China may not be top of everyone’s list as a property investment destination, and after seeing these two apartment buildings lean so far towards each other that they are now touching, I will certainly be a little more cautious as should anyone considering property investing in China.
The 2 buildings concerned are in “Xiao-Yuan Chun-Tian, a community in Chengdu city. After 5 months, property owners are still fighting for their legal rights. It continues to be an uphill battle. In March, commercial community, De Xin Yuan started construction at 3 buildings near Xiao Yuan community. After a few months, roads in Xiao Yuan community began showing cracks. De Xin Yuan’s developer acknowledged their construction was responsible for the cracks.
Zhang Lun, Shufu Property Developer GM said, “Construction of a foundation and continued heavy rains, caused cracks in the enclosing wall, roads and flower bed in neighboring community. We are partly responsible for it.”
2 apartment buildings leaning together
Damage increased in mid July, when two days of torrential rains caused walls in some apartments to crack. After discussions between the owner’s delegation and the property developer, the developer agreed to halt further construction until the negotiations concluded. The developer re-filled a foundation to ensure safety of the buildings.
Zhang Lun said, “The design of these two buildings looks like an upside down V. The two buildings are almost touching each other.”
Apartment owner Fan Xiwen said, “It’s impossible. If the two buildings were connected, all of the owners could not seal their balconies. It’s common sense. And if the roads have cracks, no one would buy apartments in this community.”
The developer and property owners have not reached an agreement. The developer provided a choice between three safety appraising departments. But the appraisal left owners disappointed.
Deng Zhengyu from China Southwest CEO-technical Investment Inst.,said, “The Xiao Yuan community is located in a soil swelling zone. The developer should have used drainage equipment during construction. But inclinations of the two buildings are up to national regulation standards. The Xiao Yuan community meets safety standards.”
Authorities believe the inclinations of the buildings and road are normal. National regulation states that the inclination of a building can not exceed 0.4 percent. But the inclination of the two buildings is 0.2 percent.
Apartment owner Fan Xiwen said, “They think so far there is no danger. If the building shows cracks, the only thing you can do is repair it. We can’t accept that.”
Facing questions from property owners, government departments can do nothing.
Bu Xuedong of Chengdu Construction Commission said, “The government’s only function is supervision. And there are no regulations saying government departments should check the appraisal.”
Collapsed buildings in Shanghai and slanting buildings in Chengdu, has caused property owners to worry about quality and safety. Not to put too fine a point on it, Chinese building quality standards are almost nonexistent, and neither the government, nor the developers are interested in dealing with the problem. There have been a number of complaints recently, and owners have sought media attention and lawsuits have been bought – all have lost as the legal system is controlled by one of the defendants – the government inc.
Thinking of investing in property in the UAE? The latest news from the region does not bode well – at least in the short term. Emirates business did a survey of real estate agents in the United Arab Emirates and discovered the consensus was “losses running into high double-digits,” for most agents. I am not quite sure what “losses in high double digits,” actually means, but it does not sound very good to me. Lost 99 dirhams?
They then go on to explain that what they means “drops in sales transactions of more than 9%.”
Upon further clarification, this turns out to mean – drops of transaction numbers in the order of 50% minimum and loss of earnings of around 60-80%. Some of the hardest hit agents and brokers have seen falls of 70% in transaction volumes, and the usually up-beat MD of Indiana Real Estate, Rajesh Kumar Krishna, admitted to a drop in commisions of over 80%.
Clearly this is unsustainable and I would expect to see a lot more agents go under in the UAE later this year and through 2010. The artificial strangling of supply by allowing developers and banks to hold massive stocks is not working in the US, Europe or anywhere else. Investors have been leaving in droves and the property investment scene looks radically different to 18 months ago. So many got caught with their pants down, the speculators have completely left the market. Prices have already fallen around 50% from peak, and I would expect them to fall considerably further before the UAE became an attractive property investment destination again.
Rents are falling, occupancy is falling, the inventory of unsold housing is substantial – and growing and the amount of people attempting to sell investment properties is quite substantial – just judging from the desperate tone of the badly written spam in my email inbox. Every one is selling and no one is buying. We all know where that ends up.
Voit Real Estate Services’ Asset Services division, the full-service distressed asset management arm of Voit, has negotiated the sale of senior debt positions between banks and investors collateralized by three properties in Southern California. The individual considerations for each of these transactions were for undisclosed amounts between $4 million and $8 million.
