Local commercial real estate market experiences challenges and bright spots

When you drive around town, you probably notice signs offering up retail and office space.

The observation alone can lead someone to ask how the local commercial real estate market is faring right now after the pandemic forced so many changes?

It’s not uncommon to see several signs advertising retail and office space within a short distance. While some commercial market sectors are struggling, those who make their living off it say there are plenty of bright spots, too.

Miller Diversified has been in business for over a century, covering several bases in the real estate market.

Jerry Miller is the vice president of the company started by his grandfather.

“I say we do just about everything in the real estate business. We have a development arm, construction, real estate brokerage and property management as well as an investment fund,” Miller said.

Miller says the retail portion of the commercial market is relatively strong now.

“I would say the neighborhood retail sector is doing very well across the board. Vacancies are low, and retailers are succeeding,” Miller said.

Similar to most areas around the country, the office space side of the local market is struggling.

The source, in part, is companies shortening work weeks and a growing number of employees working from home.

“I think the office market has changed a lot very rapidly. It is still evolving, and we have yet to see exactly how it will land. What I’m seeing is the space will look different in a lot of cases,” Miller said.

Miller says sharing office space and downsizing are becoming more common.

“The spaces are designed differently and smaller. So a company that once had 10-thousand square feet of space may now only need 5,” he said.

Higher vacancy rates often mean lower lease or sale rates, so Miller says his company sees this as a good time to make investments.

“We have [the] opportunity to buy at a lower dollar figure, and we go in and retrofit for new tenants and bring the value back up,” he said.

Miller added that there is another bright spot in the local commercial market— the light-industrial and large-scale warehousing sectors.

“It is a booming part of the market now, and I think Toledo, in particular, is well positioned to take advantage of that,” Miller said.

Miller says an important thing to point out about our local market is that it is fairly steady. While we may not see extreme highs in some markets, there aren’t extreme lows either.

Source: 13abc

Commercial Real Estate is the Next Shoe to Drop for Regional Banks and the Stock Market


The next domino to fall in the ongoing banking crisis could be commercial real estate loans, according to a Friday note from Bank of America.

A potential credit crunch in the sector, sparked by a wave of upcoming refinancings of commercial real estate loans at much higher interest rates than in the past, could send stocks spiraling and the economy into a recession.

“Commercial real estate [is] widely seen as next shoe to drop as lending standards for CRE loans to tighten further,” Bank of America’s Michael Hartnett said.

What’s not helping is the fact that occupancy rates in offices across the country are still far from their pre-pandemic levels. According to Hartnett, office occupancy rates are still less than 50% as work-from-home trends persists.

At the same time, growth in national rent levels peaked over a year ago and has been steadily falling according to data from Zillow, which means of the office buildings that are collecting rent, it’s likely less than what it was in the past.

The weakness in commercial real estate is evidenced in current market prices for stocks and debt tied to the sector.

The iShares CMBS ETF, which tracks a portfolio of bonds backed by commercial mortgages, is trading well below the lows seen at the height of the COVID-19 pandemic in March 2020, and is just 6% above its lowest levels since the inception of the fund in 2012.

Meanwhile, shares of office REITs are trading at multi-year lows, with Boston Properties Group trading at its lowest level since 2009, down about 68% from its record high reached right before the pandemic began.

This is a perfect storm for regional banks because they have so much exposure to commercial real estate loans. According to Bank of America, US regional banks account for 68% of commercial real estate loans, much more than their mega-cap banking peers.

There’s nearly $450 billion in commercial real estate loans that are maturing in 2023, and about 60% of them are held by banks, according to a recent note from JPMorgan that cited data from Trepp.

“We expect about 21% of commercial mortgage backed securities outstanding office loans to default eventually, with a loss severity assumption of 41% and forward cumulative losses of 8.6%… Applying the 8.6% loss rate to office exposure, it would imply about $38 billion in losses for the banking sector,” JPMorgan said.

And the losses in commercial real estate could be worse this time around than it was during the Great Financial Crisis because the latter was driven by a relatively short-lived recession, while today’s dynamics are being driven by work-from-home trends that show no signs of letting up.

“Furthermore, regional banks are a lot more stressed which reduces their ability to amend and consent to loan modifications given the pressure on the liability side of the balance sheet,” JPMorgan said.

To stem a potential crisis, Scott Rechler, CEO of NYC-based real estate company RXR Realty, thinks regulators need to take emergency actions now.

“There is $1.5 trillion in commercial real estate debt maturing in the next 3 years. The bulk of this debt was financed when base interest rates were near zero. This debt needs to be refinanced in an environment where rates are higher, values are lower, & in a market with less liquidity,” Rechler said in a tweet this week.

