The Property Market Begins to Show Signs of a Turnaround.

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Japan commercial real estate market begins to show signs of a turnaround

Angelo Gordon & Co., a New York- based manager with $24 billion in assets, is seeking to boost Japan property investments amid signs of a recovery, after acquiring about $650 million of commercial real estate in the country the past two years.

Angelo Gordon is seeking bargains in Japan as the property market begins to show signs of a turnaround. Office buildings in Tokyo provided a 3.4 percent total return, including rental income and capital value, in 2011, after a 0.5 percent gain a year earlier, based on data compiled by RREEF, a property investment arm of Deutsche Bank AG. Before that, the market had three straight years of decline, the data showed.

Total return for properties in the U.K. rose to as high as 15 percent in 2010 and fell by half last year, while properties in the U.S. climbed for two straight years after posting two annual losses, based on data compiled by RREEF.

“Compared to major markets like New York and London, core asset prices in Tokyo have not appreciated very much,” Tanaka said. “We think there is upside potential as fundamentals improve.”

Angelo Gordon was founded in 1988 by Chief Executive Officer John Angelo and Chief Investment Officer Michael Gordon. Angelo Gordon began investing in commercial real estate in 1993 and has acquired more than $13 billion of properties, according to the company.

www.bloomberg.com

Demand for Distressed Commercial Property Markets Across the Globe Soars

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 Distressed Commercial Property Markets on Demand Soars

Global demand for distressed commercial property increased dramatically in the second quarter of 2011 and is expected to outstrip supply in the next three months, according to the latest report from the Royal Institution of Chartered Surveyors.
The survey does, however, suggest that the supply of distressed property continues to outstrip demand in some countries, most noticeably in the Republic of Ireland, Italy and the UK.
The RICS Global Distressed Property Monitor is a quarterly report that reveals trends in 25 commercial property markets across the globe. A distressed property is defined as a property that is under a foreclosure order or is advertised for sale by its mortgagee. Distressed property usually fetches a price that is below its market value.
 An increased rate of distressed properties entering a country's market can be seen as a negative economic indicator while a decrease may signal recovery. However, it needs to be borne in mind that the results are very country specific with generally negative numbers coming from those markets where the economic pain is most intense,’ he added.
Investor demand fell in Brazil this quarter, from a net balance of 0 to one of -23. Looking ahead, agents expect the supply of distressed property to fall dramatically in the coming quarter as well, in contrast to last quarter's expectations for increased listings. That said, the real estate market still remains firm with capital values generally thought likely to rise further over the coming months.
Levels of distressed property coming to market in China are still expected to decline in the third quarter, although somewhat less so than the previous quarter, with net balance scores moving from -34 to -20. Looking ahead demand for distressed property is still expected to far outstrip supply in this country which is consistent with the projection for further price gains in the commercial market.

U.K. Housing Market is in Firm Decline After a Rebound in 2010

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U.K. Housing Market is in Firm dDecline After a Rebound in 2010


The figures are the latest to suggest the U.K. housing market is in firm decline after a rebound in 2010. The Halifax mortgage lender said last week that prices in April fell at their fastest annual rate since October 2009.
Prices have been depressed by a variety of factors. Many prospective buyers have seen their monthly income fall in real terms as inflation has outpaced wage growth, making it less appealing to invest in a bigger property. The threat of job loss has also dissuaded some from taking on a bigger mortgage. First-time buyers in particular have been deterred by tight lending conditions.
The RICS said the fall in its balance in May was driven by a rise in the number of prospective sellers on the market, coinciding with a modest drop in people looking to buy.

The European Markets Had Been Picking up, Partly Thanks to Banks Lending Again

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''The market had been picking up, partly thanks to banks lending again'',says Eric Sasson, who heads up the European operations at The Carlyle Group, the private equity firm. "But the Greece crisis put a hold to that. Having just got out of the freezing zone, banks went cold again – and some deals got delayed."
Concerns over the European markets have also kept international investors away. While the U.K. has attracted many big-ticket sovereign wealth funds and quasi-national pension funds from Asia and the Middle East over the past 12 months, the rest of Europe has been dominated by domestic institutions and property companies.
"There was a massive globalized real estate market in 2007," says Pierre Vaquier, chief executive of AXA Real Estate Investment Managers. "But then afterwards there was a 'flight to home' – as people wanted to go where they understand best."
Signs of a true recovery have therefore been seen in just a few core cities – markets that sovereign wealth funds and institutions know and understand: Primarily London, Paris and the five main German cities. For the first three quarters of 2010, investment volumes in the U.K., Germany and France accounted for two-thirds of all investment turnover in Europe, according to Jones Lang LaSalle.

online.wsj.com

As a tested market that has endured with investors, Reynolds, in her PIGS-versus-BRICs comparison, attests that despite the somewhat deceptive figures, European property still may be the way to go when it comes to investment. "On the face of it, the emerging economies look a better bet, however they will need resources to grow, both money and raw materials (witness the spate of lead thefts to supply China with base metal requirements). Some emerging markets have not yet got a proven, 'foreign property buyer' track record. Sustainability of the domestic, property markets will also be a key question to bear in mind, as well as how foreign property buyers are treated by regulation."