Asia Pacific REIT Market Could Swell to $500 Billion

REITs continue to hold their strength, even in weakened global real estate markets, according to the Asia Pacific Real Estate Association (APREA).

APREA CEO Peter Mitchell told the Malaysian National News Agency (BERNAMA) the REIT structure continues to be a fundamental driver of the securitization of real estate holdings in many international markets. 

"It has proved remarkably resilient in the face of the global financial crisis, particularly in Asia, because of their transparent and liquid characteristics." Mitchell said.

"Asia has the lowest level of securitized real estate in the world," Mitchell said. "It is estimated that only about 4 per cent of investment grade real estate in Asia is held in REIT-type structures,"

"Taking that last point, assuming an ultimate level of securitization of investment grade real estate of 25 per cent suggests a market that could grow to well over $500 billion US.  

"REITs in the US, Asia and Australia have recovered and performed much more strongly than other real estate asset classes since the crisis," he told Bernama.

Citing  Ernst & Young data, Mitchell said the global REIT market has grown to a total market capitalization of $568 billion US, growing by $138 billion last year alone. "Much of this growth has been in Asia," he said.

Just  before the launch of the first Japanese REIT (J-REIT), the market capitalization of REITs in Asia was around $2 billion US, he said. Five years later, it was about $50 billion.

"Today, there are about 144 Asian-based REITs with a market capitalization of approximately $127.7 billion US," he said.

On a total return basis, Mitchell told Bernama Asian REITs in most countries have outperformed equities regularly, particularly since the global financial crisis, and they have been superior performers on a risk and risk-adjusted return basis.

He noted the growth has been phenomenal, but the Asian REIT industry is only in its infancy, accounting for only 11.5 per cent of all global REITs, Bernama reported.

Mitchell told Bernama major investment banks confidently predict that in the near future market capitalization will comfortably exceed $100 billion US and continue to grow exponentially.

He said a number of compelling underlying factors for this growth include a large portion of real estate in Asia still held in private hands and weigh heavily on company balance sheets.

"This is not sustainable long term Mitchell said. "The REIT format is a much more efficient way for companies to hold real estate assets,"

Regardless of when India and China introduce their own REIT markets, their strong growth alone "will have cascading effects on the regional economies," Mitchell told Bernama.

Other factors, he noted, include more countries introducing REIT regimes, as in the Philippines, and more investment grade stock coming into the market "in the wake of strong economic growth throughout the region," Bernama reported.

Santa Catalina Island: Twenty Six Miles Across The Sea

Avalon Bay feels a million miles from home... (Courtesy Catalina Island Chamber of Commerce)

Santa Catalina Island became famous because of a 1958 song about "the island of romance" that was "twenty-six miles across the sea."

But a lot of people - very famous, very wealthy people - actually knew about it long before that.

The island was purchased by William Wrigley, Jr. (of Wrigley's Gum and Chicago Cubs fame) in 1919 - sight unseen! He developed it as a resort, and a spring training home for his Cubs. He also opened the island up to film production, and several hundred were filmed here. There's a living legacy to those days. To film a movie based on a book by Zane Grey, the producers brought 14 buffalo here in 1924. The scenes of the island were cut. But there are now some 200 buffalo roaming the interior.

Charlie Chaplin and his wife Paulette Goddard were frequent visitors.  So were Mr. and Mrs. James Cagney, Hollywood producer Cecil B. De Mille, and Clark Gable.

Zane Grey liked it, too. In 1926 he built a pueblo-style home on the hillside overlooking Avalon Bay.  He spent most of his later life here, writing some of his 89 books. His home is now the Zane Grey Pueblo Hotel.

Most people who live here - there are 3,500 in the main town of Avalon - don't have cars. (There's a 20-year wait-list.) The main means of transport is golf carts. But the best means is self-propulsion. Avalon's great for walking; it's a charming village on a harbor, with beautifully-restored homes, shops, and restaurants.

Your footsteps might be the only ones. (Courtesy Catalina Island Chamber of Commerce)

Catalina Island's landmark is the striking white Casino, an Art Deco treasure built in 1929. There's no gambling, though; the building was actually named after an Italian word meaning "place of entertainment." Inside is the Catalina Island Museum, with an outstanding collection of artifact, historic photographs, and Catalina tile and pottery.

Another landmark is Chimes Tower, which has been ringing every fifteen minutes since 1925. And the distinctive Holly Hill House, built in 1890 with a red roof and striped cupola, has been faithfully restored by its current owner.

The 42,000 acres of Catalina Island's vast interior offer great camping, hiking, horseback riding,  mountain-biking, and jeep eco-tours in a protected wilderness. On your rambles, you might see Catalina Island foxes, quail, bald eagles, and, of course, the buffalo.

You can experience some of the best snorkeling and diving in the world, or take a tour on a glass-bottom boat or semi-submersible submarine. And there's also parasailing, kayaking, electric-bike tours, and the Zip Line Eco-Tour, in which you'll zip 4,000 feet from mountains to sea - 300 feet above the canyon floor at speeds of up to 40 miles per hour. You can play golf at the Catalina Island Country Club. Or you can SNUBA...diving up to 20 feet beneath the water without heavy equipment.

