2011 Menu

12 September, 2011 No Comments

It is quite difficult to give advise but it is even harder to predict.

The fact that 2010 was characterized by the wisdom with which real estate investors operated, lead us to think that 2011 could go the same way, especially in the residential sector (heavily influenced by the lack of financing for properties that were not within the bank´s portfolio).

The engine for non-residential real estate transactions during 2011 could be malls and store space, surpassing demand for office space (mainly due to the decrease in rental income and to the turnover of some portfolio´s investors).

Due to the lack of financing many companies cannot continue to develop their regular activity, and their investment side has had to put their Real Estate assets for sale, in many cases through the common “Sale & Leaseback” method, at very attractive prices for external investors.

It is interesting to see that a crisis can also be a source of opportunities. It is especially at the end of it when one can make the best investments…. but the big question is: are we close to the end? To answer this you must pay attention to the moves investors are making.

If we take a look to the moves Amancio Ortega (Zara) is doing, we see that he is closing its SICAVs (variable income Investment Companies) to spend his money on real estate. With this money, the Ortega Family Office “Pontegadea” negotiates the purchase of buildings of financial institutions such as BBVA. This bank previously sold them to real estate fund REEF (owned by Deutsche Bank), in which BBVA went from owner to tenant. Later on, REEF started to sell these assets and, Ortega as well as many other investors, have been taking advantage of the liquidity needs financial institutions are facing, by acquiring quality properties at a discount. Besides the investments Pontegadea was doing in Spain, they are also investing in international destinations such as the US, Mexico, Portugal, France, and Germany. Pontegadea  focuses on commercial and office buildings that have long-term rental contracts, and that are located in the city’s prime location, which is the sector that better withstand the crisis (Expansión, 12/21/10)

Other great fortunes (ie. Isak Andic, owner of fashion brand Mango, who recently bought a building in Paseo de Gracia, 36) are investing in real estate. This type of investors are very well advised, and are able to see great business opportunities in the midst of this profound crisis and a broken housing market.

Read the following phrases that Albert Einstein proposed in order to overcome a crisis,

MUSAC, symbiosis of ARCHITECTURE and ART

8 September, 2011 No Comments

MUSAC is the Museum of Contemporary Art of Castilla and León (2005):

Mies Van der Rohe Prize for Contemporary Architecture (European Union 2007).

This museum located in the city of León is the work of two Spanish architects from Madrid, Emilio Tuñón and Luis Moreno Mansilla, awarded with the 2003 Spanish Architecture prize. After three years of development, they have designed this museum as a large surface for culture, with continuous spaces, but very well diversified. The museum consists of a series of linked but autonomous showrooms, able to display exhibitions of different sizes and characteristics at the same time. Each space opens to different rooms and patios in a way that achieve transversal and diagonal views.

It’s a wide building with irregular floors. The facade is composed of large panels of glass of 42 different colors that with changes of sunlight, make the building look as if it had a changing facade. The outside area, is projected as a concave space that also hosts events and activities.  The interior has a great surface of ​​continuous but different spaces that have plenty of rooms, skylights and patios, as an example of symbiosis between architecture and art.

The interior is built with white concrete walls, trying to be a comfortable space for art. The building’s original and current purpose was to make an exhibition of the art of the XXI century, whose collection consisted of 800 works created by national and international contemporary artists.

In addition to the prize mentioned above, the building has been recognized internationally in other occasions such as

* ON-SITE exposition: New Architecture in Spain, hosted by the MOMA in New York, noted as one of the most important architectural projects of Spain.

* Spanish representation in the Venice Architecture Biennale.

SWAP contracts and its problematics

8 September, 2011 No Comments

SWAP: also known as IRS, CLIP, CLIP BONO, SAFE QUOTAS, or COVERAGE OF RATES, adds to the nightmare of owners of mortgages …..

SWAP is a contract external to the mortgage that is sold to prevent any increase in rates. It is a type of insurance that financial institutions (banks, etc) offer to their clients and ensures that they will not pay more in case that mortgage interest rates go up.

Initially, these type of contracts were created to ensure the completion of certain financial transactions with respect to currency fluctuations or inflation in a particular territory.

