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China Says It Will Start Buying Apartments as Housing Slump Worsens

Signaling growing alarm, policymakers ramped up their efforts to stem a continued and steady decline in real estate values

Chinese officials signaled their growing alarm over the country’s worsening property market on Friday, unveiling a plan to step in to buy up some of the vast housing stock and announcing even looser rules for mortgages.

The flurry of activity came just hours after new economic data revealed that Chinese authorities are staring at a hard truth: No one wants to buy houses right now.

Policymakers have tried dozens of measures to entice home buyers and reverse a steep decline in the property market that has shown few signs of recovering soon.

On Friday China’s vice premier, He Lifeng, indicated a shift in the government’s approach to dealing with a housing crisis that has prompted households to cut spending. Mr. He told policymakers that local governments could begin to buy homes to start dealing with the huge numbers of empty apartments.

The government-purchased homes would then be used by authorities to provide affordable housing. Mr. He did not provide any details on when such a program would begin or how it would be funded.

The approach is similar to the Troubled Asset Relief Program, or TARP, that the United States government established in 2008 to buy troubled assets after the collapse of the American housing market, said Larry Hu, chief China economist for Macquarie Group, an Australian financial firm.

“The policymakers realize that the demand side stimulus is not enough,” said Mr. Hu. “So they have to step in as a buyer of last resort.”

Even so, China’s central bank on Friday took steps to encourage home purchases by effectively lowering mortgage interest rates and slashing requirements on down payments.

“Policymakers are desperate to boost sales,” said Rosealea Yao, a real estate expert at Gavekal, a China focused research firm.

The government’s official data shows that Beijing has a long way to go to increase confidence in the real estate market. The amount of unsold homes is at a record high, and property prices are declining at a record pace.

The inventory of unsold homes was equivalent to 748 million square meters, or more than 8 billion square feet, as of March, according to China’s National Bureau of Statistics. In April, new home prices in 70 cities fell by 0.58 percent, and the value of existing homes fell by 0.94 percent. The price drops were even more stark in yearly terms: New home prices fell 3.51 percent compared to a year ago, while existing home prices fell 6.79 percent, both record breaking declines.

China’s property crisis has been fueled by years of heavy borrowing by property developers and overbuilding that underpinned much of the country’s remarkable decades-long economic growth.

But when the government finally intervened in 2020 to put an end to risky practices by developers, many companies were already on the precipice of collapse. One of its biggest property developers, China Evergrande, defaulted in late 2021 under huge piles of debt. It left behind hundreds of thousands of unfinished apartments and bills worth hundreds of billions of dollars.

Evergrande was the first in a string of high-profile defaults that now punctuate the industry. A Hong Kong court ordered the company to be liquidated in January. Another beleaguered real estate giant, Country Garden, had its first hearing on Friday in a Hong Kong court in a case brought by an investor seeking the company’s liquidation.

Los fondos temen que el Gobierno fuerce un control del alquiler más allá de Cataluña

Diferentes agentes institucionales empiezan a exhibir su temor de que el Ejecutivo implemente fórmulas que empujen a otras CCAAs a controlar los precios

Mientras el Banco de España urge medidas al Gobierno que estimulen la oferta de vivienda en general, entre algunos de los principales fondos con exposición al mercado del alquiler empieza a colear un nuevo temor inhibidor: el de que otras comunidades al margen de Cataluña acaben sucumbiendo al control de rentas como solución al problema del acceso a un hogar en el corto plazo.

"Por ahora confiamos en que la mayoría de las administraciones dependen del Partido Popular, y que no se cruzará esa línea roja, pero nos preocupa que cierta presión política y social pueda acabar provocando cambios de posiciones en algunos ayuntamientos y regiones", trasladan a Vozpópuli desde un fondo de inversión que sobresale entre los expuestos al mercado del alquiler a nivel nacional. "Esperamos que el Gobierno no tome solo nota de algunos planteos de los promotores -como los relativos a la relajación de la normativa que rige el crédito promotor-, sino también de la gravedad de la situación del alquiler y de las carácterísticas propias de este mercado", añaden desde otra empresa del sector con capital institucional detrás.

El temor a nuevas medidas orientadas a la limitación de los precios tiene asidero en recientes trascendidos sobre las intenciones del ministerio de Vivienda y Agenda Urbana que encabeza Isabel Rodríguez. La Cadena Ser ha avanzado que el Ejecutivo central está explorando fórmulas que acaben condicionando los fondos para Vivienda desde la Administración Central hacia comunidades y ayuntamientos en virtud de la aplicación o no de los controles de precio. Y ello, a partir de una interpretación del artículo 18 de la Ley de Vivienda del 2023 que facultaría al Gobierno central para desarrollar programas específicos y nuevas líneas de ayudas para regiones tensionadas a su criterio y "de acuerdo con la administración territorial competente".

