BlackRock Sees Asian Institutions Return to Local Properties – Bloomberg 01-16-14

Salient to Investors:

Joseph Pacini at BlackRock said:

  • Asian institutions’ appetite for regional real estate investments has returned as they hunt for yield for their growing assets amid low interest rates and are expected to deploy more money and a bigger percentage of their property allocations to Asia, especially in commercial real estate.
  • Asian real estate has surprisingly not been part of the equation for a number of years, but now it is returning.
  • In a low interest-rate environment there is more need for yield, creating stress for Asia because it has a lot of capital to invest.
  • The bulk of new real estate investment will continue to focus in a few cities in developed markets in North America and Europe because of their size.
  • Investors will buy the ugliest building in the best block, and by improving create value.
  • Asian institutions tend to have slightly higher return expectations than western counterparts because of faster economic growth and inflation in their region.

Read the full article at http://www.bloomberg.com/news/2014-01-17/blackrock-sees-revival-of-asian-institutions-property-appetite.html

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Bubble, Bubble, Money and Trouble – Barron’s 06-01-13

Salient to Investors:

Marc Faber at the Gloom Boom & Doom Report says:

  • High-end assets from stocks to art to real estate are in a bubble caused by central bank money-printing. This money doesn’t increase economic activity and asset prices in concert, instead creates dangerous excesses in countries and asset classes. Money-printing fueled the stock-market bubble of 1999-2000, the housing bubble in 2008, and the commodities bubble.
  • Owns equities because easing money is flowing into the high-end asset market, including stocks, bonds, art, wine, jewelry, and luxury real estate.
  • The government bailed out S&L depositors in the late 1980s. Treasury and the Fed bailed out Mexico in the mid-1990s. The Fed-supervised bailout of Long-Term Capital Management in 1998 gave a green light to Wall Street to keep leveraging up. Neither Keynes or Friedman would have approved current policies.
  • In the fourth year of an economic expansion, near-zero interest rates will lead to a further misallocation of capital. The S&P 500 is a near a long-term top and could rally to 2000 in the next month or two before collapsing.
  • Money-printing leads to a widening wealth gap. In the Western  democracies, large numbers of people will at some point target the rich through wealth taxes or significantly higher tax rates. The rich have seen huge wealth accumulation in Asia in recent years but the middle class has seen diminishing purchasing power. Growing wealth inequality has always been corrected either peacefully, through taxation and wealth redistribution, or by revolution, as in Russia. European voters will turn against the arrogance of the bureaucracy.
  • China will not tolerate US interference long-term in their region.
  • 25% in equities – no US, some Asian shares and Singapore REITs.
  • Except for some high dividend stocks, Philippines, Indonesia, and Thailand markets are unattractive having quadrupled from post-crisis lows. Dislike Chinese equities unless conditions worsen and China prints money like crazy, when the currency will weaken and stocks will rise.
  • Japanese stocks made a generational low in 2012 and won’t go below that. Like Japanese REITs.
  • Vietnam exports are strong, and the people are hard-working. The beach between Danang and Hoi An will be a huge resort area in the future and is only an hour and 10 minutes by plane from Hong Kong, and two hours from Singapore. Likes stocks with yields of 5% to 7%.
  • Many rich Asian companies have been buying other Asian companies. Asia long-term economic outlook is good. Laos, Cambodia, and Myanmar are opening up, and Vietnam is reopening. Myanmar market is hot but like Vietnam near its peak in 2006-07, looks dangerous for investors.
  • The huge credit bubble in China won’t end well. The economy officially grew 7.7% in Q1 but in truth is growing 4% a year, at best. China reports export figures to Taiwan, South Korea, Hong Kong, and Singapore that are much larger than those countries report as imports.
  • Markets in Europe have made major lows so own European shares – and plan to buy more – and corporate bonds, and real estate. Money in European banks is no longer 100%.
  • Like Singapore REITs whose yields of 5% and 5.5% compare favorably with US REITs. If inflation picks up, REITs can raise their rents.
  • 25% in gold and add to positions every month. When the asset bubble bursts, financial assets will be particularly vulnerable.