“More and more non-performing commercial and residential property loans are being sold by lenders to avoid the foreclosure process and avoiding liabilities associated with ownership on chain of title,” explained John Strockis, Executive Managing Director of Asset Services for Voit Real Estate Services. “Consequently, both banks and investors are looking to asset management specialists, such as Voit Real Estate Services, to put together a plan to handle these properties and determine the best financial outcome.”
“By working closely with both the buyers and the sellers in each of these transactions, we were able to ensure the quick sale of these assets at fair prices,” explained Kendrick Askew of Voit Real Estate Services’ Brokerage division’s San Diego office, who represented the buyer in all of these transactions. “Each transaction was completed swiftly and efficiently and involved discounting the loan on the asset from the original loan balance to incentivize the buyer to acquire the loan quickly.”
Voit Real Estate Services provides single-point service for properties and portfolios, including asset services, brokerage, construction management, development, property management, strategic planning and financial modeling, entitlement work, financial reporting, and development of exit strategies.
Transaction #1:
An undisclosed bank has sold a loan collateralized by a partially constructed residential condo project comprised of 41 units in Rancho Cucamonga, Calif. for an undisclosed price.
The buyer intends to foreclose the property on the borrower and take title to the property, in order to complete the construction of the project, lease out the project and stabilize it as an income producing apartment building.
The seller financed the loan purchase, which enabled the buyer to leverage its equity in order to obtain a higher price on the property. The financing used to buy the loan will transform into the first deed of trust upon the successful foreclosure of the property.
Askew and Tony O’Neill, also of Voit Real Estate Services’ Brokerage division’s San Diego office, represented the buyer, an investment and development company based in Southern California. The bank represented itself in the transaction.
Transaction #2:
An undisclosed bank has sold a loan collateralized by approximately 35,000 square feet of land in Downtown Los Angeles for an undisclosed price.
The buyer intends to eventually redevelop the project, which is currently being operated as a parking lot.
The seller financed the loan purchase, which enabled the buyer to leverage its equity in order to obtain a higher price on the property. The financing used to buy the loan will transform into the first deed of trust upon the successful foreclosure of the property.
Askew, along with O’Neill and Michael Christopher, also of Voit Real Estate Services’ Brokerage division’s San Diego office, represented the buyer, a commercial real estate investment company based in Los Angeles. The bank represented itself in the transaction.
Transaction #3:
An undisclosed bank has sold a loan collateralized by 35 single-family homes in Fontana, Calif. for an undisclosed price.
The buyer did not obtain any financing for this transaction and paid entirely in cash.
Askew and O’Neill of Voit Real Estate Services’ Brokerage division’s San Diego office represented the buyer, a privately funded partnership based in San Diego, Calif. The bank represented itself in the transaction.
Voit Real Estate Services is one of the largest privately owned, debt-free commercial real estate services firms serving both institutional and private clients in the Western United States. With offices in California, Nevada and Arizona, Voit Real Estates Services can scale asset management, property management, market research, property leasing and sales, financial underwriting, construction and development services to its clients’ individual needs in any market. The firm’s nearly four decades of real estate ownership experience, combined with its asset management platform, provides clients with strategic alternatives, which allow owners of distressed real estate assets to maximize proceeds while minimizing risk.
Voit Real Estate Services was founded in 1971 by Robert D. Voit, who continues to lead the firm. Known for its personal, nimble and responsive service culture, Voit Real Estate Services has developed, acquired or managed more than 40 million square feet of commercial real estate and transacted sales and leases valued in excess of $25 billion. Additional company information is available at www.voitco.com.
Real estate sales in Jordan plummet; Qatar house rents have fallen 35%; Dubai prices fall 17%; Hawaii’s luxury condo market hit by swine flu fears and recession; Hugh Hefner needs to sell a house as financial problems increase.
If anyone was thinking of believing the twisted statistics being pumped out by the governments and newspapers, this is a representative selection of headlines that might persuade you that perhaps, just perhaps, the problems are not all over in the housing markets.
