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Manhattan Apartment Market Tightens as Leasing Triples, Concessions Fall
The Manhattan apartment market tightened in the fourth quarter, as the number of leases almost tripled and landlords cut concessions to renters.
New leases rose to 7,217 from 2,456 a year earlier, according to a report today by appraiser Miller Samuel Inc. and property broker Prudential Douglas Elliman Real Estate. The inventory of listings shrank 26 percent to 3,862 units and the time on market fell 42 percent to an average of 44 days.
“We went from the pendulum being significantly in favor of the tenant to perhaps more of a balance,” said Jonathan Miller, president of New York-based Miller Samuel. “Now we’re more in the middle and that’s measured by concessions, which aren’t gone. They’re reduced and more consistent with historical use.”
Landlords gained leverage as New York City’s economy rebounded from the plunge triggered by the September 2008 bankruptcy of Lehman Brothers Holdings Inc., Miller said. The unemployment rate fell to 9.1 percent in November, the lowest since April 2009. Private-sector employment rose 1.6 percent in the 12 months to about 3.2 million, with financial-services jobs rising by 5,900, according to the New York State Department of Labor.
Glenwood Management Corp. stopped offering rent concessions in March, said Gary Jacob, executive vice president of the New Hyde Park, New York-based company, which owns 25 Manhattan apartment buildings.
“In 2009, there was a lot of negotiating,” Jacob said. “That’s not happening now.”
Rents on the West Side saw the steepest increase per square foot, rising 12 percent to an average $55.31, Miller Samuel reported. Rents in the downtown area south of 42nd Street rose 5.3 percent a square foot to $49.86, while rents on the East Side, between 42nd and 96th streets, fell 6.4 percent to $44.94.
Median rents increased 1.7 percent from a year earlier to $2,950 and annual rent per square foot rose 4.5 percent to $49.13, Miller Samuel reported. A report yesterday by Citi Habitats said Manhattan’s average rent in the fourth quarter rose 5.9 percent to $3,127.
About 41 percent of leases during the quarter included a concession, saving those renters the equivalent of one month’s rent, Miller Samuel reported. A year earlier, concessions usually equaled two or three months of rent and were offered to a bigger share of new tenants, Miller said.
“Rents are stable based on what’s on the lease,” Miller said. “But concessions compared with the market a year ago have largely gone away.”
Date: 13 January 2011 | For the full report, please visit http://www.bloomberg.com
U.S. Foreclosure Filings May Jump 20% This Year as Crisis Peaks
The number of U.S. homes receiving a foreclosure filing will climb about 20 percent in 2011, reaching a peak for the housing crisis, as unemployment remains high and banks resume seizures after a slowdown, RealtyTrac Inc. said.
“We will peak in foreclosures and probably bottom out in pricing, and that’s what we need to do in order to begin the recovery,” Rick Sharga, RealtyTrac’s senior vice president, said in an interview at Bloomberg headquarters in New York. “But it’s probably not going to feel good in the process.”
A record 2.87 million properties got notices of default, auction or repossession in 2010, a 2 percent gain from a year earlier, the Irvine, California-based data seller said today in a report. The number climbed even after a plunge in filings in the last part of the year — including a 26 percent drop in December — as lenders came under scrutiny for their practices.
Foreclosures have weighed down U.S. housing prices as the nation’s unemployment rate is stuck at more than 9 percent.
Home values may rise 0.6 percent for the year, the first annual jump since 2006, according to Fannie Mae, the largest U.S. mortgage buyer. They have fallen as much as 33 percent since peaking in 2006, based on the S&P/Case-Shiller Index of 20 cities.
Banks seized more than 1 million homes in 2010, according to RealtyTrac. That was up 14 percent from a year earlier and the most since the company began reports in 2005.
About 3 million homes have been repossessed since the housing boom ended in 2006, Sharga said. That number could balloon to about 6 million by 2013, when the housing market may “absorb the bulk of distressed properties,” he said.
“What makes this almost inevitable is the fact there are 5 million seriously delinquent loans not yet in foreclosure,” Sharga said. “They’ve got to eventually get in the pipeline unless the homeowners cure the defaults.”
As many as 250,000 foreclosure filings that would have occurred at the end of 2010 were delayed by the ongoing probe into lender practices, according to RealtyTrac. Those proceedings will be pushed into this year, resulting in an “ugly” first quarter, Sharga said.
Attorneys general in all 50 states are investigating whether banks and loan servicers used faulty documents and signatures on loan documents, a process that has come to be known as robo-signing. Companies including JPMorgan Chase & Co., Bank of America Corp. and Ally Financial Inc. halted some repossessions as they reviewed their procedures.
