London tops global real estate investment despite Brexit uncertainty

Commercial real estate remains resilient in the face of geopolitical tensions

– Los Angeles rises to second place for commercial real estate investment

– Gap closing between ‘Big Seven’ and the chasing pack – Shanghai, Sydney and Amsterdam surging

– Investors still cautious of cities in ‘Emerging’ economies, which struggle to reach Top 30 global rankings
DAVOS, Switzerland, Jan. 24, 2018 /PRNewswire/ — London ranked as the top city for global real estate investment in 2017 according to research published today by JLL (NYSE: JLL), indicating Brexit uncertainty didn’t hamstring real estate investment as had been feared.

The figures highlight investment in London increased by 35% from 2016 to US$33 billion in 2017, while Los Angeles shifted up to second place in the Top 30 with US$23 billion invested and New York moved into third place with US$21 billion.
The latest JLL data shows resilience in the global real estate market, despite geopolitical uncertainty. Transaction volumes reached close to US$700 billion for the full-year 2017, exceeding the robust levels of 2016.

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Investment activity is poised to continue its strong performance, with the weight of capital seeking to access the sector still significant and investors actively looking for new ways to deploy funds.

Richard Bloxam, Global Head of Capital Markets at JLL said: “It may come as a surprise that the London commercial real estate market has stood firm in the first full year after the UK’s decision to leave the European Union. 2018 will see a number of key decisions during the negotiations and will give us a much clearer picture of what the post-Brexit future will look like.”

Expectations for 2018

Even with an expanding amount of capital targeting real estate, JLL projects that real estate investment volumes will be 5-10% lower in 2018 as the challenges of finding available assets to purchase, combined with continuing investor discipline, are likely to constrain growth in volumes. This evolution in capital markets will accelerate the drive for investors to consider new strategies with a greater focus on entity-level deals, recapitalisations, refinancing and broader debt strategies, as well as a wider investment universe of real estate sectors and cities.
The gap will continue to close between the leading cities (the Big Seven) attracting around a quarter of the world’s investment flows over the past three years, led by London and New York, and the next tier (the Contenders), such as Amsterdam, Los Angeles, San Francisco, Shanghai, Sydney and Toronto which are rising to compete with elite cities for capital and businesses.
Established locations which are hubs for science and technology industries (Innovators), like Berlin, Boston and Seattle, will continue to strengthen their status as investment destinations.
With value increasingly difficult to find at this stage in the extended investment cycle, we could see more ‘Lifestyle’ cities enter the Top 30 such as Vancouver, Brisbane and Oslo.
Despite a widening investment universe and strong growth prospects, many ‘Emerging’ cities like Mexico City, Moscow, Manila and Mumbai need to further improve their real estate transparency to increase their attractiveness to investors, who will otherwise continue to gravitate toward cities in more mature and transparent markets.
Big Seven Cities Dominate

The global investment landscape continues to be dominated by the Big Seven1 cities – an elite group of the world’s most globalised and competitive cities – which include London, New York, Tokyo, Paris, Singapore, Hong Kong and Seoul; all seven were featured among the Global Top 10 in 2017.

The data reveals a power shift between two of the Big Seven – London and New York – and Contender Los Angeles. London took the top position as the world’s most traded city with investment volumes rebounding by 35% from 2016 lows, supported by significant activity by cross-border purchasers, in particular from Hong Kong, the U.S. and Germany. The Asian members of the Big Seven also saw investment activity increase in 2017, with major transactions by offshore investors contributing to double-digit growth in Hong Kong, Singapore and Tokyo.

Contenders Closing the Gap

Despite dominance at the top of the rankings, the overall share of global investment accounted for by the Big Seven fell to 19% in 2017, its lowest level since 2006. A lack of product and high pricing for prime assets in this group has contributed to strong investor demand in a second tier of Contenders – cities with many of the gateway functions, scale and assets of the top group, pushing to join the established elite.

In true Contender style, Los Angeles has displaced New York in the 2017 global rankings, climbing into second place, and Amsterdam saw investment volumes nearly double in 2017. Other Contenders such as Sydney, Shanghai and Toronto also saw higher levels of activity, with Shanghai registering its strongest year on record.

