Gary Richetelli

Commercial Real Estate

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Real Estate in Cairo

In recent global real estate news, sectors of the Cairo market have shown a positive increase performance-wise upon analysis during the first three months of 2015.  This improvement in their market lead to a stronger confidence and investment inclination, helping increase political and economic stability for the country.

gary richetelli cairo real estate

According to an article published in Property Wire, “A new analysis from international real estate firm JLL says that this confidence is most clearly illustrated by the recent announcement of the mega real estate project Cairo Capital which will serve as an extension for New Cairo and will draw the centre of gravity further to the East of the existing city,” (Improved Economy and Political Stability Boost Cairo Property Markets). Data confirmed that residential sale prices increased across Cairo over the first quarter of the year. In addition, the hotel real estate market has also shown an increase in performance with the amount of tourists and occupancy rates rising.

Improved sales figures within the residential market in Cairo are also showing an increase. According to Property Wire, “Apartment and villa sale prices increased during 2015 across all the areas monitored by JLL as many residential developments have few units left and have increased prices accordingly,” (Improved Economy and Political Stability Boost Cairo Property Markets).

Even better news is that this positive economic outlook is expected to continue to increase investment in the residential sector throughout the year. Cairo is undoubtedly a city to keep an eye on for the entirety of 2015. For more information about Africa’s real estate market, read this article published by Property Wire.

 

Global Real Estate Trends

According to an article published by Carisa Chappell on REIT.com, foreign real estate investors have been favoring commercial real estate in the United States for quite some time now.  Chappell explains, “Markets in the United States dominate as the top global cities for real estate investment, according to participants in the Association of Foreign Investors in Real Estate’s (AFIRE) annual survey,” (Chappell, Survey Shows Internationals Investors Favor U.S. Commercial Real Estate). The top global cities that have been favored for investment were: New York, London, San Francisco, Washington, and Houston – with the United States representing four of top five.

gary richetelliBut what is the reasoning for this?  Chief executive of AFIRE discussed with REIT.com why the U.S. is preferred to all other countries in the world.  In Chappell’s article, Fetgatter says, “‘I think non U.S. investors have some faith that the U.S. is coming out of the recession.  The recovery may be slow, but I think they feel like it’s a definite recovery and we’re not falling back down into another recession,’” (Chappell, Survey Shows Internationals Investors Favor U.S. Commercial Real Estate).  In addition, Fetgatter noted noted that commercial real estate in the U.S. is one of the most stable, secure investments that people can rely on.

Apart from the United States, Turkey was also noted as being a country that contained an increase of renewed interest in AFIRE’s survey.  Turkey was ranked number three for the top emerging countries to invest in this past year and has been on the rise in previous ones.  With Turkey’s location, “Fetgatter attributed the renewed interest to Turkey being the logical place for companies looking to establish a foothold in the Middle East,” (Chappell, Survey Shows Internationals Investors Favor U.S. Commercial Real Estate).

In terms of the latest global trends for commercial real estate, it looks like America and Turkey are up there on the list, but if you want more information on this topic, check out REIT.com’s article here.

 

Georgetown University’s New Global Real Estate Center

In recent real estate news, two Georgetown University McDonough School of Business alumnus are donating $10 million for the school to build a global real estate center. Robert Steers and his wife, Lauren, want this center to help both undergraduates and MBA students prepare for global real estate careers by offering various career planning strategies and consulting projects.

gary richetelli

Georgetown’s new Steers Center for Global Real Estate

Mr. Steers is the current CEO of the global investment manager Cohen and Steers in New York City, which focuses on real estate innovation, along with infrastructure and commodities and income solutions. Mr. Steers commented on his excitement of the new building to the Washington Business Journal, stating, “‘It was important to me to see Georgetown McDonough create a formal real estate center with the financing to be permanent and to think and plan strategically,’” (Clabaugh, Georgetown Biz School Alum’s $10M Gift Funds Center for Gloal Real Estate).