Entre las zonas con tensiones en el alquiler, al margen de la citada región catalana, aparecen las de Madrid, Andalucía, Valencia y Baleares, en manos del PP, pero también otras que no lo están, como País Vasco, Navarra o Asturias.

En Barcelona, la inversión en proyectos de vivienda nueva para alquiler retrocedió ya un 90% en 2023, por el 3% de caída en Madrid, según datos de la consultora Savills. Los anuncios diarios en Idealista en la principal provincia catalana cayeron en más de un 20% en los primeros dos meses tras la aprobación del tope, y el coste promedio de los anuncios subió un 15,2% respecto a abril del 2023. Una proyección de Alquiler Seguro ha perfilado un descenso de la oferta agregada en Barcelona equivalente a unos 25.000 pisos al cabo de este año.

Alerta de Colliers sobre los inversores en alquiler

"La actual Ley de Vivienda y las amenazas de declaración de nuevas zonas tensionadas (ya sea de forma voluntaria o forzada por el Gobierno) van a seguir presionando el mercado, retirando oferta e imposibilitando que se genere nueva oferta especialmente en determinadas ubicaciones hiper reguladas que ya están siendo calificadas con 'no go zone' por muchos fondos institucionales", llega a afirmar Antonio de la Fuente, managing director de la consultora Colliers.

"Esta situación se va a prolongar durante varios lustros salvo que se ataje de forma decidida por parte de las administraciones públicas en sentido opuesto al actual, dando garantías a los arrendadores frente a los arrendatarios, fomentando la creación de obra nueva en alquiler y no regulando los precios", añade de la Fuente.

De acuerdo a los datos de Colliers, la inversión en residencial en 2023 en todo el territorio de fue de 2.332 millones, equivalentes a una caída interanual global del 14,5%. Una cifra que debe ser comprendida en el contexto del alza de los tipos de interés y cuyo descenso a partir de este año podría relanzar las inversiones. Pero los montos parecen también estar topándose con otros límites fundamentales: el volumen de 2023 fue la cifra más baja desde 2019 pese al creciente déficit estructural de viviendas en el país.

"El capital institucional no es ajeno a las oportunidades y la buena evolución del sector residencial. No obstante, este capital cada vez más caro y con alternativas de inversión más rentables en otros países está apostando por aquellas estrategias que en este momento le otorgan un mayor retorno: promoción de BTS -vivienda para la venta- del segmento High-End -con mayor poder adquisitivo- y de alternativas habitacionales para satisfacer la necesidad de vivienda en alquiler como el flex living", incide de la Fuente.

En cuanto al flex, esto es, el uso de suelos terciarios para satisfacer la demanda habitacional, la apuesta se está centrando en los mercados con "certidumbre regulatoria a pesar de ausencia de legislación específica". Se trata de un fenómeno creciente pero incipiente a los efectos de resolver el problema de la vivienda: de acuerdo a los datos de Colliers, hay ya unas 10.000-15.000 unidades de este tipo en marcha.

Otra de las vías que parece estar buscando el sector propietario para sortear tanto los controles de precios como otras restricciones de la Ley de Vivienda pasa por la conversión de los alquileres tradicionales en arrendamientos de temporada o de habitaciones.

De acuerdo a las cifras de Idealista, el alquiler temporal se duplicó el último año, hasta representar más del 10% de todo el mercado. Paralelamente, la oferta de habitaciones creció un 43% en el conjunto de las capitales españolas al cabo del primer trimestre de este 2024.

Gonzalo Bernardos: “Se acerca un boom inmobiliario espectacular”



Estamos a punto de vivir un momento espectacular en el mercado inmobiliario. La demanda va a experimentar un auténtico boom, y eso va a repercutir en el volumen de negocio y también en los precios. Así de claro lo ha afirmado el economista Gonzalo Bernardos en el último Fotocasa Pro Academy Day celebrado hace unos días en Valencia.

Ante una sala repleta de agentes del sector inmobiliario, no pudo ser más directo: “En cuanto salgan de aquí, a todos quienes están intentando comprar una vivienda, díganles que se den prisa”. 

