Positive outlook for UAE real estate. Image courtesy of Visit Abu Dhabi va Flickr.com

Gulf Business reports that the starkest gains have been made in Dubai, where real estate transactions increased by 65% over the last year, says JLL’s Alan Robertson. Much of this success can be put down to Dubai’s strong economic ties with the relatively healthy economies of China in particular, and South Korea, Australia and sub Saharan Africa. This upward trend is expected to continue, and so Dubai’s real estate sector will likely see further growth during the next 12 months, concludes the report.

Things aren’t quite so rosy in Abu Dhabi, with JLL estimating the city to be around 18 to 24 months behind Dubai in terms of recovery. The report says that the situation isn’t expected to improve substantially through 2013, although the city is at least laying the foundations for a full recovery, expected to commence in 2014.

Dubai’s resurgence:

Dubai has witnessed a significant increase in market confidence over the last year, something that JLL puts down to its steady economic growth, rising employment levels and its ‘safe haven’ status. Several major new real estate developments are being planned in the city, and now the government is even taking steps to prevent another ‘bubble’ by instituting mortgage caps on lenders.

Increased foreign investment:

China and South Korea are likely to step up their investments in the region as a result of growing business ties. In particular, Chines investors have been heavily involved with Dubai’s retail sector, and JLL predicts that hotel and tourism could well be next. In addition, JLL points to growing interest among petro-dollar rich oil-producing nations such as Nigeria and Angola.

Growing real estate inventories:

Good news for buyers and tenants, who will have plenty of choice when it comes to buying or renting property in the UAE this year. Several ongoing developments are expected to be completed sometime during 2012, adding further supply to the UAE’s housing inventory. However, JLL warns that there is a risk that this could offset improving market sentiments.

Funding constraints:

One positive factor that will help to limit the pace of development will be the limited availability of funding. Gulf Business notes that bank lending, off plan sales and IPO’s have already been challenged, and says that caps on LTV ratios will act as a further deterrent. However, this lack of domestic financing will be offset by an influx of cash from overseas investors and private funds.

Sustainable building:

Abu Dhabi is likely to take the lead in the development of ‘green’ buildings due to its Masdar and Estidama regulations. However, this will likely remain small-scale as owners worried about financial viability remain reluctant to accept green leases.

Dubai at night – courtesy Kamel Lebtahi

© sergign – Fotolia.com

There’s no doubt we’ve managed to push through some tough years in the industry, with the housing crash of 2008 perhaps being rock bottom for most, but the end of these difficult times appears to be in sight and unlike the past several years, many of this year’s projections relating to the housing industry seem to be exceedingly positive. So although not every market is the same, some of the following real estate trends we’re likely to see in 2013 might make this year one of the best we’ve all seen in quite some time. Here are just a few things to keep an eye out for as we get set for the next 12 months:

Home Prices Should Continue to Rise

It’s no secret the new construction industry has dramatically slowed. According to statistics from the United States Census Bureau, 1,398,415 building permits were issued nationwide in 2007, followed by 905,359 in 2008, 582,963 in 2009, 604,610 in 2010, and 624,061 in 2011. Although there has been slow progress in new construction homes being built since the drop-off in ’08, the population growth is finally going to start demanding a substantial increase in the number of homes we’ll need in the coming months. In fact, some economists project that construction of new homes and apartment residences will need to be around 1.25 to 1.5 million a year, just to keep up with the rise in population. However, because of the decline of new construction homes in years past, the number of available homes is actually at the lowest we’ve seen in years—meaning the prices of homes will go up and more homeowners will be encouraged to sell.