Jordan – Land sales during the first half of this year declined by over 50 per cent to stand at 30,403 transactions, compared with 65,385 in the same period of 2008. According to Department of Lands and Survey (DLS) figures, sales of residential apartments also dropped by 28 per cent, with 8,006 units sold in the first six months of 2009 compared with 11,190 apartments sold in the same period of last year. Jordan Times
Qatar - Thanks to slackening demand and oversupply of residential units, house rents have come down by between 30 and 35 percent, say real estate agents. The demand for housing is usually low during the lean summer months but picks up subsequently. This year, though, property market operators say they do not expect any major improvements after the long summer break. The Peninsula
Dubai – Owner behavior is preventing the leasing market from reaching a price floor, but they are just delaying the inevitable, indicates Landmark Advisory’s Q309 Dubai and Abu Dhabi Real Estate Report. In an oversupplied market like Dubai, price floors are consumer driven. Jesse Downs, Landmark Advisory’s Director of Research and Advisory Services, said “landlords are opting out of the market because of lower rents creating a temporary respite in the price correction process. This short term decline in supply is a market distortion, which will end. Real prices will be determined by what Dubai residents are willing to pay.” investing in real estate in Dubai
Hawaii – The Hawaii luxury condo market is taking a beating along with the rest of the luxury real estate markets, with rising foreclosures, but this is causing issues for those in good financial standing as well as those foreclosed upon. The amount of foreclosures is meaning that, in some cases, as many as 20% of the units in some developments are delinquent in paying maintenance fees to the homeowner’s association or condo boards. Hawaii luxury condos
Playboy – It’s not easy being a world-famous playboy in the Great Recession. Just ask Hugh Hefner, the 83-year-old founder of Playboy magazine – which made its name in the fifties by publishing the short stories of Ian Fleming and Vladimir Nabokov in between glossy pictorials of lightly dressed and generously proportioned young women. With Mr Hefner’s Playboy Enterprises media empire facing mounting losses and plunging revenues, the ageing publisher sold his ’English Manor’ in Los Angeles over the weekend for $18 million — a full $10 million less than the asking price. Government press release farm doomed to extinction
According to the Telegraph, the house price correction in the UK is now over, so everyone can relax. They reference a report by the Centre for Economics and Business research which apparently states, house prices will actually “grow,” between the fourth quarter of 2009 and end-2010 and that, “there is a good chance that they will rise even more quickly, thanks to the unprecedented collapse in new homebuilding.”
Quite how they come to this conclusion is beyond me and there are of course, no actual figures to back any such claim. We are all aware that median house prices in the UK are rising slightly as the amount of sales falls dramatically, but to suggest (once again) that all is now well and house prices are rising just demonstrates the desperation amongst the traditional media purveyors.
Having been reading similar stories and headlines for the last two years, any one who takes this as a sign to jump into the market as an investment needs their head examined. Several issues are still to be overcome before any house price recovery can possibly occur. Mortgage financing is still difficult to come by, unemployment is on the rise, and lest we forget, average house prices in Great Britain are still around six times average salaries. This ratio is nowhere near sustainable unless Northern Rock is prepared to start offering no deposit, 125% loans again. Which seems unlikely as their current default rate is going through the roof. The low interest rate may be making people stay put, but this cannot continue indefinitely. Bide your time, offer low and have cash available – there will be plenty of bargains around over the next 18 months.
With US real estate prices still on the way down, most would-be real estate investors are facing issues if they need to refinance a mortgage on a property they were renting out. The mortgage resets are not exclusive to residential buyers and a lot of investors are facing problems also. Refinancing a mortgage is the big issue currently, because, whatever mis-information might be being spread around by the banks and governments, credit markets remain tight.
The home equity loan rates bear no relation to the silly low interest rate the fed is charging, and Bank of America are charging one of the highest rates around – if your credit is good. Those needing to refinance with bad credit can forget about it at the moment.Where this madness will end is anybody’s guess, but the big four banks are now the biggest real estate owners in the US. They are under pressure not to release their stocks of foreclosed houses to prevent the real estate market from correcting properly. Supply and demand? Forgetaboutit too. If the bank foreclosures hit the market, supply would outweigh demand to such an extent that prices would be so low that any American would be able to afford their own home. Wait a minute, wasn’t there a dream about that?…………
Yes, the great manipulation continues unabated. The massive amount of properties being held by the banks is the only thing preventing prices from correcting, yet still they are falling. This makes the decision to get into property investing rather tricky at the moment, because it seems the market correction is merely being slowed and dragged out. So when to get back in? I have seen deals in Florida where bulk lots of condos have sold for less than 6% of peak prices. And these are completed projects, not part built. The logical best place to look for a real estate investment in the US is the bank owned properties, but they are hanging on in there using Uncle Sam’s money to keep prices up.
The Directorate of Real Estate in Lebanon has released a report which was published by Bank Audi Weekly Monitor this week. The report states that the total value of property sales in Lebanon in the first half of 2009 was at L£3.7033 trillion (Dh90.59 billion), down by 5.2% from the same period 2008.