Interest rate SWAPS began to be offered to individuals who hired financial products such as mortgages early in 2007. Mainly due to the increasing euribor at the time, in which these contracts provided protection to clients with mortgages or loans subject to variable interest rates.
But 2008 was the year in which interest rates started to drop, the financial crisis arrived and the economy stagnated. Customers who had Swaps, had tp keep paying ​​the difference between the initial interest rate and the current interest rate. To this, add that in order to cancel a SWAP clause a customer had to pay a significant sum of money.

SWAPS have been considered high-risk products that are poorly suited to the investor’s profile, who could be individuals and SMEs who are poorly trained in investment products that entail higher complexity. Although these contracts are perfectly legal, the amount of lawsuits filed by customers who manifested that they were not properly informed before and after the signature, what the contract exactly meant, its risks, or the real cost of cancellation. In other words, the client did not know the consequences of a lower Euribor, and what to do to get rid of the contract, and this section especifically was filled with conditions referred to as “draconian”, unclear and unbalanced for the client. In many of the cases the signature was based on good faith and trust placed by the customer on the financial institution.
 

The possibility of whether any financial institution that closed this type of contracts could be held criminally liable, if a complaint was filed, has been widely discussed. It would be based on 2 premises:

1-It is important to provide the client with all the information, as the Securities Exchange Act mandates, in accordance to the instructions of the Bank of Spain. Explain all the risks the product involves.  In this case, the problem was that the risks the client was assuming in case of a decrease in interest rates was not clearly stated.

2 – Lack of clarity and little or no risk information at the time of the contract’s signature, may be considered as the presence of vice in the customer’s consent (art.1266 cc), which therefore nullifies the contract.

After completion, in the ICAB (Barcelona School of Lawyers, ​​magazine Mon Jurídic, No. 252 11.10) of a journey about swap contracts, they came up with the following conclusions:

* The client was signing a contract to request a financial contract in addition to other particular conditions. Both contracts were written by the bank, which leads to an adhesion contract with speculative character, because the contract depends on the evolution of interest rates in order to  assess the amounts to be liquidated, the last depending also in what was specified in the contract. However, the client simply thought he was signing an insurance contract to keep his interest rate fixed.

* The commercialization of a swap to a customer is considered a risky investment product since it can produce, depending on the market, both profits or losses .

 There is no uniformity in the criteria, the amount of complaints, nor the ability to take protective measures, which is of great significance because the determination of the amount influences on the procedure to follow.

If the complaint asks to nullify the contract and asks for the return of the excess sums, take the following into consideration:

1-the amount is considered undetermined based on the request to nullify a contract without an exact amount.

2- the amount to be refunded can be determined at the time of filing the complaint.

3- the financial risk is taken as reference to calculate the amount.

New York Museum of America: Monopoly (game) of gold and diamonds.

8 September, 2011 No Comments

A real estate fiction that holds on to the crisis.

This is a version of the popular board game Monopoly created by the jeweler Sidney Mobell in 1988, ordered by toymaker Hasbro, the company that commercializes the game, and that carries a value of $2 million. This version was not marketed, instead was donated to the Smithsonian’s Museum of Natural History, who then lent it to the New York’s Museum of Finance located on Wall Street for a few months, and became the museum’s newest attraction.

No need to explain the dynamics of this game, which we all know and have enjoyed since its inception

The following pieces of the game are made with gold; the board, the street cards, its chips and the dices. The hotels are decorated with sapphires and the houses with rubies on top of the chimneys. The dots on the dices are diamonds, and the famous streets, which could vary depending on which country or city the game was bought, are decorated with diamonds as well as the path from the prison to the parking lot.

There have been many versions of this game, noting the chocolate one made by Neiman Marcus.

 This game is intended to be a representation of the capitalist world we live in and the attractions of wealth accumulation, promoting competition, and the search for the best positions within the real estate market in different locations, and therefore of our society.

The Associated Press video gives a more detailed picture of the Monopoly as a piece of jewelry . 

http://www.youtube.com/watch?v=EZTICTJpRnE&feature=player_embedded

A peculiar version of the famous Forbes list ranking billionaires around the world, is the “Fiction Forbes List” which has also had some variations in the last few years; Mr. Monopoly, who had amassed great wealth through real estate speculation and was at the top of the list early in the decade, has disappeared after losing his fortune, swept away by the crisis that hit real estate (subprime mortgages) in the United States. Instead, Uncle Scrooge (Donald Duck), invested his fortune in gold (a safe haven during the financial-real estate crisis) that increased his wealth even more scaling up to the top 5 in the Forbes-fiction list.