Technology Isn’t Going Anywhere

Of course, this really isn’t news to anyone. But as technology evolves, so does the way home buyers find property. We already know that, anymore, most everyone initially begins their home search online. But what you may not realize is that Google isn’t the only way for you to drive more business in 2013. Believe it or not, YouTube is now the 2^nd largest search engine in terms of the number of searches performed each month. Along with that, today’s internet users actually run more searches on YouTube than on Bing, Yahoo!, and Baidu combined. So what does that mean for real estate agents? Snapping photos of all your listings simply isn’t enough anymore. Home buyers want to watch videos of walkthroughs, the surrounding neighborhood, and building or community amenities. So to all agents out there: I hope you’re not camera shy! Oh, and to get all your videos seen once you’ve spent the time and effort making each, make sure you SEO the video descriptions and tags with quality, keyword-rich content much the same way you would with a blog or webpage.

Rent Prices Will Continue to Rise

In many places around the country, Chicago especially, the rental market has been as busy as ever over the past 12-18 months. That likely won’t change in 2013. Yes, the buyer’s market is certainly improving, but for now, that shouldn’t dramatically affect the renter’s market. All of those recent college graduates and young professionals who moved back in with their parents or decided to find a roommate to combine resources in order to ride out the down times are now starting to find work. Ultimately, this demographic will once again need to find housing as well, which will usually be in the form of a rental apartment, and that’s likely going to happen later this year. You didn’t really think they’d stay in their parents’ house forever, did you?

Expect a Busier Start to the Year

There seems to be a general consensus among mortgage bankers that interest rates in 2013 will begin to rise. After seeing historic lows in 2012, this may not be much of a shock to many people working in the real estate business. However, for those home buyers paying attention, if you’re going to buy, the time to buy is right now. Rates have already climbed since the Federal Reserve’s meeting in December, but still remain near these same historic lows. Savvy home buyers and investors have certainly taken notice that the Mortgage Bankers Association projects that 30-year fixed rate mortgages will increase to 4.40% over the next 12 months, so the likelihood of delaying a home investment much longer isn’t likely.

What are some of your predictions for 2013? We’d love to hear what your expectations are for the coming year, so let us know what you think!

Joe Heath is a graduate of Indiana University and also holds a Graduate Certificate in Real Estate Development from Drexel University. After working as a Market Research Associate and writing published Market Snapshots for Hanley Wood Market Intelligence in Chicago, Joe now works as a Web Marketing Specialist and is a managing partner at Real Estate Web Creation, LLC.

 ”London and New York are the only two markets identified as key investment areas by investors from other regions,” the report stated. ”Investors will continue to target these markets through 2013, while monitoring the effects of the U.S. election result and continuing problems in the Eurozone London, Paris and major cities in Germany are among the favorite sites.”

Another global trend is the investor’s preference for the office sector. In what commercial properties are concerned,  industrial sector properties are the most attractive in the US and Latin America, while shopping center investments are increasingly sought after in Australia, Canada, and New Zealand saw increasing interest in shopping center investments.

 ”Major investors are becoming more critical when selecting their investment locations,” said Tony Horrell, CEO, U.K. and Ireland, Colliers International. ”This is supported by the overarching themes we found when asking respondents about their investment strategies. They are more likely to look at home locations first, and when they do look at international opportunities, they are far more specific about the individual markets and sectors in which they are interested.”

Horrell added, “The survey also found that the availability and price of debt finance will remain an issue in a number of territories, particularly in EMEA, as stringent lending requirements endure and LTVs remain low. This is opening the door for new lenders, in the form of insurance companies, and the resurgence in the provision of mezzanine finance.”

While the preference for such safe markets will generate a slow but steady growth in Western markets throughout the next year, it will also lead to a shortage in core investment opportunities as all global investors will fight over the same limited key locations.

The survey also showed that Asian, EMEA and Latin American investors were the most likely to access funds from outside their regions. Asian investors used local funds for only 40% of their investments, with the United States (20%) and Western Europe (19%) providing significant capital. The US also provides a third of funding for investments in Latin America, with Western Europe providing another 15% of the funding. Canadian investors are the most self-reliant, with close to 80% of investment being funded locally.