Read the full article at http://online.barrons.com/article/SB50001424052748704509304578511561194530732.html?mod=BOL_twm_fs#articleTabs_article%3D0

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San Francisco Office Costs Increase the Most in the World – Bloomberg 12-13-12

Salient to Investors:

CBRE said office space in San Francisco rose the most in the world in the year to September 30 fueled by technology companies. Seattle had the 4th largest rise.

Asieh Mansour at CBRE said the U.S. high-tech sector has matured, with new applications for even traditional businesses. Mansour predicts San Francisco’s gains and Asia-Pacific expansion will slow in 2013 because there’s already saturation in the market. Mansour said London’s status as a global financial hub should offset austerity measures in the UK.

Central Hong Kong was the most expensive location in the world at $246.30 a square foot, followed by London’s West End at $219.81 a square foot and Tokyo’s Marunouchi Otemachi at $197.27.  12 of the top 20 most expensive office space were in the Asia-Pacific region.

Read the full article at http://www.bloomberg.com/news/2012-12-14/san-francisco-office-costs-increase-the-most-in-the-world.html

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The Decoupling Has Started – Seeking Alpha 10-25-12

Salient to Investors:

Albert Sung at Katchum Macro-Economic Blog writes:

The Fed can print money but can’t control where it goes. Money is now flowing into Asia – Thailand, Indonesia, Hong Kong, Shanghai, Australia are at new highs, while the Hong Kong and Shanghai real estate markets are making new highs. Asian real estate developers in China are making new highs.

Decoupling between stocks, bonds and the US dollar has started. The bond market is starting to implode as yields rise. If all three markets – stocks, U.S. dollar and bonds – fall, there has to be another part of the market that rises. Money will increasingly flow from the West to the East via the currency market – the yuan and Singapore dollar are making new highs versus the US dollar, Hong Kong had to intervene to prevent the HKD from rising versus the US dollar.

The precious metals market has risen 10% in 3 months.

Investors should look overseas for their investments, or buy real assets like precious metals as Asia is all about commodities.

Read the full article at http://seekingalpha.com/article/950431-the-decoupling-has-started

London Jumps to Second Behind NYC in PwC Rank of Finance Cities – Bloomberg 10-12-12

Salient to Investors:

PricewaterhouseCoopers ranks London a close second behind New York as a financial center on its economic clout, ease of doing business, innovation and attraction as an international gateway. Toronto and Paris rank 3rd and 4th, Singapore 7th, Hong Kong 8th.

Paris topped the livability category.

Read the full article at http://www.bloomberg.com/news/2012-10-12/london-jumps-to-second-behind-nyc-in-pwc-rank-of-finance-cities.html

Southeast Asian Properties Are Attractive, Deutsche Bank Says – Bloomberg 09-27-12

Salient to Investors:

Leslie Chua at Deutsche Bank says:

  • Retail real estate and logistics facilities in Southeast Asian cities, including Bangkok, Jakarta and Kuala Lumpur, are attractive and office markets in Sydney and Melbourne are attractive because of a lack of supply.
  • Investors are caught between a rock and a hard place – the need to be risk averse and the volatility in equities and bonds – so have to go up the risk curve, typically to hard assets like real estate.
  • Yield spreads between real estate assets and government bonds are attractive – for Singapore office markets a range of 2-3 percent above sovereign debt; for retail a range of 2-4 percent; for industrial space between 2.5 – 4 percent.
  • Low borrowing costs, which will remain low, and stable yields make for a very good form of alternate investment.
  • Indonesia, Malaysia and Thailand have got their act in order and transparency has improved – is cautiously optimistic on Singapore office market because supply of new office space remains limited.
  • Southeast Asia has often been ignored largely because of a lack of transparency – for a new investor in the region, Australia, Singapore and Japan are a natural choice.

Sigrid Zialcita at Cushman & Wakefield revised its forecast for a drop in Singapore office rents to 6 percent this year from 15 percent on June 29.

The IMF says Indonesia, Thailand, Philippines, Malaysia, Vietnam, China and India will outpace the rest of the world over the next two years.

Read the full article at http://www.bloomberg.com/news/2012-09-28/southeast-asian-properties-are-attractive-deutsche-bank-says.html