“I have joined @TheRERoundtable in calling for a program that provides lenders the leeway and the flexibility from regulators to work with borrowers to develop responsible, constructive refinancing plans… If we fail to act, we risk a systemic crisis with our banking system & particularly the regional banks,” Rechler said.

All in, the weakening outlook for commercial real estate, combined with a mounting wall of debt due to mature soon, could lead to a wave of defaults that stings bank stocks and add to a “coming toxic recession,” Bank of America said.

source: businessinsider

Property owners overwhelmingly respond to county’s alert

Mahoning County Public Health’s environmental division experienced a busy 2022 as it sent letters to about 17,000 Mahoning County property owners with basic-level septic systems to alert them they are required to participate in a new state-mandated septic system operation and maintenance program.

The good news, said Colton Masters, health board environmental health director, is 82 percent responded to the letters, provided their contact and other information and paid their $30 annual registration fee.

That was a significant response rate, Masters said.

“We were told by other jurisdictions to expect maybe about 40 percent or below your first year because people don’t understand it,” Masters said.

Masters attributes the high response rate in Mahoning County to the public outreach he and his staff carried out throughout 2022.

“That is why the education component was so important — to do so much public outreach and to answer every phone call and every email and do every interview with people who came to us,” Masters said.

“It’s because we wanted to get that message out and help everybody understand.”

The health department rolled out the new operation and maintenance program starting in January 2022 with Austintown, Jackson, Milton and Coitsville townships being notified that the program was starting in their area and they were required to participate. A small number of septic owners in Youngstown, Struthers and Campbell also were notified.

The rest of the townships in the county were notified in the second, third and fourth quarters of the year to make it manageable for staff to address all of the questions.

The letters informed septic tank owners that they needed to contact a registered sewage pumper / hauler from an approved list and have the tanks pumped and / or inspected sometime within the coming three years.

The letter informed septic owners that the program requires them to have a service provider check the sludge levels in the tank or tanks and pump when needed; check the surface for erosion, settling or evidence of surface water infiltration; check for ponding; or observe operation and maintenance requirements specified by the manufacturer of the system.


Masters said not everyone was happy to learn the program was starting, but “I can say maybe 95 percent, once we explained the program to them, said ‘You know what I understand what you need. I get it, not a problem at all. I will get my tank pumped and get you the report.

“I will get the check mailed to you. I will get whatever you need,” Masters said. “The key was taking the time to answer people’s questions.

They were generally property owners who knew their septic system was probably going to need to be replaced.

“They knew they just had a straight pipe out to a ditch,” Masters said.

“They said ‘Well, now you’ve found me. You know what’s out here. You are going to make me fix it,’” Masters said.

Masters estimates fewer than 200 property owners fall into that category. The computer system and database that keeps track of septic systems does not track how many systems have been identified as needing to be replaced, Masters said, so he does not know a specific number.

The good news is that such property owners have three years to make the changes.

“They are taking those three years and starting to get their contractors in line,” Masters said.

Septic-system installers told Masters last summer they had seen an uptick in septic system customers. Some contractors were booked until the middle of this year with customers needing their septic systems replaced, Masters said.

Additional septic service providers also are expanding their service area into Mahoning County to meet the need, Masters said. Some are from Trumbull, Portage and Geauga counties.

“We’re happy for that,” Masters said, adding that it’s possible those contractors also can remain their presence in Mahoning County to maintain the systems.

David Eaken, owner of All Aspects Excavating of the Lordstown area, which installs and maintains septic systems in Mahoning, Trumbull and Portage counties, said he feels that many septic owners in Mahoning County don’t understand the new program.

He said he understands the program and tells customers “step-by-step” what they can and cannot do, but he wishes the customers were being better educated by the health department because he gets “caught in the middle.”

He said many systems in Mahoning County have had no service done on them in 30 years, so some of those have to be replaced, others do not. He said some of the systems that have to be replaced are because the homeowner added on to the house but did not update the septic system as required.

A representative from another company who did not want to be identified said it is apparent that most companies have seen an increase in calls from homeowners needing regular service visits to their property.

“We got more customers and calls,” the representative said. “That’s the biggest (change.) We inspect the system to make sure it’s working in the proper order.”

The representative said it did not appear that the new septic program resulted in a significant increase in the replacement of septic systems. The main driver of that is when a home is sold, the representative said.

“The health department runs a dye test. If the system is outdated or if it doesn’t pass the test, then they have to replace if it can’t be repaired.” When home sales are up, septic tank replacements rise, the representative noted.

A service provider told The Vindicator last summer that one of the biggest challenges is for low-income septic-system owners to maintain or replace them.

There’s some parts of the county that don’t have money,” he said.


The health department thought a little more than 17,000 septic systems were in the county when the program rolled out at the beginning of 2022. After sending out letters and talking to property owners, the number actually dropped by about 3,000 — to 14,000. There were multiple reasons this happened, Masters said.