Foreclosure filings in December totaled 257,747, the lowest monthly tally since June 2008. The number fell 2 percent from November and 26 percent from a year earlier, the biggest annual decline in RealtyTrac records.
Date: 13 January 2011 | For the full report, please visit http://www.bloomberg.com
Chinese Developers Turn to Commercial Properties, Cushman & Wakefield Says
Chinese developers shifted more investments to commercial properties last year with government curbs on homes, marking the start of an “era” for malls, office and industrial buildings, Cushman & Wakefield Inc. said.
Commercial real estate investment jumped 42 percent last year from 2009, while transaction volume rose 20 percent, according to the world’s largest closely held real estate services company.
“2010 saw the first year of the era of commercial property,” Cushman said in a press release today. China’s retail, office and industrial properties “delivered another year of strong rental growth with healthy demand from both international and local players,” it said.
Investment in commercial properties picked up last year as the government suspended mortgages for third-home purchases and pledged to speed up trials for residential property taxes. In October, the People’s Bank of China increased interest rates for the first time in three years and raised borrowing costs for a second time on Dec. 25.
Government regulation will remain the main challenge for China’s real estate market, Cushman said. Some investors shied away from the residential property market following the real estate curbs, it said.
Date: 13 January 2011 | For the full report, please visit http://www.bloomberg.com
Brisbane Flooding May Trigger a `Big Spike’ in Home Sales, Economists Say
Brisbane may have increased home sales and construction this year once the cleanup of Australia’s third-biggest city begins after the worst floods since 1974, economists at Citigroup Inc. and JPMorgan Chase & Co. said.
“We could see an increase in activity, once the total damage assessment is made,” Josh Williamson, senior economist at Citigroup in Sydney, said in a telephone interview yesterday. “There could be a big spike in housing market activity.”
Auction clearance rates in Brisbane dropped to 22 percent in the week ended Dec. 19, the lowest among major Australian capital cities, compared with 48 percent a year ago, according to figures from real estate researcher RP Data. Brisbane home prices fell a seasonally adjusted 1 percent in the three months to November, compared with a 1.2 percent increase in Melbourne and 0.3 percent growth in Sydney, RP Data figures show.
Muddy water inundated about 12,000 homes and 2,500 businesses, smashed roads and shuttered the city center. Residents of Brisbane’s most expensive suburbs, including Newstead and Hamilton, who pay median prices of more than A$1 million ($995,000) for waterfront properties on the Brisbane River’s banks, are among those affected.
“Socially, it’s terrible to have things destroyed,” Ben Jarman, a Sydney-based economist at JPMorgan, said by phone yesterday. “But if you have to replace them, that looks good in growth numbers.”
More information about the extent of the damage is needed to gauge the long-term impact on prices, said Williamson and Jarman. By this time next year, Brisbane property price growth could be in line with the rest of the country, Jarman said.
Property sales will slow significantly over the next month as residents focus on assessing damage and put purchase decisions on hold, said Rod Cornish, Sydney-based head of property research at Macquarie Group Ltd. Buyers are also likely to turn more selective about where they buy properties, avoiding low-lying areas that have been particularly hard hit, he said.
Construction activity appears to have slowed in December in Queensland as a result of the wet weather, said Harley Dale, chief economist at developers’ industry group Housing Industry Association. Still, the damage caused by the flood is likely to spur development later in the year, he said.
“There’s likely to be a considerable short-term negative impact that will weigh heavily in the March 2011 quarter,” Dale said. “But the net outcome over the entire 2011 calendar year may turn out to be a higher level of new home building as a result of the need to rebuild homes and engage in quite considerable improvement and renovation.”
Date: 13 January 2011 | For the full report, please visit http://www.bloomberg.com
Aspen Group starts on Swan Valley development
ASPEN Group says it has raised the minimum amount needed to start the development of a new residential area in the Swan Valley.
The property group raised the minimum $8 million from investors in six weeks, in a sign Aspen said indicates a pick up in the state’s property market on the back of a strong economy.
The development, called the Enclave at St Leonards, will comprise of 181 residential lots and form part of the Swan Urban Growth Corridor, adjacent to the Swan Valley.
“We have already received considerable interest from builders in the land when it becomes available on the market, with expressions of interest received on 60 per cent of the lots,” Aspen’s head of residential Chris Lewis said.
“We are seeing very strong demand for residential land available this close to the CBD, and expect this to continue, given the strong outlook for growth in the WA economy.”
Date: 13 January 2011 | For the full report, please visit http://www.perthnow.com.au
Mortgage brokers shine in slowdown
MORTGAGE brokers performed better than average during the slowdown in residential lending during 2010.