Regreso a lo grande del boom inmobiliario

“Lo que viene en el mercado inmobiliario, excepto que haya algún acontecimiento internacional imprevisible, va a ser lo mejor de lo mejor”, predice Gonzalo Bernardos. Las causas de este impulso positivo son variadas: la escasez de obra nueva que concentra la demanda en la segunda mano, la bajada de los tipos de interés y el aumento del crédito por parte de los bancos, la llegada de población extranjera que necesita una vivienda, el trasvase de inquilinos a compradores y una situación económica favorable. 

Y todo ello, además, sin el riesgo de repetir una nueva burbuja inmobiliaria, porque las condiciones son muy diferentes, según el experto. 

Máximos históricos de segunda mano, pero poca obra nueva

En los dos últimos años hemos visto un máximo histórico de venta de viviendas de segunda mano y unas cifras mucho menores de creación de vivienda nueva, a pesar de la demanda existente en ese mercado. En 2022, con los intereses aún bajos, en España se vendieron 640.000 viviendas de segunda mano y solo 77.000 de obra nueva, un porcentaje de nuevas construcciones mucho menor que en la década anterior. 

En 2023 la cifra aún es más baja: solo se vendieron 60.000 viviendas nuevas, y la previsión para 2024 es de 74.000 nuevas entregas de llaves. “Tenemos un serio problema de construcción de viviendas”, indica Bernardos. La demanda de vivienda nueva se estima alrededor de 250.000 y, al no poderse cubrir, pasa a la vivienda de segunda mano.
 


Los tipos de interés y el crédito de la banca

La subida de los tipos de interés en 2023 ha sido la más rápida de los últimos 30 años y ha aumentado la dificultad de muchas personas para solicitar hipotecas. La banca ha tenido una postura extremadamente precavida ante el temor de un aumento de la morosidad: han endurecido los requisitos y se han limitado a conceder crédito solo a los mejores perfiles. “En 2023 hemos estado con el freno de mano puesto por la banca”, afirma Gonzalo Bernardos. 

Pero la realidad ha sido otra: la morosidad no ha subido y los principales bancos han visto multiplicados sus beneficios precisamente por la subida de los intereses de las hipotecas. Y ahora quieren seguir ganando más que el año anterior. 

Para ello, y coincidiendo con las próximas bajadas de los tipos de interés por parte del Banco Central Europeo, los bancos españoles van a volver a conceder más créditos, lo que va a beneficiar al mercado inmobiliario. Además, entran en juego nuevos actores: las pequeñas cajas de ahorro quieren volver a ganar volumen de negocio, y para conseguirlo están dispuestas a ofrecer hipotecas de hasta el 100% del valor de la vivienda. 

Con todo ello, el economista vaticina que a final de este año veremos hipotecas fijas alrededor del 2% de interés, y variables con diferenciales del 1,25%. 

La fortaleza del mercado

En 2023 las compraventas inmobiliarias disminuyeron un 10,5%, pero el número de transacciones sin hipotecas aumentó en 20.000 operaciones. “Es un indicador de fortaleza del mercado brutal”, valora Bernardos. “En un momento nefasto para mercados como el estadounidense o el alemán, el mercado español va francamente bien. Han aumentado los puestos de trabajo y la renta de los trabajadores. El turismo está repartiendo riqueza en el conjunto de la economía, el número de empleados está en máximos históricos y sigue al alza. Somos uno de los tres países que más han crecido en la Unión Europea. Y este año ya estamos volviendo a superar todos los récords mientras que Europa se estanca”.

Nueva población, aumento de demanda

La llegada de población extranjera es otro factor clave para el futuro inmediato del mercado inmobiliario. “Están llegando 500.000 personas al año, tenemos un crecimiento de población similar al de antes de la burbuja inmobiliaria, y no es algo puntual: va a continuar”, detalla el experto. En parte, porque pueden ocupar puestos de trabajo. En otros casos, porque se trata de teletrabajadores de otros países que eligen España como lugar de residencia. Y todos ellos se suman a la demanda de vivienda. 

El alquiler, un mercado al límite

La escasez de oferta de viviendas en alquiler va a mantener los precios altos. Además, como ocurre también en otras ciudades de todo el mundo, el aumento de población móvil de estudiantes y jóvenes profesionales internacionales que necesita alquilar tensiona aún más este mercado. Y la población local se ve obligada a competir con estos inquilinos con mayor presupuesto. 

Con todo ello, cada vez va a ser más barato pagar una cuota hipotecaria que alquilar. Y eso va a motivar un aumento de la demanda de compra, sobre todo entre los menores de 40 años, para quienes alquilar a largo plazo deja de ser una opción viable y se van a decantar por la vivienda en propiedad. 



