Abu Dhabi, the capital and the second largest city in United Arab Emirates, has recently witnessed a series of rapid developments. The economy, which is mainly dependant on hydrocarbons for its economic wealth, has one of the highest GDP per capitas in the world. Abu Dhabi also has the largest share of oil reserves in the UAE; 95% of oil reserves and 92% of the gas. In order to diversify its economy, the UAE government has taken large steps to encourage oil revenue investments in manufacturing, tourism, agricultural and real estate industries to limit its dependence on the finite resource of oil.
Even the Abu Dhabi Securities Exchange ended its third quarter on a positive note, increasing by 18.7% over the three months to close at 3,124.22 points compared to 2,631.32 points the previous quarter and 2,390.01 points at the end of 2008.
The investment in the Abu Dhabi real estate market has been increasing due to changes in their rigid policy regarding the buying and selling of houses for sale making it more flexible and thus giving passage for new investors, thereby making the market more robust.
The Abu Dhabi government plans to work with its local counterparts to build stronger partnerships with the private sector, giving Abu Dhabi special priority for industrial development. The government estimates a doubling in the population of the city in coming decades as workers from all over the world head to the city lured by lucrative, tax-free salaries, and a comfortable lifestyle. So the city is experiencing great wealth generation with multicultural talent.
The positive outlook of the city thanks to the strong determination of the government has pushed Abu Dhabi’s market sky high. It is surely an ideal place for anyone who wants to invest his life for greater returns in the future. This is Abu Dhabi’s promise.
More than two-thirds (69%) of smaller, independent landlords will reduce rents to help tenants remain in their homes, according to The National Association of Independent Landlords.
Nearly one-third of these landlords (32%) say they have lowered rents over the past 18 months, according to an informal survey of association members released today.
Tracey Benson, president of The National Association of Independent Landlords, points out that in today’s tough economy, renters absolutely should approach their landlords if they need help making ends meet.
“Just like everyone else in this recession, landlords are trying hard to pay their mortgage and cover their bills. As long as renters pay on time and take good care of where they’re living, landlords will work with them,” Benson said.
Of those landlords willing to negotiate, 61% said they would drop rents up to 5%, and another 29% said they would take off up to 10%; the handful of those remaining said they would consider even steeper discounts.
Benson said renters and landlords have much to gain by working together: “Often if renters can’t pay all of their rent, they don’t pay anything at all—hoping the problem will just go away—but that strategy of avoidance just compounds their troubles, hurts their credit rating and adds to their stress level. Landlords today understand what’s going on. They don’t want an empty home any more than a renter wants to be asked to leave.”
The National Association of Independent Landlords polled members from Oct. 7 to Oct. 10, 2009. For this informal online survey, 496 landlords, almost all residential, across the country responded. About The National Association of Independent Landlords The National Association of Independent Landlords is the country’s largest provider of services for small landlords. Services include credit reports, electronic rent collection and tenant screening as well as information about property management, rental laws in all 50 states and other issues critical to property owners.
For further information, please visit www.landlordassociation.com.
There seems to be a dearth of trustworthy property investment companies at the moment. Our email inbox has been inundated with spam recently as property investment companies go belly up and sell their mailing lists to the highest bidder. This seems particularly prevalent amongst the Dubai based companies where the level of desperation is high.
If I have seen a headline stating that a recovery is under way or that prices are about to skyrocket once, I have seen it a thousand times. This is not going to happen and in the unlikely event that a bubble does start forming again, the government Inc will step on it – and hard. They have not finished paying our way out of the last one yet, and the Hong Kong government acted pretty swiftly this week to increased the deposit needed on a luxury property from 30 to 40% after a high ranking Chinese government official paid the highest price ever for an apartment in Asia, causing concern that another bubble was forming. One swallow does not a summer make, but this was pretty aggressive on the part of the authorities.
Still the issue remains of finding a trustworthy property investment company. With the banks in Spain, the USA and a number of other countries holding vast – and I do mean vast – stocks of properties, this is not going to be an issue easily overcome. We recommend taking a good hard look at the fundamentals before making any sort of investment based on a real estate agent’s advice right now.
