New York City Real Estate Blog

Happy Easter!

 In medieval times a festival of egg throwing was held in church, during which the priest would throw a hard-boiled egg to one of the choirboys. It was then tossed from one choirboy to the next and whoever held the egg when the clock struck 12 was the winner and retained the egg.

The first Easter baskets were made to look like bird's nests.

Easter Bonnets are a throw back to the days when the people denied themselves the pleasure of wearing finery for the duration of Lent.

Happy Easter From GNYRE!

Housing market in the US has slowed

“The increase in house prices in many countries since the late 1990s has exceeded what would have been expected on the basis of changes in underlying fundamentals, such as household income and interest rates. This suggests that house prices in these countries are overvalued, increasing the possibility of a price correction.

In the United States, house price appreciation during the current cycle has been strong by historical standards.There has, however, been considerable differentiation across regions, with house price appreciation being most rapid in the west and northeast of the country, whereas prices in the south and midwest have lagged.

With the housing market cooling—most indicators of housing activity are weakening—the key question is how U.S. growth will be affected, given that consumption and residential investment, both affected by rising housing prices, have been key drivers of the strong economy in recent years.Previous housing market cycles in the United States have been associated with vastly different economic outcomes. In the 1979 cycle, real house prices fell, and consumption, residential investment, and GDP growth all slumped. Of course, economic conditions then were very different from those today: real interest rates were very high, as was the unemployment rate. The 1987 housing cycle was associated with a limited growth impact, and the IMF forecasts that the current housing cycle will do the same for 2007 growth. But there are downside risks. First, the slowing in house price appreciation could be more pronounced than expected—a drop in prices cannot be ruled out. Second, the wealth effects of slower house price growth on consumption may now be larger than in the past because of the greater exposure of households to asset price movements.

The Slowdown in Global Housing Markets(IMF)

 

India-Satisfying travel experience

“FOR the first-time visitor to India, the sheer vastness of the country — more than a million square miles — all but defeats the romantic notion of seeing all that this place has to offer in anything approaching the usual time frame of a normal vacation. Retirees no longer punching the clock, college students who want to take a couple of semesters off, backpackers on a global journey of exploration: these are the kinds of travelers that India seems made for.

But what about the rest of us who are limited to one or two weeks of vacation a year? Is India completely beyond our grasp?

In a word, no. Even sampling the tiniest geographical crumb of India over a period of 7 to 10 days can be a satisfying travel experience.

Quite rightly, no one wants to miss the Taj Mahal, especially on a first visit, so our suggested route pivots around that Platonic ideal of tourist attractions. Spending a couple of days first in the nearby capital of New Delhi — a strange patchwork of imperial Mughal monuments, bustling urban villages, leafy British Raj-era avenues and expanding middle-class housing colonies — is bound to give you a good taste of urban India. ”

India Made Easy(NYT)

Read the offering plan carefully!

“IN New York’s construction boom of the last few years, many people have been buying apartments in buildings before they actually rise out of the ground. The buyers can’t see them, smell them or touch them. When they finally do, they are sometimes in for very big surprises, some of them infuriating.

Rooms are often smaller than advertised. The Viking stove isn’t there, but a stove described as being of “similar quality” is. The view is not at all what the buyers imagined.

Were they deceived?

Not necessarily. In many cases, neither they nor their lawyers read the offering plan carefully. Buyers often must hand over a $200 deposit for the thrill of getting three days to review the plan, sometimes 500 pages or more. It includes floor plans; tables that provide square footage, estimated taxes and common charges; and detailed descriptions of construction materials and apartment finishes. But it is also filled with technical and legal language that would be indecipherable to anyone other than a real estate lawyer.

Consider this piece of boilerplate: “The gross square footage of a unit is greater than the approximate square footage of a unit measured by using the legal definition of the unit. ... As is customary in New York City, these gross square footages exceed the usable floor area of each unit.”

The Danger in the Fine Print(NYT)

Happiest Country

1.

Denmark
2.

Switzerland
3.

Austria
4.

Iceland
5.

The Bahamas
6.

Finland
7.

Sweden
8.

Bhutan
9.

Brunei
10.

Canada
11.

Ireland
12.

Luxembourg
13.

