Real Estate

ESR buyout showcases depths of Hong Kong misery

27 May 2024

The $6 bln Asian real estate fund manager is mulling a take-private bid. While its complex business has been hit by high interest rates, a 60% fall from the stock's 2021 peak looks harsh amid a promising turnaround. Shareholders like OMERS can push for a high premium.

China’s new property fix is a work in progress

20 May 2024

Local governments can now borrow up to $138 bln to buy unsold homes. It's the strongest signal yet that Beijing is determined to revive the country's ailing housing market. The amount is not enough. But it lays the foundations for providing more support as needed.

China stimulus starts with a bond, not a bang

17 May 2024

Beijing will issue $138 bln-worth of special sovereign debt. It's not much by itself, but combined with planned offerings from local governments, fiscal support could top 3.2% of GDP this year. It can spur ailing credit demand and speed up investment in strategic sectors.

China goes on a $1 trln apartment-buying spree

16 May 2024

State-owned firms and local authorities will answer Beijing's call to purchase up to 3.6 bln square feet of unsold homes. The bold move will ease the property crisis, which has weighed on growth. But this will weaken already strained government and corporate balance sheets.

Yuan devaluation isn’t worth the trouble

14 May 2024

A weaker currency would boost exports and prices, but speculation China could engineer a fall underestimates Beijing’s desire for a stable exchange rate. Aggressive US tariffs could change the calculus. For now, official signals point to a slow grind lower against the dollar.

China property fix aims to restock speculation

6 May 2024

Reducing unsold inventory is Beijing’s latest directive and replaces the mantra “houses are for living in, not for speculation”. It’s a prelude to removing some investment curbs. Allowing people to get rich off the sector is a necessary evil to restore overall confidence.

Market forces knock ominously on US realtors’ door

12 Apr 2024

Home buyers will soon find it easier to negotiate fees they pay to 1.5 mln agents – a move that might have happened earlier in a less distorted market. Some brokers will earn more. But the reforms are likely to shrink the fee pool, which is tricky for ancillary firms like Zillow.

Blackstone’s apartment deal has only so much room

8 Apr 2024

A $10 bln buyout of AIR Communities and its 27,000 US rental units is the biggest of its ilk in a while. It hews to COO Jon Gray’s plan to invest before a market recovery. But unlike his firm’s post-2008 spree, deep pockets aren’t enough. The Fed and the economy loom larger now.

Ping An and Vanke look made for each other

26 Mar 2024

Pressure is mounting on China's financial giants, including the $90 bln insurer, to support the beleaguered property developer. That is a big ask for Ping An, whose own earnings just slumped 23%. Still, helping Vanke could limit the pain for its own hefty property exposure.

Hong Kong property tycoons send warning by waiting

22 Mar 2024

A home price slump has left blue-chip real estate firms like New World trading at their lowest valuation since 2003. Back then, it sparked a rash of shareholder buyouts. This time round, property magnates remain on the sidelines, suggesting the market has further to fall.

AI hype will be hard to puncture

20 Mar 2024

Short-seller Hindenburg is attacking $80 bln Equinix, whose data-center investments have been pumped up by artificial-intelligence exuberance. US regulators are also starting to target some of the hot air. Even so, the valuation bubble is more likely to deflate slowly than pop.

China property’s Enron damp squib may yet surprise

19 Mar 2024

Markets shrugged as a watchdog accused Evergrande of inflating sales by $78 bln over a two-year period. The US firm’s 2001 demise, by contrast, had broad impacts. More fallout in China is likely, potentially ensnaring banks and auditors like PwC. Investors are too sanguine.

Lower rates, office return will ease property pain

7 Mar 2024

The post-pandemic boom in hybrid work is causing trouble for banks that have lent heavily to office developers. But in this Viewsroom podcast, Breakingviews columnists explain how losses may be limited if central banks bring borrowing costs down and bosses call employees back.

European bank property buffers rest on two big ifs

28 Feb 2024

Lenders like BNP and ING sit on $1.5 trln of commercial property loans, which look vulnerable to high interest rates. Longer leases give EU players more breathing space than US counterparts. Yet averting a crisis requires a mixture of falling inflation and a revival of offices.

Shenzhen offers glimpse of China’s housing future

28 Feb 2024

The tech hub’s plan to put 60% of its 18 mln residents in subsidised homes answers President Xi Jinping’s call for a “new development model” prioritising affordability. The state is reclaiming a lead role in the property market of the world’s second-largest economy, at huge cost.

Central banks’ waiting game plays with fire

21 Feb 2024

Western policymakers fret that if they cut rates too soon inflation may rebound. But keeping monetary policy tight has costs. Staying put as price growth abates means rate-setters squeeze consumers and companies, raising the odds of blowups in areas like commercial real estate.

Capital Calls: S&P/Visible Alpha

20 Feb 2024

Concise views on global finance: The financial analytics firm’s $500 mln bid for alternative data provider underscores the importance of bringing proprietary data to funds that trade on momentum. But as Lyft’s rally after a typo showed, automation has its limits.

US real estate is a micro-drama set to turn macro

15 Feb 2024

So far, loans on isolated buildings by individual banks and funds have gone bad. As mortgages worth $1.5 trln come due in the next two years, strains will also spread from offices to apartment blocks. A correction is inevitable, but its impact can still be contained.

Capital Calls: Disney

7 Feb 2024

Concise views on global finance: Boss Bob Iger nabbed Taylor Swift’s movie for his company’s streaming service, took a $1.5 bln stake in Epic Games and shipped more money to shareholders. But traditional TV is declining, and a new sports partnership makes for an awkward fit.

Julius Baer pops myth of private bank prudence

1 Feb 2024

CEO Philipp Rickenbacher is leaving the $12 bln Swiss wealth manager after bad lending led to a $700 mln writedown. It’s a reminder that serving rich clients is not risk-free. Money managers will have to provide more clarity on loan books or give up lucrative but dicey practices.