Real estate in UAE seen to offer good affordability

DUBAI — Investors should re-balance portfolios in 2013 away from fixed income to take advantage of better returns in other asset classes, including equities, commodities and real estate, according to Emirates NBD Wealth Management, a part of the Middle East’s leading bank.

Mark McFarland, chief investment strategist at Emirates NBD Wealth Management, said on Wednesday that investors should also look closely at alternative asset classes. “Real estate in the UAE continues to offer good affordability while demand is seen rising, particularly in apartment and commercial sectors,” he said.

At a roundtable discussion on Wednesday, McFarland said investors need to run a balanced portfolio of multiple asset classes and geographies in 2013. Emerging market equities and commodities are preferred to US and European fixed income securities, he said.

“Looking at world markets, we see investment opportunities in equities and commodities across the globe; including Mena, where we favour high dividend equities over fixed income,” said McFarland at a recent roundtable: “The Year Ahead: Rising to the Challenge (of Taking Risk).

Besides real estate, McFarland also highlighted fine art. “While not a key component of a balanced 2013 portfolio, this does offer critical low volatility and low correlation to normal asset classes.”

McFarland said US investment spending is recovering while the US financial services and home building sectors are both showing signs of recovery. Although he sees this as positive for the US overall, the consequent increase in demand for supplies to these areas from outside the US — notably from Emerging Markets — should be significant.

“This demand for goods and services should be aided by the continued injection of liquidity, by Central Banking Authorities in the US and Europe, thereby facilitating the flow of capital from Developed to Emerging Markets,” he said.

McFarland is advising investors to hold over-weight positions in Japanese, Asian, Latin American and Russian equities. “Investors should only participate in fixed income if they intend to hold their positions for two to three years. We believe that portfolios should focus on bonds that are investment grade, not junk or high grade as these are either risky or too expensive.” From a commodity perspective, and in keeping with the need to capture emerging growth or recovery, McFarland favours palladium, agricultural, cyclical and industrial vehicles all of which have a direct correlation with Chinese recovery.

McFarland believes that investors should avoid US and EU bonds where yields have fallen sharply in the last two years. Similarly, European equities are at risk of continued political risk while US equities appear to have priced most of the expected positives into current levels. Unless investors are specifically hedging against underlying risk, McFarland believes that inflation and volatility products offer minimal value for 2013 portfolios.

“Foreign exchange remains interesting to Emirates NBD Wealth Management,” he said. “However, portfolios should focus again on Emerging, rather than Developed, Markets.” He highlighted the Russian rouble, Mexican peso, Turkish lira, Malaysian ringgit and the Indian rupee as of interest.

“We believe that the yen is likely to fall further and sterling is under-valued. The euro is tricky as it’s politically vulnerable, but very over-sold. The US dollar will rise in periods of market fear but is a broad sell when growth recovers. The large US deficit will make the US Dollar less attractive than Emerging Markets currencies in general,” said McFarland.

“The key to 2013 will be the potential for growth in the US which, in turn, will generate faster growth from outside the US, mostly in Emerging Markets. This will generate better market returns in emerging markets,” he said.

— issacjohn@khaleejtimes.com

Original post @ http://www.khaleejtimes.com/biz/inside.asp?xfile=/data/uaebusiness/2013/February/uaebusiness_February237.xml&section=uaebusiness

REAL ESTATE: Some debt maturity clocks will ring in 2013

The commercial property markets appear to be coming back, but professionals in the industry warn there are still hazards to watch out for this year.

One of them is the maturation of equity notes, some of which are coming due right about at the fifth anniversary of the start of the recession. According to Breakwater Equity Partners, a San Diego-based real estate consultant, there could be some stress signals this year on that.

The company’s statement pointed out that 10-year loans taken out in 2003 are maturing, along with shorter-term notes taken out just before property values began declining. While more than half of distressed property issues have been resolved, there could be a lot of maturity defaults this year.

Office properties will make up the largest share of this distress. Some markets, Breakwater said, have worked through only a little more than a third of the properties in distress, and many landlords are still not realizing a significant return on their investments because of the high vacancy rates.

Also, Breakwater is suggesting the owners of some smaller, out-of-the-way office buildings should reconsider some of the rents they’re asking, to remain competitive.

ONTARIO APARTMENTS SOLD

Archstone Terracina, an Ontario apartment community and one of the city’s largest, has been sold for $95 million, according to a statement. The South Archibald Avenue complex, with 736 units, detached garages and four swimming pools, was built in 1988.

