Agent Or No Agent? - New York Times December 17, 2009

By HARVEY ARATON

SIDE BY SIDE on a quiet South Nyack street with striking Hudson River views, Jeanette Corvino and Jeffrey Hall have each been trying to sell expensive houses in a challenging market. But the similarity of their neighboring situations ends there.
Ms. Corvino has a four-unit Italianate Victorian that she bought as an investment property more than four years ago and now needs to unload before a balloon payment on a second mortgage comes due.
Mr. Hall and his wife, Sharon, have a colonial revival and are empty nesters with more than a quarter-century’s worth of equity.
After listing her property with a real estate agent for almost a year for $892,000, Ms. Corvino decided in June that she could not afford to pay a broker’s fee on the sale and is now trying to sell the house on her own for $840,000.
For his part, Mr. Hall picked up the telephone and called the same agent who sold him and his wife their house 26 years ago. They have set an asking price of $899,000.
“It would never even occur to me not to use an agent,” he said. “But I’m a restoration architect. I live in the past.”
Are real estate brokers — like travel agents and other middlemen coping with the increasingly digital culture — in danger of becoming expensive anachronisms?
After all, it is only logical that as people feel more empowered based on their access to information and their ability to connect without help, they are at least questioning the wisdom of the conventional way of buying and selling a home.
According to the National Association of Realtors, the percentage of homes sold nationally by their owners has actually declined, from 14 percent in 2004 to 11 percent in 2009. But Real Trends, a company that monitors the residential brokerage industry, considers those findings to be low, and estimates that the number of for-sale-by-owner, or FSBO, homes was almost one in five three years ago, when it stopped tracking them.
“I’ve been in this business for 33 years and I’ve always wondered why more people didn’t say, ‘I’m going to take a shot at this myself,’ ” said Steve Murray, the editor of Real Trends’ reports. “Now, with the technology available, that would seem to be inevitable. We tracked FSBO numbers through 2006 — before the market collapsed — and we were already seeing substantial differences between the attitudes and habits of people under 35 and those over 50.”
Younger people, he said, are far more likely to embrace the multitasking and risk taking involved in selling their own homes. If the decision to use an agent is becoming generational as well as situational, that would not augur well for real estate agents.
“This is going to sound bad, but I just don’t give a lot of credence to what brokers do,” said Cynthia LeStar, who is selling her studio apartment on the Upper East Side. “I mean, what do they do that I can’t do on my own?”
Ms. LeStar, 30, moved to New York from Cincinnati on Sept. 9, 2001, and was on a PATH train to the World Trade Center station from Hoboken for an interview with JPMorgan on the morning of Sept. 11. Despite her parents’ pleas to come home, she took the job and, after a few years, decided to buy instead of rent. But she was laid off last spring, and recently concluded that she could no longer carry her studio while changing careers — to acting.
Ms. LeStar consulted streeteasy.com for comparable neighborhood sales and settled on an asking price of $444,000. She placed an ad on craigslist.com and expanded her search for buyers by gaining access to ASmallWorld, a private international online community that she likened to a celebrity Facebook. Marketing her apartment has cost her nothing.
Ms. LeStar’s background in finance made her comfortable in representing herself. “Even when I was buying, I would have preferred cutting out the middleman,” she said. “I felt out of the loop. I love negotiating.”
Like Ms. LeStar, Ms. Corvino, 35, was undaunted by the prospect of catering to potential buyers. She says that she has not seen any appreciable difference in the amount of traffic now that she is in charge.
Ms. Corvino bought the house hoping to turn it into a bed-and-breakfast. But when the economy tanked, she needed the income from renting all four units.
"Selling in this market is difficult, because it takes a special person to buy a large home like this one,” she said. “Not to mention that right now it’s a rental property."
To appear more businesslike, she hired a graphic artist to produce a sign that “didn’t look like those chintzy red ones that say For Sale By Owner.”
Ms. Corvino also created a Web site for the 4,600-square-foot house, 46Voorhis.com, where she posted 43 color photos taken by a professional photographer. She placed ads at craigslist.com and loopnet.com, a commercial real estate site. A sales manager for a wine wholesaler and importer, Ms. Corvino monitors responses via her mobile phone and has been able to break away from her job to show the house.
Factoring in the minimal cost of open houses, she estimates that she has spent $1,000 thus far, a far cry from the $40,000 to $50,000 broker’s fee that she would have to pay if she sold for near her asking price.
“I think if you go about it the right way, you don’t need an agent,” Ms. Corvino said. “But that’s if you can take all the calls, answer all the e-mails and be at the house at 3 o’clock in the afternoon.”
