California Pending Home Sales Post Double-Digit Annual Gains in May

According to the California Association of Realtors (C.A.R.), pending home sales in California were flat from April but posted double-digit gains from the previous year for the fourth straight month. Additionally, the share of distressed sales continued to decline from year-ago levels, signaling a return of non-investors to the housing market.

C.A.R.'s Pending Home Sales Index (PHSI)* was unchanged in May from a revised 128.8 in April, based on signed contracts.  The index was up from the 115.8 index recorded in May 2011.  May marked the thirteenth straight month that pending sales were higher than the previous year.  Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.

"Despite a slowdown in economic growth in recent months, sales in California remain strong as record low mortgage rates and favorable home prices continue to fuel demand in the housing market," said C.A.R. President LeFrancis Arnold. "The strong results in pending sales - double-digit year-over-year gains in the last nine out of 10 months - suggest solid housing market performance for the state in the upcoming months."

Distressed housing market data:

• The share of equity sales - or non-distressed property sales - compared with total sales improved further in May.  The share of equity sales rose to 59.3 percent in May, up from 55.8 percent in April.  Equity sales made up 51 percent of all sales in May 2011.Likewise, shares of REOs and short sales sold statewide decreased in May, with the share of REO sales dropping the most markedly from a year ago.  The combined share of all distressed property sales fell to 40.7 percent in May, down from April's 44.2 percent and from 49 percent in May 2011.

• The share of short sales declined in May to 19.4 percent, down from 20.6 percent in April and from 20.3 percent a year ago.

• Of the distressed properties, the share of REO sales declined further in May to 21 percent, down from 23.2 percent in April and 28.4 percent in May 2011.

• The available supply of REOs for sale continued to tighten in May, with the Unsold Inventory Index declining from a 2-month supply in April 2012 to 1.5 months in May 2012.

Abu Dhabi Developer Plans $267 Million Residential Project in Saudi Arabia

Riyadh, Saudi Arabia

Oil-rich but shelter-poor Saudi Arabia is finally getting some much-needed new housing. Abu Dhabi-based Gulf Capital announced it will be entering Saudi Arabia's real estate market for the first time with a planned, multi-phased $267 million residential undertaking in Riyadh.

Riyadh is the largest city and capital of Saudi Arabia. The SR 1 billion investment equates to over Dh 900 million.

The company said in a prepared statement its first housing project in Saudi Arabia is being launched by its real estate arm, Gulf Related, a joint venture between Gulf Capital and New York City-based Related Companies, one of the largest privately owned real estate development firms in the U.S.

"The development involves a multi-million dollar world-class residential compound in Riyadh which is timely and will fill the acute shortage in residential housing in the Kingdom," according to Emile Habib, Gulf Related managing director for real estate investment..

 He said studies show there is "a huge demand for housing units in Saudi Arabia, projected at 1.3 million residential units over the next seven years."

The initial phase of the project will consist of a residential compound which will be built on the first 157,000 square meters plot (about 1.7 million square feet) with 450 residential units. The first phase is tentatively expected to be completed by early 2015.

Habib told the Khaleej Times his firm already has raised funds for the project which include equity and loans from an unnamed Saudi bank.

He says Gulf Capital has acquired two strategically-located plots of land, totaling an area of almost 300,000 square meters where the project will be built. The land is in the growing northwestern part of Riyadh on the Salboukh Highway.

The new development will be about 10 minutes from the King Abdullah Financial District and about 20 minutes from King Khalid International Airport.

Dr. Karim El Solh, CEO of Gulf Capital and Co-Managing Partner of Gulf Related, said in the statement his firm has been "studying the Saudi Arabian real estate market extensively and have concluded that there is significant demand for residential compounds in Riyadh."

El Solh said studies suggest there was currently a shortage of over 100,000 residential units in the capital.

 He added that Gulf Related, Gulf Capital's real estate joint venture, "intends to cater for this growing need by launching one of the largest and most appealing residential compounds in Riyadh."

"This development is in line with our vision to pursue marquee real estate development opportunities across the region which will contribute significant, stable income to Gulf Capital and its shareholders," he said.

