Investment Real Estate

Miami, Dubai and London Among Top Global Cities Enjoying Double-Digit Price Growth in 2012

Miami, Dubai and London Among Top Global Cities Enjoying Double-Digit Price Growth in 2012

Courtesy of
According to a new Global Cities Report by London-based real estate consulting firm Knight Frank, fifteen of the 26 cities tracked by the Prime Global Cities Index (58%) recorded flat or positive price growth in the year to September, but over the last quarter 20 of the 26 cities (77%) have seen flat or positive growth – indicating an improving scenario.

The index now stands 18.7% above its financial crisis low in Q2 2009 with Hong Kong, London and Beijing having been the strongest performers over this period, recording price growth of 52.9%, 45.4% and 39.5% respectively.

Five cities recorded double-digit price growth in the year to September; Jakarta, Dubai, Miami, Nairobi and London – a city from each of the five key world regions.

Knight Frank Global Cities Report Highlights for Q3, 2012

The index rose by 1.1% in the three months to September, down from 1.4% last quarter
Prime prices across the 26 cities tracked by the index increased by 3% in the 12 months to September
Cities in Europe remain the weakest performers, recording a fall of 0.5% on average in the last 12 months
Jakarta (up 28.5%) was the strongest performer in the year to September
Economic uncertainty together with few strong-performing alternative asset classes is strengthening demand for luxury bricks and mortar

Dubai UAE – Courtesy to
Although Asia heads the pack – Jakarta recorded 28.5% annual growth – the results this quarter suggest that demand for luxury homes is only loosely linked to the strength of regional economies (Asia Pacific has only two cities in the top ten compared to Europe’s three). Instead, the flow of international wealth and the attitudes of HNWIs are increasingly influential.

Cities such as Dubai, Miami, Nairobi and London are increasingly considered investment hubs for HNWIs in their wider regions. In the wake of the Arab Spring, Dubai has been seen as a relative safe haven for MENA buyers while Venezuelan and Brazilian investors have looked to Miami to limit their exposure to domestic political and economic volatility.

Not all prime residential markets are benefitting from the global economic uncertainty. In Paris, although prices held firm in the third quarter, sales activity was muted as buyers of all nationalities adopted a “wait and see” attitude. Vendors are unwilling to reduce prices until there is greater clarity from President Hollande and the Eurozone leaders in relation to the debt crisis.

Asia’s prime markets look to be entering a period of more moderate growth due in part to the regulatory measures aimed at cooling prices and improving domestic affordability.

London UK – Courtesy of
James Price of Knight Frank’s International Residential Development team tells World Property Channel, “Aside from London, it would appear the other strong performers are either those established international markets that experienced a lull but are now ‘kicking on’ again (e.g. Miami, Dubai) or those that could be described as second tier international cities – strong established markets, but not global ‘gateway’ cities (e.g. Zurich, Vienna, San Francisco), where interest has driven price rises from a lower base.”

James continues, “While some of the more traditional prime second-home markets are recording negative movement, this should not disguise their long-term popularity and strength, instead it suggests a cooling from previous higher levels.”

Teresa King Kinney, CEO of the Miami Association of Realtors commented, “Miami is a truly global city that has experienced the positive impact of international buyers and investors unlike any other. Miami’s global appeal resulted in a rapid and strong recovery that yielded an all-time sales record in 2011 and extraordinary inventory absorption. Such demand has fueled more than 10 months of consecutive double-digit price appreciation in the Miami residential real estate market. More importantly, Miami’s position as a leading global market will continue to generate demand from both U.S. and foreign buyers long into the future, adding great value to our city, our market, and our properties.”

Source: World Property Channel
By Michael Gerrity

Investment Projects Real Estate

Old Grand Bay hotel to become new residential Tower, Grove at Grand Bay

In its prime, the Grand Bay hotel in Coconut Grove was the place to be, whether you were a businessman meeting for breakfast, a celebrity seeking publicity or a bride celebrating her perfect day.

But the hotel’s heyday was a long time ago. And soon, it will just be a memory.

The only hotel south of Palm Beach to have ever earned the coveted Mobil five-star rating will be demolished to make way for a residential tower designed by an up-and-coming Danish architect, the developer confirmed Thursday.

“Our plans are to do something that’s very one-of-a-kind,” said David Martin, chief operating officer of Terra Group, which bought the property last summer for $24 million. “We wanted to really build something that people felt they could be proud of.”

For the first time since the purchase, Martin provided details on the company’s plans for the site. After a gradual decline, the Grand Bay has been shuttered for nearly four years, collecting mold, graffiti and pigeon droppings.