For a great place to stay, check out the Hotel & Ristorante Villa Portofino, a classic European-style resort on the waterfront. This AAA Triple-Diamond property has 35 beautifully-appointed rooms; and some of the suites have fireplaces, marble baths, and balconies with great views.

The Ristorante Villa Portofino has received the coveted Three Star Award for three consecutive years from the California Restaurant Writers' Association.  The décor is Mediterranean, the views are great, and the food is reminiscent of that other Portofino.

The best way to traverse these "twenty-six miles across the sea" is via Catalina Express, which departs from three Southern California bases. The high-speed boats make the trip in about an hour. And they offer upgrades to make your trip more relaxing, such as the Commodore Lounge or the Captain's Lounge.

EB-5 Visa Program Gaining Popularity with U.S. Property Developers

In the spring of 2011, when financing for new hotels in the U.S. was scarce, a Seattle-based investment firm called American Life, Inc., and Portland, Oregon-based Williams/Dame and Associates, announced that they would develop a two-hotel complex in downtown Los Angeles on a site owned by AEG, a Los Angeles-based entertainment company.

The two-hotels, a 174-room Courtyard by Marriott and a 218-room Residence Inn by Marriott were to be developed using EB-5 funding from immigrant investors. The EB-5 program, sponsored by the US Citizens and Immigration Services (USCIS), which is part of the Department of Homeland Security, has two subcategories: the traditional EB-5 program and the regional center program.

The traditional program involves investing $1,000,000 into a business, actively managing it, and creating 10 direct jobs. In contrast, the EB-5 regional center program allows developers to pool foreign investor funds into a limited partnership and invest its capital into qualifying projects approved by the USCIS.

As the investments are almost always in a high-unemployment or rural area, the investment amount is $500,000 and indirect job creation is permitted. Due to the lower investment amount and the relaxed job creation requirement, during FY 2011, 90% to 95% of foreign investors used the regional center model rather than the traditional program.

While the EB-5 program has been around for about 20 years, it only started to take off in the last five years, said Roger Bernstein, a Miami-based immigration attorney with Bernstein Osberg-Braun, who spoke on the subject to an audience of local and international real estate brokers gathered at the Miami Association of Realtors International Real Estate Congress on November 5th. South Florida is a hot spot for EB-5 visas, he said. There are now 250 regional centers throughout the country, but in Florida alone, there are 20.

See related news story on WORLD PROPERTY CHANNEL:

• Foreign Buyers Still Boon to Florida Housing Market in 2012, Especially Miami-Dade County

The Florida Overseas Investment Center is a regional center in Ft. Lauderdale. Its job is to administer the EB-5 program for its area. In this case, the EB-5 investors are loaning money to the developer of a 135-room hotel on Ft. Lauderdale Beach. "The regional center makes sure that (the developers) follow the letter and spirit of the law," said Bernstein. The project needs $30 million and most of that has been raised in China, he said.

There are two ways for immigrants to invest in regional centers, by contributing equity or debt, said Bernstein. The equity model is favored for long-term investment, he said. "The debt model involves loaning proceeds to a developer," which investors should do cautiously, said Bernstein. But, by definition, these types of investments are all "at-risk investments," he said

Miami Condo Prices Spike 28% in Q3 Over Last Year

(Miami, FL) -- According to the Miami Association of Realtors, the performance of the Miami-Dade County residential real estate market continues to create opportunities for sellers, as limited supply and strong demand consistently yield significant price appreciation.

Median and Average Sales Prices

The median sales price for single-family homes in Miami-Dade County rose 5.06 percent to $189,000 in the third quarter of 2012 compared to the third quarter of 2011, and 2.2 percent compared to the second quarter of 2012. The median sales price for condominiums was $145,000, an increase of 28 percent year-over-year.

"The Miami real estate market continues to perform remarkably well despite the shortage of housing inventory that is limiting potential sales," said Martha Pomares, 2012 Chairman of the Board of the Miami Association of Realtors. "Such performance is reflective of the strong demand being fueled by both U.S. and international buyers.  Buyer interest will continue to positively impact our market long into the future."

Year-over-year, the average sales prices for single-family homes and condominiums increased 6.2 percent to $347,716 and 19.3 percent to $276,883, respectively.

Nationally, the median sales price of existing single-family homes was $186,100 in the third quarter, up 7.6 percent from the third quarter of 2011, according to the National Association of Realtors.  The national median sales price for condominiums was $180,800, a 7.7 percent increase over the previous year.

Homes Sales Remain Keeps Pace with Record Levels in 2011

Miami-Dade residential sales - including existing single-family homes and condominiums - increased a 0.61 percent in the third quarter, from 6,672 to 6,713, compared to a year earlier.  Following a record-breaking year in 2011, sales in Miami remain at historically strong levels.  In the third quarter, Miami sales of existing single-family homes increased 0.07 percent compared to a year earlier. The sales of existing condominiums increased one percent compared to the third quarter of 2011.