Next door, Mr. Hall said he and his wife, who works in the Nyack school district, do not have the time, inclination or technical expertise to sell their own house.
“I wouldn’t call myself Internet savvy,” said Mr. Hall, 55. “I don’t have an iPhone. I wouldn’t know what avenues to use. I also think the personal touch is important, though the younger generation probably feels that Facebook is a human relationship.”
When the Halls decided to sell their house last July, there was no question that they would list it with Suzanne Blaisdell Grant of Wright Bros. Real Estate in Nyack. Mr. Hall has served on town boards with Mrs. Grant’s husband and considers them old friends.
Mrs. Grant cited her longstanding relationship with the Halls as a prime example of why real estate brokers are not endangered and why what they do cannot be compared to selling a stock or booking a vacation.
“I can understand why people would say, ‘Why would I pay someone to sell my house? It’s a lovely house. I’ll just put a sign out,’ ” Mrs. Grant said.
“But it’s so much more than that, much more than selling a stock or buying a car on Craigslist. It’s being honest with the seller in staging the house, getting it ready. It’s giving the seller distance, because people who are emotionally involved in a purchase or sale of something as big and life-shaping as a home aren’t necessarily in the best position to be objective.”
Jennifer Juergens of Manhattan and her four brothers and two sisters came to that conclusion after their mother died in 2007 and they put her Tudor-style house in Larchmont up for sale.
“It needed some work, but the market at the time was strong and Larchmont is a very desirable town,” said Ms. Juergens, 48, a former magazine editor who now works in public relations. “My brother said he thought we didn’t need a broker, we could sell it by ourselves. So we put an ad on Craigslist and listed it for $1 million. The first guy that came to see it with his wife, before it was even cleaned up, told my brother John, ‘Oh, we love it; we’ll give you $1 million.’
“But,” Ms. Juergens continued, “he also wanted his father to see it. The dad came over and said, ‘We’re going to start with the asking price and work our way down.’ They went room to room and he kept saying, ‘Well, this needs replacing, this is old, this isn’t good.’ Everything negative. This was the house we’d grown up in. Our mother had just died. Emotions were high. My brother got so upset he just asked them to leave.”
Now supporting Mrs. Grant’s contention that there is no better buffer than a broker, the family hired Keller Williams Realty of Scarsdale and embarked upon a cleanup plan. The house is listed at $899,000.
Linda West Eckhardt, an author of cookbooks, has her Dutch colonial in Maplewood, N.J., on the market for $345,000. She has sold homes in Texas, Oregon and California, and is firmly in the get-an-agent camp — with a caveat.
Having worked with agents who were “indifferent, incompetent and otherwise disappointing,” she said, “I feel about real estate agents the way I feel about literary agents — those areas are filled with peril.” But, she added, “I believe they’ll get you more than enough to make up for their fee.”
So Ms. West Eckhardt’s advice is to “interview, interview, interview” brokers. But this time around, serendipity played a role in her selection. At a party in Maplewood, she met Joanne Douds, who works for Sotheby’s International Realty in Fort Lee, N.J.
“She says the hard things to me, like ‘Your house smells like dogs,’ ” Ms. West Eckhardt said. “On the day of the open house, she walked in with her makeup and eyelashes six inches in front of her face and Prada shoes, took one look at what I considered neat and clean, rolled up her sleeves and said, ‘Get me the vacuum cleaner.’ ”
Ms. West Eckhardt said that at 70, she is more eager to churn out several more books than to spend time extolling the Maplewood-South Orange school district to a trail of bright-eyed couples.
But as Ms. LeStar has discovered while showing her Upper East Side studio, there is not that much extolling to do. “The buyers walk in and they know as much about the apartment as you do,” she said.
Technology has made it much easier for people to educate themselves, a trend that agents have had to acknowledge and adjust to.
“It’s not like it was 10 years ago, where you might show someone eight houses in a day,” said Russ Woolley, the president of Wright Bros. Real Estate. “They have already been online and know what they like and don’t like. They may have seen 20 pictures of one house.” Potential buyers, he said, now arrive with specific houses in mind.
Dan Murray, a firefighter in the South Bronx, is hedging his bets and working both ends of the real estate equation.
To market their three-bedroom condominium in Riverdale, Mr. Murray and his wife, Diana, placed ads online and paid a one-time fee of $300 to forsalebyowner.com, which placed the property with the Westchester-Putnam Multiple Listings Service.
Mr. Murray, 40, is prepared to pay the agent who delivers a buyer 2 percent of the selling price, substantially less than the standard industry fee of 5 percent to 6 percent.
Meanwhile, in his search for a new home in northern Westchester County, he is using Google maps and satellite photos, while scouring the same sites he is advertising on for a FSBO.
“I would think anyone who is comfortable with the Internet would prefer to do it this way,” Mr. Murray said. “Eventually, who won’t be?”

