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.

Miami, Dubai and London Among Top Global Cities Enjoying Double-Digit Price Growth in 2012

South Beach, Miami

According to a new Global Cities Report by London-based real estate consulting firm Knight Frank, fifteen of the 26 cities tracked by the Prime Global Cities Index (58%) recorded flat or positive price growth in the year to September, but over the last quarter 20 of the 26 cities (77%) have seen flat or positive growth - indicating an improving scenario.

The index now stands 18.7% above its financial crisis low in Q2 2009 with Hong Kong, London and Beijing having been the strongest performers over this period, recording price growth of 52.9%, 45.4% and 39.5% respectively.

Five cities recorded double-digit price growth in the year to September; Jakarta, Dubai, Miami, Nairobi and London - a city from each of the five key world regions.

Knight Frank Global Cities Report Highlights for Q3, 2012

• The index rose by 1.1% in the three months to September, down from 1.4% last quarter

• Prime prices across the 26 cities tracked by the index increased by 3% in the 12 months to September

• Cities in Europe remain the weakest performers, recording a fall of 0.5% on average in the last 12 months

• Jakarta (up 28.5%) was the strongest performer in the year to September

• Economic uncertainty together with few strong-performing alternative asset classes is strengthening demand for luxury bricks and mortar

Dubai, UAE

Although Asia heads the pack - Jakarta recorded 28.5% annual growth - the results this quarter suggest that demand for luxury homes is only loosely linked to the strength of regional economies (Asia Pacific has only two cities in the top ten compared to Europe's three). Instead, the flow of international wealth and the attitudes of HNWIs are increasingly influential.

Cities such as Dubai, Miami, Nairobi and London are increasingly considered investment hubs for HNWIs in their wider regions. In the wake of the Arab Spring, Dubai has been seen as a relative safe haven for MENA buyers while Venezuelan and Brazilian investors have looked to Miami to limit their exposure to domestic political and economic volatility.

Not all prime residential markets are benefitting from the global economic uncertainty. In Paris, although prices held firm in the third quarter, sales activity was muted as buyers of all nationalities adopted a "wait and see" attitude. Vendors are unwilling to reduce prices until there is greater clarity from President Hollande and the Eurozone leaders in relation to the debt crisis.

Asia's prime markets look to be entering a period of more moderate growth due in part to the regulatory measures aimed at cooling prices and improving domestic affordability.

London, UK

James Price of Knight Frank's International Residential Development team tells World Property Channel, "Aside from London, it would appear the other strong performers are either those established international markets that experienced a lull but are now 'kicking on' again (e.g. Miami, Dubai) or those that could be described as second tier international cities - strong established markets, but not global 'gateway' cities (e.g. Zurich, Vienna, San Francisco), where interest has driven price rises from a lower base."

Blackstone Lays Out $200 Million In India's Biggest Acquisition Deal

New York City-based Blackstone is investing $200 million (Rs 1,000 crore) for a 50 percent stake in three Indian business parks totaling 10 million square feet. The deal is being called the largest of its kind to date in India.

The properties are Embassy Golf Link and Manyata Embassy Business Park in Bangalore and Embassy Tech Zone in Pune.

Embassy Property Developments is currently 51%-owned by Embassy, which will now purchase the remaining 49% of share capital from Mauritius-based financial investor Alta Vista. That transaction will make Alta Vista a subsidiary of Embassy Property Developments, according to the Asian Venture Capital Journal.

A Blackstone spokesman in New York said the private equity firm does not comment on pending or completed transactions.

The Economic Times of Mumbai reports the Blackstone deal beats Citigroup's acquisition of a Mumbai office building earlier this year for Rs 985 crore. That transaction eclipsed Maple Tree's Rs 800-crore buyout of two million square feet from Assetz Global Technology Park and Baring PE Partners' Rs 500-crore investment in RMZ Corp for six million square feet.

Embassy Golf Link is a five-million-square-foot, 65-acre, business park. Manyata Embassy Business Park is a 100-acre integrated mixed-use development business park with a developable area of 18.29 million square feet.

Embassy TechZone in Pune is spread over 70 acres with 52 acres designated for a special economic zone.

Big-name tenants at Embassy properties in Bangalore and Pune include IBM, Capgemini, Mercedes Benz, Atos Origin and Accenture. Blackstone and Embassy will jointly control and manage the entity in which the fund has invested. Embassy will be responsible for completing the project,

The Economic Times reports Embassy has developed nearly 25 million square feet  mainly in business parks valued at an estimated  Rs 10,000 crore ($2 billion US).

The company is also increasing its presence in the residential segment and has eight residential projects totaling 10.56 million square feet under construction. It has a total debt of Rs 1,200 crore, of which 85% is linked to rentals. The company has a total land bank of 1,300 acres in Bangalore.