There are too many property investment companies prepared to white wash the truth for comfort and it will probably take another year or two to weed these bad apples out.
C5 Advisors announced the closing of the first proprietary C5 Asset Recovery Company (”ARC5(TM)”) for an $800 million commercial bank client which had no options for public sector assistance. This particular bank client will realize significant benefits not available in the current market via the private or public sector and expects to close additional follow-up ARCs over the next 6 months. C5 is currently structuring ARCs for 12 other banks nationwide (ranging in size from $20-300+ million per ARC5(TM)).
According to Gary Saykaly, President, “C5 invested time, capital, resources and worked with a team of extremely creative advisors to create a unique proprietary private sector solution (ARC5(TM)) that provides banks with a structure that best addresses their current issues (capital access & “toxic” or troubled real estate loan / OREO exposure) and creates a 100% bridge between investment capital and banking requirements. The current options, public and private sector, for community and regional banks are limited and are not providing optimal long term solutions and also do not fully bridge the market bid/ask spread.
Bill Buchalter, CEO of C5, states “the ARC5(TM) is not a liquidation vehicle but instead provides a long term investment for a bank in a new real estate operating company equipped with capital, expertise, and the luxury of time, to significantly maximize the value of a bank’s troubled real estate holdings. Each Bank’s ARC5(TM) requires precision construction to structure around key factors: Accounting, Economics, Capital, Regulatory, and Management & Control.”
- The C5 ARC5(TM) provides very unique accounting, economic and execution benefits to a bank that are not currently available:
- The ARC5(TM) allows C5 to operate the assets over a much longer time horizon than a bank can, thereby maximizing the value of those assets, resulting in larger cash distributions to the bank.
- The ARC5(TM) system would enable a bank to account for the investment in the venture using an accounting methodology that is appropriate for a long term investment.
- The bank would no longer consolidate the assets/loans and thereby receive an immediate tourniquet effect for future asset impairments, providing the balance sheet stability to attract the interest of new capital.
- Immediate capital (pre-funded by the manager) for the ongoing operations and business plan execution, eliminating the need by the bank to provide any additional future capital.
- Puts the troubled assets in the hands of an interdisciplinary team of experienced real estate professionals with the required expertise and resources to maximize the value for each asset, allowing the bank to go back to the business of banking.
- Banks can contribute all or a portion of their performing/sub & non-performing loans and OREO assets for both residential (land, lots, subdivisions, vertical homes) and/or any type of commercial project or land.
According to Saykaly, “given the specific mechanics and structure of each ARC5(TM), investment capital is provided very unique benefits: attractive risk adjusted returns, flexible investment structures, 80-95% synthetic leverage, principal preservation, access to a significant amount of off-market bank owned real estate loans/assets, and proven execution expertise.
The Western Australian government is so worried about the impact of the next boom on the state’s property prices that they are running an emergency meeting including State government officials and developers to consider how the state is going to avoid a repeat of the last property price bubble in Western Australia.
Between 2004 and 2006, at the height of the last boom, the average price for a home in Perth jumped $200,000 to $460,000 – immediately making Perth one of the most expensive capital cities in Australia for home buyers.
Now on the back of China and India’s ongoing demands for Western Australia’s minerals, not to mention the enormous LNG project at Gorgon, in the state’s NorthWest, predictions are that WA will need another 38,000 workers by 2012.
To be honest I seriously doubt the state’s ability to manage this size boom any better than it did the last one. After all this is an incumbent government which can’t even legislate to allow late-night shopping never mind Sunday trading! It would indeed be logical, and indeed strategic – given the population pressures in over-crowded Indonesia just to the north, for Western Australia to actually spend some serious money and effort and develop the huge state north of the 66th parallel. At the moment it looks like again that most workers will fly-in, fly-out from Perth to dormitory resorts in the north. Perth may expand from its current population of 1.5 million to over 4 million by 2020. Meanwhile the largest town north of Perth – Geraldton is only 30,000. In the far north Broome is by the largest town – with a population of 10,000.