Buying? You? - New York Times December 13, 2009

By VIVIAN S. TOY

ARTHUR FREEDMAN has lived in a rent-stabilized studio in the East Village for 29 years.
But as he watched housing prices fall over the last year and as a leak in his bathroom went unrepaired month after month, he decided a few months ago that it was time to become a homeowner.
“Some people might think I’m the luckiest man in the world, paying $725 a month to live in this neighborhood,” he said. “But my friends say: ‘You can live nicer than this.’ And you know what? I should live nicer.”
In a city where nearly 70 percent of the population rents — about double the rate for the rest of the country — the decision to buy an apartment in New York is not taken lightly.
But now that housing prices have dropped by as much as 30 percent since the height of the real estate boom, even people who, like Mr. Freedman, are paying well under market rates for their rentals, are venturing into the housing market.
A rent-stabilized apartment, of course, provides a certain sense of security, with affordable payments and fairly predictable increases. The people who decide to leave this all behind know that they will probably wind up paying more. But they have some very compelling reasons for flying from their protected nests.
It could be a desire to upgrade to a nicer building or a larger space. Some trade down in size for the experience of owning. Others take the plunge because they recognize that their rents will soon head into market-rate territory anyway. Major incentives that unite them all, though, are sales prices that have been heftily discounted and mortgage rates that are hovering enticingly low at around 5 percent.
Mr. Freedman, 61, lives in a no-frills walk-up in the East Village, and after a five-month search, is now in contract to buy a studio for $305,000. The place is about the same size as his rental, but it is in an elevator building with a doorman on the Upper West Side. Similar apartments in the building sold for as much as $360,000 at the height of the market.
Leaving the East Village will not be easy for Mr. Freedman, a retired teacher. “I’m nostalgic. I have my bagel place and I’m there every morning, 365 days a year,” he said. “They were incredulous when I told them. But I’m sure I’ll feel comfortable when I move, too.”
Over the years, many of Mr. Freedman’s rent-stabilized neighbors have left, and their apartments have been renovated from top to bottom and then deregulated. Market-rate studios in the building now rent for about $1,800, and he suspects that complaints emanating from those premises receive much quicker attention than his do.
“I know I’m at fault, too, for not asking and pushing for more work to be done,” he said, gesturing at yellowed walls that probably have not seen a paintbrush in two decades and a stove covered in a thick layer of dust. (He doesn’t cook — at all.) “But I don’t want the hassle to fix it.”
His broker, Suzanne Zinsel, an agent at Halstead Property, said her colleagues warned her against taking on a rent-stabilized buyer, because these clients are notoriously indecisive and afraid of commitment.
Mr. Freedman, in fact, did put her through a few extra paces, backing away from two deals before settling on this last one.
“I think he just got scared, and he literally backed out the night before on those deals,” Ms. Zinsel said. “But he was very apologetic.”
Mr. Freedman, who works as a substitute teacher when he can, said that throughout his apartment hunt, he relied on the advice of friends who already own homes, “because I had no idea what I was doing.”
Three decades of low rent, however, did enable him to save enough for a 30 percent down payment.
“I’m not Alex Rodriguez here,” said Mr. Freedman, a consummate Yankee fan. “I’m not even C. C. Sabathia. It’s just me, Artie Freedman.”
By his calculations, after tax deductions, his monthly housing costs will be about $1,500, which is double what he pays now, but less than what he would pay for a market-rate rental. “But it’ll be better, because it’ll be mine,” he said.
Celia Chen, a senior director of the research staff at Moody’s Economy.com, and a specialist in housing economics, says that the housing cycle nationally is near its nadir, with prices very likely to fall a little more into the middle of next year.
“But even if you’re not getting a rock-bottom price,” Ms. Chen said, “prices have come down substantially since the peak of the market, and you will get a good, reasonable deal at very low mortgage rates. Now is probably as good a time as ever to buy.”
Because prices will take awhile to start appreciating again, and because closing costs must be factored in, home buyers should plan on staying put for three to four years to at least break even, she said.
Ms. Chen also said that while people in rent-stabilized apartments would be hard pressed to find a better bargain, there may also be “a cost of renting, if you’re not renting what you really want to rent.”
The residents of rent-stabilized apartments often put up with lesser spaces and fewer services just to hang onto their coveted leases, said Steve Dobkin, a Manhattan lawyer who often represents tenants. “Tenants in general are nervous to ask for even necessary repairs, because they don’t want to be on the landlord’s list of undesirable tenants,” he said.
But some renters ultimately decide that they are willing to pay more for a better quality of life.
Thomas Coates, another agent with Halstead Property, said that people in rent-stabilized apartments naturally approach buying with great reluctance. “It’s a bit of a golden noose kind of thing,” he said. “They may be in a dump, and the landlord is trying to get them to move, but some just don’t want to give up the security blanket.”