Most investors prefer to put their money in their local markets, with only 25% making overseas real estate investments. Those who venture overseas favor Western Europe. Asian investors eyeing foreign markets prefer those closer to home, such as Australia and New Zealand.

While still focusing on preserving their wealth and income security as main goals, investors in the US, Asia and Latin America are most likely to start taking greater risks over the next six months. The European and EMEA markets will still struggle with securing debt in 2013, the survey showed, also forecasting increased activity for specialist debt funds that pursue higher returns on their investments. Asian investors are seen as most likely to extend debt, while those in Latin America are the most concerned with avoiding additional debt.

 ”In 2013 we will see more new lenders and mezzanine funds to partially replace the void left by retreating mainstream banks,: Horrell said. ”And more generally, 2013 will be a year of continued recovery, with investment volumes showing modest growth as investors accept the new norm and sentiment improves.”

This figure certainly has an impact on the real estate industry, and in an effort to make sense of where the industry should expect to be, the Strategic Issues Work Group Association Executives Committee with the National Association of Realtors (NAR) put together a study entitled, “Simplify! Real Estate Trends in a Time of Uncertainty”.

The report attempts to answer the question, “What forces and trends will be shaping the industry in the next few years?”

The committee consulted with real estate professionals – brokers, consultants, economists and technology experts, asking them to identify industry trends which they believe will shape the future of real estate in the coming years.

Specifically, the committee asked the questions:

1. What do you see as the future of real estate in the next few years?
2. What are the major changes in the real estate business ahead?

Those real estate pros who were polled agreed on many issues, however opinions varied strongly among them as well.

One of the “common themes” arising as a result of the committee’s questions includes the idea that “more is not always better”.

Consumers often suffer from “information overload” – so much so that it leads to what some term “analysis paralysis”, meaning that the potential buyer does nothing towards buying a home, because they are too confused to understand the process.

NAR’s report indicates that when brokers make the buying process much simpler for potential clients – providing clear information across all of their marketing channels, utilizing technologies to their utmost and being responsive to the needs of customers, they will stand out above the rest.

The following analogy from the report spells out an opportunity that realtors should really take note of:

“Thirty-somethings Susan and her partner are trying to buy their first home, but feeling frustrated by the process. They’ve picked out five condos in their neighborhood that looked promising, but found the websites gave conflicting information. The first agent they contacted didn’t know how to send text messages. The second agent didn’t know as much about the buildings as they did. But Matt, the third sales associate, made it simple for them. He advised on their approach, validated the information, helped negotiate the contract, and made sure everything was in place for a smooth closing. Now, Susan is sending Matt a steady stream of referrals – by text.”

As you can see from the example, brokers who meet buyers where they are at – simplifying the buying process for their clients, have the potential to stand out from the crowd, ultimately leading to even more business.

NAR’s report covered much more than we’ve discussed here, and it is a good resource for brokers who are concerned about the impact that the current economic client will have on their business. Why not check it out now? Tell us what you think about the future of real estate!

© Junial Enterprises - Fotolia.com

With the real estate market is still in a state of flux, and with foreclosures still accounting for a large percentage of the market, real estate auctions have become a more popular sales method amongst both homeowners and professionals. The advantages of real estate auctions include a time specific liquidation of properties that is beneficial for both buyers and sellers. The numbers of auctions taking place nationwide is steadily increasing, and every type of property is being sold. The PropertyAuction.com survey allows clients to assess industry activity last year, and to see their predictions for this year. The topics of survey included frequency of auctions by region, auction type, online bidding, mobile accessibility, the use of social networking, advertising allocation, and the rate of success.

The survey found that the South West, Central, and Southeast regions of the United States had the highest number of real estate auctions last year, with states on the West Coast seeing the lowest numbers of auctions. This data is in agreement with media reports, as states such as Nevada and Florida are still struggling with high levels of foreclosures. Participants in the survey revealed that signage was the most effective method of promoting real estate auctions last year, with the Internet being the second most effective advertising tool. This was In spite of spending an average of 44% of their overall budget on print advertising.