Some advice when purchasing in the foreign market so that YOU DON´T…

6 September, 2011 No Comments

1 – Overestimate the budget itself:
It is dangerous to rely solely on the income received from renting the property to cover  mortgage payments. One must always have reserve funds.

2 –Sign a contract without the appropriate legal counseling such as an attorney:
It is crucial to have a lawyer check any document that you need to sign. When you purchase a property off the architectural plans, or when you make a trip to the region to check out the promotions, there may be some pressure to sign documents, or make payments. Thus, you must count with an efficient lawyer that is available either by email or fax at any time.

3-Rely on something, unless otherwise specified in the contract:
In most cases the developer selling the property is the one that will be responsible to rent and manage it during the months the owner does not use it, which will be specified in advance. The concepts that should be clearly identified are: the months available for rent, total amount charged for rent, and how will be divided between the owner and the agency. The guarantees for rentals, in particular, are always based on verbal promises, but often are not specified in the contract clauses. Make sure that the contract has no cracks in this matter.

4-Ignore additional costs: 
 In some countries, fees and taxes can add another 15% of the purchase price. It must me added to the total.

5-Ignore the effect of currency fluctuations: 
 The value of Euro € may vary, increasing or decreasing based on the fluctuation with repect to other currencies like the US dollar $.

 6-Ignore the local tax system:
You must be aware of the tax obligations instead of assuming a similar system as in our country.

7 -Use a lawyer who works or has a close relationship with the promoter:
To avoid conflict of interests between the promoter or agent to whom you are buying the property.

8- Purchase with your heart instead of using your head: Most purchases abroad work quite well … …… But it may happen that the property of your dreams becomes a nightmare if you have not done the appropriate market research before deciding to purchase the property.

Homes with cellar

6 September, 2011 No Comments

For people who are wine lovers and enjoy to have it at home, here are some guidelines to follow that will help keep good wine in perfect condition.

- An environment with adequate ventilation to prevent odors.
- Very little presence of light
- Temperature should be between 10 º and 16 º C.
- Moisture MUST be over 60%
- Bottles must be placed horizontally to prevent that wine moistens the cork
- Must be located in a place with no vibrations.

Today, with glass cabinets specially designed to store wine, and in most cases acclimatized to a temperature suitable for its conservation, it becomes less necessary to have the traditional cellar in the house’s basement. This saves space and ensures better preservation of the wine because its temperature is kept constant.

There are many ways to decorate a wine cellar. From the classic cellars made of wood with customized furniture to take advantage of every single corner, or simply by stacking the modules required to store the number of bottles available.

 On the other side we have the modern ones, which include those made of metal, as designed by the Spanish architecture studio A-cero. Check out these pictures…..

TELEFONICA Foundation: OSCAR NIEMEYER’s exposition

6 September, 2011 No Comments

About to turn 104 years old, winner of the Pritzker Architecture’s Prize ’87, and with a stunning resume of architecture works internationally recognized, Oscar Niemeyer remains active.

One of the lines of his artistic thought, reflected throughout his work, is summarized in this sentence:

Is not the right angle that attracts me, nor the straight, hard, inflexible line created by men, instead what attracts me is the free and sensual curve, the curve that I find in my country’s mountains, in the course of its winding rivers, in the sea waves, or in a beautiful woman’s body. The universe is filled with curves, Einstein’s curved universe. – Oscar Niemeyer

 

From his words it is clear that modern architecture should move out of the usual straight lines and put emphasis on curves, making a reference in his works to the structures of nature ….. In order to accomplish it, he explored the possibilities of reinforced concrete to create curved surfaces (innovations favor new creative possibilities).