The project is called Grove at Grand Bay, here’s what is known:

The building will be 20 stories high with about 96 units, all residential.

Lead design is by Bjarke Ingels Group, or BIG, which has made waves for high-profile projects near Copenhagen and in China, New York City and Utah. Ingels, a 30-something “starchitect” in-the-making, was named Innovator of the Year in Architecture by the Wall Street Journal’s magazine.

Raymond Jungles, the landscape architect who designed the grounds at 1111 Lincoln Road and the New World Symphony’s rooftop garden, will handle the outdoor space. And rounding out what Martin called a “design dream team” is Coral Gables architecture firm Nichols Brosch Wurst Wolfe and Associates, which has worked on Miami-area residential projects and hotels for years — including the original Grand Bay.

Developed by the late Sherwood “Woody” Weiser and Donald Lefton of The Continental Companies for $30 million, the hotel opened in 1983 in an area transitioning from artsy-hippie enclave and cocaine-cowboy hangout to major tourist destination. The 200-roomGrand Bay, at 2669 S. Bayshore Dr., was immediately hailed for its pyramid-shaped structure, its pristine service and its draw for jetsetters, especially Regine’s nightclub, which sat atop the hotel. The eponymous nightclub queen operated party spots around the world but chose the Grand Bay as only her second U.S. location.”I called it Fantasyland,” said Terry Zarikian, who worked there for 10 years in jobs including public relations director for Regine’s.”It was filled with celebrities. It was very, very classy, very chic.”

Click here to read more about the Grove at Grand Bay as well request to receive more information.
Local power brokers talked business over breakfast. Often.

“I’d go there for breakfast a couple or three times a week to meet people,” said Monty Trainer, a longtime Coconut Grove businessman. “The public areas, the banquet rooms and the downstairs and upstairs, the pool area, everything was absolutely gorgeous, well appointed, well furnished. You felt like you were in New York.”

Michael Jackson stayed there. So did Luciano Pavarotti, Prince and Sophia Loren — and just about everybody who was anybody.

“I remember when Elizabeth Taylor asked for a toothbrush,” Zarikian said. “We sent her stone crabs the night she arrived. Crab meat got stuck in her diamond ring and she needed to brush it out.”

In 1987, the Grand Bay earned five stars from Mobil, a feat that has still not been repeated by any other local hotel.

David Kurland was general manager at the time. He said Weiser and Lefton created a haven for VIPs — something that was then, unlike today, hard to come by.

“There was no Miami Beach, per se,” said Kurland, who now manages the La Gorce Country Club. “There were very few places where one could go and be in that type of environment that was A., so elegant, but B., so hip at the time.”

Over time, however, the sheen started to dull. After becoming the Wyndham Grand Bay, the hotel lost a star in 1999, then fell to three in 2001. Other upscale properties opened nearby and on Miami Beach.

The Merco Group bought the property for $25 million in 2005, planning a major renovation. They closed the doors to make $20 million in upgrades in 2008. The recession hit, money dried up and a foreclosure fight followed. The bank took back the property last March.

Terra Group’s Martin has watched the hotel’s rise and fall; he and his father both spent time at the Grand Bay. His sister spent part of her honeymoon there, and a friend got married in the hotel.

But, he said, given the surrounding neighborhood, a “boutique residential project” rather than a 200-room hotel with restaurants and event space would be a better fit.

“I think that what we’re going to be developing here is really going to be special and much less impact to the community and neighborhood,” he said.

The building’s design and a time frame for demolition and construction are still not final. Martin said concept testing is under way and work will likely begin within the next year.

Ingels, he said, is known for designing to the community he is working in.

“What someone wants to do in Shanghai or New York is different than what you’re going to do in Coconut Grove,” Martin said. “It’s really going to be clean and pure and something I think will really work.”

Public art fans will delight in the news that the ribbon-y red Alexander Liberman sculpture out front will stay put.

And while those nostalgic for the Grand Bay’s glory days say they will miss the building, others are looking forward to the next stage for the property.

“I think that it coming down and a beautiful new building going up in its place is great news for the Grove,” said David Collins, executive director of the Coconut Grove Business Improvement District. “It hasn’t helped us sitting quietly and empty.”

Economy Investment Real Estate

4 Reasons Why Foreign Investors Are Keen to Invest in Miami Real Estate

4 Reasons Why Foreign Investors Are Keen to Invest in Miami Real Estate

If current trends are to be analyzed, you will see a substantial rise in foreign investment in the Miami real estate boom. Market experts believe that high-end buyers from foreign countries are helping Miami real estate come out from its dark days. These are the reasons for these foreign investors to invest in the real estate market of Miami.