Thousands of miles of undeveloped coastal property, Exmouth, WA
Due to the lack of infrastructure in remote towns, it is impossible to buy a family home for less than $775,000 in Karatha. Land is relatively cheap – but to build a standard home costs around $600,000 in the Pilbara, twice the price of building the same home in Perth. Those at the bottom of the ladder – though often earning $200,000 a year – live in a caravan park – because that is all that’s available – at the price is still over $300 a week (for the site not the van – BYO!)
Yet these towns have climates which make Florida and southern Spain look down-right second rate. Set in the tropics air conditioning is essential, but the benefits include year round swimming and a only a short wet season which extends for around 3 months. Damage causing hurricanes are rare and don’t occur each year.
To get families to move there full-time, and for those who have enjoyed the high-wages from the mining industry to retire there, the government would have to take some radical decisions and make a serious effort into reducing transport costs, freeing up land for workers, developing appropriately priced single person’s quarters, and developing community and educational opportunities in the region. At least the shops in the Pilbara are allowed to open on Sundays …
The new Prime Minister of Greece, Georges Papandreou, made a powerful statement of intent when he announced that the Greek government would be seeking to push through its first green property development in Greece. Whilst visiting the Ilia prefecture, home of the site of Ancient Olympia and a region devastated by fires two years ago, the PM announced a scheme to completely redevelop the area and make it into a showpiece for sustainable development.
In one of his speeches before the election, Papandreou stated,
“PASOK’s green development strategy is based on three central policy pillars: environmental protection and urban planning, energy, and transport. In order to promote sustainable development and eco-friendly businesses, we have designed a series of policies that include: subsidies and tax breaks for companies investing in environmental technology or renewable energy, shifting the tax burden to operations and products that are harmful to the environment, introducing sustainable construction standards for all public works, and improving the energy efficiency of all public buildings.”
The Olympia Development
This plan for a green community is the first tenuous sign that there may be some substance behind the promises, a potential break from the status. The new leader of Greece showed that this scheme was more than mere bluster when he announced that he had employed, Josep Anton Acebillo, the architect responsible for the redevelopment of Barcelona for the 1992 Olympics, as a consultant.
The redevelopment of the Olympia region will include residential areas, green space and amenities. Also planned is the establishment of various sports facilities, tapping into the history and fame of this corner of Greece. Alongside residential areas, the birthplace of the Olympics will contain sports schools and various foundations to promote peace through sport. Certainly, the idea of promoting ‘sports tourism’ is intriguing and offers some potential for generating income and regrowth.
Economic Recovery and Green Property Development in Greece
This plan has been heralded as a flagship reform, aimed to show investors that Greece is serious about environmental reforms and plans to cut much of the bureaucracy and red-tape currently holding up many sustainable developments. Greece has a vast and underexploited potential for using solar and wind energy, and Greeks are already ahead of the game in installing solar water heating. Laws have already been submitted to parliament and the new Environment and Energy Minister, Dina Birbilli, is hoping for a quick resolution.
Olympia - Future Showcase for Green Property Development in Greece
The new administration hopes that this will stimulate economic growth and set Greece on the way to becoming as important as Denmark in the field of generating green energy. For green property investors with vast sums of money tied up in a tangle of Greek bureaucracy, this could be the best news for many years. For the beleaguered Greek construction industry, Green property investments in Greece could be the lifeline needed after the recent economic crisis.
As with all governmental directives, this one has yet to pass beyond the promise stage, but Green property development in Greece is certainly high on the agenda. The government hopes that this will kick-start the struggling Greek economy, although Papandreou has not yet made any indication of where the money will come from.
Most property developers will be hoping that there is substance behind these promises, because success means that the economy improves and property prices will rise. There is certainly nothing inherently wrong with the idea, only that Greek governments have a terrible tendency to mess things up. Whilst most people only voted PASOK into power through default, nobody seriously wants the government to fail and Papandreou will be given time to prove his intentions. However, he cannot afford to get this one wrong, as the electorate and media will not be merciful.
With the end of Cityscape Dubai, Nakheel is planning on another 500 job losses according to “The Independent,” newspaper.