Buffalo Lender Provides $92.6 Million to TIAA-CREF for Apartment Buy in Washington DC

MassCourt East End luxury apartments, Washington DC

M&T Realty Capital Corp., a wholly-owned subsidiary of 156-year-old Buffalo, NY-based M&T Bank (NYSE: MTB), has loaned New York City-based TIAA-CREF $92.6 million to buy the 371-unit MassCourt East End luxury apartments in the Mount Vernon Triangle neighborhood of Washington, DC.  Terms of the financing were not disclosed in a news release from the Washington office of HFF which arranged the deal.

India's First REIT Raises $81.3 million in Over-Subscribed Issue

Investors in Asia, Europe and the U.S., looking for a vehicle to fight inflation, have over-subscribed India's first real estate investment trust.  Singapore Stock Exchange-listed Ascendas India Trust (a-iTrust) closed when it reached $81.3 million (Singapore $100 million).

The trust was initially looking to raise $70 million Singapore dollars. (One Singapore dollar equals 81 cents US)

The private placement is offering new units in a-Trust. at 72 Singapore cents per unit. The joint placement agents were Citigroup Global Markets Singapore Pte. Ltd and DBS Bank Ltd.

According to the company's statement, the placement saw strong participation from Asian, U.S. and European investors and was about 2.6 times subscribed based on the upsized issue of S$100 million or 139 million New Units. The new units represent 18 per cent of existing units.

The company said the issue price of S$0.72 per new unit represents a discount of 9.2 per cent to the adjusted volume weighted average price (vwap) of S$0.7933 per unit for trades in the units on the SGX-ST for the full Market Day on September 27 and a 22 per cent premium to the net asset value per unit based on a-iTrust's unaudited financial results for the first quarter ending June 30.

An announcement will also be made when the date the new units are expected to be listed on the SGX-ST.

Ascendas India Trust was publicly listed in 2007. This  is the fund's first attempt in issuing a follow-on equity fund raising for its private placement. The money raised through this offer will be used to finance a-iTrust's initiatives, the company said.

a-iTrust is developing Aviator, a 6 lakh square feet multi-tenanted building in International Tech Park Bangalore (ITPB) due for completion in December 2013.

U.S. Construction Market Annualized Spend Rate at $851.6 Billion in September

According to the U.S. Census Bureau of the Department of Commerce, U.S. construction spending during September 2012 was estimated at a seasonally adjusted annual rate of $851.6 billion, 0.6 percent (±2.1%) above the revised August estimate of $846.2 billion. The September figure is 7.8 percent (±2.1%) above the September 2011 estimate of $790.3 billion.

During the first 9 months of this year, construction spending amounted to $624.8 billion, 8.9 percent (±1.3%) above the $573.7 billion for the same period in 2011.

Private Construction

Spending on private construction was at a seasonally adjusted annual rate of $580.5 billion, 1.3 percent (±1.3%) above the revised August estimate of $572.8 billion. Residential construction was at a seasonally adjusted annual rate of $285.9 billion in September, 2.8 percent (±1.3%) above the revised August estimate of $278.0 billion. Nonresidential construction was at a seasonally adjusted annual rate of $294.6 billion in September, 0.1 percent (±1.3%)* below the revised August estimate of $294.8 billion.

Public Construction

In September, the estimated seasonally adjusted annual rate of public construction spending was $271.1 billion, 0.8 percent (±3.1%) below the revised August estimate of $273.4 billion. Educational construction was at a seasonally adjusted annual rate of $66.7 billion, 0.8 percent (±3.6%) below the revised August estimate of $67.2 billion. Highway construction was at a seasonally adjusted annual rate of $78.4 billion, 1.6 percent (±7.4%)* below the revised August estimate of $79.6 billion.

Escalante Golf Unveils New Master-plan for Florida's Black Diamond Development

Black Diamon Quarry Course

Escalante Golf, owner-operator of the exclusive Black Diamond golf club, recently unveiled a new multi-million dollar master-plan for the iconic golf course development. Located about 75 miles north of Tampa, Black Diamond is highlighted by the famed Tom Fazio-designed Quarry Course.

In concert with Black Diamond's 25th anniversary, the master-plan features a major clubhouse redesign; numerous golf course enhancements including bunker renovations, course lengthening and amenity upgrades; and new residential products and memberships.

"Our goal is to build on Black Diamond's world-class reputation to ensure the club's long-term sustainability and exclusivity," says David McDonald, president of Escalante Golf. "The comprehensive master-plan demonstrates a continuing commitment to our existing members, and is a point of pride and emphasis in attracting new members and residents who share our vision and values."

Phase one begins this month with extensive clubhouse renovations. The new interior design was crafted by nationally recognized, Club Design Associates and features upgrades to the dining facilities, boardrooms, outdoor patios, flooring, furniture and mechanical systems. The second phase will focus on the golf shop, retail environment and locker rooms.

To further elevate the Black Diamond experience, golf course architect David Whelchel will work closely with Escalante and Black Diamond to identify opportunities to lengthen and modernize the golf courses.