One is that many properties had a septic system at one time but received sewers and got rid of their septic system. Some took out a building permit for a house but never built it. And in some cases, a property owner did a lot split and built one house but never developed the other lots, Masters said.

The responses to the letters increased has improved accuracy of county septic-system records.

We cleaned up our database and records considerably,” Masters said. “In cases where a property owner got a letter and notified the health department that they no longer had a septic system, a health department inspector went out to verify the information and remove the address from the system.

Masters said some people added themselves to the program who did not get a letter.

“We had phone calls where someone said ‘My neighbor got this letter. Why didn’t I get one?’”

The health department took down the address and sent then a letter. Frequently it led to the property calling out a septic-service provider to have the system evaluated. In some instances, the septic system had not been serviced in many years.

It would lead to the service provider giving the health department information on the type and size of the system, pumping it and providing other services if needed.

The rollout phase in 2022 was not intended as a way to “go out randomly scour the neighborhoods looking for houses we didn’t have in the program,” Masters said. “We don’t have the time for that. However, we will continue to find systems through the real-estate program and or our additions program.”

The addition program is where a person comes to the building department for a building permit. If it is a house with a septic system, the information about the building permit goes to the health department, which then will check to see what type of septic system the property has and “make sure you know what you need to do to take care of it,” Masters said.


As 2022 went on, the health department refined the letters they sent to property owners.
“We made simple changes in the wording that helped people understand what we needed from them. And the more they understood, the better the program was,” he said.

“Most of the people who were agitated or angry were because they didn’t understand the program or the purpose behind it. I can say with quite a bit of confidence that now the public has a much better understanding of the program, what we need from them and the reason for rolling it out to begin with.”

He said he thinks it is human nature for some people to avoid servicing their septic systems.

“It’s something people don’t think about all the time because it’s not top of mind,” he said. “These tanks are typically buried. They are not easily accessible. And every year you think ‘Oh, I should get that done,’ and you ’ and you move past it and it just kind of gets put on the back burner for another year. That’s understandable but that’s why we need this program,” he said.


Though 2022 was focused on the most basic type of septic systems, known as Level 1 systems, the health department’s main goal this year is to address the more sophisticated systems — which are classified as either Level 2 or Level 3, many of which require an Environmental Protection Agency permit.

As an example, some Level 2 or Level 3 systems discharge wastewater into a drinking-water system, such as a lake. Health department sanitarians take samples at the discharge point of such septic systems to verify that the discharges are at safe levels, Masters said.

“You want to make sure that whatever is being discharged out is at least to the Environmental Protection Agency standards of cleanliness. Something like a ultraviolet light could go bad and you might not even realize it and then be discharging (septic water) that is not safe.”

Ultraviolet lights are used as a disinfection method for destroying disease-causing organisms in wastewater.

Owners of level 2 and 3 systems got a letter in 2022 telling them how the program would change in 2023, Masters said. Such systems were already in the program, but there are still changes affecting them in 2023, Masters said.

The biggest change is that the owner now pays their septic fees to the health department instead of to a service provider.

Source: the vindy

Property owners unhappy with council valuation to get onsite inspections

Fewer Christchurch ratepayers have officially taken issue with their city council property valuations than last time, despite the biggest jump in values for years.

More than 2500 of the city’s property owners have lodged an objection to their latest three-yearly rating revaluation, released last month.

Kris Rodgers, operations manager for Quotable Value (QV), which calculates the valuations for the council, said about 1.5% of the city’s 180,000 rated properties attracted an objection.

Rodgers said they would all have an onsite inspection.

“We will aim to get all objections processed as soon as possible,” he said.

Owners had until Monday this week to say they disagreed with their valuations, which will be used by the city council to calculate rates bills for the next three years.

Objections were down from the 2% after the last revaluation three years ago, he said.

The previous calculations reflected a flat real estate market, while this time they were taken near the peak of a heated market.

Rating valuations are typically calculated as a desktop exercise, based on the age, size and type of building, and the size and location of the land, with only a few sample sites visited. They are not intended as market valuations.

The city’s average home rating value is $774,000, based on QV’s August 2022 snapshot of house prices.

This is a jump of 47.3% from about $525,000 three years ago.

Commercial property values rose 23.2% on average.

The average proposed rates increase – to be finalised by council in June as part of its annual plan – is 5.68% across all residential, rural and commercial properties, and 5.79% for the average household.

The rating valuations determine how the rates burden is shared out. If accepted, the proposed rates increase would see the average homeowner billed $3344 for the 2013-24 year, while the owner of a $400,000 home would pay $1922 and a $1 million home would be pay $4264.