City Clustering Methodology

The typology is informed by over 300 global indices and benchmarks that assess the relative performance of cities including finance and business activity, investment profile, demographic diversity, innovation, infrastructure, global reach, quality of life, culture, governance and institutional framework. Other factors include core analysis of city size, GDP per capita, growth rates, industrial structure, position within the national and continental ‘system’ of cities and in-depth experience working with hundreds of city governments and leadership teams in the development of city and metropolitan strategies.

Save the environment: Build homes with mud, not cement

Architect Revathi Kamath explains the economic and ecological benefits of using mud to construct homes


Architect Revathi Kamath believes in adhering to green ideologies. Delhi-based Kamath, is hailed as a pioneer of mud homes in India. “Mud is cheap, is a ‘breathable’ material and helps to maintain fairly even temperatures inside the house. Besides being eco-friendly, it is malleable and offers better insulation than concrete structures,” says Kamath, explaining the benefits of using mud to construct homes. Moreover, it reduces dependence on the traditional supply chain of construction materials, as mud can be procured locally. Mud bricks are also strong and last for years, adds Kamath, who left no stone unturned, in building a sustainable home for herself.

Setting an example

Her two-storeyed mud house in Anangpur village, Haryana, is situated on a one-and-a-half-acre abandoned quarry. It has been constructed, through a rearrangement of natural materials found on the site and its surroundings, along with minimal and prudent use of non-renewable, non-biodegradable and fossil resources, like metals, stone and cement.

“It used to be a barren land. Now, there are over 200 trees, all around the house. We used mud from our land, moulded the bricks on site and sun-dried them. During the warm summer months, earth-based houses are naturally insulated. So, the home is cool in summers and warm in winters,” Kamath explains.

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There is no air-conditioner in her house. A green roof, with live grass and vegetation, covers the house. Atomiser sprays in the courtyard, keep the home cool naturally. The air in the courtyard, which is cooled by the atomisers, is drawn into the living spaces by low-speed blowers, through the traditional wet ‘khas tati’ (a curtain made of khus-vettiver roots).

The drainage system of the house, has a natural recycling process that purifies the waste water through an anaerobic chamber. Above the chamber, plants draw up the water and purify it, as well. Three such anaerobic digesters, treat the entire waste water produced by the household and discharge the clean treated water to an earthen embankment, to irrigate the land.

Creating sustainable habitats

Kamath is a post-graduate in urban and regional planning, from the School of Planning and Architecture, in Delhi. She and her husband set up Kamath Design Studio in Delhi, almost three decades ago and have built eco-friendly projects across the country. Three of her projects were nominated for the Aga Khan award. Her famous designs include the Mud Resort in Madawa, Rajasthan; the Museum of Tribal Heritage in Bhopal; the Lakshman Sagar Resort, the Jiva Ashram animal shelter in Delhi, and many others.

Kamath has also designed the Gnostic Centre on the outskirts of Delhi, entirely out of bamboo and mud. She is presently working on a healing centre in greater Faridabad, which is designed using bamboo extensively.

“Architects should realise that the purpose of humanity, is to give dignity to all forms of life. Sustainable architecture is the need of the hour. It is important, to use materials that least destroy our environment. Everything should go back seamlessly, from where it has come. Mainstream developers and architects, have to be ecologically-sensitive and create sustainable habitats, using construction standards that focus on conservation of water, energy and materials,” maintains Kamath.

Kamath, who is known for conceiving the ‘Evolving Home’ concept for redevelopment, also has several suggestions for individuals:

  • It is better to avoid synthetic paints. Instead, opt for biological products, such as plant-based and water-based colours.
  • Bamboo can be used for door and window frames and window shutters.
  • Grow plants at home, wherever possible.
  • Use solar cooking devices.

“Do not do things today that make tomorrow worse. Man and nature should live harmoniously,” she concludes.

Author:  Purnima Goswami Sharma

Bitcoin fever hits US real estate market

As of the end of last year, the digital currency was listed as a way to pay for some 75 properties for sale, especially in south Florida and California, according to the real estate firm Redfin.

