U.S. shopping mall REITs hurt by department store woes

NEW YORK: After a spate of disappointing quarterly results from big-name retailers, mall real estateinvestment trusts (REITs) have come under pressure.

The FTSE NAREIT regional mall index is on track for its second straight month of declines, after department store operators such as Macy’s and Nordstrom reported disappointing earnings and soft monthly sales results, raising concerns about possible store closings.

High-end malls, where names such as Nordstrom serve as an anchor, are considered more resistant to department store closings as they are able to attract new occupants often paying higher rents. A glut of store closings at lower-end malls could prove more problematic for REITs that own them.

“It wouldn’t be surprising if high-end malls ended up with two traditional department stores compared to the roughly four traditional department stores currently at most malls,” said Cedrik Lachance, Director of U.S. REIT Research at real estate research firm Green Street Advisors in Newport Beach, California.

“The high-end mall still has a lot to offer to retailers and customers, but many lower-end properties will face sizable challenges in the coming decade and could garner a disproportionate share of headlines.”

Even if high-end mall REITs lose some department stores as tenants, analysts said they are able to turn over those locations at higher rates to stores such as Apple, Tesla and popular grocer Wegmans.

Alexander Goldfarb, an analyst at Sandler O’Neill Partners LP in New York points to Simon Property Group Inc and General Growth Properties Inc as mall operators that have been able to successfully book newer tenants at rents more than 10 percent higher.

“It’s not about traffic in a mall, it’s about conversion to shopping. That shows the desirability of their centers,” said Goldfarb. By bringing in shoppers willing to spend, the malls are able to charge new tenants higher rates.

The mall REITS may have been hit with a double whammy – following quickly on those poor retail reports were numerous indications from the U.S. Federal Reserve that it could lift interest rates as early as June.

Higher interest rates could make other investment vehicles such as bonds more attractive than REITs and other high dividend stocks. Still, it appears most of the industry took the Fed warnings in stride. The broad FTSE NAREIT All REIT index is up more than 4 percent for the year, and fell just 0.4 in the last week since the release of the latest Fed minutes. The S&P is up about 2.3 percent year to date.

A factor that could help insulate REITs is additional exposure to investors that will be brought about by their classification as an eleventh sector by S&P Dow Jones Indicies – starting September 1.

“The new sector classification will shine a brighter spotlight on real estate and REITs in particular,” said Lachance.

Real estate company Mid-America Apartment to buy rival Post Properties

NEW YORK: . Mid-America Apartment Communities Inc is buying rival real estate investment trust Post Properties in a deal worth about $3.9 billion.

The deal brings together two companies that owns or operates rental communities in several southern cities, including Atlanta, Dallas and Charlotte, North Carolina.

corporate-officeThe combined company will have nearly 320 properties with about 105,000 units.

As part of the deal, Post Properties investors will receive 0.71 share of MAA stock. Using MAA’s Friday closing price of $102.15, that would mean Post Properties shareholders would receive about $72.53 for each share they own.

Shares of MAA, which is based in Memphis, Tennessee, fell more than 3 percent to $98.95 before the market opened Monday. Shares of Atlanta-based Post Properties Inc. jumped more than 12 percent to $69.84 in premarket trading.

U.S. home builder sentiment index highest in 11 months

NEW YORK: A private gauge on U.S. home builder sentiment unexpectedly rose in September to its strongest level in 11 months, prompted by renewed interest in home purchases following a summer lull.

The National Association of Home Builders and Wells Fargo said their index on builder confidence regarding newly built, single-family homes climbed to 65 points in September from a downwardly revised 59 in August.

This was matched the level set in October 2015.

The August figure was originally reported at 60.

Analysts polled by Reuters had forecast a September reading of 60.

“As household incomes rise, builders in many markets across the nation are reporting they are seeing more serious buyers, a positive sign that the housing market continues to move forward,” NAHB Chairman Ed Brady, a home builder and developer from Bloomington, Illinois said in a statement.

