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Real estate market would be better if credit growth targets rise: experts

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VIETNAM, September 16 – HÀ NỘI — The State Bank of Vietnam’s decision to raise credit growth targets for banks is expected to create favorable conditions for businesses to lend capital, including real estate firms, according to experts.

“This is a positive move to inject money into the domestic economy in the post-COVID-19 period, thereby energizing the sectors, including services, production, business and real estate,” said Sử Ngọc Khương, senior director of investment, Savills Việt name

This information has received special attention from businesses, investors and customers of the real estate market, according to the Savills Việt Nam.

In the first half of 2022, capital flows to the real estate market were narrowed due to tight control of credit sources and the bond market’s decline.

According to Khương, the tightening of credit aimed to help the State prioritise capital for enterprises and projects in good operation. In addition, this move would limit bad credit, making it difficult for banks.

Việt Nam is currently one of the countries with the fastest economic growth and recovery in the world in the post-pandemic period. That is helping the country attract a lot of attention and foreign investment.

After the Government reopened international flights, economic sectors have benefited, especially tourism and hotels.

This factor has created favorable conditions for foreign enterprises to enter the Vietnamese market, according to Khương.

However, there are still legal obstacles in many real estate projects in Việt Nam, causing hesitation for domestic and foreign enterprises and investors.

Nguyễn Văn Đính, vice chairman of the Việt Nam Real Estate Association, said the real estate market is going through a period of restructuring. As a result, house prices will increase due to rising costs so liquidity will decrease. As a result, investors tend to be more cautious in their investments.

If the difficulties in the property market are not removed, this market may have a long freezing period, causing difficulties for enterprises. Therefore, it is necessary to have supportive policies for the market’s recovery process, said Đính.

There has been an association between the capital and real estate markets. But it has lacked synchronous development, so the capital market has not had timely support for the real estate market when the channels supplying capital for the property market have been congested.

The Prime Minister has issued Directive 13, including directions of not hindering enterprises with good business results in mobilizing capital for recovery and development. This is extremely meaningful because real estate enterprises have faced bottlenecks in getting capital, Đính said.

Economic expert Đinh Trọng Thịnh told the Lao động (Labour) newspaper that it is very necessary to extend credit growth targets for some credit institutions in the current context.

In the past, many enterprises faced difficulties due to lack of capital when the bank stopped disbursing due to running out of credit room, according to Thịnh.

He said that the economy is a strong recovery, and increasing the credit growth target will reduce pressure on capital at the enterprises.

Meanwhile, Lê Viết Hải, chairman of Hòa Bình Group, also said that new information about credit room is very interesting in the market. The construction industry will have jobs when the real estate market warms up.

Investors cannot borrow capital to operate their businesses and not pay debts to contractors, leading to a series of difficulties. However, with good projects and reputable investors, there is no reason to control them tightly, Hải said.

He said it is also not necessary to tighten credit for homebuyers with real housing needs to boost the market.

In the context of many changes in credit regulations for the real estate industry, Khương said that investors trust in calling for capital via merger and acquisition (M&A), and they are looking for international M&A consulting firms to get support in connecting with the right partners .

For the M&A trend of foreign investors in Việt Nam’s real estate market at present, Khương said this is a great opportunity for domestic enterprises to improve their capacity to develop projects and attract new customers brought by foreign investors.

“In addition, for listed companies, this will assist them in attracting foreign capital on the stock exchange. Small-sized companies with low financial capacity need to have a strategy to restructure the investment portfolio and ensure the completion of the project’s legal procedures,” Khương said. —VNS

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Advice today on leasing commercial real estate might surprise you – Orange County Register

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Like the strong weather patterns of late, much can be said for the headwinds in our commercial real estate market this year.

Shaking off the cobwebs of a post-pandemic hangover, 2022 started with great momentum only to be cooled mid-year.

We received some decent economic news of late with the consumer price index not increasing as fast and some major retailers posting better earnings than expected. But our path forward still remains murky.

So what advice are we giving to tenants, investors and occupants who own? Allow me to categorize each.

tenants

Faced with a lease expiration at the end of this year, we recently recommended a client of ours renew for a short period of time, just six months, to gauge the market trajectory.

We’ve been watching what property has become available for several months. His options to relocate were limited and we’d even created a Plan B to stay put if we didn’t see some loosening in the market.

Lo and behold, we noticed a trick of new buildings hitting the market in October. Now it’s running about three a week. If you’re looking for space, this is a vast improvement vs. six months ago when we were lucky to see one every three weeks.

Another interesting metric is the asking rates have declined. Gone are the days when a newly available property was swept up before it was widely marketed. Every new deal was a new high. Not anymore.

