A report from the Wall Street Journal. “UBS Group AG is stepping up efforts to stem the bleeding at its $20 billion flagship real-estate fund amid concerns over its retail holdings. As late as June 2015, Trumbull had a $1.2 billion backlog of funds looking to invest, and no backlog of investors looking to get out, according to RVK for the Ohio Bureau of Workers’ Compensation. Core funds ‘just had incredible market tailwinds,’ said Christy Fields, a managing principal at consulting firm Meketa Investment Group, Inc.”
“But analysts say once a fund faces a rise in redemption requests, capital outflows can be hard to stop. If a fund manager doesn’t have enough cash to meet the requests, it has to sell properties. That often takes time, causing a backlog and increasing pressure on the fund to sell. ‘When there is a redemption queue investors often feel they have to get in line so they aren’t the last ones left to turn off the lights,’ said Nori Lietz, a faculty member at Harvard Business School.”
The Edmonton Journal in Canada. “Based on interviews with builders, developers, realtors and other industry insiders, David Yee, Edmonton tax leader for PWC Canada notes buyers are facing an abundance of choice in both the new and resale markets, as well as the rental side. And they’re looking for trouble-free, move-in ready products. ‘The homebuilders that we’ve talked with still concede it’s a buyers’ market so people have a lot of choice,’ says Yee.”
The Manchester Evening News in the UK. “Home owners living in a ‘luxury’ new build development say their lives have become a ‘nightmare’ after finding dozens of faults in their properties. Some residents living in the Barnes Village development said they were promised ‘luxurious’ and ‘elegant’ family homes when they purchased off-plan two years ago. But, months after moving in, they say the development is wracked with issues. Michael Morris, 62, who purchased a three bed apartment with his wife inside the renovated hospital building – costing £330,000, said: ‘It has been a nightmare, in our particular circumstances it has been life-threatening.’”
“He added: ‘(Henley) are a nightmare to deal with. They are an outfit from London, they think they can come down here and think we are just cobbled streets and flat caps.’”
The Times of India. “Investors who bought luxury apartments, hoping property prices would appreciate and they would earn fabulous rents, now face a harsh reality. Not only have prices stagnated or dropped, but rental incomes from such flats are low. ‘It’s true. Home owners who have leased big apartments are left with little in hand,’ said Pranay Vakil, chairman of Praron Consultancy.”
“While owners rue investing in what has turned out to be a bad rental market for them, the situation couldn’t possibly better for tenants. In this zero-sum game, the rentier’s loss is the renter’s gain.”
The South China Morning Post. “Hong Kong’s largest property agencies with almost 900 sales offices in the city are asking for discounts on new leases as they brace for further slide in sales after the industry’s worst year since 2016. ‘We have leases coming up for renewal nearly every day and in current market conditions, it will not have much impact to lose some branches,’ said Louis Chan, vice-chairman for Asia-Pacific at Centaline. ‘We are in a situation where no one dares to come out at all’ to view properties, he added.”
The Korea Times. “As the housing bubble is showing no signs of abating, the government is on track to introduce much tighter and broader regulations to normalize the market, in a move to divert the capital flow into more constructive sectors, such as the stock market. But real estate experts here and abroad shared the same view that the current ‘regulations-cure-all’ approach will not be able to calm the overheated market. Experts argued that a shift in the real estate tax system here is crucial to change the ‘real estate-first’ mindset of Korean investors.”
“‘The U.S. government levies a considerable amount of property taxes, with those who purchase a house worth about 500 million won paying almost 5 million won, or 1 percent of the housing price annually, as a property tax,’ Sung Choi, a real estate agent based in Oregon, the U.S., said in an email interview. But under the same standard of comparison, the Korean government imposes only about 1.1 million won for the homeowner’s annual property tax.”
“Kwon Dae-jung, a professor of real estate studies at Myongji University, said controlling housing prices with regulations is a very risky idea, as this goes against the market logic of supply and demand. Also, few other countries intervene in the real estate market by introducing such multiple and specific regulatory packages, according to the expert.”
“‘The U.S. government minimizes its intervention into the real estate market, and adopts flexible regulation by simply controlling loans from time to time,’ he said. ‘The U.S. authority never introduces unnecessary and unreasonable regulations simply because there is a surge in housing prices in some specific areas.’”
From Domain News in Australia. “Domain’s Property Price Forecasts – 2020, released Wednesday, predicts houses in Sydney will rise by 10 per cent over 2020 to a new median of around $1.25 million, while apartments will rise by 8 per cent to a new median of $790,000 – just above the peak reached in June 2017. And if FOMO, or Fear Of Missing Out, sets in as it has in the past, those increases could reach even more record-smashing heights, said forecast author and Domain economist Trent Wiltshire.”
“The major risk lurking in the wings, however, is the coronavirus, which could impact China’s economy massively, with a follow-on slug to Australia, Mr Wiltshire says. ‘The economy overall is sluggish and businesses aren’t keen on investing, but that means interest rates will stay low to try to bolster the economy, which directly feeds into property prices. The big risk, however, is the coronavirus which could have a significant short-term impact on our tourism and education sectors and cause the economy to soften more. It’s possible the outbreak will be much more severe and cause a significant economic slowdown in China, which would have a massive impact on Australia’s economy.’”