“Bitcoin accepted” is a message now seen in the description of homes for sale in the Miami area.

One seller is going even farther, saying he will take only bitcoin (33 of them to be exact) for his half-million-dollar downtown condo in the Florida metropolis.

Bitcoin has been on a roller coaster ride of late, shooting up to nearly $20,000 a piece in mid-December and then dropping sharply around Christmas. It started the year at around $14,000.

Its use in real estate transactions is novel, and agents are wary because of its high volatility.

“I’d be blown away if a year from now we see hundreds of real estate transactions in bitcoins,” said Jay Parker, Florida CEO for the Douglas Elliman brokerage agency.

Still, such transactions can be useful for foreigners who want to invest in the United States and cannot otherwise do so, said economist and bitcoin expert Charles Evans of Barry University.

“This seems to be driven by international investors who are circumventing inefficient banking and currency controls at home, and by US cryptocurrency enthusiasts,” Evans told AFP.

“The governments in those countries restrict the amount of money that their residents are allowed to transfer abroad through the banking system. Bitcoin enables individuals there to bypass such restrictions,” he added.

This could be a draw for investors, who even before the bitcoin rage were already hot on the real estate market in south Florida.

Nearly half of all foreign buyers of property in south Florida are from Latin America.

According to the National Association of Realtors, over the past five years, investors from Venezuela, Brazil and Argentina—in that order—have led purchases in this part of the state.

Money laundering?

Bitcoin offers another advantage for some foreign investors: it lets them dodge US economic sanctions.

Evans cited the example of Venezuela, which imposes strict currency controls and is enduring runaway inflation that surpassed 2,600 percent in 2017.

What is more, many senior officials in the government of Venezuela’s President Nicolas Maduro have been hit by sanctions imposed by Washington, which considers his administration a dictatorship.

Evans said there is also a lot of interest in bitcoin among Iranians, whom he described as “doubly hit” with restrictions in Iran and international sanctions.

It is an open secret that money laundering fuels the real estate market in south Florida. But instead of hiding the practice, bitcoin could have the opposite effect.

The crypto currency “is a terrible medium for large-scale money laundering, because all bitcoin transactions are recorded in the publicly available transaction record known at the Blockchain,” said Evans.

Although bitcoin has been associated with the drug trade and cyber attacks, Blockchain “leaves a lot of fingerprints,” former Florida representative Jose Felix Diaz told Politico.

“So if you’re using it for illegitimate reasons, the state and the federal government should have every tool at their disposal to go after you,” Diaz said.

Last year, Diaz sponsored a bill-turned-law that includes bitcoin in Florida’s laws for fighting money laundering.

Real estate agent Parker also said money laundering via bitcoin is far from posing a risk because “the beneficial owners of the real estate are always going to be able to be traced.”

Parker said the fad of doing real estate deals in bitcoin could be as volatile as the currency itself.

“I think it’s a gimmick. There’s not much risk. The only risk is if the currency crashes before you can liquidate it,” said Parker.

“I think the people that are using bitcoins to try to market their properties are doing it with the very purpose of getting you to write about it, getting their properties exposure,” said Parker.

UN Habitat Presents Tool for the Implementation of New Urban Agenda

The New Urban Agenda encourages UN-Habitat and others ‘to generate evidence-based and practical guidance for [its] implementation and the urban dimension of the [SDGs], in close collaboration with Member States, local authorities, major groups and other relevant stakeholders, as well as through the mobilization of experts.’ UN-Habitat’s draft Action Framework for Implementation of the New Urban Agenda (AFINUA) aims to set out the essential ingredients for the implementation of the NUA, who should lead each, how they might be measured and how they link to the provisions of the NUA. The 35 key elements are grouped into the following five categories: (1) national urban policies, with six key elements, (2) urban legislation, rules and regulations, with nine key elements, (3) urban planning and design, with eight key elements, (4) urban economy and municipal finance, with six key elements, and (5) local implementation, with six key elements. Cutting across all 35 key elements are the principles of participation and governance.The action framework greatly benefited from inputs gathered at expert group meetings held in Surabaya in July 2016 and New York in April 2017.

