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,
Tags: Albert Einstein, Amancio Ortega, BBVA, crisis, Deutsche Bank, Family Office, Malls, non residential investment transactions., Pontegadea, real estate, REEF, sale and leaseback, SICAVs, store spaces
Category: Finance and real estate market, New Homes International Portal
3 August, 2011 No Comments
The situation in Paris and part of France, could be a sign of a slight recovery in the housing sector. Even though buying a property could be a safe haven for one’s money, one must wait and see how 2011 reacts, as one shall not forget that it is a fragile market unbalanced by the crisis and an economic situation filled with uncertainty. (All of this combined with a possible increase in interest rates and a partial reduction in government aid …… should warn investors to act prudently.
(Magazine Le Point.fr 19/08/10) This strong awakening of the real estate market after a latent period (in 2008), has resulted in a significant increase in prices, especially in Paris, which are being compared to the levels before the crisis, and makes people regret not having bought a property a year earlier, instead of having waited for prices to decrease even further.
But the big question now is: Faut-il acheter maintenant? (Should we buy now?)
This outrageous increase in value of real estate assets during 2010 is given only in large cities and some suburbs; whereas in small cities and rural areas of the country, the increase existed in a much smaller scale.
For investors who are buying fast and under pressure due to the small number of properties for sale and the speed in which are sold, I believe that rush always carries a risk and most of the times is not worth it. At first sight it is appealing to buy fast for the reasons that I previously stated, but to me it is not enough argument because buying a property takes time and market research, in addition to be disciplined to avoid buying overpriced and mediocre assets.
I agree that some tax incentives and low interest rates are appealing, BUT in a market with little supply there is a higher risk of getting anything at any price. In this case, whatever gain obtained on one side with tax deductions can be exponentially lost on the other side due to the purchase of an asset that when is time to sell, does not generate capital gains because at the time of purchase was an overpriced asset.
“Pour les Notaires de France, cette hausse s’explique a la fois par la permanence des taux historiquement trés bas, mais aussi pour le valeur refuge donnée aux investissements immobiliers lors de periodes de crise”. Certain questions arise such as: what will happen to prices if rates go up?……. Can we anticipate another housing bubble? are wages capable of keeping up with current prices?
21 May, 2010 No Comments
This year 2010 is very complicated for the Chinese economy, due to issues related to the appreciation of the Yuan, inflation and the growth of house prices , as discussed in the article on BBC news.
To stop the current speculation in the Chinese real estate sector, the Government has taken several measures to avoid the rise in housing prices, including:
- Increase the first payment from buyers of second homes to a minimum of 50%.
- The State Council called on banks to stop lending money to buyers of residential properties for third properties and do not grant loans to buyers who do not show evidence of at least 1 year of residence in China.
- Increase the provision of land for development.
- Strengthen controls on financing real estate companies.
- Instruct the developers to not monopolize properties in order to drive up prices (Beijing has been limited to a purchase of new construction homes to its residents).
Given these measures to suppress the increases in housing prices,some investors are rushing to sell their property while prices remain high. Many real estate speculators who invested in Shanghai and Beijing began to sell their homes since March 2010, so that the number of properties for sale increased significantly.
Today, although China’s society is very conservative, have also introduced measures to regulate the granting of mortgages, because the new generation, western-minded, have no problem asking credit cards and mortgages (previous generations requested financial support to the family and there was not much demand for banking products).
Another issue that has helped the growth of demand and therefore prices to remain higher, is that Chinese society in matters of family is very traditional and many marriages can not be held if the couple has no home ownership . This has led to the problem of the relationship between salaries and house prices in major cities is increasing. The solution given by government is to create public housing parks to facilitate access to citizens with lower purchasing power.
