March 30, 2016

Aggrieved Investors Realise There Is A Problem

The Globe and Mail reports from Canada. “After riding the oil boom for more than a decade, Newfoundland and Labrador is facing a dire economy and a return to the days when it was the archetypal ‘have-not’ province. To accommodate the hundreds of additional labourers, engineers and executives moving to St. John’s to work on these projects, new offices, housing and restaurants popped up, including upscale restaurants and luxury condos with a view of the harbour. The average house price increased to $284,000 from $104,000 over the oil bull market, according to Canadian Real Estate Association data. ‘There would be bidding wars. Here. I mean I had never heard of that,’ said Elizabeth Lawrence, director of strategy with the City of St. John’s.”

“Condos used to get snapped up as soon as they went up for sale, but many have been sitting on the market for months. Throughout the city there are indications that construction has slowed: An empty hole that was destined to be a condo; a person taking down a sign for a gleaming building that was never built. ‘People are holding off right now because of potential layoffs with the government,’ said Larry Hann, a real estate agent with Hann Group, which specializes in condos and houses. Mr. Hann is optimistic for the future because of the huge offshore oil finds, but said: ‘In a couple of years time, unless we get another major oil project, there is going to be a lot of inventory sitting around empty.’”

The Rio Times on Brazil. “As Brazil is rocked by political uncertainty and alarmed by a shrinking economy, canny investors are turning to the country’s real-estate market in search of a bargain. Companies are keen to identify ’stranded’ properties from a surplus of stock and secure large discounts on them. Exxpon, a Brazilian real-estate growth company that specializes in high-risk investments, is looking at discounts on houses of up to sixty percent.”

“‘The greatest opportunities today are in the residential segment, with the high number of cancellations (returns),’ says founder Jonathan Franklin. According to the Fitch credit-rating agency, dissolutions in construction between January and September 2015 were 41 percent.”

From Emirates 247 on the UAE. “Sixty investors from the UAE have paid money for dream homes that are yet to be delivered by Indian builder. A group of non-resident Indian investors in the UAE and other Gulf countries said they have lost hope in a residential apartment project in their home country bearing the name Esperanza (Spanish word for Hope) because even six years after making the payment, they are yet to get possession of their dream homes.”

“Now the Dubai office of the company is non functional and the aggrieved investors said there is no response from the builders office in Kerala too. When Emirates 24|7 contacted the Dubai office phone number provided in the Mather project official website, the respondent said the office is currently used by an ambulance company. According to them about 60 investors from the UAE alone have paid 90 per cent of the price already, taking bank loans and savings. In many cases, banks have already handed over the loan amount to the builder, but no one got possession of the residential units.”

“‘About four years ago, the Chairman of the company himself came to Dubai promising to speed up the project delivery. He had told us to give some more time and we were counting on his promise,’ the aggrieved investors said.”

Domain News on Australia. “An industry report recently predicted Victoria would be the most oversupplied market in the country by 2017, led by high-density apartment development in the inner and middle ring. Buyers’ advocate Cate Bakos had to gradually drop the rent of her ’60s St Kilda apartment with each tenant term over the past three years – from $290 a week to $240. When her last tenant vacated, and the property manager recommended lowering the rent even further, Ms Bakos realised there was a problem. ‘It’s been very difficult with the oversupply that we’ve got, and in particular the new glossy apartments with reasonably low rental yields because you’ve got landlords competing with each other,’ she said.”

“With a large volume of new apartments being built in Prahran, Biggin and Scott’s Suzie Farrell said a purchaser might make a loss if they sold the property within the first year. One of her clients paid $389,000 for an off-the-plan apartment in Prahran about a year ago and tried to sell it at that price six months later with another agency. The property sat on the market for six months before it was relisted with Ms Farrell, who has the lowered the asking price to $369,000. The last sale in the block was $365,000.”

From Bloomberg on the UK. “Lenders are charging higher interest rates for development loans for London luxury homes as slumping commodity prices and increased taxes deter overseas buyers, fueling concern the market is oversupplied. Developers are constructing or plan to build about 54,000 homes in central London, according to data compiled by researcher Lonres last year, just as demand and values fall. Home prices in the U.K. capital’s best districts fell the most since June 2009 in the six months through February, according to broker Knight Frank LLP.”

“‘Everyone is freaking out,’ Randeesh Sandhu, whose firm has loaned close to 1 billion pounds ($1.4 billion) to developers, said in an interview. ‘There has been nervousness for a while in the super prime market and there is also now nervousness in prime.’”