1. Low Prices

The city of Miami is still recovering from its rough patch after the country wide economic down-slide. This has caused the prices of properties to be at their all time low. The developers and investors of Miami Beach condos are desperately trying to remove the large number of apartments from their hands by offering low prices. This has seen a large wave of foreign nationals buying these properties. These high-end condos and apartments may not be exactly cheap for the US citizens, but these foreigners find these prices cheaper than the price of property back home. Thus, they are rushing to buy their own properties in the city.

2. Vacation Homes In Beautiful Locations

Miami is a beautiful place with the sun, beach and sand. It is an ideal place to set up vacation villas and homes. This is one reason for rich people from other foreign countries to come and invest in beautiful Miami Beach condos, facing the clear blue ocean. These investors are rich and price is not a factor for them. What they want is a villa or condo that meets their basic necessities and demands and with developers eyeing rich buyers there are plenty of expensively done high-end condos that these people can invest in.

3. Better Livelihood In The States

United States has often been the country where people want to migrate to for a chance at a better lifestyle. These foreign nationals upon arriving in the country invest in properties. Majority of the sale in Miami is in the residential market where these investors are spending all their money. The USA has a trustworthy legal system which places a lot of importance on property rights and these people feel that it is the safest place to invest their money in.

4. Low Interest Rates

With the Federal Reserve keeping the interest rates low to attract foreign investors, investors and developers from Japan, China, Germany and Russia are coming in. These investors feel that United States that is recovering economically is a safe market for their investment. Moreover, investing in projects in Miami where the real estate market is going through a boom, they will be able to gain more profit than in investing in their own countries.

Miami is one of the most popular cities in the USA and getting an opportunity to buy property in this city is not something that most foreign investors would like to give up. Property prices cheaper than their home country and the benefit of low interest rates are responsible for large scale foreign investment.

By Brenda Lyttle

Economy Investment Real Estate

Miami Leads US Property Market Recovery

Miami Leads US Property Market Recovery

The tide is finally turning in the U.S. real estate market and the charge is being led by increased prices and sales in Miami. The city got a head start by drawing attention from foreign investors early on and the attention has not waned despite rising prices. The Miami Association of Realtors report that prices were up again in August, making it the ninth consecutive month of gains. A shortage of homes for sale is helping to drive prices up faster and higher than in other areas of the country, but it doesn’t seem to bother investors who are still finding deals on properties in the Floridian hotspot. For more on this continue reading the following article from Property Wire.

Miami, which is considered as leading the property revival in the US, saw home prices rise again in August, the latest figures from the Miami Association of Realtors show. It is the ninth consecutive month of appreciation with buyers from overseas in particular fueling the growth of the real estate market.

The median sales price of Miami-Dade condominiums increased 28.4% to $146,500 compared to a year earlier, with prices having now increased for each of the last 14 months. The median sales price of single family homes rose 10.8% to $195,000. Despite the shortage of housing inventory, Miami home sales remain strong and continue to drive significant price appreciation, according to Miami Association of Realtors chairman Martha Pomares.

There is evident demand for Miami properties, particularly from foreign buyers and investors who recognize Miami?s desirability and profitability. Miami remains the top market for foreign buyers in the nation, and local international activity continues to grow, she said.

In August the average sales price for condominiums in Miami-Dade County increased 20.9% to $283,497. The average sales prices for single family homes increased 28.4 percent to $408,810. Statewide median sales prices in August increased 5.8% to $147,000 for single family homes and 13.2% to $102,980 for condominiums, according to data from the Florida Realtors Industry.

Total residential sales in Miami-Dade County increased 7% compared to a year earlier, compared to record sales levels in August 2011. The sales of existing condominiums in Miami-Dade increased 8% from 1,382 to 1,492.

Sales of single family homes increased 5% from 1,009 to 1,059, year on year. Statewide sales of existing single-family homes totalled 18,669 in August 2012, up 10.8% compared to a year ago. Statewide condominium sales totalled 8,767, up 5.7% from those sold in August 2011.

‘Miami is experiencing a mini-boom fuelled mostly by demand from international buyers but also by population growth resulting from migration from other states, baby boomers, and local consumers,’ Patricia Delinois, residential president of the Miami Association of Realtors.

‘Miami’s firm position as a major global city is expected to continue to draw demand long into the future, as businesses, residents, visitors and tourists, investors, and vacation and second homebuyers take advantage of all that our vibrant and unique city has to offer,’ she added.

Over the last year, the inventory of residential listings in Miami-Dade County has dropped 26% from 15,405 to 11,431. Compared to the previous month, the total inventory of homes decreased 0.2%. The figures also show that currently there are 4.2 months of supply in Miami-Dade.