Archstone sold the complex to MG Properties, which was able to take advantage of low interest rates to make the deal, according to a statement.

DESERT PHARMACY SELLS

A Yucca Valley Rite Aid location has been sold for about $5.7 million. The free-standing store is located at 57701 Twenty Nine Palms Highway, in the Warren Vista Center.

The seller was GL Yucca Valley. An individual, Timothy Hopkins, was the buyer.

NAIOP NAMES 2013 OFFICERS

Kim Snyder, southwest regional president for industrial property developer Prologis, was elected to serve as president of NAIOP-IE, the Inland Southern California’s largest commercial real estate support group. Snyder steps in for John Magness of Hillwood Investment Properties, whose term is up.

Other top officers for this year include Stephen Batchellor of Panattoni Development Co. as treasurer and president-elect, Milo Lipson of Cushman & Wakefield as secretary and Gary Edwards of Western Realco as corporate representative.

For the original post visit: http://www.pe.com/business/business-columns/commercial-real-estate-headlines/20130211-real-estate-some-debt-maturity-clocks-will-ring-in-2013.ece

Real estate sales kick off in Europe

Photo: EPA

Banks are fearful that the Eurozone will collapse – hence, they are selling out their real estate. Morgan Stanley says that credit organizations have accumulated real estate to the tune of 600 billion euros.

The main buyers of these accounts are big investment funds and private persons. These investors are sure that cheap European real estate will be able to ensure high profitability in the future.

The European real estate market has been the most attractive in the past 10 years. At least, speculators involved in the resale of real estate think so. 3 years ago they visited the American market of real estate that collapsed during the crisis and paid peanuts for apartment houses and offices, aiming to sell them in a year or two, after measures to support the economy produce the desired effect and the prices on real estate go up.

It is Europe’s turn now. The European banks have started selling real estate cheap. Meaning the real estate which they received from mortgage borrowers as indebted property. The point is that mortgage borrowers lost their jobs during the crisis and failed to pay off their credits as a result. There were also other speculators who before the recession hoped that the prices would go up - therefore, they took loans, aiming at first to buy houses and then to resell them. As a result, banks have accumulated accounts to the tune of 600 billion euros. It is absolutely clear now that borrowers will not be able to pay back their deposits.

The more so as the rumours about the collapse of the eurosone are not subsiding. The territories in the western and eastern part of Europe are considered to be the tidbits there. Both big investment funds and small investors go there. President of the international Gordon Rock real estate agency Stanislav Zingel says:

"The capitalization of accounts in Germany, Austria, and Switzerland started in 2009. Thus, we can see that these countries are getting advantages from attracting investors to their markets. Other countries are less attractive."

However, not all players are eager to work on the falling market. It may happen that cheap real estate will not rise in price. Besides, the crisis is not over yet. The maximum one can expect, buying real estate in Europe, is the preservation of money. Executive Director of the ALOR Group of Companies Sergei Hestanov says:

"The economic crisis in the PIIGS countries, including Portugal, Ireland, Italy, Greece, and Spain, continues to develop, and their economic problems are multiplying as well. Taking into account the current crisis, there is reason to believe that the real estate market in these countries will find itself in a state of stagnation. And as regards Northern Europe, there is a reverse dynamism there. The real estate market looks sufficiently attractive there from the point of view of preservation of capital."

Regarding the Russian real estate market, we should say that it could become a breeding ground for investors from other countries. As it has become evident in recent years, the price increase of both houses and apartments is steadily outstripping inflation in Russia. For example, the cost of one square metre in Moscow has risen from 5 to 5.500 dollars in the past 6 months, and at the moment there are no grounds to claim that this tendency will be halted.

For the original post visit: http://english.ruvr.ru/2013_02_07/Real-estate-sales-kick-off-in-Europe/

Growth and real estate look good in Pueblo West

It's a city that's been booming for years, with a high climb in population since 2000.

We found out more about Pueblo West when it comes to people and real estate.

"We get people in and out of here quite a lot," said Laurie Cozzetto, Community Development Manager for Pueblo West Metro.

Nearly 30,000 people now live in Pueblo West.

That's up from around 17,000 in 2000.

"We're doing a lot to beautify and enhance our community," said Cozzetto. "I used to know everybody that lives here, but no longer. There's too many people."

They're proud of that and their metro.

