Butler, head of external affairs at impartial information service Reita, said the asset class is “not as well understood” by either private or institutional investors as the organisation “would like”.

However, the expert suggested that since their launch in the UK, awareness has improved significantly. “Our research shows that financial advisors are increasingly aware of them, although there is a background of commercial property generally falling out of favour,” Mr Butler remarked….. Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From The Age: A record low reading in a monthly construction index points to the way the September slump on global finance markets has “boiled over” into the economy of bricks and mortar.

The Australian Performance of Construction Index has registered the most subdued conditions since it began three years ago. Construction activity fell 11.3 points in September to 31.8, well below the 50-point mark that divides expansion from contraction. The index, based on a survey of 120 Australian construction companies, found that apartment and commercial building suffered the biggest drop. New orders for all buildings plummeted and companies cut staff at the highest rate over the three-year history of the survey….. Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From NZ Herald: Moscow’s decade-long building boom is falling victim to the global credit crunch as record high interest rates squeeze developers in the world’s third most expensive property market.

“Loan rates have climbed to ridiculous heights and the terms are very short,” said Dmitry Lutsenko, a board member at Mirax Group, the Moscow-based company building the Federation Tower, which will be Europe’s tallest skyscraper when completed. Mirax cancelled plans to develop 10 million sq m of commercial and residential space after interest rates on some loans rose to as high as 25 per cent….. Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From Gulf Daily News: Middle East stocks slumped to multi-year lows yesterday as speculation intensified that a five-year Gulf property boom was over and developers could be forced to merge as financing conditions deteriorate.

Ambitious Gulf developers have unveiled $100 billion in new projects this week and officials have tried to restore confidence in the market, but investors focused instead on falling global markets. Shares in Saudi Arabia fell by 7.7 per cent to their lowest level since the index was reformulated in 2007….. Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From Reuters: Vanke, China’s biggest listed property developer, said on Wednesday that its real estate sales in September rose from the previous month but fell from a year earlier.

The company sold 532,000 square metres in September, up 12.2 percent from August but down 27.6 percent from September 2007. In value terms, sales rose 5.7 percent from the previous month to 4.3 billion yuan ($631 million) but fell 37.9 percent from a year earlier….. Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From Times of India: The realty situation, anyway, has been bleak for some time. Construction work at the major project sites had slowed down as developers found it increasingly difficult to lure buyers.

The global financial meltdown has visited Mumbai’s realty market in this bleak scenario and has destroyed whatever chances there were of a quick revival of the market, say industry experts. These experts now say builders can no longer hold on to their astronomically high prices and will have to reduce them soon to a much more realistic level if they want the stagnant sales to take off. ….. Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From Arabian Business: Dubai’s Al Fara’a Properties on Tuesday revealed they are in talks to buy a UK-based real estate/construction-related firm. Speaking to Arabian Business on the sidelines of the Cityscape exhibition in Dubai, company director Natasha Gangaramani said: “Now is a good time to acquire assets or companies in Europe.”

While she would not go into any more detail about the proposed acquisition, she did also reveal that the company is planning to launch a new fund next year with the aim of targeting further real estate and construction expansion, including opportunities in the US….. Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From Shelter Offshore: If you have turned on the TV of late or tuned in to the radio, picked up a newspaper or even overheard conversations in bars or on trains there is absolutely no way you can have missed the fact that the UK is in a terrible situation financially speaking.

The situation is expected to get worse with the most negative, (or perhaps realistic) analysts suggesting that the end will not be in sight for at least five years. So how on earth can anyone find anything positive to focus on when all around us financial markets are falling, banks are going bankrupt and the average man and woman on the street are the ones being most affected…… Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From Menafn: Colliers International, the global real estate consultancy, has launched its Saudi Arabia Real Estate Overview. The pioneering report is the most comprehensive country overview of its kind and provides comparative key performance indicators across four areas: Riyadh, Jeddah, Mecca and the Eastern Province.

According to the report the demand-supply dynamic remains very positive, with robust economic growth patterns set to continue, underpinned by high oil prices and rapid industrial expansion promoted by accession to the World Trade Organisation (WTO). While Dubai and Abu Dhabi remain the region’s largest property centres, Saudi Arabia is emerging as the real estate market to watch. ….. Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From NZ Herald: China may use targeted measures and interest-rate cuts to revive a sagging property market and sustain economic growth, said Jing Ulrich, chairwoman of China equities at JPMorgan Chase in Hong Kong.

“Expectations are building for the government to introduce policies supporting lower-income home buyers and a selective easing of credit for some developers,” Ulrich said yesterday.Policymakers are trying to prevent a sharper slowdown in the world’s fourth-biggest economy as the credit crisis undermines demand in export markets. ….. Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From Zawya: The Iskandar Investment Board (IIB) yesterday launched Malaysia’s largest urban development at Cityscape Dubai. Medini Iskandar, a 2,300 acre (920 hectares) international mixed-use urban development project consisting of nine clusters.

IIB holds a 30 per cent stake in the Medini development. It will be located on prime Greenfield land in the heart of Nusajaya which lies between Malay-sia’s second crossing to Singapore and the southern Johor state’s New Administrative Centre….. Full Article: Source

Posted on 08 October 2008 by Laxman |  Email |Print

From Canada: Global economic jitters are starting to catch up to Montreal’s commercial real estate market, a study by real-estate consulting firm GVA Devencore says. Devencore president Jean Laurin said that banks have tightened credit significantly, but expressed confidence that other lenders, notably pension funds and insurance firms, will step into the breach.

“It’s a fact that banks are being more careful,” Laurin said, “but other large institutional investors still have dollars coming in and they have to invest those dollars.”…. Full Article: Source

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