The Steers Center for Global Real Estate, which was once the school’s Real Estate Finance Initiative will implement individualized career planning with experienced professors and mentors, helping the school become one of the primary destinations for global business education.

For more information about the new Steers Center for Global Real Estate, please read the Washington Business Journal’s article here.

Is Greece’s Real Estate Market Recovering?

Real Estate Market in Greece

Signs point to a gradual Greek real estate recovery.

While the country is still certainly facing challenges, the recent upswing in the Greek economy has been attracting more real estate investment since before the global financial crisis began in 2008.  The Wall Street Journal has the full story here.

Tourism is one of the major factors that seems to be contributing to the country’s gradual but consistent recovery over the past year and a half.  According to the Wall Street Journal piece, Greek Real Estate experts, like George Kintis of Alcimos, have compared the situation in Greece to that of Florida in the United States.  Florida’s affordable real estate prices and perpetually warm weather have attracted not only vacationers from out of state but foreigners looking to purchase a second home.  Kintis feels that European and Asian buyers in the market for a vacation home would find Greece attractive for several reasons.  The Mediterranean’s consistently temperate climate makes it an ideal location for a second home.  Coming off one of the worst economic crises in its history, Greece has an extremely affordable real estate market.

Though the Greek residential market has failed to recover as of yet, analysts believe the bounceback could follow on the heels of what is perceived as a modest but growing commercial recovery.  Major deals have been taking place across Greece over the past 18 months.  The uptick is largely being driven by the fact that European countries that underwent similar financial turmoil are beginning to recover in their real estate sectors.  Hard-hit nations like Spain, and Ireland have received influxes of real estate investment over the past few years and while neither experienced the same kind of economic downturn that Greece did, the recovery of the real estate market in those countries has made real estate holding groups more optimistic about Greece’s future prospects.  International real estate investors would be smart to keep a close eye on the Greek market which could be poised for a boom.

Can New App Make Applying for an Apartment Easier for Tenants and Brokers?

App_Zumper

Zapp by Zumper hopes to make the rental application process a breeze.

There’s no dearth of apps and websites that can make finding an apartment a bit easier.  Sites like Trulia, Zillow, StreetEasy and others help buyers and renters filter apartments by price, size, location, fee/no fee, and even more specific criteria.  But if you’ve ever tried renting an apartment in a highly competitive market like New York City, you know that finding the apartment is half the battle.

So you’ve found a listing you love, decided you can afford it, met the broker, toured the space, and now it’s time to move.  So what’s next?  The dreaded application.  The application process for an apartment can be a crucible for both prospective tenants, brokers, and landlords.  There may be help on the way.

Techcrunch recently profiled real estate startup, Zumper, a company that has been trying to establish itself as a competitor to some of the other big names in online real estate rentals by matching tenants and property managers.  While they have their own take on the process, this isn’t necessarily anything new.  What could be a gamechanger is Zapp, Zumper’s latest app that actually allows tenants to apply right through their phones.  Imagine an apartment hunting process that allowed you to find and apply for an apartment all from one app on your phone.  No paperwork, no signing and scanning, and best of all, no expensive credit checks.

Zapp allows you to apply for apartments for free has partnered with Experian to provide $10 credit checks, a fraction of what you’d pay on the average.  You can also reuse the credit check to apply for other apartments once it’s been run.

Zapp is launching now, but only on a limited basis in the San Francisco metro.  With around $8 million in funding, Zapp is poised to make a big change to something that most shoppers consider a major headache.

NYC Real Estate Watch: Cooper’s Moves to Open Second Location

Craft Beer

Cooper’s is banking on the tech sector being thirsty for craft beer after their recent 10-year lease signing for a second location.

How do you catch a Silicon Alley tech executive with money to burn on food and drinks?  You bait him with 24 types of craft beer.