India Developer Plans 25,000 Homes Across Seven Indian States

Mumbai, India

In a speculated billion-dollar project, Mumbai-based Sahara Infrastructure and Housing, the real estate division of Sahara India Pariwar, announced  it plans to build 25,000 low-cost homes on a total 900 acres in 10 cities across seven states of India.

Ground-breaking is tentatively set to start in 2.5 years with project completion in five years.  Real estate professionals in India say it will be the most ambitious affordable housing undertaking in the country in over 1,000 years.

The tentative estimated price range of the housing is Rs. 5-15 lacs to  Rs 12 lakh or in the estimated range of  $11,000 U.S. to $13,000 U.S.

(10 lakh in Indian Rupees is 1 million Rupees. Depending on the daily exchange rate, it would convert to different amounts of U.S. dollars every day. It is currently  averaging 45 Rupees for every U.S. $1, so10 lakhs would be around U.S $22,222).

The homes will range from 285 square feet studio apartments to one and two bedroom sets. They will be built under the Swapna City brand.

Sahara India managing worker and chairman Subrata Roy said the time to offer affordable housing in India has arrived.

"This affordable housing project is our first such venture," he said at a recent ceremony marking the ceremonial groundbreaking of the project.. "With cities feeling the pressure to cater to supply mass-housing schemes, this project will come as a relief to people who belong to low-income groups."

Roy said "India has always been an attraction to the world for its magnificent architecture and vibrant lifestyle.

"While the magnificence of the ancient marvels of architecture stand tall for the world to see, the standard of living space across the nation has failed to match the change of time and the world standards, primarily due to lack of adequate up-gradation of support infrastructure; load of population and fractured & sporadic planning.

"It is my earnest desire to provide a lifestyle to the citizens of our beloved nation which matches the world's best standards. We have vowed to develop comprehensive real estate projects offering quality lifestyle to people across the board covering not just Tier I cities but also Tier II, III and even small towns, in congruence to the scales of income of people."

He added,  "In our endeavor, we have witnessed many ups and downs in the industry and faced many challenges, many due to the magnitude of our vision; but I am happy that we have proved at all steps that our mission is undeterred.

Don Trump Lays Out Plans for 800-Acre, Billion-Dollar Trump Studio City in South Florida

Trump Studio City - Soundstages/Studio Boulevard

An 800-acre, billion-dollar film production studio could become a reality in South Florida in the next five years if New York entrepreneur Donald Trump's dream materializes.

Trump's vision of a Universal Studios South undertaking is being reviewed by the Miami-Dade Commission. It will take at least six months before a formal initial vote on the project goes before the commission.

The project is tentatively called Trump Studio City and would be twice the size of Universal Studios in Los Angeles, according to various media reports. Speculated studio sizes would be 25,000 square feet to 250,000 square feet.

Trump Studio City - Event Plaza and Entertainment/Retail Arcade

In a previously unannounced and unscheduled move, Commissioner Joe Martinez presented Trump's plans at a regular public commission meeting June 5, 2012. Martinez is running against Mayor Carlos Gimenez in the August election.

Gimenez said he couldn't comment on the plan because it was not on the regular meeting agenda. This was the first he had heard of it, he said.

Still, the commission voted unanimously for Miami-Dade to begin a feasibility study on the project.  Of primary concern to the commission is how much of the land in question near the Homestead Air Reserve Base is contaminated and not fit to build on.

Trump Studio City - Event Plaza and Entertainment/Retail Arcade

Homestead Base officials told The Miami Herald they were unaware of Trump's proposal. Smaller studios recently built in Miami have not had sustained success.

For Martinez, Trump's plan is his second pitch to fellow commissioners for a similar project. He pitched the idea of a Homestead film studio for the first time in 2001.

He told CBS 4 News in Miami, "Back then, I thought it was such a great idea that I thought I would just propose it to my colleagues and it would pass and people would flock here. I've learned. I've matured. And I knew I had to get someone with a name."