Research published yesterday by the Market Intelligence Strategy Centre (MISC) showed the domestic mortgage market contracted by 11 per cent in the six months leading up to September 2010. However, 164 broker groups wrote only 9 per cent less loans in the six months, showing that the slowdown for brokers was not as pronounced as it was across the mortgage market.
MISC said the better than expected performance showed that Australian home loan customers were increasingly prepared to use a mortgage broker to negotiate, rather than dealing with banks directly.
In the six months, the average broker loan was worth $276,715 compared to direct loans of $270,688.
“Borrowers will naturally be encouraged to embrace channels they perceive afford them more assistance and more lender choice,” MISC said.
The contraction in the wider mortgage market of nearly 19 per cent was attributed to three interest rate rises and the federal government winding back its first-home ownership grant scheme, which had been introduced during the global financial crisis.
Figures from the Australian Bureau of Statistics published yesterday showed the value of new home loans rose by 2.9 per cent during November, despite an interest rate rise that month.
Date: 13 January 2011 | For the full report, please visit http://www.theaustralian.com.au
House buyers shrug off interest rate rise
HOME buyers shrugged off the Melbourne Cup day interest rate rise to boost housing finance by a strong 2.9 per cent in November.
The seasonally adjusted increase in loans taken out by owner-occupiers to buy new or established homes was the largest since September 2009, defying market predictions of a fall in the measure.
Economists had expected the total number of new and refinanced home loans to owner-occupiers to slide by 1 per cent, winding back October’s 2.2 per cent rise, in the wake of the Reserve Bank’s seventh consecutive hike in the official cash rate on November 2.
“The latest figures on home lending are certainly encouraging,” CommSec economist Savanth Sebastian said.
“However, a couple more months of improving figures would be needed to claim a full-blown turnaround in the fortunes of the housing sector, especially given the last interest rate hike is yet to have a profound impact.”
Owner-occupiers provided the greatest support for lending, with first-home buyers marginally increasing their share of the market to 15.6 per cent. But investors remained cautious, with the value of their borrowings dropping by 2.3 per cent.
Owner-occupiers hedged their risk by shifting to fixed interest loans, which financed 8.1 per cent of all homes in November, up from 6.9 per cent the previous month. They also moved much of their business to building societies, wholesale lenders and other non-bank institutions, which collectively recorded a 22.7 per cent jump in the value of their loans.
Date: 13 January 2011 | For the full report, please visit http://www.theaustralian.com.au
Blame game over Perth city tower
THE receiver of the $500 million Raine Square project in Perth’s CBD has rejected claims by developer Luke Saraceni.
Mr Saraceni has said Bankwest ignored his refinancing proposals in order to take control of the asset at the cheapest possible price.
KordaMentha principal Mark Korda said proposals by developer Westgem Investments, jointly owned by Mr Saraceni and fellow developer Hossean Pourzand, had been unsuitable for the banks, which appointed receivers on Tuesday.
The receivership was triggered when Westgem missed a $50m payment due on December 31, following delays to the troubled project caused by a bitter dispute between Westgem and original builder Salta Constructions.
“The banks have given them every opportunity to sell down assets or find a white knight to meet the payment,” Mr Korda said. “The banks were in very lengthy negotiations” with Westgem.
But Mr Saraceni accused the banks of failing to discuss his refinancing proposals. He questioned the motivation of the banks in taking control of the project, saying it was fully funded to completion and would generate a surplus.
“Over . . . months, Westgem had tried to engage with the security holders to progress a range of commercial proposals” intended to reduce the banks’ exposure and refinance the associated debt, Mr Saraceni said.
“The security holders did not at any time engage with Westgem” on any of these proposals generated by Westgem, he said.
Date: 13 January 2011 | For the full report, please visit http://www.theaustralian.com.au
Shangri-La’s Rasa Sentosa Resort to reopen next week
REBRANDED as Shangri-La’s Rasa Sentosa Resort, the former Rasa Sentosa Resort will reopen its doors from next week after a 10-month-long, $80 million renovation.
The hotel will reopen on Jan 18 at the auspicious time of 8.18 am just ahead of Chinese New Year.
‘The resort has always enjoyed good occupancy in the past. We are expecting even better occupancy with the new product. The new resort has services and facilities to cater to different types of guests so we can be all-rounded,’ a spokesperson for the hotel said. ‘We are looking forward to a greater market share.’
As part of the upgrading works, the number of rooms in the hotel has been reduced from 459 previously to 454, with some of the existing rooms having been expanded. Room rates start from $320++ per night.
The resort also provides meeting, incentive, conference and exhibition (MICE) services, as its function rooms have been refurbished and equipped with an intelligent lighting system, soundproof double walls as well as audio-visual equipment to cater to corporate travellers.
Date: 13 January 2011 | For the full report, please visit http://www.businesstimes.com.sg
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