So proud in fact, they're putting in two gateway signs complete with their motto "Where Eagles Soar."

"One on the west end of Highway 50 and one on the east end of Highway 50, and they'll be placed so they are visible from Highway 50 for travelers coming through our community," said Cozzetto.

Just a way to welcome people to the community.

"It's a source of pride for the people that live in Pueblo West," said Cozzetto.

Real estate is also looking good.

"Pueblo West has been very active in the last year and would seem like it would continue," said Gary Miller, Broker and Owner at Remax of Pueblo. "Housing is affordable out there, ammenities are nice. It's just a great place to live."

That could be because there are a lot of newer homes.

"Because Pueblo West is a newer community, I think that's helped them be more attractive to people," said Miller.

"We're pretty proud of the way that we're going with our community and the way we're developing," said Cozzetto.

Real estate sales in all of Pueblo County went up over six percent from 2011 to 2012.

Numbers are looking good in Colorado Springs as well.

For the original post visit: http://www.koaa.com/news/growth-and-real-estate-look-good-in-pueblo-west/

Real estate investing deals with the highest yields Read more: Calhoun Times - Real estate investing deals with the highest yields

Our bank savings account is earning less than 1% interest. It’s not even keeping up with inflation. Meanwhile, Kim and I did a Lonnie Deal a few weeks back and we’re getting an eye-popping 50.38 percent yield on our investment. If you’re like us, you believe it makes better financial sense to get a higher yield versus a much lower one.

So what’s a Lonnie Deal? Basically, it’s when you buy a mobile home (that’s right, a trailer) in a mobile home park for cash and then sell it on time. Hey, in 2008, I had the same soured look on my face as you do right now as you ask, “Trailers? Seriously? Are you kidding me?”

Back then we were getting tons of calls from folks looking for $500-per-month housing. We couldn’t help them because our single-family houses rented for between $800 and $1,400 per month. I remember telling Kim that because of the huge demand for $500-per-month property, we needed to start doing Lonnie Deals.

We bought our first trailer on September 19, 2008 in Bartow County, Georgia. Our all-in purchase cost was around $5,500. We sold it on November 9, 2008 for $16,900 with the following sale terms: $500 down, $16,400 loan balance for 75 months at 18 percent interest with monthly payments of $375. Our yield on this deal is a jaw dropping 81.22 percent.

There are a number of advantages to doing Lonnie Deals. First, in today’s market, there’s a huge need for affordable housing. Second, there’s not much competition. Folks wanting to buy a trailer are forced to pay all cash – cash they don’t have – because banks won’t lend on used mobile homes in a park. At the same time, very few sellers offer owner financing. If you buy for cash and then sell on time, you’re offering a very unique – and profitable – service. Third, every month you receive mailbox money that is taxed as portfolio income – which means these earnings aren’t getting hit with Social Security or Medicare Taxes.

There are also a couple of disadvantages. First, you must remember that park owners are all- powerful. Don’t do a deal in a park unless you and the park owner have a clear meeting of the minds. Second, some of the buyers you work with can be pretty interesting. It’s shocking how many are 100 percent healthy but still get monthly disability checks. These are your tax dollars at work, folks.

A few weeks back, I partnered with my buddy Houston Long on my most recent Lonnie Deal. He is a long-time friend and fellow investor. I put up the deal and the purchase money. Houston agreed to be responsible for the rehab, marketing and selling. After I’ve been repaid my purchase money, we will split all profits 50-50.

The trailer is a nice three-bedroom, two-bath doublewide in a park in Acworth, Georgia. The seller was asking $12,000. She agreed to our $5,500 offer that included the following purchase terms: We’d give her $3,000 cash down if she’d accept an unsecured note for the $2,500 balance with payments of $100 per month at zero percent interest for 25 months.

A few weeks later, Houston sold this home with owner financing for $17,500 with the following sale terms: $2,000 down, payments of $250 per month at 14 percent interest for 114 months.

Including our expenses (about $2000), our yield on this deal was 39 percent. When it came time to make our first $100 monthly payment to the seller, we offered her $895 cash in exchange for our $2,500 note. She quickly accepted our offer. Shorting our note from $2,500 down to $895 lowered our purchase price from $5,500 down to $3,895 and increased our yield from 39 percent up to 50.38 percent.

Over the years, Kim and I have done a wide variety of creative deal structures. Our favorite – and it happens to offer the highest yields – is Lonnie Deals.