Hotel Investment Volumes in U.S. Reach $5.1 Billion Thus Far in 2012, Private Equity Most Active Investor Group

According to a new report by Lang LaSalle Hotels, U.S. hotel transaction volumes reached $5.1 billion through May 2012, representing the second highest volume over the past four years. Their data excludes note sales, recapitalizations and foreclosures, as well as the previously announced $1.9 billion Motel 6 transaction that has not closed yet.

"The volume of capital flowing to hotel real estate remains high as acquisitive investors enthusiastically seek opportunities to buy hotels. The average single-asset transaction size reached $40 million during the first five months of 2012, representing a slight increase over the average deal tracked between 2006 and 2011," said Arthur Adler, Americas CEO of Jones Lang LaSalle Hotels. "Underpinning investor confidence is the continued strength in hotel operating fundamentals, which are solid across all metrics. On a national basis, hotel revenue per available room (RevPAR) has maintained the strong growth rate posted in 2011."
 

The first five months of 2012 represent the second highest start to a year since 2008, only exceeded by the first five months of 2011 when real estate investment trusts (REITs) dominated purchases of $100+ million prime urban assets. During that same period of time in 2011, total transaction volume was $6.4 billion.  The average price per key for single assets that traded year-to-date 2012 topped $194,000, five percent above the full-year 2011 level. This level far exceeds the average price per key recorded over the past several years, and emphasises the strength of hotel fundamentals and high level of investor interest.

Private equity investors have become the most active hotel buyers, representing a shift from the first five months of 2011, "Private equity investors continue to make headlines and account for 52 percent of transaction volume, followed by real estate investment trusts (REITs), as the second most acquisitive group, representing 25 percent of purchases by volume. REITs remain active bidders for a number of hotel transactions, and are expected to be increasingly active in the market in 2012," added Adler.

Single asset hotel transactions dominated the landscape, accounting for 70 percent of deal volume. High-quality assets with in-place cash flow located in key urban markets have made up the bulk of the hotel trades tracked thus far in 2012.

Jones Lang LaSalle Hotels' Hotel Investor Sentiment Survey, released last week, reveals that investors' "buy"' sentiment again marks the dominant investor strategy in the United States, with 46 percent of respondents indicating that their primary investment intention over the next six months is to acquire assets. Concurrently, investors' intentions to "sell' assets are at a four-year high, pointing to an increasingly active transactions market over the next six months. The survey is directed toward the world's 6,000+ leading hotel investors and owners.

"Based on the pace recorded thus far in 2012, the firm remains confident that the transaction volume forecast of up to $15 billion for full-year 2012 will be met as momentum in the market further accelerates," concluded Adler

Mortgage Application Volumes Uptick in U.S.

According to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending June 1, mortgage applications increased 1.3 percent from one week earlier. This week's results include an adjustment for the Memorial Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 1.3 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index decreased over 9 percent compared with the previous week.

The Refinance Index increased 2 percent from the previous week to its highest level since February 10, 2012.  The seasonally adjusted Purchase Index decreased slightly from one week earlier to its lowest level since April 13, 2012. The unadjusted Purchase Index decreased 13 percent compared with the previous week and was 3 percent lower than the same week one year ago.

The refinance share of mortgage activity increased to 78 percent of total applications from 77 percent the previous week.  This is the highest refinance share since February 24, 2012.  The adjustable-rate mortgage (ARM) share of activity remained at about 5 percent of total applications.

In May 2012, among home purchase applications, 85 percent were for fixed-rate 30-year loans, 7 percent for 15-year fixed loans and 6 percent for ARMs.  The share of purchase applications for "other" fixed-rate mortgages with amortization schedules other than 15 and 30-year terms was 2 percent of all purchase applications. The number of home purchase applications with a 15-year fixed term is at its highest level of the year as a share of all home purchase applications, but the number of 15-year fixed refinance applications is at its second lowest level of the year as a share of all refinance applications.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.87 percent, the lowest rate in the history of the survey, from 3.91 percent, with points remaining unchanged at 0.46 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.  The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 4.13 percent, the lowest rate in the history of the survey, from 4.23 percent, with points decreasing to 0.35 from 0.40 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged at3.70 percent, the lowest rate in the history of the survey, with points increasing to 0.60 from 0.59 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.20 percent, the lowest rate in the history of the survey, from 3.23 percent, with points increasing to 0.46 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs increased to 2.78 percent from 2.77 percent, with points increasing to 0.40 from 0.38 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.

