Tag Archives: housing
The Future Of Global Real Estate: Where To Put Your Hard Earned Money
Photo: Ken Lund/Flickr Monday, September 16, 2013 – Moving A Needle by Jona Jone MANILA, September 16, 2013 – Many developed and developing countries are making promising contributions to the world of international real estate. Such an important upturn in international real estate investing currently takes place between China and the United States. The Chinese have become the second-largest foreign buyers of U.S. homes, not far behind the Canadians according to the National Association of Realtors. Consumers from China and Hong Kong also spent $1.71 billion on commercial property in the U.S. in 2011. Currently, it appears that the Chinese investors are attracted to commercial projects, residential properties, and shopping centers to name a few. According to Zhang Zu Wei of China Daily, “It’s no news that Chinese real estate developers and property buyers are flooding into the US – something that’s currently, to many Chinese, a better investment than gold – and it’s bringing more than just cash into the market.” The growing interest by the Chinese in US real estate is also creating new business opportunities. Shenzhen World Union Properties Consultancy Co. Ltd., a Chinese-listed company that offers real estate consulting services, sees the real estate appetite of the Chinese for U.S. land as a trend that may continue for a long time. Teaming up with local American realtors to serve the growing needs of Chinese investors is one approach that may prove to be productive. A recent article in China Daily notes that the National Association of Realtors affirmed that the Chinese are huge participants in acquiring residential properties in the U.S. The Chinese also ranked third in terms of land purchases in California, after the Mexicans and the Filipinos, the website Realtor.org noted. Sally Forster Jones, who works as an agent with Coldwell Banker International in Los Angeles, believes that the increasing level of international real estate purchases in LA is indeed an ongoing trend. Mary Alice Hines, author of “Investing in International Real Estate,” identified two types of passive investments international real estate investors are making. One type involves investing in securities based on international real estate collateral; the other investing in international real estate service firms and offices. The general term “real estate” also embraces real property development, sales and leasing relations across domestic borders. And indeed, the sub-category of international real estate could be regarded as one of the most dynamic branches of this business area. It is best broken down into two categories: international commercial real estate and international residential real estate. The majority of international real estate transactions will come about between corporations and may encompass or be a result of authorized urban planning, engineering, financing, and construction work. Persuading foreign investors into real estate development projects may be a priority for snowballing national revenue and an excellent strategy for finding new capital to build or improve infrastructure and services. The growth in international investment practices makes it feasible for investors to look beyond their own locales for above average performing investments. A major portion of international residential real estate transactions occur through individual purchases of lots or built units. Currently, most of these individual investments are for condominiums located in Asia, such as those existing or being built in the Philippines. Experts say that acquiring such property does not merely depend on location but also on reputation. These acquisitions account for the bulk of what is sometimes referred to as the second home market. As such, international investors may find that renting in South East Asia could be one excellent way of researching this type of investment before an actual purchase. The actual acquisition of a property, of course, always depends on the terms laid down between the realtor and the potential client. Renting in a desired locale for a time will enable an investor to research property acquisition laws and customs in a new market, better enabling him to evaluate each deal. In one article posted through investopedia.com, experts have duly noted how the tiger economies of Southeast Asian countries such as Hong Kong, Singapore, South Korea, Taiwan and China, and even the rising market economies of Thailand, Malaysia, Vietnam, Indonesia, India and Pakistan have all seen rapid growth in recent years. China remains the most promising country, currently, followed by India, although real estate inflation has become an issue in both countries. Kenneth Rapoza who contributes to forbes.com and covers Brazil, India and China wrote recently that the decision whether to jump onto the international real estate bandwagon depends on the individual. He finds the situation in China, for instance, to be most interesting. As compared to the housing market in the U.S., real estate investing the Asian tiger can be considerably different. Compared to the zero-money down, liar-loan scenarios common in the U.S. prior to the popping of the housing bubble, most buyers in China do not have mortgage issues. One simple reason: the Chinese indeed have an inclination to purchasing homes in cold cash. In the case of cash purposes, of course, there are never any foreclosure issues to worry about. Most importantly, there is no staying late at night worrying that the next day might be the owner’s last in their dream house. Chinese and Southeast Asian buyers of American real estate often make their investments on a cash basis as well. Perhaps such purchases will help head off a real estate bubble of the future by putting many housing units in the strong hands of cash buyers likely able to weather the next storm. Continue reading
Fundamentals seen driving Dubai’s property rally: Report