A recent real estate deal watch in Crain’s New York profiles Tom O’Byrne, the owner of New York’s LES Cooper’s Craft and Kitchen.  O’Byrne recently made a splash by inking a deal for a 2,000 square foot space on 8th avenue in New York’s hip Chelsea neighborhood.  By moving to open a second location with a 10-year lease in one of NYC’s most expensive neighborhoods, it’s clear the O’Byrne doesn’t believe the craft beer trend is going anywhere any time soon.

According to reports, rent for the space comes in at around $150 per square foot.  So why is O’Byrne confident enough to pay such a steep price?  One of the reasons is the flourishing tech community in the Chelsea area.  As expensive as the neighborhood has been over the last several years, rent continues to rise on a regular basis.  For example, similar ground-floor retail spaces on 8th Ave. skyrocketed nearly 70% in the last year alone.  The spike is most likely due to the proximity to major tech players like Google and Twitter who have offices in the area.

The original Cooper’s has been operating in the Lower East Side for about three years and O’Byrne clearly feels it’s time to strike while the iron is hot.  He’s clearly banking on craft beer becoming a staple rather than a fad.  While unique microbrews don’t seem to be going anywhere any time soon, those in the business should take note of another niche gastronomical trend’s death knell.  Just as Cooper’s announced a new craft beer centered bar, the NYC based cupcake bakery, Crumbs shuttered its doors.  It seems no food or drink fad is safe from falling out of favor with fickle New Yorkers.

Commercial Real Estate Spotlight: Nashville Commercial Real Estate Market

Downown Nashville

Nashville, TN has one of the fastest recovering commercial real estate markets in the country.

When national real estate market trends are published it’s easy to get lost in the numbers.  Vacancies are down.  Rents are up.  But what does this mean on a more granular level?  To analyze these numbers in a qualitative way, the savvy commercial real estate investor should also put faces to the numbers so to speak, by researching what’s going on in individual real estate markets throughout the country.

Today we’ll take a look at Nashville’s booming commercial real estate market for a bit of local context which can help explain national trends.  The Tennessean Online recently published an article discussing the continued strength of Nashville’s real estate market in 2014.

After two quarters, the vacancy rate for Nashville’s industrial and office space was down to an almost seven year low.  Coming in at just 9.8%, more office spaces are being leased than any point since the second half of 2007.

Not only are businesses new and old signing leases at a higher rate, there is a renewed investor interest in Nashville’s commercial market.

As far as specific highlights, Fifth Third Center was sold to Lincoln Property Company out of Dallas for $90 million, while Fourth & Church went for just under $34 million to property company, Albany Road.  The fact that large scale deals with management companies as well as individual leases with companies continue to be strong are both signals that the market will remain strong throughout the year and beyond.

Chris Gear, a partner at Colliers believes that this increased growth will lead to new office construction and rising rent sooner rather than later.

If you are a real estate investor looking to expand out of your market, Nashville, Tennessee might be worth a second look.

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Large Real Estate Investors Are Reselling Less

Housing Development

Large scale real estate owners are reselling at a lower rate than their small scale counterparts.

Large real estate investors are not selling their houses, despite seeing sizable gains.  Check out the full story from Forbes here.

RealtyTrac recently analyzed 600,000 purchases made between January 2011 and September 2013, and found that real estate investors who purchased more than 500 properties, sold a small proportion of those properties – only 5 percent. This is compared to investors who made between 100 and 499 purchases, who sold off 19%, and investors who made between 10 and 99 purchases, who sold off 29%. All these properties increased in value by around 20%. So why did the small investors re-sell more?

One reason could be that those who own a smaller number of property value the cash more now than later. It could be the personality of small investors to enjoy their money now, while larger investors would rather accumulate it for the future.  It’s also possible that smaller-scale investors are looking to put their capital into higher return ventures since making a profit on real estate can be a slow process.