Our advice centers around the belief in a future market softening. Tenants are becoming valuable again, especially if they pay on time and are easy on the building.

What’s causing the increase in supply? Some businesses faced with the new rent structure are headed out of state or out of business. What’s left in their wake are vacancies.

Investors

We see two sets of motivations these days: to defer taxes or not. Unless motivated by tax reasons, it might be wise to put your money in short-term treasuries—say, two years—and wait for the right opportunity to come along.

Institutional capital is largely sidelined and occupants are priced out. Private investors rule. If rents are softening in the face of rising interest rates, values ​​can only decline. Will there be better deals in mid-2023 vs. today? Our opinion is yes.

Certainly, if your investment is dictated by tax-deferred timeframes, you either transact or pay the capital gains taxes. But remember, the impetus of those buys was a sale. Our sense is they’ll be fewer equity sales as values ​​have declined or the market’s evaporated, leading to fewer tax-fueled purchases.

Occupants who own

We saw a voracious appetite from institutional capital targeting properties. Their pitch was a sky-high purchase price in return for a leaseback of two-10 years. This activity peaked in June.

With the uncertainty of recession, inflation and rising rates, these deals weren’t as attractive.

With more lease deals hitting, our prediction is some of these owners will need to sell, especially if faced with a refinance bullet or a shortage of dollars necessary to refurbish the building into rent-ready condition.

Once again, patience is key.

Allen C. Buchanan, SIOR, is a principal with Lee & Associates Commercial Real Estate Services in Orange. He can be reached at abuchanan@lee-associates.com or 714.564.7104.

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Rotman grad pursues social impact in real estate development

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If anyone had told Fatima Saya four years ago that she’d work in real estate development after completing her MBA at the Rotman School of Management, she probably wouldn’t have believed them.

With a passion for building community, creating social and global impact and advancing equity, diversity and inclusion (EDI) wherever she goes, Saya was recognized in her second year for creating and leading a diversity education program for the incoming MBA class in partnership with the school’s Office of Student Engagement and her peers.

Today, she is a senior manager of social impact at The Daniels Corporation, a Toronto-based real estate development company – and says the link between the two is not as unusual as it might initially sound.

“Without cultural, economic or social infrastructure, buildings are just buildings,” says Saya. “State-of-the-art construction is a big part of what we do at Daniels, but what we’re really focused on is building inclusive and sustainable communities through real estate development.”

Saya’s work falls under three main categories: social infrastructure development, local economic development and community engagement. One of the largest projects she’s involved in is the Regent Park revitalization project, where Daniels has been the development partner for its first three phases since 2006.

Since the project began, the physical infrastructure in Regent Park has been completely transformed for its residents, including the building of a new youth centre, community arts and culture hub and award-winning athletic facilities. The revitalization project has also helped to connect more than 1,600 people with employment opportunities through the new Regent Park Employment Centre.

“No two days are the same in my world,” says Saya. “One day, I might meet with the employment community group in Regent Park about creating new jobs for residents, then I might meet with Artscape on creative placemaking that we’re trying to bring to one of the communities.”

The Daniels Corporation has been a development partner for three phases of the Regent Park revitalization project (photo by Steve Russell/Toronto Star via Getty Images)

A typical afternoon involves meeting with the College of Carpenters and Allied Trades and the YMCA about CRAFT, the youth employment program Daniels runs in Regent Park and Scarborough. And to cap off the day, an internal meeting on EDI – another key portfolio in her role.

“I’m consistently juggling about two dozen projects, and they’re all different,” says Saya. “I became used to that at Rotman, and it has also been a common thread throughout my academic experience and now at work – I’m always looking for that multidisciplinary approach.”

After working in the education sector in Montreal following her undergraduate studies, Saya recalls noticing a management gap in the non-profit sector. Coming from an international development and political science background, she figured business school would be largely uncharted territory, but took the plunge anyway.

“I wanted to gain those management skills and challenge myself in a new way,” she says. “I like to pull from different disciplines when seeking out solutions to problems, so I was drawn to how inherently interdisciplinary the MBA program was. That’s also why I pursued a dual-degree program, completing my master of global affairs degree from the Munk School of Global Affairs [& Public Policy] at the same time.”

Following her graduation, Saya searched for a role that would allow her to apply her MBA skills in the social sector, with a focus on EDI. In the meantime, she worked as a freelance consultant using the skills she gained from working at NeXus Consulting Group during her second year. NeXus is an in-house consulting firm comprising Rotman MBA students and not-for-profit organizations, which merged with the Impact Consulting Group at Rotman in 2022.