Strong demand for bank owned (REO) properties and improved processing of short sales continues to yield absorption of distressed listings and to contribute to price appreciation.

In August, 45.8% of all closed residential sales in Miami-Dade County were distressed, including REOs and short sales, compared to 56% in August 2011 and 47% the previous month. In Miami-Dade County, 64% of total closed sales in August were all cash sales, compared to 62% in August 2011 and 64% the previous month. Cash sales accounted for 45% of single family and 78% of condominium closings.

Nearly 90% of foreign buyers in Florida purchase properties all cash, reflecting the stronger presence of international buyers in the Miami real estate market.

Miami Leads US Property Market Recovery

Economy Investment

Why Credit-Card Firms Are Sweet on You Again

Banks are returning to a practice they abandoned after the financial crisis: taking Americans’ credit-card debt, slicing and dicing it, and selling it off as bonds.

Photograph by Daniel Acker/Bloomberg
Believe it or not, that’s a good thing.

So far this year, banks and other companies that issue credit cards have sold $21 billion in bonds backed by those accounts’ debt, Bloomberg News reported on Aug. 29—up from $4.8 billion in the same period the year prior. Broadly, it’s a bet that consumers have their finances in order and will continue to be able to pay their monthly bills on time.

Bonds thrive when there’s predictability, and the credit-card business has become more stable since the crisis. The number of accounts 30 days past due peaked in March 2009 and again in November 2009, and has been declining ever since. Spenders are reining in their charging habits. Card issuers have cut off their least creditworthy customers, and reforms such as the CARD Act have forced them to be more careful about the riskiness of new customers. While all of this has put a crimp in credit-card companies’ growth, it has made for fat, steady revenue streams. In 2012, that’s not a bad position to be in.

“You may have to go back to the 1980s to see credit losses and delinquencies as low as they are right now,” says Bob Napoli, an analyst with William Blair. “It’s a sign that consumers are much more concerned about having good credit today, and a sign that the credit-card companies have been very disciplined in their underwriting.” The result, Napoli says, is a credit-card market that’s “Goldilocks healthy.”

With Europe’s future a giant question mark, and Treasuries offering meager returns, buyers such as mutual funds view credit-card-backed bonds as an attractive investment. For credit-card companies, this creates an opportunity to lower their own borrowing costs. Yields on top-ranked, five-year credit-card securities are the lowest in five years relative to a common benchmark, according to the Bloomberg report.

Might credit-card companies perhaps be grateful for the 2009 CARD Act, which they fiercely lobbied against? “I think so,” says Scott Valentin, an analyst with FBR Capital Markets. “The key has been the discipline coming out of the CARD Act.” Issuers are being more honest about their upfront pricing, Valentin says, and are restricted from the old industry practice of revising rates at any time for any reason. As Bloomberg Businessweek’s Karen Weise reported in July, the legislation has instilled a “forced rationality” in credit-card companies.

The New York Fed, in a report published yesterday, offered more data about the country’s credit-card habits. The number of open credit-card accounts has fallen 23 percent from its 2008 peak, to 383 million. And balances on those accounts are 22 percent down from their peak in the same year, from $866 billion to $672 billion. (Delinquency rates for student loans and home equity lines of credit rose.) That’s part of a general decline in household debt, which fell 0.5 percent in the second quarter of this year, to $11.38 trillion.

Fans of plastic still have plenty to curse credit-card companies about. This $20 billion-and-growing bonds trend, though, is a rare signal of a saner industry.

Summers covers Wall Street and finance for Bloomberg Businessweek.
By Nick Summers

Economy Investment Real Estate

Three myths that sustain the economic crisis


The summer of 2007 was a run-of-the-mill affair. Tony Blair had stepped down as prime minister in late June and his successor Gordon Brown was enjoying a honeymoon period. It was a year without a football World Cup or an Olympics, while Roger Federer won the men’s singles at Wimbledon, and the cricket involved series against the West Indies and India.

Then, on 9 August, came reports that central banks had been active in the markets. The Guardian said the action involved pumping billions of pounds into the financial system to calm nerves amid fears of a credit crunch. The trigger for the panic was the decision by BNP Paribas to block withdrawals from three hedge funds because of what it called a complete evaporation of liquidity. A spokesman for the bank described the move as a technical issue and said he hoped it would be temporary.

Technical? Temporary? Within six weeks, it was clear the meltdown of August 2007 was no short-term blip when investors queued outside branches of Northern Rock for three days in the first run on a leading UK bank since the mid-19th century. Five years on, the global economy has yet to recover from the deep trauma caused by the hubris of the bankers.