Is Buying a House With a Friend a Good Idea? - Pros & Cons“The single-family market continues to make gradual gains and we expect this upward momentum will build throughout the remainder of the year and into 2017,” Brady said.

An upswing in home sales should support the U.S. economic expansion and the view the Federal Reserve may raise interest rates by the end of the year, analysts said.

U.S. household wealth has grown on a resilient real estate market. It increased to $89.1 trillion in the second quarter, Fed data released on Friday showed.

In the latest survey, the measure on current sales expectations rose 6 points to 71, while the gauge on sales outlook in the next six months increased 5 points to 71.

The component on traffic of prospective buyers climbed 4 points to 48.

By region, the three-month average indexes showed the Northeast and South each booked a 1-point gain to 42 and 64, respectively, while the West increased 4 points to 73. The Midwest was unchanged at 55, NAHB said.

MIPIM LAUNCHES FIRST EVER EVENT AT ANNUAL NYC REAL ESTATE TECH WEEK

MIPIM, the leading global real estate conference, has partnered with MetaProp NYC, the premier real estate technology nexus and RETech accelerator, to produce MIPIM PropTech Summit, the 2016 NYC Real Estate Tech Week’s flagship event. The event will be held next Wednesday, October 5, 2016, in New York.

The MIPIM PropTech Summit will be the first conference in North America to be part of the renowned MIPIM series of events, which includes MIPIM UK, MIPIM Asia Summit, MIPIM Japan and the MIPIM flagship event in Cannes, France, a four­-day exhibition, conference and networking event with more than 23,000 international attendees. It will also be the first of the MIPIM series to focus exclusively on the future of the real estate market, with a heavy emphasis on the impact of technology as the real estate tech industry continues to gain momentum.

The MIPIM PropTech Summit will bring corporate real estate, government and technology professionals together under the same roof for a full day of panels and networking opportunities. The keynote addresses will be delivered by Alicia Glen, Deputy Mayor for Housing and Economic Development, New York City; Brad Hargreaves, Co-Founder and CEO, Common; Paul Massey, 2017 New York City Mayoral Candidate – President, New York Investment Sales, Cushman & Wakefield, and William Rudin , Vice Chairman and CEO, Rudin Management Co., Inc. Each speaker will offer their unique perspectives of government, RETech and traditional real estate to address the profound impact technology is making on real estate in New York and globally.

During the course of the MIPIM PropTech Summit, speakers will discuss key topics including:

  • An overview of PropTech: Leading international real estate and property technology investors discuss what’s what in property technology.
  • Government’s role in PropTech: Hear more about this burgeoning specialty from some of the leaders in government real estate, government affairs, and real estate technology.
  • The real estate industry’s next frontier: Learn about the most cutting-edge technologies in real estate that will shape the next generations of PropTech.
  • PropTech on a global level: How are regional new technologies going international as PropTech interest continues to grow?

“We’ve been seeing strong interest in these themes globally,” said Filippo Rean, Head of Reed MIDEM’s Real Estate Division. “And with New York being the country’s epicenter of technological innovation, this day is shaping up to be one of the industry’s most exciting, diverse and thought-provoking events of the year.”

A Unique Opportunity for Startups
In addition to the gold-standard conference sessions, the MIPIM PropTech Summit will host the first ever North America stop in the Global Start­up Competition Series. The competition provides start­ups with an opportunity to meet and pitch business to relevant investors, developers, financial companies, media, analysts and other key influencers. The NY winner will compete against start­ups from stops in London (October 21, at MIPIM UK) and Hong Kong (November 29 at the 11th edition of MIPIM Asia) and will qualify for the final competition at Reed MIDEM’s MIPIM event, in Cannes, France.

“The first-ever MIPIM Startup Competition was a resounding success last year. We intend to significantly strengthen the presence of real estate technology at our MIPIM events, with the launch of the first-ever Innovation Forum at MIPIM UK, as well as an inaugural Hackathon, co-organised by Future Proptech,” explains Filippo Rean.