“I was looking for something very specific, and I was comfortable with the reality that it was going to take some time to find whatever that is,” she says.

Now in her ideal role, she says the best part is getting to use her diverse skills on projects that impact thousands of people in the Greater Toronto Area.

“At the end of the day, real estate development is inevitable as we grow rapidly as a city and a country,” says Saya. “It gives me hope that more people are embracing that development can happen in ways that build the social, cultural and economic infrastructure of our cities and our communities.”

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Home flippers getting burned by the US housing downturn are now slashing prices to cut losses — here are the 2 big reasons why

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‘Not the time to get greedy’: Home flippers getting burned by the US housing downturn are now slashing prices to cut losses — here are the 2 big reasons why

Home flippers who pounced on recent drops in home prices now face some major hurdles — and potentially major losses.

It’s a story few could have foreseen: After home-flipping reached record heights as 2022 kicked off, the bubble seems to have burst. The one-in-10 home flipping/conventional sales ratio has dropped as the overall real estate market hits the brakes.

Home sales fell for the ninth month in a row in October, and dipped an astounding 28.4% from October 2021, according to the National Association of Realtors. It’s now causing many property investors to dump their inventory, and fast.

“Anybody that’s flipping right now needs to be looking closely at pricing of property: Price it to sell. Today is not the time to get greedy,” Noah Brocious, president of Capital Fund I, a hard-money lender that does business in Phoenix, Colorado and Texas, told Bloomberg News in October.

It’s true that elsewhere — in the stock market, for example — low prices and selloffs reveal golden opportunities to buy. But for those eagerly eyeing the housing market, it’s time to think again.

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Slumping demand

Home flippers must face facts: The skyrocketing demand we saw earlier this year may not return for years, if ever. First, housing inventory reached a 10-year low back in January 2022, according to Trading Economics, with just 860,000 single family and condo units for sale in the United States.

About 115,000 single-family homes and condos were “flipped” in the US during the second quarter of 2022, according to real estate data curator ATTOM. This made up about 8.2% of all home sales in the quarter, or up to one in 12 transactions. It indicated that any economic cooldown had not yet manifested in the broader market.

Story continues

“The total number of properties flipped was the second-highest total we’ve recorded in the past 22 years, and the median sales price of a flipped property — $328,000 — was the highest ever,” said Rick Sharga, executive vice president of market intelligence for ATTOM.

read more: Trade up while the market is down: Here are the best investing apps to pounce on ‘once-in-a-generation’ opportunities (even if you’re a beginner)

“The big question is whether the fix-and-flip market will begin to lose steam as overall home sales have declined dramatically over the past few months, and the cost of financing has virtually doubled over the past year.”

Inventory of homes for sale peaked in July at 1.31 million homes. While that came down to 1.22 million homes in October, a general rise has continued even as demand continues to fall.

Rising rates

Now for the second issue facing home flippers, the one that’s making everyone groan: higher interest rates. That means costlier mortgages, which have socked flippers with massive increases in their loans.

As property investors usually invest in several homes at once, it’s no wonder that many now want to get them off their hands. But with prospective buyers also turned off by high rates, it’s turning into a Hail Mary play.

The federal funds rate rose 0.5% at the start of 2022, and now sits between 3.75% and 4%. Yet it’s likely to climb higher before the year is out, as the Fed has hinted at a slew of hikes to come, which could tip the country into a recession.

With that in mind, many property investors will want to wait before they get greedy over home prices. Today, a great deal on a home is counterbalanced by a mortgage with a far higher interest rate compared to this time last year.

There is some hope on the horizon, though, according to the ATTOM report. After six straight periods of losses, profit margins rose during the latest quarter. The gross profit on a typical transaction hit $73,700, up 10% year-over-year and 10% quarter-over-quarter.

What’s next, then? Americans should have more information on forward-looking trends when the next housing reports come out at the end of December.

Meanwhile, bear this in mind: As home flipping tends to mirror the rest of the market, property investors should brace for further drops — stomach drops included.

A better way to buy property?

Of course, flipping single-family homes and condos isn’t the only way to invest in real estate.

Amid hot inflation and the uncertain economy, real estate moguls are still finding ways to effectively invest their millions.

Prime commercial real estate, for example, has outperformed the S&P 500 over a 25-year period. With the help of new platforms, these kinds of opportunities are now available to retail investors. Not just the ultra rich.

With a single investment, investors can own institutional-quality properties leased by brands like CVS, Kroger and Walmart — and collect stable grocery store-anchored income on a quarterly basis.

This article provides information only and should not be constructed as advice. It is provided without warranty of any kind.

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