Market-rate renters, on the other hand, have even more incentive, especially since the cost of owning in the current market is often on a par with the cost of renting, he said.
Nick and Kevin Burkett-Caudell are clients of Mr. Coates who have lived in a rent-stabilized fifth-floor walk-up in Chelsea for 18 years. They decided to buy because they feel they have outgrown the neighborhood and because they want a proper bathroom. The couple legally combined their last names five years ago, when they were married in Quebec.
Their one-bedroom railroad apartment is in a 1900 tenement. Some apartments in the building have bathrooms out in the hall, but the Burkett-Caudells have a water closet in the apartment and a shower stall in the kitchen. “When I first saw this apartment, I thought it would be great for a year or two, until we found something bigger,” said Nick Burkett-Caudell, a communications manager at Ernst & Young. “But then, once you’re in, you never move because it’s stabilized.”
In their 20s, they were not bothered by the four flights of stairs and the awkward design of their apartment: You have to walk through the bedroom to get to the living room. But, he said, “now we’re in our 40s and we think we need rooms with doors on them, a proper bathroom, and a place that’s more guest friendly.”
They also feel that they have moved beyond the club and party scene in Chelsea, and are ready for what he called “a more established” neighborhood, which is why they are hoping to buy a one-bedroom in Park Slope.
Their rent started at about $800 and now is close to $1,400. The average rent for a one-bedroom in Chelsea is $2,916, according to Citi Habitats, but Mr. Burkett-Caudell said that he thought market-rate apartments in his building were now renting for about $1,600. “We’re just a few hundred dollars away from that,” he said, “and I don’t want to be on the wrong side of that equation.”
When they crunched some numbers, they determined that buying a one-bedroom in Park Slope for about $400,000 would give them monthly housing costs close to what they are paying now.
“We wouldn’t have been able to do this two years ago, because apartments were too expensive,” he said. “But now we’re looking at proper one-bedrooms with 600 to 700 square feet in elevator buildings that seem like the Taj Mahal to us.”
They made an offer on an apartment last month, but the deal fell through. They now hope to find something early next year.
Clearly, not all rent-regulated tenants can expect to trade up or even get something comparable to what they have now. (The city has some 1 million rent-stabilized units and another 350,000 apartments under other types of regulation.)
Charlie C. Summers, a vice president of Bellmarc Realty, is working with a client who rents a one-bedroom walk-up in Chelsea for $1,300 and hopes to buy a two-bedroom in the neighborhood for $600,000 to $800,000 — a tall order even in today’s market. In that price range, he and his client have found mostly junior-fours, or one-bedrooms with an extra space that can be converted to a small second bedroom.
The client hopes to move into a place where her 6-month-old baby can grow up. “She wants more space, and she wants an apartment that can be a home and an investment,” Mr. Summer said. But she ultimately may have to move beyond Chelsea to get the apartment she wants.
Rochelle Meyer knows that she will not be able to replicate what she has now. She has lived at Waterside Plaza on the East River for more than 20 years, in a large one-bedroom that has what she describes as “a million-dollar view.” From her 24th-floor windows she can see as far south as the Verrazano-Narrows Bridge and as far west as New Jersey, with the open sky expanding the apartment well beyond its walls.
Waterside Plaza was built as affordable housing under the Mitchell-Lama program, and when it left the program about 10 years ago, Ms. Meyer became a “settlement tenant,” which allows her to stay as long as she wants with 7.5 percent annual rent increases.
That was fine at first, she said, but the increases have added up and “now a year goes by very quickly for me. It seems like I just got used to one rent and then, oh, my God, it’s time for another one.”
Her rent started under $1,000 and is now $1,902, but utilities often push her costs well beyond $2,000 a month. It was her financial adviser who urged her to consider buying, and he suggested she look outside Manhattan for something under $400,000.
“But I can’t do that,” said Ms. Meyer, an executive at Citibank. “I’ve lived and worked in Manhattan my entire adult life. I can’t live anywhere else.”
She started her search about two months ago with Carol Halt, a senior vice president of Barak Realty, and is trying to find a one-bedroom for under $500,000.
“She has an enormous apartment right now,” Ms. Halt said, “and when she looks, she thinks, ‘How does this compare with my apartment?’ But you can’t compare, because the difference is she will be building equity in something she owns, instead of throwing her money out the window in rent.”
Nothing Ms. Meyer has seen so far, with the possible exception of an apartment in Riverdale, measures up to her current home. “I know it’s going to be hard to duplicate what I have in my price range,” she said. “So I’m prepared to say that there is something I have to give up. But hopefully the balance sheet will have more positives than negatives.”
And maybe, just maybe, she added, “I could find a diamond in the rough.”