Higher percentage house price rises in some cheaper suburbs since the previous revaluation mean their rates bills will rise by the biggest percentage, although with cheaper homes the dollar increases will be lower overall than for dearer homes.

Based on the proposed figures, average residential rates rises would be 11% or 12% in Bromley, Bexley, Woolston, Ferrymead, Aranui, Woolston, Burwood, Avondale, Central Brighton, North Brighton and South Brighton.

Where rises in market values have been lower, rates could rise by close to 1% or even drop very slightly, in the central city, Avonhead, Russley, Upper Riccarton, Sockburn, Fendalton, Burnside, and Ilam.

The owner of a business property with an average rating valuation of $2.44m would receive a $16,300 rates bill.

source: stuffconz

What will happen in London’s property investment market in 2023?

London-based estate agency, JOHNS&CO, looks at what has happened in the capital’s property investment market since the pandemic-induced exodus of tenants a few years ago.

Matt Johnson, Area Director at JOHNS&CO, said: “Coming into this year, we expected to see buyer demand dampened by the rise in interest rates, the cost of living crisis, and changes to political leadership in Q4. The reality is that we have been exceptionally busy, with 100% more new offers year on year, and a 20% increase in agreed deals.

“This has been contrary to what is currently being reported about the market overall, as the London property market has shown its resilience during times of economic pressure.”

Data from Q1 of this year has revealed buyer demand to be 70% higher than the five-year average, with the average pipeline of listed-to-sale shortened to just three weeks.

Matt commented: “What we are seeing is growing investment prosperity as mortgage rates rise, property sale prices remain static, and rents continue to increase. Meanwhile, rental growth has begun to outpace property prices, creating an increasingly positive outlook for the London rental market.”

For investors, JOHNS&CO advises that the rental yield of a property can provide a good indication of how different properties are likely to perform, allowing for a more informed comparison of investment opportunities.

During the pandemic, London’s property market was significantly impacted after a huge decline in demand for rental homes in the nation’s capital, which in turn caused rental values to fall, and rental yields to drop below 2%.

Yet, over the past few years, the capital’s rental yields have recovered to an average of 4.2%, as transactions have risen while supply has remained low.

Matt observed: “Increasingly, the rental market is stabilising after the effects of the pandemic and we are seeing the return of renters looking to move to the city in search of work.

“From stabilising rental yields to growing tenant demand, this is a prime time for investors to consider investment opportunities within London and take advantage of this strengthening rental climate.”

Using current data, the firm has identified the boroughs in London where rental yields have prospered.

Matt continued: “Despite some areas of London having some of the highest property prices in the UK, our data has identified that there are far more lucrative investment opportunities available in the capital for investors looking to expand their portfolios.”

When considering an investment opportunity, JOHNS&CO advise evaluating if the property has the potential to grow in value, if tenants are reliable, and if the location has appropriate amenities.

Matt continued: “Alongside strengthening demand and rental yields, we have also seen rental renewal rates remain consistent, with the current renewal rate at 62%, which is an increase from 2022.”

“To that, void periods remain extremely low, at approximately four days due to exceptionally high tenant demand, illustrating that despite the rising cost of rent, landlords are still seeing a good return on investment.”

“Overall, while the property market can be unpredictable, from this data we are seeing that the London investment market is looking increasingly prosperous for 2023.”

He concluded: “While some demographics are leaving London for more rural areas, the job and leisure opportunities available means that economic migration to London will always be present, hence why buying property in London will remain a good long-term investment opportunity.”

source: propertyreporter

Millennials have least amount of confidence in Vancouver real estate: survey

Optimism in Vancouver’s housing market is divided among generations, according to a new survey by Mustel Group and Sotheby’s International Realty Canada.

Millennials are the generation that have the least amount of confidence in the city’s real estate market and its ability to perform as a financial asset, according to survey results. On the other hand, baby boomers and gen X are the most positive when it comes to Vancouver real estate.

Thirty per cent of millennials believe that over the next 12 months real estate will perform worse than other financial investments. Twenty-three per cent believe that it will be equal.

“A lot of the gen Z’s and the millennials that have come into the market have come in at a time when there has been a shortage of inventory and that’s definitely going to skew their outlook in terms of the market,” said Don Kottick, president and CEO of Sotheby’s International Realty Canada.

While 18 per cent of baby boomers think that real estate will outperform other investments in the next 12 months, 41 per cent believe that real estate will exceed expectations in the next decade.

The aim of the survey was to compare generational sentiments towards the country’s housing market. Mustel and Sotheby’s said it’s the first survey of its kind since January 2020. Since then, mortgage rates have skyrocketed as the Bank of Canada has raised its key rate in a bid to contend with high inflation.