Bill and Kim’s North Georgia Real Estate Investors Association meets on the second Thursday of each month, from 7 to 9 p.m., at the Hilton Garden Inn off Main Street in Cartersville, Georgia. For more info, go to REIoutpost.com.

For the original post visit: http://www.calhountimes.com/view/full_story/21617906/article-Real-estate-investing-deals-with-the-highest-yields-?instance=home_local_news

REAL ESTATE: Experts eye the progress of recovery

Users considering signing up for a lease on industrial space in inland Southern California should expect to pay a little more this year, according to a forecast released recently by The Salazar Group, an Orange County commercial real estate brokerage that specializes in representing tenants.

But that should not deter people looking for leases, according to a statement. The overall picture is that it appears to be a promising year for both tenants and property owners. The vacancy rate for industrial properties in San Bernardino and Riverside counties declined last year and closed the year at 6.9 percent, down from 7.5 percent in the previous year.

The Salazar Group, which has worked on up numerous deals in the Inland Empire, said its prediction is for the vacancy rates to remain flat in 2013.

Lease rates increased about 2.6 percent over the course of the last 12 months, and that should be a trend that will continue, somewhere in the 2 percent to 4 percent range. But interest rates should remain low, so expect to see some more activity in the area based on those metrics as users try to lock in those rates.

RIVERSIDE OFFICE COMPLEX SOLD

A 30-year-old office complex in Riverside’s Box Springs area has been purchased for about $10 million by a Los Angeles-based developer.

The property is 147,000 square feet of space at 2085 Rustin Ave. It is a two-story complex with lots of parking built in 1983, and it went through tenant renovations in 2000. AT&T occupies about two-thirds of the office space on the 14.5-acre site.

The seller was Century Park Partners.

APARTMENTS GAIN FINANCING

HFF, a mortgage banking firm with an office in Irvine, has announced it has helped to secure $40 million in financing for the Santa Barbara Apartments, a 192-unit community in Ranch Cucamonga. HFF worked on behalf of the borrower, Lewis Operating Corp., to secure a 15-year fixed-rate loan through Prudential Mortgage Capital Co.

The Inland-based Lewis operation has developed more than 56,000 homes in the area in the last half-century and has been prominent in constructing multifamily projects in the area in the last two years.

For the original post visit: http://www.pe.com/business/business-columns/commercial-real-estate-headlines/20130204-real-estate-experts-eye-the-progress-of-recovery.ece

Abu Dhabi’s Aldar sees 2012 profits up 109%

Aldar Properties, Abu Dhabi’s largest real estate developer, reported net profit for 2012 surged 109 percent to AED1.340bn (US$364.8m), on the back of increased sales and the restructuring of its credit facilities, it was announced on Monday.

Revenue increased 69 percent to AED11.403bn, on the back of an 83 percent rise in revenue from land sales and the handover of completed units.

While the developer, which is 35 percent owned by the Mubadala Development Company, ended the year with cash and bank balance reserves down 45 percent to AED 2.259bn, it successfully renegotiated its debt and credit facilities.

Total borrowing fell 23 percent to AED14.014bn mainly because of repayment of loans, while the developer drew down AED800m of a new AED4bn revolving credit facility.

“This facility will enable the Company to optimally manage its working capital and liquidity requirements over the next two years,” the company said in a statement. “In light of these results, the Board of Directors has recommended a cash dividend of 6 fils per share for shareholder approval at the AGM,” it added.

“2012 has been a truly exceptional year for Aldar… Our shareholders will benefit from both the continued efforts of our employees to realise value from our sizeable asset base and from our proposed merger with Sorouh that will create a significantly stronger platform from which to drive sustainable growth," said Ali Eid AlMheiri, chairman of Aldar Properties.

On January 21, the boards of Aldar Properties and Sorouh Real Estate, the Gulf’s 10 and 11 biggest real estate companies in terms of market cap, recommended a merger between the two companies to their shareholders and a final decision is expected in March.

In terms of product delivery, Aldar sold 102 residential units in 2012, worth a total of AED352.9m and handed over 1,882 residential units to customers at Al Raha Beach during the year.

Yas Mall pushed ahead, with 62 percent of units leased so far, while the Yas Waterworld was handed over in the fourth quarter and is expected to attract 700,000 visitors in the first 12 months.

For the original post visit: http://www.arabianbusiness.com/abu-dhabi-s-aldar-sees-2012-profits-up-109--488240.html