Momentum in South Harlem - New York Times December 23, 2009

By IRWIN ARIEFF

A MINI-BOOM is rippling along Frederick Douglass Boulevard in South Harlem, with the Douglass, a 38-unit luxury condominium at West 114th Street, the latest to join the scene.

Known not too long ago for its abandoned buildings and stubborn street crime, the area now has amenities like a yoga studio and a pet day care center.
Heading north from Central Park, the area along Frederick Douglass Boulevard from West 110th to West 138th has long been viewed as ripe for renewal. Several developers are banking on it, even as the recession keeps a lid on asking prices.
Fueled by the A, B, C and D subway lines that run beneath it, the mile-long stretch is gaining momentum from new restaurants and businesses. Recent arrivals include a Starbucks, a Dunkin’ Donuts and a Chase bank. A Best Yet Market is to open next month at West 118th Street. And Starwood Hotels will open a midpriced boutique-style hotel in May at Frederick Douglass Boulevard and West 124th Street.
Before the recession, a high-end apartment in South Harlem was going for as much as $800 a square foot. Today, it might be $600 to the low $700s, said Stephen G. Kliegerman, the executive director of development marketing for Halstead Property, which is handling the Douglass. Other real estate professionals estimated the decline in South Harlem at 10 to 25 percent.
“These price points are relatively similar to downtown Brooklyn or Fort Greene,” Mr. Kliegerman said, “but here, you are in Manhattan.”
While many were predicting last year that the Harlem market would slide into the $400 to low-$500 range per square foot, “it never really came to that point” and prices have now bottomed out and are stabilizing, he said. “A lot of buyers who were actually pushed out of Harlem a year or two ago because prices rose so quickly are now able to come back because prices are a little bit more reasonable.”
Adding to the area’s allure are 25-year real estate tax abatements granted a number of new buildings, including the Douglass, under the city’s 421-a plan, which rewards projects that set aside some apartments at reduced prices for low-income buyers.
The Douglass (thedouglasscondo.com), which came on the market in late November, offers one- to three-bedroom units ranging from 762 to 1,355 square feet and from $529,000 to $969,000, putting the average price in the mid $600s per square foot.
Amenities at the Douglass include hardwood floors, granite countertops and high-end appliances, among them washers and dryers.
The four penthouses have 12-foot ceilings, skylights and private terraces. There’s also a shared courtyard and fitness room. Basement parking spots are being sold separately, for $50,000 each. There is a subway stop at 116th Street; Central Park starts four blocks south, and Morningside Park is a block and a half to the west.
During its first four weeks on the market, interest in the Douglass was very strong, even during the snowstorm last week, said Sheree Yellin Satos, the building’s sales manager. “Offers have been made on six properties, four of these have been accepted and there are negotiations on a few more,” Ms. Yellin Satos said, declining to say precisely how many more.
A second luxury condo, the Livmor (livmor.com), with 73 units and the same 25-year tax abatement, is due to open officially in January at 301 West 115th Street.
“We have had a great deal of interest, even before the printing of the offering plan,” said Dawn Tsien, an executive vice president at Prudential Douglas Elliman, which is handling sales for the Livmor.