Download AFINUA19thApr

UK housebuilders to prefabricate hundreds of homes in factories

One company says it can build house in 20 days in factory, then erect it on site in hours

One of Britain’s major housebuilders is to prefabricate up to a quarter of its homes in a factory, in the latest attempt by the construction industry to tackle the housing shortage.

Berkeley Homes, which builds 4,000 homes a year, is planning to create a facility in Kent next year where builders will work to produce up to 1,000 houses and apartments annually which will then be craned on to sites.

Another company, nHouse, is setting up a factory in Peterborough with the capacity to build 400 homes a year, complete with light fittings, bathrooms, bookshelves and kitchens. Production is expected to start in January.

Fears of a shortage of skilled construction workers caused by an ageing workforce and an exodus due to Brexit are part of the reason for the revival of prefabrication, which last provided a significant number of homes after the second world war.

The government has set a target of building 300,000 homes a year by the middle of the next decade. Despite recent increases in activity, the last annual figure was 190,000.

A Berkeley spokesman said: “We have acquired a 10-acre brownfield site from the Homes and Communities Agency to build a factory for modular homes in Ebbsfleet, Kent. This will have the potential to deliver up to 1,000 homes a year.

“Construction of the factory could begin next year. While the speed of production and the impact on skills and labour are important factors, our real driver is the quality we can achieve with modular housing.”

The nHouse has been designed by the architect Richard Hywel Evans and is made in four modules from engineered pine panels which are transported on the backs of lorries and are then clipped together on site and connected to pre-existing services. Its built-in features include solar panels, a robot vacuum cleaner and even a drone landing pad – looking forward to a time of aerial deliveries.

A three-bed house is on sale to developers or individual householders from £170,000 to £185,000, which is about the same price as a standard house built using wet trades.

Nick Fulford, the director of nHouse, argues that with 100 workers operating on an indoor production line rather than on muddy building sites in the elements, the homes will suffer from fewer snagging problems.

Real Estate Developer Woodbridge Group Files for Bankruptcy Amid SEC’s Fraud Probe

Woodbridge Group of Companies LLC, a high-end real estate developer, filed for bankruptcy amid the departure of its chief executive and an investigation into potential securities fraud linked to $1 billion in investments.
The Chapter 11 filing on Monday in U.S. Bankruptcy Court in Wilmington, Delaware, cited “unforeseen costs associated with ongoing litigation and regulatory compliance.” The U.S. Securities and Exchange Commission has been probing whether Woodbridge defrauded investors who invested more than $1 billion. The agency also sought more information on about 236 limited liability companies Woodbridge formed, according to an October SEC court filing.

Woodbridge said in a statement it’s cooperating with the investigation. Chief Executive Officer Robert Shapiro resigned, but will take on a consulting role as the Sherman Oaks, California-based company seeks to restructure $750 million in debt, according to the statement. He’ll get a monthly fee of $175,000, which will be paid to WFS Holding Co., an entity he controls, according to court papers.

Affiliate Control

“Woodbridge has represented to investors that bona-fide third parties are borrowing money and repaying interest at a high rate, of which the investors in Woodbridge funds get a portion thereof,” the regulator said in an Oct. 31 filing. “However, evidence obtained in our investigation reveals that many, if not all, of these LLCs may be Woodbridge affiliates with Shapiro as their manager.”

Ryan O’Quinn, a lawyer with DLA Piper representing Shapiro, didn’t immediately return a call seeking comment about the SEC’s investigation.

The Woodbridge Group Enterprise operates through a group of affiliated companies that are all directly or indirectly owned by RS Protection Trust, according to court papers. Robert Shapiro or members of his family are trustees, the papers show.

“Although RS Protection Trust retains its economic interests in the debtors, it has relinquished its control rights over them to independent third parties,” the company wrote in court papers filed Monday.

Hankey Capital LLC has agree to provide up to $100 million in debtor-in-possession financing to fund the business as it reorganizes, secured by liens on 28 properties, according to court papers. Larry Perkins of SierraConstellation Partners has been appointed chief restructuring officer.

