Suffering A Hangover From A Construction Binge
A report from the Dawson Creek Mirror in Canada. “Housing prices in Tumbler Ridge are recovering after a double-digit drop brought on by a crash in the region’s coal industry. The improved prices come one year after assessment values plummeted a province-worst 34 per cent following the shuttering of the area’s coal mines. Jennifer Marsel, a realtor with Royal LePage Cascade Realty, said economic conditions in the town are improving after Conuma Coal Resource reopened a pair of mines acquired from Walter Energy last year. ”
“While she’s seen only modest signs of recovery in the housing market, she expects things will pick up soon as miners go back to work. ‘It hasn’t happened so much yet, it was more in anticipation of (the mines) reopening, which (led) investors to jump in,’ she said. While the town’s outlook is improving, she said all but a handful of houses were selling for less than $100,000. The majority of those were court-ordered sales, she said.”
From Live Mint in India. “Rohit Agarwal, 47, a retired army officer based in Delhi, recently shifted from a rented two-bedroom-hall-kitchen house to a three-bedroom house in the same locality. But strangely, the rent for the bigger house was the same. The Agarwals had been living in the earlier house for the past 7 years, during which time the rent had doubled to what it was initially. ‘Almost every year, the house owner increased the rent by 10% or more, as is the norm in Delhi,’ he said.”
“According to ArthaYantra’s Annual Buy v/s Rent Report 2017, there was an average decline of 7.67% in annual rent of residential properties in the past 1 year in Delhi. Many localities have seen a much steeper decline. According to the report, there was a decline of about 27% in rental values in Safdarjung Enclave in South Delhi. Other cities too have seen rents fall in the past 1 year. ‘As prices have not appreciated much, many investors have decided rent their property rather than sell it. This has increased supply and put pressure on the rental market,’ said Ankur Dhawan, chief business officer, PropTiger, a real estate consultancy.”
The Australian Financial Review. “Over one-third of the cranes building Australia’s next wave of apartments due for completion in the coming two years sit in postcodes ‘blacklisted’ by lenders, raising concerns about settlement failures across the country. New analysis of RLB’s crane index shows that about 38 per cent of cranes counted across Australia’s skylines in the September quarter were located inside areas flagged by lenders as problem spots in which they are seeking to reduce or restrict lending.”
“Of the 625 cranes in Sydney, Melbourne, Brisbane, Perth, Gold Coast and Adelaide 239 are within city postcodes singled out by National Australia Bank and AMP for measures such as lower loan-to-value ratios. These lower ratios mean buyers may have to come up with more equity at settlement than they expected at the time of purchase. Brisbane is the worst, with nearly 57 per cent of all cranes located in problem areas, the highest ratio of all the cities. ‘It could be that there has been increased investor activity in Brisbane due to the current differential between residential prices particularly when compared to Sydney,’ said RLB director of research and development Stephen Ballesty.”
From The Pulse on Nigeria. “With frozen cranes, deserted construction sites and empty buildings, Lagos is suffering a hangover from a construction binge as Nigeria wrestles to overcome a damaging recession. Look no further than Eko Atlantic, billed as the largest real estate project in Africa, where frenetic construction has slowed to a snail’s pace. Just one year ago, it was a symbol of the promise of Lagos, when Nigeria was still the continent’s number one economy. But today it is mostly an expanse of sand, interrupted by two lonely ultra-modern skyscrapers and a couple of roads lined with young palm trees.”
“Pierre Edde, development director at South Energyx, a subsidiary of developers, the Chagoury group, said some 80 percent of the plots for sale had already been bought but investors were still wary and ‘waiting for positive signals to get started’ on building construction, he told AFP.”
“Dapo Abe, who heads an engineering consulting firm in Lagos, estimated that some 60 percent of major construction projects — both public and private — are currently shut down. ‘No bank wants to lend money, rent revenues no longer make it possible to repay construction costs, and there is no return on investment,’ he added.”
“Now the real estate market is left in an ironic situation: landlords of up-market office blocks and apartments are struggling to find occupants in the wealthy suburbs of Lagos. Yet at the same time, there is not enough housing stock for the city’s estimated 20 million-strong population. According to the Federal Mortgage Bank of Nigeria, 16 million people currently need a house in Lagos.”
“In the past, Nigeria’s booming growth attracted real estate developers who scrambled to build high-rise condominiums and modern office blocks catered to the executive class in Lagos. Yet today many of those buildings have ‘to rent’ spray-painted in a red scrawl on the outside walls in a desperate bid to attract tenants. ‘Companies have reduced their activities and many expatriates have left,’ says Ade Kunle, a real estate agent.”