Nakheel, the state-owned Dubai property group that was responsible for the iconic Palm Jumeirah artificial island, is set to make as many as 500 redundancies now that the Emirate’s “Cityscape Dubai 2009″ show is over. Announcements are expected in the next few days, a consequence of fallout from the global financial crisis. Dubai property values have fallen 50 per cent in a year. The company said last night: “Nakheel continues to evaluate its projects and commitments against market conditions and opportunities. In doing so, the company also evaluates its cost base and efficiencies.” Ratings agency Standard & Poor’s said Dubai needs to raise another $10bn (£6.3bn) for its economic support fund, to prop up government-related companies. The independent.
Cityscape was a shadow of it’s former self, with attendances down more than 50% and no new projects announced. A number of key developers pulled out just before the event.
It’s a far cry from last year’s event when men dressed as Zulu warriors alternately danced and lounged next to a sprawling scale model of AmaZulu World, a development slated for South Africa, by Ruwaad, a U.A.E.-based company. During the boom times, some developers spent up to $3 million on exhibition models, entertainers and glamorous promotion girls, according to Donald Trump Junior, executive vice president of the Trump Organization. Wall St journal
At least 25% of all homes and commercial property in Dubai is sitting empty, with substantial inventory still in the pipepline.
One in four homes is vacant in Dubai and a quarter of office space lays empty due to oversupply and additional supply coming onto the market will continue to put pressure on prices, Colliers International said on Wednesday. The property services firm said in a report the emirate will have 340,000 residential units by the end of the year, with and another 34,300 expected to come online in the next two years. Maktoob
All in all, things are not looking well for Dubai, and one has to question where the Emirate is now headed. I suspect that there will be a limited recovery in a very small sector, while a large proportion of the so-called “luxury homes,” will end up as public housing projects.
Tourist arrivals continue to fall on the popular holiday island of Lanzarote. Making unpleasant reading for the many overseas owners of Lanzarote holiday villas and apartments as they struggle with declining occupancy levels and falling rental returns.
According to the latest figures just released by the Spanish airport authority AENA the number of visitors arriving on flights to Lanzarote fell again last month by 16.2%, versus September 2008. With overall arrivals for the year to September end now down by 17.84%.
The UK market – Lanzarote´s largest – remains the worst affected. Thanks to the combined impact of the credit crunch and the depreciation of sterling against the euro. Currently standing at just €1.05 to the pound. Factors which have colluded to create a sharp drop in the number of British arrivals of nearly 20% for the year to date. Whilst other key markets such as Germany and Eire are faring little better. With arrivals down by 12.2% and 16.85% across the same period respectively.
Traditionally the UK has been a key engine of growth in the Lanzarote property market. With thousands of British investors snapping up apartments and villas for retirement and relocation purposes or to rent out to fellow holidaymakers. Lured by the promise of year round rental returns and a hitherto reliable and sizeable tourist industry – which last year alone welcomed over 1.5 million foreign visitors.
Now however transactions have fallen away sharply – compounded by the reluctance of local banks to lend to overseas buyers. Creating price falls across the island and a glut of property for sale on the market. But with very few buyers around to take advantage.
The impact of this shortfall in visitor numbers on Lanzarote´s economy cannot be underestimated. Island tourist authorities recently reported that each tourist spends an average of €36 per day whilst on holiday in Lanzarote. Which when multiplied by a drop of over 215,000 visitors for the year to date represents a €54 million plus hole.
Hoteliers and apartment complexes are hurting just as much as overseas property owners and estate agents. With ASOLAN, the island’s trade body reporting a fall in occupancy levels in Lanzarote hotels of 6.55% last month. A vast improvement on the shocking figures recorded in May – when the number of beds filled fell as low as 49%, the lowest figures ever recorded in forty years of island tourism. But still some way below last years monthly averages of 72% plus.
I am slowly coming to the conclusion that the governments and news media think all potential readers are morons. According to this ridiculous press release disguised as journalism, Emirates Business says:
Property owners in Dubai have been increasing the asking price for their properties in the past two months and some areas have witnessed appreciation of 20 to 30 per cent in the past few weeks.
Heightened end-user interest has seen prices in some areas of Dubai at their highest since they bottomed out earlier this year. Prices in the Burj Dubai area, Dubai Marina and The Greens have been edging up on a weekly basis.