IMG Worldwide, Dogus Group Plan Multi-Billion-Dollar JV to Build Mixed-Use Projects in Turkey, Turkic Republics

Istanbul, Turkey

This wasn't supposed to happen during a world-wide recession.

But the speculated multi-billion-dollar deal has already closed. The players are Istanbul-based Dogus Group and New York City-headquartered IMG Worldwide.

IMG already has active joint ventures in Brazil, India and China.

Dogus, one of Turkey's largest private-sector conglomerates with a portfolio of 126 companies and 30,000 employees in finance, media, tourism, automotive, real estate, energy and construction assets, and IMG Worldwide, the global sports, fashion and entertainment company, jointly announced they have signed an agreement to form a 50/50 joint venture company in Turkey.

The JV has been agreed to and signed by Ferit Sahenk, Chairman of Dogus, and one of the country's most successful businessmen, and Mike Dolan, Chairman and Chief Executive Officer of IMG.

The JV's mission will be to create and develop a broad range of sports, fashion and entertainment projects in Turkey and the Turkic Republics, including Azerbaijan, Kazakhstan, Turkmenistan and Uzbekistan.

No estimated date for the beginning any of the projects was disclosed. Neither was a projected development cost for the various undertakings.

The JV has its eye on the 2020 Olympic Games and the 2020 European Football Championships. Turkey is bidding to be the host country for both global events.

Dogus Group already  is a major supporter of sports in Turkey through its sponsorship of Turkish national soccer and basketball teams.  Sahenk is a member of the Fenerbahce Football Club.

International property analysts say they cannot recall a comparable proposal in the history of Turkey or its immediate neighbors.

Besides the broad scope of the envisioned  properties themselves, the plans are considered unusual in that they aim to establish a fully equipped sports school with a professional team, in order to raise world class athletes in Turkey and surrounding areas.

"Young athletes coming from all over Turkey will be trained and raised as world-class athletes," Sahenk told a recent press conference in Istanbul. . "The athletes will be able to compete and successfully represent Turkey in the global arena. The athletic training will be accompanied with foreign language and academic education."

The partners' proposed agenda is huge.

Initial plans for the JV include, but are not limited to:

• Creating sports academies, camps and clinics;
• The building, construction, ownership and operation of stadiums, sports and entertainment venues;
• Staging, representing, managing, owning and selling fashion-related events;
• Representation for sale of sports media and sponsorship rights;
• Staging, representation, management, ownership and sale of sports and events including football (soccer), tennis, sailing regattas, golf, motor racing, action sports, beach games, mass participation events, cycling and triathlons.

Asia Pacific Office Market Rents Holding Steady in Q2

According to Jones Lang LaSalle's regional market experts, office rents in Asia Pacific are holding steady in Q2 while more companies are maintaining a 'wait and see' approach to location decisions.

Jones Lang LaSalle's Asia Pacific office leasing markets report for the second quarter of 2012 says those markets that were experiencing office rental declines in previous quarters are anticipating a slowdown in the rate of decline.

For example, a three to four percent fall in Grade A office rents this quarter in Hong Kong compared to an actual 6.3 percent decline in the first quarter. Similarly, in Singapore a fall of three percent is anticipated by the end of the current quarter, compared to an actual 5.2 percent decline in Q1 2012.

Elsewhere in the region it is once again a mixed picture; the Jones Lang LaSalle markets teams are predicting:

• Some growth in Grade A office rents in Shanghai, Beijing, Jakarta, Manila, Mumbai and Delhi.

• Grade A office rents to remain stable and show little movement in Tokyo, Seoul, Sydney and Melbourne.

• Some declines in Singapore and Hong Kong but at a slower pace than previous months; three percent and 3-4 percent respectively. A decline of around two percent is expected in Ho Chi Minh City.