It will offer one-, two- and three-bedroom apartments from 808 to 2,100 square feet and priced from the mid $400,000s to $1.1 million or $1.2 million, some with private roof terraces. Amenities will include a yoga studio, a media room with projection TV, a children’s play space and a kitchen for catered events.
“I consider the Franklin Douglass Boulevard corridor to be an extension of the Upper West Side at this point,” Ms. Tsien said. “Many years ago, some people said you couldn’t go above 68th Street, and now it is even above 125th Street.”
Ms. Tien described potential buyers at the Douglass and for Harlem in general as “people who are perhaps priced out of the Upper West Side. It is like any emerging neighborhood,” she said. “People have been moving to these various areas because of the attraction of the size of the apartments and the affordability of the product.”
The crime rate in the South Harlem area is roughly comparable to that of the Upper West Side precinct directly to the south, according to police figures. In the 28th Precinct, which stretches from Central Park North to 127th Street between Morningside and Fifth Avenues, there have been 869 crime complaints so far this year.
The 24th Precinct, which runs from 86th Street to 110th between the Hudson River and Central Park West, has recorded 946 crime complaints so far this year
The Douglass and the Livmore join condominiums like SOHA 118 at 301 West 118th Street. SOHA 118 (soha118.com) is a 15-story building with 91 apartments ranging from one- to four-bedrooms. The building opened its doors in early 2008 and about two-thirds of its market-rate units have so far sold.
The Corcoran Group, which is handling sales, shows two- to four-bedroom apartments at 1,100 to 3,400 square feet and ranging in price from $740,000 to $3 million. A four-bedroom penthouse, going for $3 million, is at 3,400 square feet said to be one of the largest condos available in Harlem at this time.
“At the beginning of 2009,” said Vie Wilson, a senior vice president at Corcoran, “the market wasn’t doing much of anything. But within the last six months, six apartments have sold. There has been more interest, more people coming to see, more people making offers.”
The emerging luxury market is drawing almost every category of potential buyer, agents said, including families, young professionals, single women, gay couples and empty-nesters seeking to move back into the city.
“There are probably 15 or 20 new condo or co-op buildings that have popped up between 110th and 125th along Frederick Douglass Boulevard in the past six or seven years.,” said Eric McLendon, a senior sales associate at Corcoran. “It is good for the neighborhood and it’s good for buyers as well, and the spring market is poised to be a big one. Any buyer that comes up here is going to spend much less than in other parts of the city and get more, and these luxury buildings are attracting a wider audience.”
“Harlem Guy,” a blogger at HarlemCondoLife.com, a Web site dedicated to “all that’s great about Harlem,” calls southern Harlem “truly spectacular.”
“You have new condos, new stores and new restaurants springing up,” he said in a telephone interview, concealing his real name, he explained, to ensure that he and his fellow bloggers can write honestly.
“It takes just half an hour to get home from Midtown by cab or train, and it’s a true melting pot, just what New York is meant to be. If you’re a local, you may feel priced out or unhappy over all the recent real estate activity. But from what I see and hear, there is plenty of room for everyone in Harlem; it’s a huge piece of New York.”

