Most Expensive Real Estate

Business Insider  recently published the 4th Quarter 2011 list of the cities with the most expensive real estate (follow the link to see the article). The chart is below.  The list quickly underscores what an affordable environment in which we live and work in the United States. 

  

Here Comes the Cavalry !!!!

Take a look at a very informative article appearing in the July 2010 Shopping Center Today  describing the recent activity of several sovereign wealth funds shopping for distressed real estate to acquire.  Perhaps this is the cash we have been hearing about which has been sitting out the downturn ?

  

Yes, The U.S. Immigration Laws Apply to the Real Estate Industry

The federal government recently announced several changes to U.S. immigration legislation. Two key topics involve increased enforcement efforts of the Immigration and Customs Enforcement (ICE) and changes in request for prevailing wage procedures. 

Preparing for an I-9 Audit or Inspection
Immigration and Customs Enforcement (ICE) has significantly increased its enforcement
efforts with respect to undocumented workers and Form I-9 recordkeeping. Employers must be prepared to quickly and effectively respond to an ICE-issued Notice of Inspection (NOI). ICE may review the employer’s files in as few as three days from the time the NOI is issued. Often enough, a prompt and complete response to the ICE office handling the investigation will end or significantly curtail their inquiry. In any event, a cooperative employer is far less likely to face fines or sanctioning. With that in mind, employers can prepare themselves for responding to a NOI by ensuring the availability of the following records:
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Chinese Money coming in for U.S. Real Estate?

Recently, the news about the $300 billion China Investment Corp. (“CIC”) invested an additional $500 million in Blackstone’s Fund-of-Funds unit and earmarked about $800 million for investing in a Morgan Stanley Global Property Fund has stirred up another round of excited discussions about China’s money pouring into the U.S. Lately, the Wall Street Journal reported that CIC is in talk with U.S. private-equity funds, including BlackRock Inc., Ivesco Ltd. and Lone Star Funds, about potential investments opportunities in the distressed commercial real estate assets in the U.S.   According to the Wall Street Journal, last year, CIC deployed just $4.8 billion in global financial markets and this year it invested that much in a single month. CIC’s chairman has indicated that Mr. Jiwei Lou, if CIC's future returns are good enough, it might ask the government to let it invest more of China's $2.132 trillion foreign-exchange reserves.

CIC’s investment decisions are among the most watched indictors for Chinese private investors when they choose foreign investments. Will Chinese private investors follow CIC this time to look into the real estate market in the U.S.?

 

In contrast with the U.S. real estate market, China’s overall real estate market, both residential and commercial is very “hot.” Some even have concerns that a serious asset bubble is developing in real estate. According to Shanghai real estate and foreign investment lawyer, Zengli Li, a partner at Yaoliang Law’s Shanghai office, the hot China real estate market is mainly attributed to the “flood money” that Chinese investors have directed to the real estate market. According to Zengli, Chinese investors now do not have many choices when it comes to investment opportunity. Originally, Chinese investors invested heavily in manufacturing sector but because foreign consumers tighten their belts under the current economic situations, manufacture does not sustain good investment opportunity anymore. The lack of other investment opportunities domestically has pushed and concentrated the private investors to the real estate market.  In July, for instance, a land parcel along Beijing's Guangqu Road was auctioned off for more than 4 billion yuan ($585 million US dollars) after fierce bidding among major developers from the mainland and Hong Kong. In Shanghai, developers of the luxury Tomson Rivers apartments, known for their price of more than 100,000 yuan per sq m ($14,000 US dollars), sold 10 units in the first 25 days of June. Some investors are starting to look outside of China. Many high end residential real estate markets around the globe are seeing discreet Chinese buyers.

 

However, Chinese investors are not accustomed to foreign markets. It has been decades that people are used to foreign investment flowing into China.  Now Chinese investors start to reverse the general trend of investment. They have heard U.S. distressed real estate market and understand there could be opportunities for buy in low. 

 

The channel directing the flow in of Chinese money is still not there. If you can figure out a smooth channel to attract the abundant Chinese cash, you probably need not worry about cash flow for a long time. After all, $2.132 trillion can make quite an impact!

Congress Introduces Chinese Drywall Legislation

Congress has recently introduced a number of measures in response to the problems caused by defective drywall imported from China. Both the House and Senate introduced identical bills titled the Drywall Safety Act of 2009 (H.R. 1977; S. 739), which, if enacted, would require the U.S. Consumer Product Safety Counsel to study at least ten samples of drywall imported from China between 2004 and 2007 taken from homes in Florida, Louisiana, Mississippi, Texas and Virginia. The study is to include an analysis of (1) the chemical and organic composition of the drywall, (2) the effect of the drywall compounds on metal wiring, air conditioning and heating units, and other metal fixtures, and (3) any health or environmental impact of the compounds. The Act further directs the CPSC to initiate a proceeding to determine whether a consumer product safety standard regulating the composition of materials used in drywall is necessary to protect the health and safety of residential homeowners and imposes a temporary ban on the importation of drywall exceeding five percent organic compounds.

Additionally, the House passed a measure to amend the Mortgage Reform and Anti-Predatory Lending Act, H.R. 1728, to direct the Secretary of Housing and Urban Development to study the effect on residential mortgage foreclosures of (1) the presence of defective Chinese drywall in such residences and (2) the availability of property insurance for residences where such drywall is present.  HUD is required to report its findings, conclusions and recommendations to Congress. This bill has been referred to committee.

 

The focus of the legislation under consideration is the evaluation of the drywall problem and its impact upon residential owners, and addressing future drywall imports, as opposed to providing any relief to those whose homes contain the defective Chinese drywall. If the proposed studies show that Chinese drywall issues have caused environmental, health, foreclosure or insurance issues for residential property owners, there may be another round of legislation to address those issues. Check back here for updates as we track the progress of these measures through Congress.       

Introduction to China's Real Estate Ownership System

In the past 20 years or so, China’s real estate market has experienced phenomenal growth. Hundreds of skyscrapers bursted into the sky during the two decades and many more are coming. This dramatically changed the landscape of many cities in China. All these skyscrapers and other real estate developments are built on a unique land ownership system. The system is still in its primary state of formation, thus uncertainties exist in many crucial areas. In 2007, the first Property Law of People's Republic of China was enacted and clarified some of the uncertainties but it is far from eliminating them all. Many land ownership issues are still left undefined. The following is an overview of some aspects of China’s unique system. 

In China a private party cannot “own” land. All land is either “owned” by the State or by the Collectives. The State owns most of urban area land (i.e. commercial land) and the Collectives are the owners of most rural land (i.e. farm land). Under the current system, even though the land itself can not be transferred, the State may pass the right to use its land to private parties through the granting of “Granted Land Use Right” (“GLUR”) or “Allocated Land Use Right” (“ALUR”). In contrast, Collectives are not allowed to transfer the use right of the land they own. Collectives’ land must be converted from Collective ownership into State ownership before the use right of the land can be transferred. There are efforts, including legislative and administrative, to “free” the land owned by Collectives.  The general purpose behind these efforts is to give farmers more “property right” to energize the rural economy in China. 

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