Roughly 31 per cent of Vancouver residents are more likely to buy or sell a home in the coming years than they were pre-pandemic, regardless of generation, with 35 per cent across Canada having the same sentiment, according to the survey.

“That’s one market that saw rapid price escalation during the anomaly years and then it went through more of a correction than some of the other markets. So, there’s probably some residual impacts in the Vancouver market that are a little more pronounced when you compare them to the national average,” said Kottick.

Sixty per cent of Vancouver residents across all generations believe that a real estate purchase will outperform or equal the performance of their financial investments over the next 10 years.

Forty-three per cent of residents across generations have the hope that over the next 12 months a real estate purchase will outperform or remain on par with the performance of their financial investments.

“This shows confidence in the real estate market, not only short term but longer term,” said Kottick. “What it means is that it’s going to put additional pressure on the housing supply, which we all know has a chronic decades-long shortage.”

Survey findings are based on a survey of 2,000 Canadians, ages 18-77, in Calgary, Toronto, Montreal and Vancouver.

source: biv

Doors are Open in Commercial Real Estate, Experts Say

When the phrase real estate comes to mind it usually deals with the residential sector, but professionals and entrepreneurs in the commercial field say there are opportunities to partake in for those who are willing to work hard and learn the industry.

“I am focusing on investing in four-unit buildings and affordable housing here in D.C. and in Baltimore,” said Anthony McDuffie, the owner of Real Estate Wealth Investors, a commercial real estate and education firm in Ward 8 in Southeast. There are a lot of opportunities in commercial real estate, but it is like anything, you must give it your best.”

The Brookings Institute in Northwest published a study, “The Devaluing of Assets in Black Neighborhoods: The Case for Commercial Property,” on July 11, 2022, that said only three percent of Black households own commercial real estate compared with eight percent of white households, and their holdings are much smaller — valued at just $3,600 on average, compared with nearly $34,000 for white households. The study said Black neighborhoods are often undervalued, denying their commercial property owners in those areas some $171 billion in aggregate wealth. The way to end the cycle, according to the study, is to diversify owners of commercial real estate and change the rules that guide investment.

Advice on Getting Into Commercial Real Estate
Jerome Nichols serves as the president of Standard Real Estate Investments, LLP with offices in the District and Los Angeles. Nichols, a former professional football player with the Washington Redskins and other pro teams, said African Americans lack the capital to get into commercial real estate because they don’t have the family financial connections or the personal assets. Nevertheless, he said lack of capital shouldn’t discourage Black people from seeking careers in the field.

“There are plenty of opportunities to gain capital to get into commercial real estate,” Nichols said. “You can earn a paycheck at a real estate company or use equity in your home as ways to finance a project.”

Nichols said specialties in development, leasing, ownership, brokerage, investment and management are available for African Americans.

“There are so many different ways to get into the industry,” he said.

Nichols manages two projects in the District. He is working on developing the southern entrance of the Congress Heights Metro Station in Ward 8 and has started work on re-developing the East River Park Shopping Center and Senator Square Shopping Center in Ward 7.

McDuffie, 53, said before he became a real estate developer, he studied finance, estate planning, tax preparation and probate while incarcerated in the federal penal system. When released he secured a broker’s license in the District and Maryland, worked for a real estate investment firm and started his business. He said there are no hard educational requirements to become involved in the commercial real estate field but there must be a desire to learn and be self-motivated.

Omar McKeithan, 42, said his desire to work in commercial real estate began early in life.

“I have had a passion for commercial real estate since the 1980s when I worked for my grandfather’s clothing store on 7th and Rhode Island, Talib Discount,” he said. “We were tenants. I wanted to represent my family and my culture in the industry; I worked towards that goal.”

McKeithan said in 2007, he gained employment at the CoStar Group, the world’s largest commercial real estate research firm. From there, he moved to Scheer Partners, a biotech/medical coverage brokerage firm in Rockville where he became a broker. He joined NAI Global in 2016, where he works in Lanham, Maryland. McKeithan said self-confidence and focus are keys to success in commercial real estate.

“I have achieved extreme success and primarily credit that to those who gave me opportunities and me believing in myself,” he said. “Getting the opportunity is one thing but believing you can achieve is another. You must be fearless and undeniably believe in yourself when others do not. Learn the weaknesses of the industry and make them your strengths.”

source: washingtoninformer

UAE: 5 reasons to invest in Dubai’s off-plan real estate

The emirate’s off-plan segment was particularly a bright spot with an eye-popping 144 er cent surge in performance which contributed to the UAE’s overall real estate boost

Dubai’s property sector witnessed significant growth in 2022 as sales transactions rose by 76.5 per cent. The emirate’s off-plan segment was particularly a bright spot with an eye-popping 144 er cent surge in performance which contributed to the UAE’s overall real estate boost. This positive outlook is poised to continue through 2023 as another 115,000 units are being built, 34,000 of which have exceeded 70 per cent completion and are expected to be delivered by the end of the year .