Las viviendas que más van a subir

Ante esta situación, “lo que más va a subir es lo barato”, predice Gonzalo Bernardos. “Son los compradores que el año pasado no obtuvieron financiación y ahora la van a poder conseguir”. El gran traspaso del alquiler a la compra va a afectar a toda España, “especialmente en poblaciones y barrios con viviendas de clase media-baja, a partir de este año y también durante 2025, excepto que algún acontecimiento de repercusión internacional altere el mercado”. 

Las perspectivas también son buenas para la vivienda de alto standing, especialmente por parte de compradores extranjeros, pero se trata de ventas largas y con una gran inversión para su comercialización. 

Recomendaciones para los profesionales inmobiliarios
 
“Yo recomiendo centrarse en la vivienda de clase media-baja, que se puede vender fácilmente en tres meses si el precio es adecuado y requieren muchas menos visitas por inmueble”, según Bernardos. Es más, “es momento de captar incluso algo por encima del precio de mercado, porque lo que viene va a permitir vender a esos niveles en breve. Calculo que este año los precios subirán el 7%, y en 2025 el 10%”.

No habrá burbuja inmobiliaria

El fantasma de la burbuja inmobiliaria suele sobrevolar cualquier predicción sobre el futuro del mercado, pero Gonzalo Bernardos lo tiene claro: “No va a haber burbuja inmobiliaria. En absoluto”.

Y lo sustenta con una amplia diversidad de argumentos: “Los bancos tienen más depósitos que créditos. No necesitan financiación del exterior, por eso va a aumentar el número de préstamos. El mercado está a tope, no hay peligro. La demanada de extranjeros está como nunca. La clase media-baja está comprando y los jóvenes apuestan por la propiedad. Hay creación de empleo y subidas de sueldos. Es el momento perfecto para el negocio inmobiliario”. 

Trudeau Housing Push Challenged by Weak Productivity, Study Says

Government study says Canada could build 70% more homes a year
Looser regulations would boost building efficiency: researcher

Canada has the workers it needs to build 70% more homes a year and municipal red tape is the main barrier to construction, according to the nation’s housing agency.

The 650,000 workers building homes in Canada last year should have been enough to start work on 400,000 new units, compared to the approximately 240,000 that actually got underway, Mathieu Laberge, senior vice president at Canada Mortgage & Housing Corp., wrote in a report released Thursday.(...)

England’s universities face ‘closure’ risk after student numbers dive

Report from Office for Students warns ‘significant changes’ needed to ‘funding model’

Universities in England face a looming funding crisis as a result of a fall in student applications, with some requiring deep cuts to avoid closure, the sector’s regulator has found.

The warning will be issued in the Office for Students’ annual report on the financial health of the sector, which will be published on Thursday morning.

The report, extracts of which have been seen by the Financial Times, finds 40 per cent of England’s universities expect to be in deficit in the 2023-24 academic year, with an “increasing number” showing low levels of cash flow. 

“An increasing number of providers will need to make significant changes to their funding model in the near future to avoid facing a material risk of closure,” the report will say.

The findings come as the higher education sector battles with Rishi Sunak’s government over plans to restrict further the number of lucrative international graduate students who come and study in the UK.

The government removed the right of overseas graduate students from bringing family members, and increased the salary threshold for skilled workers from £26,200 to £38,700, contributing to a sharp drop-off in applications.

Last week the head of the Russell Group of top-tier universities warned any further reduction in overseas recruitment would lead to a “significant destabilisation of the sector, [and] result in less spending in local communities, fewer opportunities for domestic students and less UK research”.

The OFS annual statement notes a sharp deterioration in the financial outlook for the sector compared to last year’s report, which said “overall we are not currently concerned about the short-term viability of most providers”.

The report also finds current data on student applications indicates numbers have declined this year, which it said “contrasts starkly” with earlier aggregate forecasts that there would be a 35 per cent increase in international students and a 24 per cent rise in domestic ones.

The report will say: “Data on undergraduate applications and student sponsor visa applications indicates that there has been an overall decline in student entrance this year, including a significant decline in international students.”

More than 50 UK universities are making budget and job cuts as a result of the growing financial pressures caused by the drop-off in overseas students, and a decade-long freeze in the annual £9,250 tuition fees paid by domestic students.

The Russell Group of elite institutions estimates universities are losing £2,500 a year on average per student, a figure that is set to rise to £5,000 by the end of the decade.

The OFS said it was “concerned” about the decision some universities were making in response to mounting financial risk. “Across the sector as a whole this may over time reduce student choice: in some subject areas, or in some regions, or for some types of students,” it added.