Asian Governments Indicate They May Take Action to Deter Speculation - New York Times November 20, 2009

By ALEX FREW McMILLAN

As a tumultuous year for Asian real estate comes to an end, it seems that regulators are likely to try to cool the market next year — as hard as that might be to believe.
The change over the course of the year could not have been more pronounced. At the beginning of 2009, Asian real estate prices were dropping sharply in the wake of the Lehman Brothers bankruptcy and the global downturn that followed. Banks weren’t lending. Transactions slowed to multiyear lows as buyers and sellers found themselves in an “Asian standoff,” the two sides facing off in a battle of wills, neither ready to budge on price.
But as the calendar turns to 2010, all eyes are on this part of the world to drive the recovery. “Asia’s economy is in the lead, benefiting most from a more-rapid-than-expected rebound and renewed attention from both foreign and domestic investors seeking attractive relative pricing,” the brokerage Jones Lang LaSalle stated in an October report.
In fact, property markets in some parts of Asia are doing so well that three governments — in China, Hong Kong and Singapore — already have warned that they may be forced to implement measures to cool real estate prices and deter speculation.
Donald Tsang, the chief executive of Hong Kong, tried to “talk down” the market in his annual policy address. “The relatively small number of residential units completed and the record prices attained in certain transactions this year have caused concern about the supply of flats, difficulty in buying a home and the possibility of a property bubble,” he warned in October.
There already has been action elsewhere. Australia became the first country to raise interest rates after the crisis. And Beijing’s bank regulator has started requiring commercial banks to look at the bank valuation and the transaction price, then to base the mortgage on whichever price is lower.
The Hong Kong Monetary Authority, the equivalent of the city’s central bank, has instructed banks that loans on homes selling for 20 million Hong Kong dollars, or $2.6 million, or more must be capped at 60 percent. The cap had previously been 70 percent. And the Hong Kong Mortgage Corp., which issues second mortgages, said it would no longer make loans to investors and cut its maximum loan size.
In early November, Singapore also suggested it would introduce cooling measures. The Monetary Authority of Singapore said there should be “close monitoring” of home prices and transactions. The central bank already had scrapped a system of “interest-only” loans, which the bank believed was making it easy to “flip” apartments.
Hong Kong and China were the first places in Asia to see real-estate values recover this year. The mainland government introduced a mammoth stimulus package of 4 trillion yuan, or $586 million and the program freed up Chinese bank lending, and prompted the country’s annual rate of economic growth to return to pre-crisis levels.
According to Bank of America Merrill Lynch, China’s economy was forecast to grow at a rate of 8.7 percent this year and expand to 10.1 percent in 2010. The slowest recent growth was in the first quarter of 2009, when annualized growth fell to 6.1 percent.
In September property prices in the “Big Four” Chinese cities — Beijing, Shanghai, Guangzhou and Shenzhen — already were 6 percent to 9 percent higher than their peaks in the previous upturn. Now there is mounting speculation that the Chinese government will introduce measures to curb the rapid rise.
Xavier Wong, research head for greater China at Knight Frank real estate, believes the central government will act next year, raising mortgage rates and introducing administrative measures to combat price increases.
