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Monthly Archives: June 2013

Industry Standard Property Index Expands Footprint in Asia

Real Capital Analytics and Nikkei Business Publications, Inc. agree to launch commercial property price indices for Japan

Kyoto and New York– June 28, 2013 – Real Capital Analytics (RCA), a global commercial real estate research firm, and Nikkei Business Publications (Nikkei BP), publisher of the Nikkei Real Estate Market Report (Nikkei RE), today announced their agreement to develop a suite of transaction-based commercial property price indices for Japan. This collaboration will combine RCA’s innovative repeat-sales regression methodology with Nikkei BP’s proprietary property transaction data.

Today’s announcement, which was made at the 2013 International Conference of the Asian Real Estate Society (AsRES), marks an important milestone in the trend toward increasing transparency in Asian real estate markets. “Until now, there was no practical index based on actual repeat-sales pricing in the Japanese market,” explains Nikkei RE Deputy Editor, Jun Homma. “This sort of market transparency will greatly benefit Japan’s property investment professionals.”

In 2007, RCA launched Moody’s/REAL CPPI, the first transaction based repeat-sales regression (RSR) indices for commercial real estate in the United States. These national indices quickly became an industry benchmark and are still published with Moody’s Investors Service as the Moody’s/RCA CPPI. RCA has since launched more than 200 US market-level indices called the RCA US CPPI and will soon release a suite of indices for the UK.

“In the western markets, many investors have already come to rely on RCA’s transaction-based, repeat-sales indices to measure property performance,” says RCA Managing Director Steve Williams. “Now investors will have access to these same index methods for Japanese markets allowing them to establish a consistent global measurement platform.”

The launch date of the RCA Japan Commercial Property Price Index (CPPI) is planned for early 2014 and will be based on a 10-year time series that uses advanced statistical techniques developed by respected US real estate academic Dr. David Geltner of Geltner Associates. In addition, the parties will receive academic support from the Center for International Real Estate Research at Waseda University, which is headed by Professor Yuichiro Kawaguchi.

“This initiative is planned to connect the missing link between real estate assets and Japanese institutional investors giving real estate credibility as a secure, long-term asset. By 2021, Asia is anticipated to become one of the largest sources of capital for the world’s real estate markets,” says Kazuhiro Mikami, Chief Editor of the Nikkei Real Estate Market Report.

About Real Capital Analytics, Inc.
Real Capital Analytics, Inc., based in New York City, is the industry’s leading global provider of commercial property data. The firm’s proprietary research is focused exclusively on the investment market for commercial real estate. Within that arena, Real Capital Analytics offers the most in-depth, comprehensive and current information of property investment activity. In addition to collecting transactional information for property sales and financings, RCA interprets data such as yields, pricing and sales volume, and quantifies the market forces that affect the liquidity of commercial real estate around the world. The firm publishes a series of Capital Trend reports and offers an online service that provides current transactional information for all markets globally. For more information on the indices, visit http://www.rcanalytics.com.

About the Nikkei Real Estate Market Report:
The Nikkei Real Estate Market Report, a news letter and online media published by Nikkei Business Publications, Inc., delivers peerlessly detailed newsletter on the Japanese commercial real estate market. It provides exclusive news on real estate deals and developments in Japan, as well as in-depth market analysis to the institutional investment professionals. Established as a group company of Nikkei, Inc in 1969, Nikkei Business Publications is based in Tokyo and one of the largest publishers in Japan. Covering a wide variety of specialized areas including real estate, architecture, construction, IT, medicine and general businesses, the publisher issues about 40 magazines with a combined total readership of over 2 million. More information can be found at http://realestate.nikkeibp.co.jp.

Industry Standard Property Index Expands Footprint in Asia

Real Capital Analytics and Nikkei Business Publications, Inc. agree to launch commercial property price indices for Japan

Kyoto and New York– June 28, 2013 – Real Capital Analytics (RCA), a global commercial real estate research firm, and Nikkei Business Publications (Nikkei BP), publisher of the Nikkei Real Estate Market Report (Nikkei RE), today announced their agreement to develop a suite of transaction-based commercial property price indices for Japan. This collaboration will combine RCA’s innovative repeat-sales regression methodology with Nikkei BP’s proprietary property transaction data.