Costa Rica
14.

Malta
15.

The Netherlands
16.

Antigua and Barbuda
17.

Malaysia
18.

New Zealand
19.

Norway
20.

The Seychelles

Other rankings: USA (23), France (62), China (82) Japan (90), India (125). Fortunately, I am married to a Danish woman.

http://blog.guykawasaki.com/2007/02/the_world_map_o.html

Abu Dhabi, the capital of the United Arab Emirates and the richest city in the world!

“Khaldoon Khalifa al Mubarak is a man in a hurry. The 31-year-old, American-educated developer steps on the gas of his silver Audi and zooms past a hole in the ground crawling with construction workers - the future home of a $1.3 billion complex featuring three skyscrapers, two five-star hotels, and a souk. The car zips by a new $3 billion hotel that boasts 1,002 Swarovski crystal chandeliers and a gold-leaf dome larger than the one atop St. Paul's Cathedral in London.

The Emirates Palace hotel and the skyline of Abu Dhabi.

In the distance, glittering in the aqua-blue Persian Gulf, are dozens of islands that will one day sprout skyscrapers, hotels, museums, hospitals, and factories financed in part by the government-owned investment company that Khaldoon runs, Mubadala Development. In all, plans call for almost $200 billion to be spent here over the next ten years.

No cranes yet, but hundreds of dump trucks like these on Al Raha Beach are paving the way for development.

Welcome to Abu Dhabi, the capital of the United Arab Emirates and the richest city in the world. The emirate's 420,000 citizens, who sit on one-tenth of the planet's oil and have almost $1 trillion invested abroad, are worth about $17 million apiece. (A million foreign workers don't share in the wealth.) Yet most people couldn't find Abu Dhabi on a map. Khaldoon's job is to change that. Tall, handsome, and politically savvy, he wants to make his hometown mentioned in the same breath as Singapore, Tokyo - and yes, Dubai. “

Ominous signs loom

“In the parlance of Thomas Friedman, the world never looked flatter than it did this week. A 9% stock market sell-off in China on Feb. 27 prompted sharp drops almost everywhere else around the globe. Suddenly, money managers and traders, lulled into a trance by seven months of steadily rising share prices, felt like they'd been hit over the head with a best-selling hardcover. With one big thwack, they were reminded that stocks are risky and that emerging markets are riskier.

But a stronger case can be made that Feb. 27 will turn out to be more of a tremor than an earthquake. Notably, U.S. indexes gained on Feb. 28. That's in part because powerful forces are undergirding stocks now in a way they weren't in earlier bear markets. The last bear came on the heels of a long bull market that included the biggest five-year run-up since the 1920s. Share prices are only now beginning to revisit their 2000 levels. The amount of cash sitting on the sidelines is at a record. Individual investors haven't jumped into the market en masse.

What's more, private equity is now a major factor. Buyout firms have raised billions in the past two years. Furious dealmaking is keeping asset prices buoyant and also cutting the supply of shares available to investors. That squeeze is being magnified by activist hedge funds, which are badgering companies into stock repurchases like never before. With the inventory of equities down and so much money already on the sidelines, the market appears to have a steady floor underfoot.”

What The Market Is Telling Us(BusinessWeek)

Diesel exhaust shorten the lives of 70,000 Americans each year

 “New Yorkers are getting dosed with dirty air during their daily commute -- no matter how they travel.

High levels of diesel ultra-fine particles are invading commuters' lungs along the highways, buses and commuter rails, according to a Clean Air Task Force study released Wednesday.

And while the subway system may be diesel free, researchers found steel dust in the air may be a hazard of its own.

The study looked at exposure to diesel-caused pollution in New York City, Boston, Austin, Texas and Columbus, Ohio during typical commutes. Using what Iwanowicz called "guerilla monitoring" techniques, researchers rode the rails and chased buses with detection devices to get air quality readers.”