The company’s units specialize in multi-million-dollar properties, with recent listings including an $11.7 million, 8-bath home in Aspen, Colorado. They also market mortgage notes to individual investors, commercial loans and alternative investments.

Miami real estate tech firm to build global HQ in downtown Orlando, create 100 jobs

A Miami-based emerging real estate fintech company announced today, Dec. 7, that Orlando will become the company’s future global headquarters location.

The World Property Exchange Group Inc., which deploys technology solutions for the global real estate investment market, has offices in New York City, Miami and Irvine, Calif. It will have its downtown Orlando headquarters location open in early 2018 at the Regions Bank tower in Suite 800, where it has a short-term lease, according to the Orlando Economic Partnership.

The company will hire more than 100 people in the next three years for high-wage jobs consisting mainly of computer coders, network engineers, data scientists, cyber security experts, economists, mathematicians and corporate executives, as it builds and deploys the world’s first all-digital, patent-pending, Security Exchange Commission-regulated Real Estate Stock Exchange by the end of 2019.

“Given Central Florida’s indigenous University of Central Florida tech, real estate, cyber security and banking software talent, coupled with the state of Florida’s zero corporate tax rates, lower cost of doing business and great quality of life, Orlando was the obvious choice to plant our company flag as the best place in the U.S. to build, grow and operate our global real estate investment platform,” CEO Michael Gerrity said in a prepared statement.

Saudi real estate market named among world’s worst performers

Saudi Arabia’s real estate market is one of the worst performers in the world, according to new data released by Knight Frank.

Its latest Global House Price Index showed that Saudi Arabia was ranked 55th out of 56 markets analysed during the third quarter of 2017.

The index said prices in the Gulf kingdom fell by 5.4 percent over the past year although there are signs of an improving picture in recent months.
Knight Frank data revealed that prices in Saudi Arabia were up by 0.7 percent and 0.5 percent over the past six- and three-month periods.

The real estate consultancy added: “This quarter marks the inclusion of Saudi Arabia within the index for the first time. Latest data shows prices slipped 5.4 percent on an annual basis meaning it is second only to Ukraine as the weakest-performing market.

“The oil-dependent Saudi economy is struggling to gain traction, which along with the recent introduction of a levy on expatriate workers is stifling housing demand.”
Globally, Iceland topped the Q3 rankings with year-on-year price growth of more than 20 percent, ahead of Hong Kong, the Czech Republic, Malta and Canada.

Overall, the Knight Frank Global House Price Index increased by 5.1 percent in the year to September. Prices increased year-on-year in 88 percent of the countries tracked but almost half saw their rate of growth decline compared with last quarter.

FG finally hands over State House, Marina to Lagos govt

The Federal Government on Tuesday completed the process of handing over the State House, Marina, to the Lagos State Government.

The process which started about 20 years ago was completed with the signing and exchanging of documents between the state government and the Federal Government in Abuja.

The Lagos State Governor, Mr. Akinwunmi Ambode, signed for the state government while the Minister of Power, Works and Housing, Mr. Babatunde Fashola, signed on behalf of the Federal Government.

Speaking before signing the documents, Ambode described the hand over as a sign of greater things and greater collaboration between the state and the Federal Government.
He disclosed that the state government’s intention is to turn the property to a tourist centre that will help improve the economy of the state.

The governor said, “We are delighted to be here on a historic day that finalizes the intention of President Buhari to bring positive change to Lagos.

“We thank the President that approved that the presidential lodge be released to Lagos State.We have been trying for 20 years.

“I am pleased that on a day like this, it is my predecessor and the current minister that is now doing the final hand over. He has also been part of efforts to get the property back to Lagos. It is by God’s doing that he is positioned today to do the final handover.

“We see this as a sign of greater things and greater collaboration between the Federal Government and the state. It will improve the economy of the state because our intention is to turn that property to a national monument that we will christen a National Heritage Centre for Leadership.

“We will also use it as a tourist centre to attract Nigerian and foreign tourists and use it as a means of improving the economy of the state.”