Today’s announcement, which was made at the 2013 International Conference of the Asian Real Estate Society (AsRES), marks an important milestone in the trend toward increasing transparency in Asian real estate markets. “Until now, there was no practical index based on actual repeat-sales pricing in the Japanese market,” explains Nikkei RE Deputy Editor, Jun Homma. “This sort of market transparency will greatly benefit Japan’s property investment professionals.”

In 2007, RCA launched Moody’s/REAL CPPI, the first transaction based repeat-sales regression (RSR) indices for commercial real estate in the United States. These national indices quickly became an industry benchmark and are still published with Moody’s Investors Service as the Moody’s/RCA CPPI. RCA has since launched more than 200 US market-level indices called the RCA US CPPI and will soon release a suite of indices for the UK.

“In the western markets, many investors have already come to rely on RCA’s transaction-based, repeat-sales indices to measure property performance,” says RCA Managing Director Steve Williams. “Now investors will have access to these same index methods for Japanese markets allowing them to establish a consistent global measurement platform.”

The launch date of the RCA Japan Commercial Property Price Index (CPPI) is planned for early 2014 and will be based on a 10-year time series that uses advanced statistical techniques developed by respected US real estate academic Dr. David Geltner of Geltner Associates. In addition, the parties will receive academic support from the Center for International Real Estate Research at Waseda University, which is headed by Professor Yuichiro Kawaguchi.

“This initiative is planned to connect the missing link between real estate assets and Japanese institutional investors giving real estate credibility as a secure, long-term asset. By 2021, Asia is anticipated to become one of the largest sources of capital for the world’s real estate markets,” says Kazuhiro Mikami, Chief Editor of the Nikkei Real Estate Market Report.

About Real Capital Analytics, Inc.
Real Capital Analytics, Inc., based in New York City, is the industry’s leading global provider of commercial property data. The firm’s proprietary research is focused exclusively on the investment market for commercial real estate. Within that arena, Real Capital Analytics offers the most in-depth, comprehensive and current information of property investment activity. In addition to collecting transactional information for property sales and financings, RCA interprets data such as yields, pricing and sales volume, and quantifies the market forces that affect the liquidity of commercial real estate around the world. The firm publishes a series of Capital Trend reports and offers an online service that provides current transactional information for all markets globally. For more information on the indices, visit http://www.rcanalytics.com.

About the Nikkei Real Estate Market Report:
The Nikkei Real Estate Market Report, a news letter and online media published by Nikkei Business Publications, Inc., delivers peerlessly detailed newsletter on the Japanese commercial real estate market. It provides exclusive news on real estate deals and developments in Japan, as well as in-depth market analysis to the institutional investment professionals. Established as a group company of Nikkei, Inc in 1969, Nikkei Business Publications is based in Tokyo and one of the largest publishers in Japan. Covering a wide variety of specialized areas including real estate, architecture, construction, IT, medicine and general businesses, the publisher issues about 40 magazines with a combined total readership of over 2 million. More information can be found at http://realestate.nikkeibp.co.jp.

GE Capital Real Estate Plans to Increase Lending as Investors Pull Away

GE Capital Real Estate, among the world’s biggest property investors before getting burned in the financial crisis, is increasing lending this year as deals accelerate and the cost of borrowing jumps in the commercial mortgage-backed securities market. According to Alec Burger, North America president of GE Capital Real Estate, the unit of General Electric Co. (GE) plans to make about $7 billion of new loans on North American real estate, up 40% from last year.

U.S. commercial transactions jumped 35% in the first quarter to $72.8 billion, according to Real Capital Analytics Inc., a global commercial property research firm. Lenders are charging more on loans that will be packaged into bonds as investors pull away from the securities amid concern about rising rates. That makes it more expensive for borrowers looking for 65% or more of a property’s value in the CMBS market, the loan-to-value ratio, or LTV.

Life insurance companies also will benefit, said Dan Fasulo, Managing Director at Real Capital Analytics. “For life companies and balance-sheet lenders, this has the ability to help them compete again almost overnight,” he said.

GE’s commercial real estate unit had assets of $96 billion in the second quarter of 2008, before the global financial crisis and the collapse of property values. The division had about $43 billion in assets as of the first quarter.