Meanwhile, in another sign of a rebounding Florida real estate market, Black Diamond Real Estate was beginning construction on the community's first "show" home called The Augusta. Overlooking the fourth hole on the Highlands Course, the architecturally appealing and energy efficient home marks a new era of home building inside the private gates.

Black Diamond's new 2,800-square-foot model home features two master suites, a guest bedroom, three baths, study, extended lanai, family organization area, and several flex options.  According to Black Diamond officials, delivery of the Augusta show home is scheduled on or around December 15 in time for the 2013 season.

Also in the works at are Golf Cottage designs starting at 1,900 square feet, and Village Homes starting at 2,200 square feet.  Construction of these models is scheduled for late fall.  Three best in class builders are also available for design and construction of custom homes on available lots

57,000 U.S. Foreclosures Completed in September, Says CoreLogic

According to CoreLogic's latest National Foreclosure Report for September, there were 57,000 completed foreclosures in the U.S. in September 2012, down from 83,000 in September 2011 and 59,000 in

August 2012. Prior to the decline in the housing market in 2007, completed foreclosures averaged 21,000 per month between 2000 and 2006. Completed foreclosures are an indication of the total number of homes actually lost to foreclosure. Since the financial crisis began in September 2008, there have been approximately 3.9 million completed foreclosures across the country.

Approximately 1.4 million homes, or 3.3 percent of all homes with a mortgage, were in the national foreclosure inventory as of September 2012 compared to 1.5 million, or 3.5 percent, in September 2011. Month-over-month, the national foreclosure inventory was down 1.1 percent from August 2012 to September 2012. The foreclosure inventory is the share of all mortgaged homes in any stage of the foreclosure process.

"The continuing downward trend in foreclosures along with a gradual clearing of the shadow inventory are signs of stabilization and improvement in the housing market," said Anand Nallathambi, president and CEO of CoreLogic. "Increasingly improving market conditions and industry and government policy are allowing distressed homeowners to pursue refinancing, loan modifications or short sales rather than foreclosures."

"Homes lost to foreclosure in September 2012 are down 50 percent since the peak month in September 2010 and 22 percent less than the beginning of the year," said Mark Fleming, chief economist for CoreLogic. "While there is significant progress to be made before returning to pre-crisis levels, the trend is in the right direction as short sales, up 27 percent year over year in August, continue to gain popularity."

Highlights as of September 2012 include:

• The five states with the highest number of completed foreclosures for the 12 months ending in September 2012 were: California (108,000), Florida (92,000), Texas (59,000), Georgia (55,000) and Michigan (51,000). These five states account for 47.7 percent of all completed foreclosures nationally.

• The five states with the lowest number of completed foreclosures for the 12 months ending in September 2012 were: South Dakota (20), District of Columbia (58), Hawaii (436), North Dakota (583) and Maine (625).

• The five states with the highest foreclosure inventory as a percentage of all mortgaged homes were: Florida (11.5 percent), New Jersey (7.3 percent), New York (5.3 percent), Illinois (5.2 percent) and Nevada (4.9 percent).

• The five states with the lowest foreclosure inventory as a percentage of all mortgaged homes were: Wyoming (0.5 percent), Alaska (0.7 percent), North Dakota (0.7 percent), Nebraska (0.9 percent) and South Dakota (1.1 percent).

Russia's Commercial Real Estate Market Reviving Slowly

Without citing specific figures, the Voice of Russia states the commercial real estate market in the country is slowly reviving but has a long way to go.  Office space, especially, is in demand but supply is low.

CBRE Russia predicts the market should begin recovery by the end of this year following a sharp economic downturn in the country.

Knight Frank forecasts office rents will begin to rise by the end of this year due to limited delivery of new space.

The Voice of Russia notes the commercial real estate market was among those hit particularly hard by the 2008 world financial crisis,

Growth prospects in Russia  are "significantly impeded by uncertainty surrounding the European debt crisis worries, with investors clearly focusing on prime property and risk avoidance," the Voice of Russia reports.

"Along with this trend, the volume of transactions on the commercial real estate market in the UK and Germany this year far exceeds that of other European states."

The Voice of Russia concedes  "the country's office space segment can hardly be called a 'safe haven' due to its ever-present cloud of volatility. At times of economic instability, foreign companies strive to shed all non-core operations, making it unrealistic to expect any sizable expansion of their presence in the country."

The Voice of Russia cites CBRE data that show in 2012 only 20% of investments in Russian commercial real estate market came from abroad, while 80% has a domestic origin.

Valentin Gavrilov, research director at CBRE Russia, told the Voice of Russia by  phone, "The main problems are volatility and lack of investment grade assets in Russia currently. One emerging trend that we see is related to foreign investors' readiness to enter projects on early stages of construction. They are trying to develop high quality properties themselves, rather than search for completed assets."

Gavrilov added, "The process allows us to speculate about a transition that is presently happening in this segment. As a result, foreign players become more accustomed to building high grade objects themselves with the aim to either sell them later on, or keep them for investment purposes."