Despite factors that are known to spur economic downturns, like ongoing turbulence in Europe and a looming global recession, the UAE’s real estate sector has thrived as a result of changes in consumer behaviour; one-third of the country’s population is aged between 20-30, and 90 er cent of this group prefers to rent properties in the early stages of their careers, but many of these individuals who have been saving up are now prepared to invest in affordable off-plan developments.

Last year’s Fifa World Cup in Qatar also had a significant impact on Dubai’s off-plan growth. Attendees, many of whom were high-net-worth individuals (HNWIs) that transited in Dubai, were subjected to a better understanding of what the emirate offers, and why it is globally renowned. With the UAE garnering constant attention, and off-plan developments continuing to be long-term and profitable assets to invest in, the reason for increased interest in these unconstructed properties can be attributed to several market factors such as:

Purchasing off-plan enables investors to secure a property at the earliest time, and the lowest possible price, while providing a variety of choices to select the best units under development. Additionally, the approximate downpayment of 10 per cent proves to be an affordable option, especially when compared to the typical 20-25 per cent cost that is associated with purchasing completed projects .

Payment installations

An added element of affordability in the off-plan real estate space is the convenient payment structures that investors, and even end-users, can benefit from. Installation schemes can be split into a 40-60 allocation where the buyer pays 10% of the property cost upon signing, the balance 30 per cent in installments over the construction period of 18 months, and 60 per cent at handover. This lessens the financial strain of the investor and allows them to then structure rental contracts in a way that is still profitable for them but also attractive to tenants.

High-rental yields

Upon the completion of a development, owners who rent out the unit they purchase are able to benefit from the UAE’s steady influx of expats. Landlords can expect a guaranteed annual minimum net return of five per cent even in upcoming areas of Dubai like Jumeirah Village and Al Furjan, which continue to be among the most attractive options for high-quality affordable housing.

Safety and regulations
Dubai’s Real Estate Regulatory Authority (RERA) has implemented a system of regulations to protect buyers against delays and project cancellations. A law introduced in 2017 safeguards buyers of off-plan real estate from developers who do not abide by their contractual obligations. Investors can accordingly buy off-plan properties with their best interests safeguarded at all times as installments are only deposited in regulated accounts, which developers can only access as they meet construction milestones.

Peace of mind
If an off-plan property is being bought for the purpose of eventually living in it, the owner can rest assured that they will be the first to enjoy their purchase. Just like the development itself, their apartment will be delivered to them brand new with a Defects Liability Period of one year, ensuring that the developer takes responsibility to rectify any defects that unfold. Additionally, developers and contractors have a 10-year obligation to safeguard the structure of the development.

Additionally, newer developments often come with upgraded designs, technology, and amenities For example, the first LEED Gold certified and Well-Being integrated development is currently under construction in Al Furjan; upon completion, ZaZEN Gardens will help residents live better through modern sustainable design, high quality finishes, easy connectivity and a multitude of community focused amenities, aligning with Dubai’s 2040 Urban Master plan and UAE’s 2050 Net Zero commitment.

source: khaleejtimes

When a Green Building Is No Longer Green Enough

One Vanderbilt in Midtown was designed with climate change in mind, but it uses natural gas, which the city is moving away from.

Good morning. It’s Wednesday. Today we’ll look at a building that was built to be an environmental showpiece, but it’s already out of date — and it has been open only since late 2020.

It reached for the sky and also for the future: The building just west of Grand Central Terminal in Midtown Manhattan that’s known as One Vanderbilt had remarkable ambitions when it opened in late 2020. It was designed with climate change in mind, with green features like a self-contained power plant that could generate as much energy as six football fields of solar panels. But it is already out of date. Our reporter Ben Ryder Howe says that the building’s most important green features were the right answers on climate change when it was being planned, but in the six years since the groundbreaking ceremony, the answers have changed. I asked him to explain.

You write that One Vanderbilt is already dated. How so?

The main thing is that it uses natural gas, which is not the future of New York City. New York’s energy future is all-electric.

Fossil fuels like gas, despite how clean gas is compared with other fossil fuels, are on the way out, and they’re on the way out quickly.

In 2021, around the time One Vanderbilt opened, the city passed a law effectively banning fossil fuels in large buildings starting in 2024 and smaller ones in 2027. This law had been in the works for some time, and even when One Vanderbilt was being built, the owners knew that things were likely to change.

That, I think, is part of a larger story. Even when builders are reasonably certain that changes are coming, they can’t just stop and wait. Nor do they know how new laws will shake out.