GE Capital Real Estate Plans to Increase Lending as Investors Pull Away

GE Capital Real Estate, among the world’s biggest property investors before getting burned in the financial crisis, is increasing lending this year as deals accelerate and the cost of borrowing jumps in the commercial mortgage-backed securities market. According to Alec Burger, North America president of GE Capital Real Estate, the unit of General Electric Co. (GE) plans to make about $7 billion of new loans on North American real estate, up 40% from last year.

U.S. commercial transactions jumped 35% in the first quarter to $72.8 billion, according to Real Capital Analytics Inc., a global commercial property research firm. Lenders are charging more on loans that will be packaged into bonds as investors pull away from the securities amid concern about rising rates. That makes it more expensive for borrowers looking for 65% or more of a property’s value in the CMBS market, the loan-to-value ratio, or LTV.

Life insurance companies also will benefit, said Dan Fasulo, Managing Director at Real Capital Analytics. “For life companies and balance-sheet lenders, this has the ability to help them compete again almost overnight,” he said.

GE’s commercial real estate unit had assets of $96 billion in the second quarter of 2008, before the global financial crisis and the collapse of property values. The division had about $43 billion in assets as of the first quarter.

The New Leaders of US Foreign Real Estate Investments – Chinese Investors

In recent weeks, several big deals in New York City have set real estate circles abuzz. Zhang Xin, a Chinese business magnate and chief executive of the largest commercial real estate in Beijing, joined forces with the Safra family of Brazil to buy a large piece of the General Motors Building in Midtown. Another Chinese developer, Dalian Wanda Group said it intended to build a luxury hotel in Manhattan. (Wanda is also planning to build a hotel in London.)

Chinese and Hong Kong investors have also become the second-largest foreign buyers of United States homes, after the Canadians.

For the moment, the Chinese government is encouraging the investments and even helping to finance them. The state-owned Bank of China has become the largest foreign lender in commercial real estate deals in the United States, replacing big European banks. Beijing is eager to diversify its investments. The Chinese government owns more than $1 trillion of United States Treasury securities, but those investments generate little return given how low interest rates are.

Chinese firms and investors are also betting that the potential returns in American commercial property markets will be higher than in other areas of the world. The market for office, industrial and retail property appears to have bottomed out. Office vacancy rates have fallen and rent prices have stabilized amid signs of economic improvement. And while competition is heating up — three Manhattan office buildings have sold for more than $1 billion so far this year — many of the big bidders and lenders from Europe have pulled back as their home economies struggle.

China’s main sovereign wealth fund, the China Investment Corporation, has taken direct stakes in properties but has also invested more billions of dollars in real estate funds overseen by large private investment funds.

“The overwhelming majority of Chinese capital is getting into the commercial property market through third parties,” said Dan Fasulo, a managing director at Real Capital Analytics. “They’re getting billions of dollars into the system almost unnoticed.”

The New Leaders of US Foreign Real Estate Investments – Chinese Investors

In recent weeks, several big deals in New York City have set real estate circles abuzz. Zhang Xin, a Chinese business magnate and chief executive of the largest commercial real estate in Beijing, joined forces with the Safra family of Brazil to buy a large piece of the General Motors Building in Midtown. Another Chinese developer, Dalian Wanda Group said it intended to build a luxury hotel in Manhattan. (Wanda is also planning to build a hotel in London.)

Chinese and Hong Kong investors have also become the second-largest foreign buyers of United States homes, after the Canadians.

For the moment, the Chinese government is encouraging the investments and even helping to finance them. The state-owned Bank of China has become the largest foreign lender in commercial real estate deals in the United States, replacing big European banks. Beijing is eager to diversify its investments. The Chinese government owns more than $1 trillion of United States Treasury securities, but those investments generate little return given how low interest rates are.

Chinese firms and investors are also betting that the potential returns in American commercial property markets will be higher than in other areas of the world. The market for office, industrial and retail property appears to have bottomed out. Office vacancy rates have fallen and rent prices have stabilized amid signs of economic improvement. And while competition is heating up — three Manhattan office buildings have sold for more than $1 billion so far this year — many of the big bidders and lenders from Europe have pulled back as their home economies struggle.

China’s main sovereign wealth fund, the China Investment Corporation, has taken direct stakes in properties but has also invested more billions of dollars in real estate funds overseen by large private investment funds.

“The overwhelming majority of Chinese capital is getting into the commercial property market through third parties,” said Dan Fasulo, a managing director at Real Capital Analytics. “They’re getting billions of dollars into the system almost unnoticed.”

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