“The tendency of Chinese citizens to accumulate substantial savings and their fixation with investing in bricks and mortar may mean that China’s property market upcycle will last longer than those in the West, though the risk of an investment bubble should not be taken lightly,” Mr. Wong stated in a November report.
The recovery has spread across North Asia to Japan, South Korea and Taiwan, as well as to Singapore and parts of Southeast Asia. Residential real estate has led the way, but the slide in commercial rents also has slowed. Project funding for institutional deals, which had dried up, has started to return, although analysts say it is still a concern.
In Singapore, sales volumes turned around in February, after the Lunar New Year. Nassim Park Residences and The Ritz-Carlton Residences Singapore Cairnhill grabbed headlines for high-profile sales. And activity in the secondary market, the resale of existing homes, has tracked the bullish interest in new high-end apartments. Colliers real estate says one of the turning points was a strong launch for The Caspian, a 712-unit development at Boon Lay Way and Lakeside Drive. Over all, a total of 2,108 new apartments came on the market in the second quarter, triple the pace of the first three months of the year.
The most eye-catching deal was in Hong Kong, where an apartment in Henderson Land’s 39 Conduit Road development set a world record in October when it sold for 439 million dollars, or 88,000 dollars per square foot by net area. On that basis, it replaced One Hyde Park, a London luxury development nearing completion, as the most expensive residential real estate in the world.
The previous record at the height of Hong Kong’s 1997 property bubble was only 23,000 dollars per square foot.
Is another bubble building in Asia?
“Arguably, yes — it has created some localized asset price bubbles or early bubbles,” said Simon Smith, head of research and consultancy in Hong Kong for Savills real estate. “The China stimulus is having an impact well beyond China’s borders. Many of the economies in Asia are much more China-dependent than they used to be.”
Central bankers and policy makers now have to walk a tightrope. “The problem is that the last thing the government wants to do is hurt the recovery,” Mr. Smith said. “They would rather struggle with the problem of higher asset values than negative equity.”

Market Snapshot

"Green" Office Building Tops Out Above The High Line

Mann Report Volume 1, Issue V11

The Meatpacking District's signature luxury office tower, The High Line Building at 450 West 14th Street, one of the only buildings to offer an office or retail tenant direct frontage and access to the High Line, has topped out above the elevated park.

Developed by CB Developers and designed by Morris Adjmi Architects to LEED Gold standards, the building features 100,000 square feet of office space on 11 floors, as well as high-profile retail space at the base of the park's main entrance. Fashion tenant Helmut Lang has already leased two full floors of office and showroom space at the building, which is expected to be completed Fall 2009, according to the developer.

"Having been involved in the evolution of the Meatpacking District for 10 years now, it gives me great pleasure to have topped out on schedule and in concurrence with the opening of the High Line park. I believe the two will transorm the Meatpacking District once again," said CB Developers Founder Charles Blaichman, who was an early pioneer in the neighborhood, having developed 29-35 Ninth Avenue, the home of Soho House and Spice Market, the Theory building at 40 Gansevort Street; and 415 West 13th Street, where Estee Lauder subsidiary Bumble and Bumble has its corporate headquarters.

NYC Real Notes December 2009

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