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Is Tokyo the New Miami?
Is Tokyo the New Miami? By Michael Gerrity | May 16, 2013 What does Tokyo have in common with the Miami and Dubai property markets? A tidal wave of foreign property investment is flooding the market due to currency exchange rate fluctuations. Over the last several years Miami’s white-hot property market has been the beneficiary of both a flight of capital from Venezuela, due to the policies of late President Hugo Chavez, and Brazil’s surging real against the U.S. dollar. Similarly, the collapse last year of Iran’s rial, which fell as much as 40 percent in a single week in September 2012, sparked a significant flight of capital by wealthy Iranian families into Dubai condos. Now Japan’s new Prime Minister, Shinzo Abe, has moved to spark inflation by devaluing the yen, which has led to a torrent of foreign property investment into Tokyo and other parts of Japan. Investment in Japan property rose to $10.6 billion in the first quarter of 2013, up 32 percent year from a year ago and 38 percent from the previous quarter, Jones Lang LaSalle reports. Japan is the “one [market] to watch,” said Stuart Crow, head of Asia Pacific capital markets at Jones Lang LaSalle. As reported in the New York Times yesterday, Japan’s economy is growing at 3.5 percent annualized rate. This is a real sign that the Japanese Prime Minister’s “Abenomics” policies are gaining real traction in the marketplace. One of the things I’ve learned in my 25-year career in global real estate–“flights of capital,” either due to financial arbitrage opportunities between two currencies, or as safe harbors from unfavorable domestic policies, are a much larger influencer of property markets in many parts of the world than local demand. And that’s what is happening in Japan. The bottom line is efficient use of money drives property markets much more than consumer needs. Continue reading
Chinese Shopping Malls To Become Hottest Investment Property: ARA
Total number of mainland malls expected to jump 40 per cent to more than 4,000 by 2015. Wednesday, 22 May, 2013 [UPDATED: 5:09PM] [font=’Arial Black’, ‘, Arial, Helvetica, ‘, ‘Nimbus Sans L’, ‘, sans-serif} ‘] jeanny.yu@scmp.com [/font] Malls like Festival Walk in Kowloon Tong will be the benchmark for ARA Private Funds, which wants to invest in malls that can service China’s rapidly growing middle class. Photo: SCMP Shopping malls will surpass office and residential space as the most profitable type of property investment in China over the next two to five years, thanks to the nation’s booming middle class and its fast-growing income, says a property investment firm partly owned by Asia’s richest man, tycoon Li Ka-shing. “District shopping centres with a gross floor area of 1 million square feet or bigger, and a high footfall will offer the biggest upside with limited risks for private funds in the coming years in the mainland,” said Ng Beng Tiong, ARA Private Funds chief executive. Ng, a former investment banker, is targeting an internal rate of return of 20 per cent by building and operating shopping malls in the mainland through the newly-raised US$441 million Asia Dragon Fund II. HSBC forecasts that another 93 million Chinese households will join the middle class by 2015, while the China Chain Store and Franchise Association separately expects the number of mainland malls to jump 40 per cent to more than 4,000 by 2015. However, not all of these new malls will provide decent returns, so real estate funds will have to be highly selective, Ng said, warning that the presence of luxury brands did not guarantee fat margins. “We don’t go for malls that are full of Guccis and LVs (LVMH luxury goods), but (for) the ones that serve the daily needs of a large catchment of residents and office workers,” Ng said, citing its Asia Dragon Fund I’s Dalian shopping mall and the Festival Walk in Hong Kong’s Kowloon Tong as references. Of the two private funds closed last year, Ng plans to invest up to 70 per cent of the US$441 million Asia Dragon Fund II in China, of which over a half would go to shopping malls that serve the growing middle class. “It is the middle income group that is growing faster in terms of their wealth and buying power, which translates into a very strong fundamental support for shopping malls”, he said. The firm, in which Cheung Kong holds a 14 per cent stake, is looking to expand its footprint to key tier-two cities, such as Hangzhou, Suzhou, Guangzhou, Shenzhen, Chongqing, Chengdu and Wuhan. It already had projects underway in Shanghai, Beijing, Dalian and Nanjing, he said. By 2015, the retail market would double in China’s key tier-two cities, according to HSBC research, and shopping malls would account for 74 per cent of the retail market in these cities, up from 51 per cent currently. Singapore-based ARA managed around S$22.1 billion (US$17.6 billion) of assets as of the end of last year, according to its annual report. The company is an affiliate of the Cheung Kong Group and apart from its private fund business, it also runs some of Asia’s most popular REITS (real estate investment trust), including Hui Xian REIT and Fortune REIT. Continue reading
Farmers Land Carbon Credits
Changes to how land sector emissions are reported under the Kyoto Protocol are expected to benefit farmers and rural landholders who will gain greater access to Australia’s carbon markets. The changes announced in the 2013-14 Budget will see the Government formally account for cropland management, grazing land management and revegetation in its national greenhouse gas inventory. Parliamentary Secretary for Climate Change, Industry and Innovation, Yvette D’Ath said the decision meant when a landholder stored carbon in soils or vegetation, their efforts would count towards Australia meeting its national greenhouse gas reduction target. Ms D’Ath said the changes would mean methodologies developed under the Carbon Farming Initiative (CFI) which covered those activities would be able to generate Kyoto-compliant CFI credits. She said since businesses with obligations under the carbon pricing mechanism could buy and surrender those as offsets against their liabilities, participating farmers now had new buyers for abatement projects on their land. “This is a win for everyone,” Ms D’Ath said. “Liable firms will have more flexibility in how they meet their obligations and farmers can now benefit from new buyers and greater access to Australia’s carbon markets.” She said accounting for those land sector emissions would broaden the base of the CFI, and, by extension, Australia’s carbon pricing mechanism. “A broad base will reduce the overall cost of Australia meeting its international emissions reduction commitments,” she said. Edition 361f, 17 May 2013 Continue reading