The survey also asked respondents about their predictions for this year, and found most thought homes, condos, and co-ops would be the most popular assets brought to auction. They forecast commercial land as the least likely to be brought to auction. Auctioneers and real estate professionals are predicting the Southeast will have the highest number of auctions, and that lender REO is likely to be the most frequently auctioned property type this year.

Marriott Marquis Times Square New York

Among the industry-leading thinkers and innovators featured this year are:

• Phil Libin, CEO of Evernote, a company that offers web and mobile apps for syncing notes and other media via the cloud
• Clara Shih, CEO of Hearsay Social and author of “The Facebook Era”, a bestselling book about “tapping online social networks to market, sell, and innovate”
• Jeff Jarvis, author of “What Would Google Do?” and professor of Journalism at New York University
• Claire Boonstra, co-founder of Layar, an augmented reality browser for mobile platforms
• Jason Baptiste, CEO and founder of OnSwipe, a company that helps publishers create rich news and ad content for devices with touchscreen capabilities

Also featured will be thinkers from Zillow, CoreLogic, and Trulia, in a panel discusison about the wide range of tech real estate trends and how to take advantage of the good ones and avoid falling victim to the scams.

Attendees will have the opportunity to network with industry leaders from all over the country in some of the most prestigious real estate enterprises, acquire a wealth of innovative ideas about  technology and real estate from financial experts and leading brokers, and browse through exhibits on the trade show floor that highlight many of the products real estate professionals need to be successful. With a plethora of workshops and opportunities, it is an event worth considering.

Real Estate Connect 2012 NYC will take place at Marriott Marquis Times Square, January 11-13, 2012. You can register for the event online. Three-day conference packages start at $899. Inman News is hosting the conference.

The Pittsburgh Tribune reported Friday on Five Mile Capital Partners’ situation as fund managers for the tower’s investors – basically the fund’s debt is not being repaid – a restructure seeming evident. Area Property Partners, the New York firm that owns a big chunk of the Steel Towers estimated $228 million in loans, failed to get an extension last Fall – the necessity for restructuring or sale being likely. But the 64 story tower built back in Pitsburgh’s heyday in 1970 represents a bit more than someone’s balance sheet statistic – it is indicative of a great city’s plight.

Unfinished office 62nd floor of the US Steel Tower - courtesy Post Gazette

Pittsburgh’s plight since the “wonder years” of big steel is well known. And the city’s resilience despite catastrophic industry loss and job sector devastation are to be noted too. After all the home of the Pittsburgh Steelers is notorious for being able to take it on the chin. November’s whopping 35% drop in home sales is just another poke at an otherwise indestructible town too. Despite such horrible numbers jobs in Pittsburgh are actually stable, even getting better say some. And looking at the Steel Tower deal from another barometric symbolism stance, a sale or restructure may be a tipping point of sorts?

US Steel Tower, background left

There is some glimmer of hope on Pittsburgh’s horizon, a Clear Capital assessment of city real estate markets recently indicated Pittsburgh as one city set to climb out, at least a bit, from the lowest home prices on record. And too, following very smart people into markets, it looks like Pittsburgh may become something of a new tech hub – Google has just doubled their office space at Bakery Square (image below) at Eastside to nearly 100,000 square feet. And where Google goes, others including success are sure to follow.

Google's Bakery Square offices - courtesy harry_nl

In Pittsburgh, like everywhere else, investors and the average guy on the street are looking for signs. And the signs seem good for Pittsburgh from projected hotel revenue for 2011 to expansion in the commercial real estate market, could indicate the bottom has been reached, and a rebound is in progress. US Steel’s Tower does point up after all. Pittsburgh is certainly one market that has to be scrutinized carefully. When the real estate balloon does being to fill with air again, the prudent investor will make a killing. Take note of Google, they don’t tend to lose.

For information about leasing office space in the US Steel Tower, those interested can visit the official Winthrop Management site.