“The number of enquiries has certainly gone up, with a lot more people viewing ready properties now,” the managing director of a Dubai-based real estate agency told Emirates Business.
“There is an improvement from mere phone enquiries to actual apartment visits,” he said. This, perhaps, has acted as a catalyst to boost owner confidence that has led to higher asking prices.
The panic at the end of 2008 and early 2009 seems to have subsided even though the number of transactions are still low. A growing number of buyers now believe the property market has bottomed out. Rising prices have caught off-guard potential buyers who were waiting for further price declines.
“Cash buyers are being preferred by sellers to offload their properties,” said the head of the real estate agency. Cash buyers are, therefore, in a position to seek lower than market prices, especially for properties not listed with banks and mortgage providers.
However, while the increases have happened across most areas, there is a wide – and growing – gap in prices. Proximity to a Dubai Metro station, the quality of finish, and service charges top the list of buyers’ priorities.
At the same time, certain developments and buildings remain underpriced in relation to their neighbours due to lack of financing.
Moreover, properties that are due for delivery in the next couple of months – in Executive Towers, for instance – are also witnessing heightened activity. Buyers who cannot afford the 30 to 70 per cent final developer payment – that becomes due when a building is delivered – are desperately seeking to offload their assets at lower-than-market prices. Emirates 24/7
The opening paragraph is a joke, and clearly contradicted in both the later statements and other articles published around the same time. Nothing is selling in Dubai; contractors are going unpaid, real estate agents are going unpaid for property they sold earlier in the year or last year, and Emirates Business would have us believe that “property prices rise 30%”? I would not consider an investment property in Dubai for at least two years. It will take them that long to finish building the ones in the pipeline. And as for this press release – just remember – your government thinks you are stupid and it all makes sense. The only way they could possibly get away with garbage like this is if the banks were lending 125% of the value; no deposit; no paperwork. Guess what? – investment property loans are as plentiful as hen’s teeth currently.
At the time of writing the Australian dollar is worth around US$0.92 – up from US$0.67 in less than eight months. That is one huge appreciation and anyone who is exposed to the currency risk will certainly have noticed it. The rise of the Australian dollar is most spectacular against the US$ but its also up against almost every other currency from pounds to Euro to the New Zealand dollar. So what does the Australian dollars rise have to do with the Australian property investor? Plenty – even if you don’t think you are exposed to currency risk – you should understand what drives currencies and their close cousins: interest rates.
To a lay person it really seems that the Australian dollar is riding high because of two main things: one the confidence that Australia will avoid a recession due to China buying everything we can dig out of the ground. The second reason is that because of the rebounding economy the Reserve Bank has raised interest rates and will probably continue to do so. Both factors means that foreign investors like the rates their cash can get in A$ and they have confidence in the Australian economy.
This means – if you are investing in Australian real estate using income or assets from overseas you are paying quite a lot more than you would have a few months ago. So how do you manage the currency risk if that is your situation?
Good Times in Australia sees the A$ hit new highs
Well hindsight is 20/20 – but I would have been buying Australian dollars as the dollar hit all time lows, earlier this year, if I was planning on buying real estate in Australia anytime soon. For those Australian who work overseas and earn in another currency – this is a low risk game worth playing. Low risk – because eventually you will spend the money in Australia at some time – so its not like traditional Forex trading. Just like averaging interest rates – in my view the easiest way to reduce your currency risk is to transfer the same amount of money back to Australia regardless of the rate of the day – some times you’ll lose, other months you will gain – but on average you reduce your risk substantially.
If you had been doing this for the last six months – you would have bought some cheap Ozzie dollars – and be enjoying some of the developed world’s highest interest rates.
If rather than an income I had a lump sum to transfer to Australia I would probably delay buying by at least six months. I would bring a 1/6th of my lump sum into A$ over each of the next six months. At worst I will be getting a good deposit rate – but with some luck the dollar will drop against your lump sum’s currency over that period and you win a little, without having to place an all or nothing bet of either transferring now or later. Any major bank should only be charging you around $25 per an international transfer so the bank fees are trivial for any significant sum.