Fundamentals seen driving Dubai’s property rally: Report (Issac John) / 5 September 2013 Driven by strong demand and much-improved economic fundamentals rather than speculation, housing prices in Dubai are on the ascent, Standard Chartered bank said. The bank said in a report released on Wednesday that over the past 12 months, residential prices have increased by 38 per cent for apartments and 24 per cent for villas, with rents increasing by 20 per cent and 17 per cent, respectively. “Slowly but steadily, confidence has returned to the market. Second quarter marks the fourth consecutive quarterly increase in residential prices,” according to a report titled ‘Dubai housing: Fundamentals not speculation.’ The report said at the moment, the market seems to be driven primarily by fundamentals rather than speculation. Although there is a risk that this could change, it is encouraging that regulators are drafting laws to curb excessive speculation in off-plan properties. Subdued mortgage growth, low off-plan sales and increasing housing regulation differentiate this price rally from the one in 2008, the report said. “We expect housing-market supply to grow at the same pace as demand, with new projects being launched in a more planned and controlled manner than in the past. Dubai’s housing market is comprised of 417,900 apartments and 62,000 villas. Residential supply has been growing at an average compound rate of around eight per cent, with apartments increasing by nine per cent and villas by four per cent,” said the report. By the end of 2013, supply should increase by 19,400 apartments and 3,400 villas, assuming there are no delays in construction schedules. The largest proportion of future stock from 2013 to 2015 will be delivered in the sub-markets of Dubailand (7,900 units); Business Bay (3,800 units); and Dubai Sports City (3,800 units). “We expect the city to expand, with a focus on new developments outside central Dubai, in areas to the south and east,” the bank said. The bank expects Expo 2020 to be a meaningful contributor to the sustainability of the housing market, in the event of a positive bid result in November 2013. According to the report, Dubai’s chances of winning have increased. “In the event it does, close to 300,000 more jobs could be created with 25 million people visiting Dubai. 90 per cent of the job opportunities would occur from 2018 to 2021, with most of the jobs created in the travel and tourism sector. This indicates a good chance that a high percentage of these will be converted into permanent jobs, which would benefit the expanded economy in the post-Expo period.” The report recalled that the sharp increases in property prices in 2008 were driven by excessive short-term speculative activity, especially on off-plan properties. “For these properties, buyers only had to put down 10 per cent deposits (rather than the full price), so the market became highly leveraged. Many buyers never had the intention (or the funds) to pay the future installments as they planned to flip the property before any payments were due. This turned the housing market into an unsustainable, highly leveraged derivatives market. We pointed out these problems in our On the Ground, ’A tale of two housing markets’, published in July 2008. It was therefore no surprise to us that in 2009 there was a sharp correction in housing prices, accompanied by a rapid decline in property transactions,” said the report. The bank observed that Dubai’s housing market is influenced by broader economic trends. “Dubai’s economy has experienced solid and sustainable rates of growth over the past three years. The key drivers are logistics, hospitality and retail. This looks set to continue, particularly when it comes to logistics, which contributes 14 per cent to the GDP. We expect trade to increase in the years to come on the back of the increased spending plans of most governments in the region, including Abu Dhabi, Qatar and Saudi Arabia.” Tourism is also expected to grow at an average of 6.5 per cent per annum between 2011 and 2021, pushing up employment growth for the sector by 4.1 per cent per year, report said quoting a Dubai Chamber of Commerce and Industry study. Dubai’s population growth is another driver of housing demand surge, said the report. The city’s population is the second largest in the country, after the capital Abu Dhabi, and is largely comprised of expatriates. “The population increased from 2.0 million in 2011 to 2.1 million in 2012, according to the Dubai Statistics Center. We expect it to reach 2.2 million in 2013,” the bank said in its report. issacjohn@khaleejtimes.com Continue reading
SA’s Farmland ‘Outperforms Stocks, Bonds’
BY SHANNON SHERRY, AUGUST 29 2013 Picture: THINKSTOCK Although seen as a “new asset class”, investing in farmland ” is as old as humankind”, says Duncan Vink, head of asset manager the United Farmers Fund, which partners Futuregrowth. The company has employed the model in three projects since starting the Agri-Fund in December 2010 — a citrus farm in Marble Hall, Limpopo; table grape farms in the Northern Cape; and a deciduous and stone fruit farm in Piketberg, the Western Cape. Futuregrowth Agri-Fund manager Smital Rambhai says its investment in farmland on behalf of clients through its Agri-Fund forms part of its social responsibility suite that seeks to make “sustainable and responsible” investments. The Agri-Fund has a target size of R1bn and aims for returns of 10% plus inflation. The minimum investment is R50m, mainly from pension and provident funds. “We own the land, the farming implements and infrastructure and the trees and plants. The operator owns the produce and has to pay the lease and the costs, including labour,” says Mr Rambhai. Mr Vink says the buy-and-lease model means that the farmer’s biggest capital outlay — land — is circumvented while for investors it is easy to structure, takes less time to monitor and there is no exposure to volatile crop prices. “Food prices are rising and as long as people eat, productive farmland will have value,” Mr Vink says. “Investing in farming has two different possibilities — investing in the property or in the farming. Historically, the property entity has outperformed the farming business,” he says. The social spin-offs of the investments include job creation, provision of basic healthcare and education for workers, improving their housing and personal development, such as identifying employees for management training. GM of Standard Bank primary sector agribusiness MC Loock says from a farmer’s point or view the term of a contract would be most important when considering whether to lease. He believes farmers leasing land under the Futuregrowth model would be free of risk of land claims. “Younger farmers often look to lease land rather than buy, much like a young couple renting a home rather than buying, as a means of leveraging their balance sheets. But as soon as they can they want to get into the property market rather than pay off someone else’s bond.” Continue reading