Prices of UK homes for sale see biggest fall in 9 months in August: Rightmove

LONDON: The price of homes for sale in England and Wales fell in August, posting the biggest drop since November, as the summer lull added to uncertainty surrounding Britain’s decision to leave the European Union, property website Rightmove said on Monday.

Asking prices fell by a monthly 1.2 percent, according to a survey by Rightmove that covers properties put on sale between July 10 and Aug. 6, after shedding 0.9 percent in July.

The biggest drop was in London and the South East, with asking prices falling by 2.6 percent and 2.0 percent respectively.

“Many prospective buyers take a summer break from home-hunting, and those who come to market at this quieter time of year tend to price more aggressively,” Miles Shipside, Rightmove director and housing market analyst, said.

London-Housing-Bubble-Ernst-and-Young (1)“This summer is also affected by both Brexit uncertainty and the aftermath of the buy-to-let rush in March to beat the stamp duty deadline.”

Britain voted to leave the European Union in a referendum on June 23 – a decision many economists think could tip the economy into recession and which prompted the Bank of England to cut interest rates for the first time since 2009 earlier this month.

Official data covering the period after the referendum has been scarce, but there are patchy signs that consumer spending held up, while data on the housing market following the vote has been mixed.

The monthly drop in prices reduced the annual increase to 4.1 percent in August from 4.5 percent in July, Rightmove said, adding that the survey covered 90 percent of the market.

UK farmland demand falls sharply as Brexit adds to price woes

LONDON: Demand for farmland in Britain fell sharply in the first half of 2016, hurt by low commodity prices and uncertainty around the European Union membership referendum, the Royal Institution of Chartered Surveyors (RICS) said on Wednesday.

Forty-nine percent of chartered surveyors said they expected prices to fall across all types of farms in the coming year, according to RICS and the Royal Agricultural University survey.

“Commodity price volatility was already negatively impacting sentiment in the rural land market prior to the EU referendum, and the outcome of the vote has added further uncertainty,” said Jeff Matsu, RICS senior economist.

“For now, this appears to be weighing heavily on demand and prices have begun to slide.”

uk-house-prices-riseMany farmers have expressed concern about the possibility of diminished subsidies for British agriculture once the country leaves the EU. But others have said they will be better off without the EU’s rules and regulations.

Matsu said the Bank of England’s decision to cut interest rates and restart its bond purchases could bolster confidence, while the fall in sterling ought to help agricultural exporters.

The survey added to signs of a broader slowdown in property markets since the vote to leave the EU.

A RICS survey last week showed housing market activity ebbed last month, with gauges of house price growth and transactions falling to their lowest level in years.

London housing boom to end next year on Brexit: Reports

Home values in London will fall for the first time since 2009 next year on economic uncertainty resulting from the U.K.’s vote to leave the European Union, according to Countrywide Plc.

Price growth for homes in the capital will slow to 3.5 per cent this year and drop by 1.25 per cent in 2017, the country’s largest real estate broker said in a report on Monday.

Countrywide in December forecast that values would increase by 4 per cent this year and next. Prices for properties in prime central London will drop as much as 6 per cent this year and be little changed in 2017, the report showed.

“The vote to leave the European Union has unsettled the U.K. economy,” Countrywide chief economist Fionnuala Earley said by phone. Lower expectations of capital gains were already weighing on London’s housing market, she said, while the luxury-property market was being hurt by increased sales taxes and oversupply. “The Brexit scare has just accelerated all of that,” she said.

London properties are taking longer to sell this month, despite a summer price cut, as uncertainty surrounding how Britain will negotiate its exit compounds the dampening effect of the holiday season.

Homes in the U.K. capital are staying on the market for five days more than in May, the month before Britons voted to leave the EU, property website Rightmove Plc said in a report published on Aug. 15.

London-Housing-Bubble-Ernst-and-Young (1)The lull won’t last, however. Countrywide expects Greater London home values to rise by 2 per cent in 2018 as the economy improves and there is more clarity about how the U.K. will decouple from the EU, according to Earley.