Study: Exhaust threatens New York commutersAmNY)

“Every day, Americans are needlessly sickened from exposure to air pollution in the form of fine particles. Overall, health researchers estimate that fine particles, such as those found in diesel exhaust, shorten the lives of 70,000 Americans each year. Legions of published, peer-reviewed studies have documented the increased exposure and resultant health risk from particles in and around nearby roadways. When during our day are we exposed to these particles? According to the California Air Resources Board, although we spend only about six percent of our day commuting to and from work, it is during that time when we receive over half of our exposure. Using comparable instruments and research techniques as those employed by health researchers at major universities, Clean Air Task Force (CATF) investigated the exposure to diesel particles during typical commutes in four cities: Austin, Texas, Boston, Massachusetts, New York City, and Columbus, Ohio.”

Clean Air Task Force report

 

The U.S. economy grew less than the government previously estimated last quarter

“U.S. stocks were poised to open moderately higher Wednesday following a massive worldwide sell-off a day earlier that rattled investor confidence but left fertile ground for bargain hunters.

A report that showed the economy grew at a 2.2 percent annual rate in the fourth quarter was largely in line with Wall Street's revised expectations and had little effect on futures readings pointing to a higher opening. The Commerce Department's gross domestic product reading was more than a percentage point below the initial estimate of 3.5 percent made a month ago.

The key economic findings follow sharp declines Tuesday, which began following a drop in the frothy stock markets of mainland China that raised questions about whether a larger market correction was in the offing. Stocks fell in most of Asia earlier Wednesday although the Shanghai Composite Index, whose nearly 9 percent drop set off the domino-effect selling, closed up nearly 4 percent. Stocks were also off in Europe, but the declines were milder than on Tuesday.”

Growth in U.S. Economy Slower Than Thought(NYT)

“The figures now show a consistent pattern of slower growth over the last nine months of 2006 as housing and manufacturing slumped. Production cuts and fewer orders in January suggest companies are still wrestling with stockpiles, confirming the Fed's forecast that the expansion will proceed at a moderate pace.

`While the drag this quarter won't be as great, companies are still trying to draw down inventories, so growth will continue to be sub-par,'' said Kevin Logan, senior market economist at Dresdner Kleinwort in New York. ``The drag from homebuilding and manufacturing will probably persist through mid-year.''

Treasury notes pared losses in the minutes after the report, before resuming their decline. The yield on the benchmark 10-year note was 4.55 percent at 9:20 a.m. in New York, up 4 basis points from yesterday. The dollar remained higher and stocks opened stronger. U.S. equities fell the most in four years yesterday.

``The U.S. economy has demonstrated and continues to demonstrate really remarkable resilience,'' New York Fed President Timothy Geithner said in a speech in New York today.”

 U.S. Economy Expands at 2.2 Percent Rate, Less Than Government Estimated(Bloomberg)

More on the same subject:

Stocks in struggle(CNNMoney)

“What does this stock market drop mean for the real estate economy?

I am not entirely sure. However, if the underlying economy doesn’t change significantly and more people become more risk averse, we may see more movement to saftey like we did yesterday as people move from stocks to treasuries. Treasury prices would go up, and as a result, yields would go down. As yields go, so do mortgage rates, helping temper growing damage caused by foreclosures and limiting the future effects of tightening underwriting guidelines.”

[Getting Graphic] Speeches, Stocks And Safety(Matrix)

Stocks Fluctuate in Early Trading(NYPost)

Stocks rebound at market open(AMNY)

Stocks Rebound At Opening After Worst Day In Five Years (NY1)

 

Real Estate in India

"In the past, real estate in India was considered a risky asset class to finance by lending institutions. This was reflected in the high rate of capital provisioning on loans extended to the sector. Debt financing markets have since evolved considerably. With recent reform and growth of the real estate market, a number of financing avenues have opened up for Indian developers.

Private equity and debt are the most prevalent forms of investments. According to the Venture Intelligence India newsletter, general private equity investments in India have grown from $1.6bn invested across 68 transactions in 2004 to $2.3bn in 147 deals in 2005 to $1.4bn in 69 transactions in just the first quarter of the year just gone.

Although real estate represented only a part of that, its share is set to grow with the liberalisation of foreign direct investment rules and the rise of numerous Indian and international real estate funds.

Several private equity investment methodologies are becoming more popular. Of the various private equity investment methodologies explored internationally, there are a few options gaining popularity among real estate investors in India."

Viewpoint: Real estate is now as safe as houses(FT)