Another hugely consequential law, Local Law 97, was passed in 2019. It essentially puts buildings on a carbon diet. What’s revolutionary about Local Law 97 is that it applies to existing buildings as well as new construction. Tens of thousands of buildings much smaller than One Vanderbilt are going to be affected. But even now, four years later, the city has yet to say what the penalties will be. Nor is it clear how aggressively the law will be enforced. Imagine opening a $3 billion skyscraper with that kind of uncertainty.

One Vanderbilt is an engineering marvel, and for me as a reporter, it was fascinating to spend time with the engineers as they showed it off. Commercial developers like SL Green, the company behind One Vanderbilt, are the only ones with the money and wherewithal to make those big technological leaps. The people who run One Vanderbilt are proud of the building, and it shows.

To then find out that a building that has won all these awards for sustainability is facing the possibility of retrofitting after a relatively short time, that’s fascinating, too.

There aren’t a lot of buildings in the city that generate their own electricity the way One Vanderbilt does, are there?

There are some. It was trendy for a while because landlords saw it as a money-saver: Basically they could burn gas and get both electricity and hot water. Environmentalists liked it because they weren’t using oil or coal.

It also allowed buildings to supplement the electricity they get from the grid, which helps Con Ed avoid the use of peakers, the power plants that come online when the grid is strained. Those plants are expensive, inefficient and often powered by fossil fuels.

Also, an on-site power plant isn’t dependent on transmission lines. A lot of electricity is lost along the way from where it’s generated, usually upstate.

What else about One Vanderbilt makes it environmentally friendlier? Doesn’t it have a system that captures rainwater and uses it in the building? Is that system obsolete?

Not at all. But it does show how quickly, as the climate debate races forward, dire concerns can feel like yesterday’s struggle.

After Hurricane Sandy, a big environmental concern was resiliency. One Vanderbilt has one obvious feature of buildings constructed when that was top of mind: A lot of its machinery is well above the basement.

One Vanderbilt also has giant holding tanks, enabling it to retain the water it captures from its own surface and recirculate it throughout the building. That helps the building avoid dumping runoff into the sewer, which was a huge concern not just post-Sandy but after those crazy, once-in-a-lifetime storms just a year and a half ago.

Who knows? Things are changing quickly. That building is massive — it’s only half-built, yet it seems to cast a shadow down Park Avenue — and it has no gas or steam line. That’s the all-electric future, which, writ large, is going to make New York the world leader on sustainability, if it happens.

But there are questions about where the energy is going to come from and how it’s going to be delivered. So it’s not a small bet.

Will SL Green replace the gas-powered turbines that generate the electricity at One Vanderbilt?

Their answer, when I asked them, was T.B.D. They’re waiting to see how Local Law 97 shakes out.

I wouldn’t be surprised if they don’t have to? The most impressive thing about One Vanderbilt is how interconnected all the systems in it are, and the way those systems work together to respond to the external environment and self-regulate, almost like a plant. It’s finely balanced, and to replace the power system feels like it would throw everything off.

source: nytimes

How the Current Real Estate Market Can Affect Your Finances

The real estate market is in an interesting state right now. Home sales are slowing because of higher interest rates, but prices in some areas have yet to drop. Overall, the median existing home sales price in January 2023 was up 1.3% from the same time last year, but home prices in expensive areas have gone down, while prices in less expensive areas have gone up.

Considering that home prices were reaching record highs in 2021, one would expect them to have normalized with the slowing market, but that has yet to happen. However, if interest rates continue to rise, prices should continue to drop.

But what does that mean to you and your finances? This article will explore how the current real estate market can impact you financially.

Real Estate Situations that Can Affect Your Finances
There are several situations that you may find yourself in where the real estate market may affect your finances.

1. Buying a Home
If you’re in the market to buy a home, you’re going to pay a higher interest rate than you would have in 2021. However, the inventory of homes is high and the number of buyers is down. That means that you may have more negotiating power with sellers. Prices may be higher, but chances are, most sellers are very motivated which could put you in the driver’s seat.

But you’ll end up paying a higher rate, but with a lower price point for the home, so it may even out for you financially. You can also refinance later if interest rates go down and get ahead of the game.

Be sure to do your research into what is happening in your area in terms of prices and the number of sales that are occurring. Every local market is different. Make sure that your real estate agent talks to you about current comparable sales, and use your negotiating power.

2. Selling a Home
If you’re planning to sell your home in the near future, you may be under a bit of pressure. Buyers are fewer in many areas due to the higher interest rates, so the people that are buying have the negotiating power. If you can, you may be better off waiting to sell until rates go back down. However, what will happen with interest rates and when is a great unknown.

If you need to sell and you want to get a specific profit on what you paid for the home or on what you owe on your mortgage, you can calculate what price you need to stick to.