Average prices for homes across the U.K. are set to drop 1 per cent next year before returning to growth in 2018, according to the report.

Countrywide forecast that prime central home values will increase by 4 per cent in 2018. By the beginning of that year, the firm expects prices in that market to have fallen by 15 per cent since the market’s peak in 2014.

“There are still severe supply issues which, together with a period of ultra-low interest rates, will act as a support for pricing,” Earley said. “As for prime central properties, after two years of falling prices they will begin to look attractive again.”

India’s 2nd Real Estate Business & Leadership Awards Hit Mumbai

Mumbai: The Indian real estate fraternity recently came together to charm the Mumbai with their charisma and style at the realty fact real estate business & leadership awards 2017 knowledge partner quikrhomes.

The process of choosing winners began with inviting entries. The response was overwhelming, with entries pouring in from Builders, Developers, Interior Designers, Architects, Property Advisors, IPCS/Brokers/Realtors, Real Estate Media – OOH/Digital/Radio and so on.

Realty Fact Editor-in-Chief & CEO, Kumar Saurabh said that the nomination process attracted a lot of interest from India . The Realty Fact Real Estate Awards 2017  focuses on India’s development and aims to recognize developers and other service providers in the real estate / property sector across India.

The forum is designed and tailored for visionary senior executives at CEO, CMD, CSO and CFO level, who are empowered with innovation and growth objectives to lead their organization.

Held at The Orchid Hotel Mumbai, the event saw the presence of many industry leaders .

Here are the names of the winners in different categories:

Best Real Estate Consultant of the Year Vestian global workplaces services pvt ltd
Real Estate App of the year. Slum View App
Luxury Developers of the Year PS Group Realty LTD
Most Admired Upcoming Project PS Group Realty LTD
Innovative Company of the Year Lingel Door & Windows Technologies Pvt. Ltd
Residential Development (Multiple Units) Garden Enterprise
Residential Property Developer of the Year Garden Enterprise
Architect Firm Of The Year Ladani Consultancy
Real Estate Tech Broker of the year Z Vesta ( Startups)
Luxury Project of the Year Mantri Blossom
Women Super Achiever in Real Estate Sector Snehal Mantri
Commercial Property Developers of the Year Meenakshi Infrastructures Pvt Ltd
Leisure developer of the year Nirvana Realty
Broker of the Year Sai Estate Consultancy
Emerging Developers of the year” ( Residential) Sanghvi Realty
Female Real Estate Professional of the Year LABONY SANYAL
Best Business Ecotel Hotel The Orchid Hotel
Luxury Developer of the Year Ajmera Realty & Infra India Ltd
Best Real Estate Campainer of the year Tarun Mehrotra
Leading developer of the year Tata Value Homes

Real estate investment intensity yet to reach critical mass in Asia Pacific cities

Asia Pacific cities are some of the fastest growing real estate markets in the world, but they have yet to catch up with their European and North American counterparts when it comes to intensity of investment.

JLL’s latest Investment Intensity Index – which compares the volume of direct commercial real estate investment in a city over a three-year period relative to its economic size – reveals that of the top 30 ranked cities, only four are in Asia Pacific: Sydney (eighth), Melbourne (16th), Hong Kong (28th) and Tokyo (30th).

This means that while places like Bangalore, Ho Chi Minh City and Shanghai are racing ahead in their speed of development as real estate markets, they still have room to grow when it comes to attracting investment proportionate to their gross domestic product (GDP).

“Although the emerging cities of Asia Pacific are attracting an ever greater share of global real estate investment, our latest index shows there is some way to go before they punch their weight in terms of investment intensity,” says Dr Megan Walters, Head of Research, Asia Pacific, JLL. “However, the balance is starting to shift. What we’re seeing is that real estate investors are looking more and more to developing cities to satisfy their diversification requirements, with an estimated 60 per cent of the global office development pipeline until 2020 projected to come from emerging markets.”