Fashola, on his part, described the hand over as being consistent with the President’s promise to respond to many things that have been left undone.

He said, “We are here to sign and exchange documents which formally vest the Presidential Lodge in Marina in the Lagos State Government in fulfillment of the commitment and promise yet by President Buhari.

“This is a long journey that has come to an end. It is a journey that has taken almost two decades when the state government continued to ask that this property be vested in it. For reasons difficult to understand, it did not happen.

“But a President of change, a promise keeper, has made it happen. So while the state government has already taken possession as handed over by the Presidency, we are here to formally sign and exchange documents that will give the state government right to the property.

“It is consistent with the President’s promise to respond to many things that have been left undone. Projects like Bodo-Bonny Bridge is now bringing hope and expectation to the people of Bonny.

“The project waited for almost 30years and some works have started now. Same thing is happening with the Mambila Project that saw people of Taraba State waiting for almost 40years.”

Fashola said with the hand over, Lagos State has joined the league of states with stories of promise fulfilled.

Ambode was accompanied to the brief ceremony by the Secretary to the State Government, Tunji Bello; and the Commissioner for Information, Steve Ayorinde, among other government officials.

Bad loans push Shelter Afrique to $2.16m loss

Troubled mortgage lender Shelter Afrique has reported a $2.16 million net loss for the six months ended June, compared to a net profit of $1.65 in the same period a year ago on the back of increased provisions for bad loans.

Shelter Afrique’s loan impairment charges — provisions for credit which may not be recovered in full — jumped 173.63 per cent in the half year period to $5.6 from $2 million in a similar period last year.

The housing financier’s loan book dropped by 6.96 per cent in the six month period to June to $263.4 million from $283.1 million.Net interest income rose 19.12 per cent to $8.12 million from $6.81 million the lender said. The company — owned by 44 African governments and the African Development Bank, said total assets reduced 3.48 per cent to $324.79 million.

Shelter Afrique turned to the 44 Shelter Afrique member states who are its shareholders late last year to steady its finances after a year of turbulence.
It said it had received $45 million from its shareholders.

“The company continues to enjoy strong support from its shareholders who have so far injected up to $45 million of new equity capital into the company,” said managing director Femi Adewole told Kenyan-based BusinessDaily.

Mr Adewole said the agency, which has listed a bond on the Nairobi bourse, asked the global rating agency Moody’s in July to withdraw its Caa1 credit rating as it is not “useful” for it at present.

“The rationale was that the service is more useful to Shelter Afrique when the ongoing turnaround actions to better position the company as the leading provider of affordable housing financing is completed,” he said.

Cameroon and African Reinsurance, an institutional shareholder have made payments totaling $5.8m, with Cameroon contributing $2.3million and Africa Re contributing $3.5million.

Speaking on the developments, Acting Managing Director, Femi Adewole, expressed his pleasure, “Our shareholders continue to show that Shelter Afrique is viable and indeed valuable. These capital subscriptions show that our member countries and shareholders understand how critical affordable housing is to the growth of the continent, and how Shelter Afrique can be instrumental to achieving that and the objectives of the new urban agenda that was passed in Quito last year.”

Shelter Afrique also revealed that other shareholders had made commitments to make their contributions before the end of the year. Namely, Ghana, Kenya, Morocco, Namibia, Nigeria, Rwanda, Senegal, Swaziland and Zambia are all committed to a collective $47.2 before the end of June 2017.It is understood, as well, that the company is actively courting Class C shareholders; a new category of shareholders which was passed by the General Assembly in January. The company is said to have begun promising negotiations with some interested parties.

Shelter Afrique noted that shoring up the financial base of the company is in line with the company’s turnaround plan and follows on from the recommendation of the independent forensic report which was commissioned by the board.

Shelter Afrique expects continual engagement with its shareholders and stakeholders, and as it continues to show the value, it plays in achieving affordable housing in Africa and the New Urban Agenda, the organisation is confident it will be able to report on more commitments by shareholders shortly.Shelter Afrique is expected to hold its 36th Annual General Meeting in Zimbabwe in June 2017.

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