Often the best strategy in this kind of market is to price your home higher than what you actually need. That way the buyer can negotiate and feel like they’re getting a deal. It cannot be stressed enough, however, that the best strategy depends on your local market.

Do your homework and talk to your real estate agent about what is happening in your market and what comparable homes are selling for. And if you need to make a certain profit on your home, you can stick to your guns and wait for that buyer that “must have” your home.

Work with your agent to make your home as appealing to buyers as possible by making repairs or upgrades and staging the home well. In a tough market, you need to make your home stand out from the competition.

Also, work with your tax advisor when considering the price that you need to get. Selling at lower price means less in capital gains tax, so that will have an impact on your finances overall.

Special note: there was $400mm in sales in January 2023.

3. Investing in Real Estate
Investing in real estate right now is an interesting proposition. Warren Buffet said “be greedy when others are fearful”. Real estate investors right now are fearful of economic and market instability; however, having that kind of outlook depends on your goals and your risk tolerance.

If you’re looking to flip houses as an investment, it’s likely that you can find deals, particularly on distressed properties. But with the number of home buyers decreasing, you may find yourself having trouble finding a buyer and thus incur carrying costs. You can still make a profit, though, if you can put minimal money into the property and price it competitively based on local real estate conditions.

Your best bet if you want to flip homes now, is to carefully analyze each potential deal, including what is happening in the specific area the property is in, and cherry pick only the deals that make the most sense and have the least risk. With so many “fearful” investors, you’ll have less competition, so you can afford to be choosy.

If you’re considering buying rental properties, it’s still a matter of looking at each deal. The higher interest rates mean that fewer buyers are buying and are renting instead, which can drive rents up. That’s great if you can find a great deal and pay cash for the property. If you need to finance the property, however, you’ll be paying a higher interest rate which will reduce your cash flow.

The bottom line is, if you’re considering investing, you have to really understand your local market. Do considerable research before making a decision.

5. Refinancing Your Mortgage
Clearly, if your current interest rate is lower than current mortgage rates, refinancing your mortgage may not be a good idea, and vice versa. You also have to consider your closing costs when deciding if refinancing is financially beneficial.

If you are refinancing to a lower rate and getting cash out from your equity, you may find that when the bank assesses your home’s market value, it may be lower than you think. Again, it depends on what’s happening to prices in your local market.

If you want to refinance to a shorter loan term, you may still be able to benefit. Rates on 10 or 15 year mortgages are generally lower than 30 year mortgages, but your payment may still be higher because of the shorter term.

Another thing to consider is that lenders tend to be more conservative in a slow real estate market, so it may be more difficult to qualify for the refinance. Credit score and income requirements will be tighter, so be prepared to go through a more rigorous application process.

Your best bet is to shop around for the best rates and terms, analyze your options, and decide which option, if any, is right for you.

6. Home Equity Loans
If you’re considering getting a home equity loan, whether the real estate market will impact you depends on your goals.

If you want a home equity loan to consolidate other debt, current mortgage rates are still likely lower than the rates on other debt such as credit cards. However, similar to a cash-out refinance, your equity may not be as high as you expect based on market values.

If you want a home equity loan to remodel your home, if you’re doing it just because you want your house to be nice and you can afford the payments, go for it. You might want to consider a home equity line of credit with a variable rate so that the rate goes down when rates go down in general. However, rates may also go up.

If you want a home equity loan for remodeling, but with the goal of selling your home for a higher price in the near future, you’ll need to give it careful consideration. If rates continue to rise and home prices fall, you may not get your money back from the remodeling you do and the interest you pay on the loan. Be sure not to overdo your improvements.

7. Renting
Fewer people buying homes means more people renting, which is creating a rental shortage due to high demand. As a result, in 2023 many predict that rental price growth is likely to remain high, which is bad news for renters.

Other economic factors are also decreasing the amount of income that renters can spend on rent. What this means is that rentals in higher-priced areas will be less in demand, which should start to force prices on those rentals down a bit.

In the longer term, rental prices are likely to start to come back down, so if you’re finding it difficult to afford current rents, you may only be struggling temporarily.

As with all the other effects of the real estate market, how the current conditions will affect renters is location dependent. If you’re in the market for a new rental, do your homework and shop around, and don’t be afraid to negotiate with landlords to try to get a better rate.

In Closing
The real estate market is interesting right now, and it’s difficult even for experts to predict exactly what will happen in 2023 and beyond. Many factors will have an impact on the market’s direction, so you should stay informed about what’s happening in the market, particularly in your area.

If you’re in any of the situations discussed, be sure to do your market research and look to professionals, whether it be a real estate agent or a financial advisor, for advice. By doing so, you can find ways to successfully navigate this unpredictable market and protect your finances.

Source: entrepreneur