While offering huge investment potential, the report reveals that emerging world cities will need to boost transparency, improve regulatory oversight and build robust financial platforms to attract real estate investors in the long-term.

What’s holding back CRE investments into Mumbai, Delhi and Bangalore?

“As the report notes, the Indian ‘Emerging World Cities’ of Mumbai, Delhi and Bangalore are not yet attracting direct commercial real estate investment volumes to match their economic weight” says Ramesh Nair, CEO & Country Head, JLL India. “Although they are among the world’s fastest-growing city economies, there are a number of issues which may be partly responsible for holding back direct investment, including market transparency – they are ranked as Semi Transparent Markets in JLL’s 2016 Global Real Estate Transparency Index. Other factors are infrastructure challenges and ownership styles (such as strata-title sales or developers / investors holding on to stock). Contributing to the lower direct transaction volumes is that investors have frequently looked to development or debt lending rather than direct investment to gain exposure to real estate in these cities.”

However, direct investment into India increased by 11% last year to US$2.3 billion, and if these cities are able to continue boosting transparency, improve regulatory oversight and build strong financial platforms they will be able to increase their attractiveness to investors. An example of this is the interest shown from some global investors last year in building portfolios in India to list under the new REITs structures, which have helped to improve market transparency in other countries.

A New Chapter Opens for Indian Luxury Housing

The residential real estate sector in India has had its ups and downs for two years now. Negative news about real estate seem to be all the rage with the media these days. Luxury real estate, in particular, has been getting very bad press of late. Let us take a quick look at what is really happening on the ground, and what is driving it:

  • India’s GDP growth for FY’17 has been pegged at 7.1%. The number of Indian ultra-HNIs jumped to 2 lakh in 2015 from 1.84 lakh in 2014; it currently stands at 2.36 lakh and is expected to reach 483,800 by 2025. India is currently home to the world’s fourth-largest population of millionaires in Asia Pacific region.
  • GDP per capita income in India is USD $2000 and will increase to USD $3500 by 2020. Higher incomes naturally translate into a higher appetite for luxury housing. Meanwhile, prices of luxury housing have corrected post demonetisation. They will not fall further, but the luxury homes buyer segment – including NRIs – is keenly aware that this is an optimal time to invest.
  • The Indian real estate market will almost double to $180 billion by 2020 from the $93 billion it accounted for in 2014, thereby accounting for 13% of the GDP compared to the current 5-6%. Luxury housing constitutes almost 4-5% of the total real estate market and with overall pie increasing, share of luxury housing is bound to increase

India is a constantly growing, developing country, and its housing deficit is the stuff of legends. Currently at around 17.5 million units, most of the deficit is in affordable housing – meaning very low-priced homes to house the bulk of the country’s homeless or those living in informal housing such as slums. This is the segment where demand is the highest.

The Mid-Income Housing Story

Mid-income housing – or housing that caters to the better-off middle class – also sees a lot of demand, but such housing needs to be in good locations with sufficient infrastructure, priced right and within reasonable completion timelines to attract the latent demand. The oversupply that exists in this segment is largely because many projects have fallen short of a few or all of these fronts.

Given the huge pent-up demand for mid-income housing, this supply will eventually be absorbed – excess supply is usually measured in the number of months it will take for it to be sold. In most Indian cities, there is excess supply in this segment because most of the demand is from end-users, not investors. There is a basic lesson here that Indian developers were slow to learn, and by the time they woke up to it, they were saddled with a lot of very slow-selling inventory. The lesson is that investors are no longer a major force on the residential market – most markets are primarily driven by actual buyers.

The previous boom years had seen a lot of real estate speculation happening. Investors were literally bulk-buying into cheap under-construction housing projects in hot emerging development corridors. Their intention was to buy cheap and sell at considerable profit when the projects were complete, the locations picked up and demand for homes there rose. Developers had gotten quite used to this phenomenon, and launched housing projects at breakneck speed.