Another of his lines of thought …. Niemeyer breaks the idea that a form follows the function and proves that when a form is beautiful becomes functional, and therefore, is fundamental to architecture .- Norman Foster

Niemeyer is one of the most prolific architects of the XX^th century, creating imaginative constructions, curves (more complex than the straight line), with color, that were a revolution to the architecture of the time. Besides being an architect, Niemeyer is also a sculptor, an artist, a thinker, a humanist and an innovator, whose modernity astonishes in a conceptual and technical manner…. “The new different way, that surprises, that’s architecture” – O. Niemeyer

The importance of his work in relation to contemporary architecture: Created the most important buildings in Brasilia, a capital that has been declared a Historical and Cultural City of Mankind by the Unesco. It’s a brave architecture, sculptural, with passion for color, and that cannot be compared with anything that has been done before. “When I get a project I try to make it beautiful, different and that generates surprise …” -O. Niemeyer.

Niemeyer was born in Brazil 15.12.1907, and unsatisfied with his country’s existing architecture, he decided to pursue this career shaping his own personality into the architecture that has been doing until now. He has become a universal figure that we associate with Brazilian modernism, but to the question … can Niemeyer be included within the lines of modernism or he would be considered an “outsider”? Despite the answer, he really has a creative freedom in his drawings that leads him to find his own way into modern architecture.

 Cathedral of Brasilia

To understand this architect, let me explain that not only he draws his work, but he also writes it, so that it makes more sense…. Amazing!
His work is far more extensive, but to make it short, let me include a brief summary with his career highlights:

    * In 1952, following the initial ideas of Le Corbusier, Niemeyer collaborated in the building of the United Nations, in New York.
    * In 1956, he worked on the project of building the new capital of Brasilia, where he was responsible for the design of residential, commercial and administrative buildings: Cathedral of Brasilia, Planalto Palace, or Itamaraty Palace….. Brasilia was a city designed, built, and developed in four years, the period of time that President Kubitschek’s was in charge.

    * In 1966, during the military regime in Brazil, he was forced to exile to Paris where he worked on projects for Portugal, Morocco, and Malaysia.
    * In the 80′s Niemeyer went back to Brazil, where he built several corporate headquarters in Brasilia, such as the Memorial JK, The patriotic Pantheon, the Sambadrome of the cities of Rio and Sao Paulo, the Latin America Memorial …
    * From 1991-1996 designed the Contemporary Art Museum in Niteroi (MAC), considered by many his best work.

    * In 2002 the Oscar Niemeyer Museum opened in Curitiba, southern Brazil.

    * In 2007 is invited to design a football stadium due to the football world cup of 2014. 2007 also held the inauguration of The Oscar Niemeyer Popular Theatre in Niteroi, Rio which is a work dedicated to Brazil with green, yellow, blue and white colors.
    * In 2009 The project for Spain: In return for the 1989 Prince of Asturias Award for the Arts, Niemeyer, has given this institution the project for the International Museum of the Prince of Asturias Awards, that will be located in Oviedo, Asturias. It will be known as the Oscar Niemeyer International cultural center.

    * Alive and about to turn 104 years old, is still active and able to perform, makes arrangements of his old works which are considered national or international heritage that can only be modified by him.
Niemeyer integrates his buildings within their natural environment, including vegetation and water, as lakes, part of his work.

This exhibition promoted by Telefónica Foundation in collaboration with the Hispano-Brazilian Cultural Foundation followed by the week of architecture, organized by the Municipality of Madrid, Coam, and Coam architecture foundation, presented a complete overview of the centenary of the Nemeyer’s work.

Home Green Home

5 September, 2011 No Comments

Eco architecture, or a way of architecture that seeks to create a lower environmental impact, would be interlinked with organic, sustainable, bioclimatic, eco-design architecture, etc…

This architecture is based on taking advantage from natural resources, and trying to minimize the impact of buildings on the environment and its inhabitants.

Eco architects seek to reduce energy consumption for heating, cooling, and lighting the building…. covering the demand of these needs with renewable energy sources. Energy efficiency challenges architecture to create useful techniques that reduce the building’s energy consumption needs, fueling energy savings, either by seeking to capture solar energy or by generating their own.

 Environmentally sustainable constructions include economic, social and environmental aspects.

These buildings are built in locations where the environmental impact is minor, focusing on issues related to energy consumption, water, and chemicals used in the construction.

The materials and energy used in these constructions should be renewable. They use green electricity:  photovoltaic energy (solar panels), geothermal (collected from the ground, which is formed by the waste generated by the property itself and that can be used to generate biogas energy to satisfy the needs of the building).