Back then, though, there were few who imagined that 9 August 2007 would prove to be such a milestone in financial history. The Guardian carried the story on page 29 because there seemed to be no reason to believe this was any different from previous bouts of jitters in the markets. It took a few days to work out what the bankers had been up to, because the “masters of the universe” had their own esoteric language the rest of us were not supposed to understand. Talk of mortgage-backed securities, credit default swaps and over-the-counter derivatives was the equivalent of 12th century monks writing bibles in medieval Latin for peasants who only spoke English.

Stripped of the jargon, it is now quite easy to see what happened. Banks were taking large gambles with precious little capital in reserve if the bets went wrong. Individuals were borrowing at levels only sustainable if the value of their share portfolios and homes continued to rise year after year. Governments assumed that booming tax receipts were permanent and increased public spending.

In August 2007, the air started to escape from this gigantic bubble. It happened in three stages. The financial sector was the first to feel the impact, because while it was evident that almost every bank had been up to its eyeballs in investments linked to the American housing market, nobody knew for sure just how much money each institution stood to lose. The financial system grinds to a halt if banks refuse to lend to each other, as they did in August 2007.

It took more than a year for the second stage of the crisis to unfold. During that period there were a number of developments: the crisis in finance deepened, house and share prices fell, and inflationary pressures increased as a result of sharp jump in the cost of fuel. When Lehman Brothers went bankrupt in September 2008, the global economy was ready to blow and the next six months saw the biggest slump in output since the Great Depression.

Governments arrested the slide into a 1930s-style slump by concerted and co-ordinated action, but wrecked their own finances in the process. Bailing out the banks was expensive, particularly since much lower levels of output reduced tax revenues. Banks felt they had too much debt. Consumers felt they had too much debt. By mid-2009, most governments also felt they had too much debt. It was not a comfortable place to be.

Central banks tried to help out by making credit cheap and plentiful. They cut interest rates and used unconventional methods – such as buying bonds in exchange for cash – to boost the money supply. The hope was this would stimulate a private sector recovery and so provide a breathing space in which governments could repair their finances.

The attempt to solve a crisis caused by credit with even more credit has, predictably enough, proved a failure. It has been a bit like the motorist desperately pumping air into a tyre with a slow puncture: it works for a while, but eventually the tyre goes flat again.

Some countries have fared better than others. Australia, for example, was one of the few developed nations to escape recession, because it had well regulated banks and is a big supplier of raw materials to China.

Britain, by contrast, was more exposed than most. Lax regulation cultivated an “anything goes” culture in the City; equity withdrawal from rising house prices underpinned consumer spending; inflationary pressures were stronger than elsewhere. The level of activity in the economy is close to 15% below where it would have been had growth continued at just over 2% a year since output peaked in early 2008.

For the global economy as a whole, things may get worse before they get better. The summer of 2012 has seen signs of a generalised slowdown, with knock-on effects from Europe’s sovereign debt problems felt in North America and Asia. The eurozone is heading for a nasty, double-dip recession, the US is growing far less slowly than has been the norm after previous downturns, while China’s economy is feeling the impact of previous policy tightening deemed necessary to curb the inflationary effects of the stimulus injected in 2008-09.

There is no real comparison between the events of the past five years and the half-decade that followed the Wall Street Crash in October 1929. In the 1930s, a quarter of the American workforce was out of work and industrial production fell by 50%. A better historical parallel may be the Great Depression of the 19th century, a broad-based slowdown in growth coupled with deflationary pressure that lasted from 1873 to 1896.

The reason the crisis has been so long lasting comes down to three myths. The Anglo-Saxon myth is that big finance is essentially a force for good, rather than dangerous, rent-seeking and – in too many cases – corrupt. The German myth is that you can solve a problem of demand deficiency through universal belt tightening and export growth. The right policy mix involves putting tough curbs on the banks, international co-operation so that creditor countries increase domestic demand to help out debtor countries, and a more measured pace of deficit reduction governed by the pace of growth rather than arbitrary targets.

The chances of this happening appear slim. Why? Because there is a third myth – namely that there was not much wrong with the global economy in 2007. But the old model was financially flawed in that it operated with excessively high levels of debt, socially flawed in that the spoils of growth were increasingly captured by a small elite, and environmentally flawed in its assumption that all that mattered was ever-higher levels of growth. It is possible to move on, but only when it is recognised that the genie will not go back into the bottle.

A lot from Lehman Brothers: sale of artwork and ephemera from the failed investment bank at Christie’s of London in September 2010, on the second anniversary of the bankruptcy. Photograph: Linda Nylind for the Guardian

Three myths that sustain the economic crisis
By: Larry Elliott