The decline in the value of property transactions along with a smaller drop in the number of transactions has naturally led to a fall in the average value-per-property sale, which was at L£109.5 million in the first half, down by 2% . The total number of property sales transactions declined by a 10.6% year-on-year in June with number of property transactions falling 3.3% in the first half to 33,830, according to the report and the amount of foreign investors declined by some 50%. All things considered, this is not a terrible result compared to the rest of the region. Dubai property volumes continue declining, and 2009 is looking to be worse than the last quarter or 2008.
Moscow real estate prices continued a seemingly inexorable decline in July, breaking through the psychologically important level of $4,000 per square meter last week and continuing to sink lower, according to data compiled by a leading analytical company.
The average price of Moscow real estate on Monday was $3,930 per square meter, according to research portal IRN.ru. Last week, the average price was $3,957 per square meter, lower than the support level of $4,000 per square meter set two years ago.
The decline continues a negative long-term trend for real estate prices, which have crept lower week by week after hitting a high of $6,122 per square meter last October, when the property market first began feeling the effects of the economic slowdown.
Although part of the price drop was because of the ruble rising against the dollar, the overall downtrend is because of cash-poor consumers and a dried-up mortgage market, said IRN.ru head Oleg Repchenko.
Less-expensive properties led the decline, with more expensive offers following suit after holding steady during the first few months of the year.
The level of $4,000 per square meter is important as a symbolic barrier because that is where prices halted their decline during a brief correction in 2007, Repchenko said.
Some market players said an accurate picture of the city’s real estate prices cannot be given without including the elite segment, which the study omitted.
“We work in this segment, so we think it is necessary to take into account offers for elite real estate,” said Valery Barninets, head of Doki realty.
According to data compiled by Doki, economy-class offers start at as low as $3,800, business-class offers at about $6,000 and elite offers start at $12,000, Barninets said.
Using Doki’s statistics, the average price for a square meter of Moscow real estate, including elite properties, would be $7,266.
Repchenko, however, was quick to defend his methodology, saying elite realty would skew the results.
“It would be like using oligarchs in a study on average incomes in Moscow,” Repchenko said.
“Our analysts take into account the cost of ‘real deals’ in order to get a clear view of the situation.”
Repchenko said it was unclear which way the market would move in the short term.
While he did not expect any dramatic price swings during the remainder of the summer, any change in the macroeconomic picture in September or October would quickly be reflected in property prices, he said. Moscow Times
A similar story is playing out around the world, and despite a slew of positive spin press releases, prices for real estate in the US have now dropped to 2003 levels, property prices in France continue to decline, and British property prices have stabilised slightly, (o.1% increase in June) due to a complete abscence of sales.
Worldwide economic downturn brings with it the expectation of mergers and acquisitions, unpredictable pricing in the realms of the sales and rent markets and cautious lending, in a bid to reach a (supposedly) smooth road to market and economic recovery.
Dubai is no exception.
To stimulate lending in Dubai, two major property management and property development companies have been granted by the government the right to merge which will bestow upon them a shared 70% control of the country’s mortgage market and boost the Dubai real estate sector.
Lending is still held on tight reigns in the mortgage market, whilst recovery of the property market will continue to be bound by the high rates that have been imposed (standing at 7.5% – 9%). The regulatory authorities, meanwhile, have recently intervened, formulating laws which protect property developers and shareholders under the threat of defaults and a moreover menacing, huge financial loss.
Not surprisingly, key feats within real estate strategising include scraping the barrel somewhat. A trickle of houses for sale it has been noted are put forward for auctioning by some real estate firms, whilst, although the situation is not as dire as it was in this year’s first quarter, property valuation is still dropping in some areas for the time being.
Despite the current climate, supposing that the recently identified recovery of local stock markets remains constant, and that the economic situation does not take a further turn for the worst, there is promise of recovery as far as property valuation is concerned.
Moving away from property sales, the prices of apartments for rent in Dubai have lowered as job losses have increased. This is a state which will oscillate in response to external factors such as the possibility of job creation, the employment and mobility of residents belonging to nearby cities (in response to more affordable accommodation prices), and the capital markets – all of which appear to be mutually vulnerable.
Intervention from the Dubai real estate regulatory authorities and government are crucial to ensuring the country, and in particular the property market, continues to prosper and rank highly with other key cities worldwide; widespread are plans for fiscal aid and for the protection of local markets to ensure rates of inflation return to an upward trend at some point in the next year.
According to research carried out by Hamptons International, residential estate agents specialising in UK and International sales, lettings and rental management.