Another reason could be that the small investors have fewer properties to inspect, and so they have a better idea of what they can sell off before it loses values. It’s easier to analyze 100 properties than it is to analyze 500.

We can change the question to “Why did the big investors re-sell less?”

Maybe it’s psychological. Losing value on one house out of 500 probably does not feel as bad as losing value on one house out of ten. So big investors are less likely to sell off risky property.

Maybe it’s statistical intuition. Maybe big investors feel more confident about the trend of rising home prices because their real estate intuition is based on a larger sample size. They see a trend in what smaller investors think is luck.

One thing is clear though: having more property will change your behavior in real estate.

Pro Tips for Low Stress Mortgage Payments

Mortgage tips

There are ways to make the best of high mortgage payments.

Paying mortgages isn’t fun. They’re usually large payments, and they often remind homeowners of an investment they fear will never pay off.  Forbes.com has some tips on how to make the best of a bad situation if you’re paying a mortgage. Here are just a few:

1.Cut your taxes. The interest on up to 1.1 million of your mortgage debt is deductible from federal taxes. With the money you save on taxes, a five percent mortgage rate can look more like a three or four percent one. The more you’re taxed (i.e. the higher income bracket you’re in), the more money you’ll save.

2.Pay back as early as possible. If you decide to refinance and take the long-term (30 years) loan with the higher interest rate and you pay everything back early (15 years), you will incur less interest costs than if you paid throughout all 30 years. Plus, if anything bad happens, at least you’ll have more time to repay it and not have your home foreclosed.

3.If your home value plummets, you don’t have to repay the loan. A bank can’t force you. You can just give them your collateral (the home) and move on with your life. The bank will have no right to your other assets. This move is particularly valuable when your mortgage payment due is worth more than the value of your home.

4.Take out some home equity and profit from your mortgage by investing in stocks. You can use the equity, invest the money in over 100 companies to spread risk, and get a return that can help assuage mortgage troubles.

These are just a few ways to keep your stress in check when it comes to making mortgage payments.  Thanks for reading and come back soon for more tips and news from the real estate industry.

Real Estate Spotlight: Corner Duplex Sells for 12.3 Million

Upper West Side

A duplex on 72nd street recently sold for 12.3 million.

A recent New York Times article recaps a major sale on 72nd street in Manhattan.  Check out the full article for details but here are some notable highlights:

After being put on the market with an asking price of $12 million, the duplex ignited a bidding war that within three weeks jumped to $12.3 million. This selling price is promising for property values and those looking to pursue real estate. Seller Alexandre Chemla commenting on the duplex says, “It has beautiful light and views and a special floor plan that makes it feel like a home and is ideal for a family. Also, it has been completely renovated and beautifully maintained over the years and was in immaculate condition.”

The unit is 4600 square feet in size. It has two levels with fourteen rooms, sweeping staircases and a hand forged balustrade. The layout of the apartment includes five bedrooms, four bathrooms a powder room, reception and entertainment room. There is also a living room with a fireplace, a paneled library, dining room, and chef’s kitchen. Finally, the lower floor contains a separate guest suite.

The buyers name is Munib Islam, a managing partner at Daniel Loeb’s hedge fund. They were represented by Cathy Franklin of Brown Harris Stevens who were also listing agents for a three bedroom, four and a half bath simplex at the same building. The three bedroom apartment which sold for $8.85 million was recently purchased by Dylan Lauren, the daughter of famous designer Ralph Lauren and her husband, Paul Arrouet.

Only ten blocks south of the duplex on 125 east 72nd street is a $15 million apartment being sold by none other than Emeril Lagasse. Although, the selling price has dipped down to $13.5 million the 19 foot wide 6,900-square-foot apartment is still selling for more than the famous chef paid for it. The initial purchase price that Lagasse paid came out to $11.5 million only four years ago. This would mean a $2 million profit in just 4 years of appreciation. Ultimately, the signs are looking good on the real estate market in New York.

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