Water: Conservation and integration of rainwater, thus using recycled water to irrigate the garden, etc..

Bioclimatic architecture takes into account the environmental conditions of the area in which the building will be located, thus achieving an interior welfare with little need for a/c or heating systems. In order to do this, the architect takes advantage of the natural sources of light, heat and cold, using techniques such as orientation, insulation of walls, to partially bury the house or placing vegetation on the roof. These techniques are used depending on the type of weather that should be counteracted (very warm or very cold). In fact, bioclimatic architecture has been present in the traditional architecture of countries such as Iceland and other Nordic countries, where you can find houses that have vegetation on their roofs during the long, cold winter periods in order to temper the house. Green roofs improve insulation by reducing the heat and cold that gets onto the roofs, and filter pollution and absorb carbon dioxide from the air.

Zen architects have several proposals for green homes. 

….. to celebrate last Christmas and the incoming year 2011, the main Spanish and European cities were illuminated with “design”.

For several months starting december 4 2010, the Luce Della Exposizione Internazionale di Milano was open to the public. This exhibition aimed to shine the city with light installations from famous designer such as Matteo Thun & Partners or Fabio Novembre, along with projects of young professionals and students from schools of design, who presented their projects at the pre-Led Award Contest, sponsored by the Comune di Milano, Corriere della Sera, H & M, Nespresso, Luce & Design, Ubi Banca, a2a, Audi, Guzzini, Swarovsky, Santa & Cole ….. among others.

The projects were located in the streets (Via Montenapoleone), plazas, fountains, parks, monuments, palaces, which, added to the project of interior lighting that highlights Duomo’s windows that was put together by the studio of Castagna & Pavelli with Philips, formed the circuit of the 2nd LED display 2010.

LEDs, with all its variations (white, colored, OLEDs) provide energy, efficiency, miniaturization, control, automation and other possibilities to illuminate the future in ways that one cannot even imagine.

These pictures are just a short compilation of images from this exhibition with a design created by different color LEDs, with light being THE essence of decoration in different areas of Milan.
Erco is one of the companies that promotes LED lighting, and is in continuous research and development of this lighting system to come up with innovative decorations, with international presence (“Light + Building 2010″ in Frankfurt), and in our country.

FOOTBALL ACADEMY in the new luxury RESORTS

4 September, 2011 No Comments

Football breaks down barriers by creating a language that everyone understands….. David Beckham and Lee Sharpe introduce tourist destinations in Brazil for 2014.

The usual activities most performed in luxury resort are water sports, tennis, and golf. Due to the global impact that football has had, resorts have started to build football academies, because for what we know this country is the land of football and sun.

As shown in the video, David Beckham, Los Angeles Galaxy player since 2008, disclosed his intention to build a soccer school in the beach of Sao Roque, 50 km from Natal, northeast of Brazil. It’s a project which envisages also the construction of a resort with sports facilities including a mini-stadium and eight soccer fields, as well as a golf course. It will be managed by the David Beckham Academy, currently headquartered in Los Angeles. The complex, financed by Norwegian capital, the Brazil Development turisticos Investimentos Ltd., will count with the construction of 8 hotels and luxury apartments as well.. in anticipation to the World Cup of 2014. It will also have a kart track for Formula 1 training, with the collaboration of F1 world champion Rubens Barrichello.

David Beckham introduces Football Academy, World Of Sport Complex in Brazil

watch?v=7eFRVKpOXKY&feature=player_embedded

Another example, ManUnited Lee Sharpe will be in charge to manage the football academy that bears his name, in the White Sands Country Club resort in Natal, in particular, facing the Genipabu beach, located in the Northeast.

The complex and its Lee Sharpe Football Academy, sponsored by Planet Green, will have 244 residences, with plots ranging from 360-515m2, located 15 miles away from Natal International Airport, which it’s expected to reach an investment return of 15 -20% annually.

These examples are further evidence that investing in Brazil today is to benefit from its economic boom. In addition to the economy, add the advantages of this location, because the Northeast part of Brazil is the closest to Europe (roughly a 7 hours flight). By 2012, what will be one of the largest airports in Central and South America, Sao Gonçalo, should be operative with more flights to the area, which will increase the overall area’s value, specially from properties.

The equation is quite simple: World Cup + The Olympics + a growing economy + scarcity of homes = Benefits …… and a tight calendar to become a developed country, which, according to consultancy Ernst & Young, by 2020 Brazil will no longer be the eternal emerging country. During the presentation of the new brand of Banco Santander in Brazil, the result of a merger between Banco Santander and B. Real (Brazilian) in Sao Paulo, Emilio Botin talked about growth, growth and growth in the Brazilian market, as its primary objective. (Expansión 11/25/10)

Brazil has gone from being a country with an enormous potential to be a solid reality, with high expectations that locate it the fifth world economic power in only 10 years. To be successful, politicians are focusing their efforts mainly on job creation, a higher base salary and a policy for economic stability.

As I’ve previously mentioned in other posts, the investment opportunities for Spanish companies are favored due to the next World Cup, the Olymplic Games of Rio de Janeiro in 2016, as well as governmental plans to improve infrastructure and housing .

Another challenge for Brazil during the World Cup is that the trophy will be a green goblet featuring the country’s great power in photovoltaic solar energy as an example of renewable energy. They will also build solar stadiums (based on the Stade de Suisse Wankdorf) with huge solar panels such as the Mineirao in the state of Minas Gerais (an initiative from IDEAL, Institute for alternative energy Development in Latin America). The proposals of Qatar and Taiwan (World Games stadium) as possible hosts of the 2022 World Cup, also bet on solar stadiums.

…. in a globalized world the only way to be competitive is to expand ….

The former English Manchester United player, is expanding his football academy in Egypt, in particular building another in The Pearl of Sahl Hasheesh resort in Hurgada, Red Sea.  this exclusive resort on the Red Sea coast, counts with 165 apartments of various sizes, located in four small islands, with 12 luxury villas of 222 m2 in a plot of 500 m2.

(5) IBI, PROPERTY TAX : shopping around the world

4 September, 2011 No Comments

Real estate tax, impôt foncier, Grundsteuer, stondbeleisting, owners fiscale, Tax on properties, EMLAK vergisi ………. Taxes are paid one way or the other in the majority of countries

Taxes are inevitable. There are different property taxes:

1 – Taxes from the purchase of a property; they are in force in most countries and can be referred to as stamp duty, TRANSFER TAX, TAX PURCHASE, but in the end is the same tax that the respective governments collect. Even though the amount may vary from country to country, some countries only charge a fee on the resale and not on new construction properties. Usually VAT is applied on new construction buildings.

2 – Taxes regarding the ownership of a property: In Spain we refer to as the IBI, based on the assessed value of the property. Every property owner must pay it no matter what his/her status is. Since we are talking about a municipal tax the amount usually varies depending on the size of the property and its location. This tax is paid annually and the amount is automatically charged into the owner’s bank account. In the UK would be similar to Council Tax.

3 -. Taxes levied on the profits from the sale of the property: In many countries this tax is applied to the gain obtained from the property’s purchase price and its sale price (note; some countries allow the deduction of expenses such as maintenance, repairs or improvements made to the property (which must be justified with receipts and vouchers). Also referred to as Capital Gains Tax (CGT), is applied at the time of sale. In some countries the amount due is paid gradually ie. Turkey. In other countries such as France, this tax is paid off in fifteen years. Outside the US, there are different ways to view this tax, considering if they are residents or nonresidents in the country. Many investors are  mistaken because they beleive that if the tax is not imposed in the country where the property is being sold, they do not have to pay anything …….Wrong! You are exempt only if you are tax resident in the country. In the case of being resident, for example in the UK, a tax will be charged on any profit earned around the world. In general, the seller of any property will pay CGT or any similar tax to the country where the property is located because a tax applies for any sale.

Regarding double taxation: be careful not to pay taxes twice (the country where the property is located and the country that you belong). Countries often sign double taxation treaties to avoid its citizens to pay taxes twice for the sale of a single good. In these cases, the amount paid in the foreign country should not be re-paid in the country of residence.

It is almost “mandatory” to seek advice from a tax lawyer or a specialist in the country where the good is bought, so that he helps, within the framework of the law, to minimize the amount to pay in each case.