Earlier this week the government’s independent adviser on migration concluded a 14-week investigation into the UK’s visa graduate programme with the finding that it was not being abused, and should remain in place.

Still, the government has indicated it is considering further restricting the route, because it believes too many overseas students are applying to lower-ranked universities.

Professor Brian Bell, chair of the Migration Advisory Committee, told MPs there was limited “compelling evidence” that the graduate route was essential to raise the skills level of the UK’s domestic workforce, but remains vital for universities’ finances.

The department for education did not immediately reply to a request for comment.

High debt levels put Europe at risk of ‘adverse shocks’, ECB warns



European countries have lost momentum in reducing their high public debt levels, leaving them “vulnerable to adverse shocks” from geopolitical tensions and persistently high interest rates, the European Central Bank has warned.

Many European governments have not fully reversed the support measures introduced to shield consumers and businesses from the economic impact of the coronavirus pandemic and energy price shock caused by Russia’s full-scale invasion of Ukraine, the central bank said in its twice-yearly financial stability review.

“Any reassessment of sovereign risk by market participants due to high debt levels and lenient fiscal policies could raise borrowing costs further and have negative financial stability effects, including via spillovers to private borrowers and to sovereign bondholders,” it said.

The ECB said risks to the financial system had mostly receded in recent months, with household and corporate debt falling below pre-pandemic levels. But it added that sovereign debt was likely to stay high, identifying “lax fiscal policies” as a primary concern.

While economic activity is expected to pick up in the next couple of years, supported by resilient labour markets, lower inflation and expected cuts to interest rates by the ECB from next month, it said “structural challenges . . . remain a drag on productivity and growth”.

Combined with signs of increased losses in commercial property, the ECB said the “outlook remains fragile” and “financial markets remain vulnerable to further adverse shocks”.

“While expectations of monetary policy easing have boosted optimism in investors’ risk assessments, sentiment could change rapidly,” it said, pointing out that “persistently elevated debt levels and budget deficits would be more likely to reignite debt sustainability concerns”.

The warning from the ECB came after the EU published updated economic forecastsin which it estimated that Eurozone governments’ net borrowing would decline from 3.6 per cent of GDP last year to 3 per cent this year and 2.8 per cent in 2025.

But it said overall government debt was expected to remain above pre-pandemic levels at 90 per cent of GDP across the bloc in 2024, then tick up slightly next year.

Despite slightly brighter growth forecasts, Brussels indicated that as many as 11 EU countries including France and Italy were likely to be reprimanded for being in breach of the 3 per cent budget deficit limit under revamped fiscal rules that came back into force this year.

Borrowing costs for European governments have dropped from recent highs as investors anticipate the ECB will soon start cutting rates in response to falling inflation, which is now close to its 2 per cent target. The spread between the 10-year borrowing costs of Italy and Germany — which is closely tracked as an indicator of financial stress — has fallen close to two-year lows.

The ECB, however, said: “Risks of fiscal slippage in the light of a busy electoral agenda in 2024-25 — at both national and EU levels — or uncertainties around the exact implementation of the new EU fiscal framework could lead market participants to reprice sovereign risk.”

Commercial property markets have suffered a “sharp downturn”, the ECB warned, adding that prices of office buildings and retail sites could fall further due to “structurally lower demand”.

It said the Eurozone banking system was “well equipped to weather these risks, given strong capital and liquidity positions”.

But it warned that “insufficient cash buffers” could lead to “forced asset sales” by real estate investment funds “particularly if the downturn in the real estate market were to persist or intensify”.

Starwood’s $10bn property fund taps credit line as investors pull money

Heavy redemption requests come as fears rise over real estate valuations

A $10bn US property fund is running low on liquidity as investors demand their money back, threatening a reckoning for a sector rocked by rising debt costs and fears over real estate valuations.

Starwood Real Estate Investment Trust (Sreit), one of the largest unlisted property funds, has drawn more than $1.3bn of its $1.55bn unsecured credit facility since the beginning of 2023 following heavy redemption requests.

The fund, managed by Barry Sternlicht’s Starwood Capital, entered 2023 without having tapped the credit line. But it now has only about $225mn of cash left to draw, according to the latest filings this week.

At the current pace of redemptions, Sreit would run out of credit and cash in the second half of this year unless it borrows more or sells more property assets.

Both Starwood’s fund and a larger rival run by Blackstone Group raised and invested tens of billions of dollars in commercial property shortly before US interest rates began to rise in 2022, generating substantial fees for their private equity owners and financial advisers who sell the funds to wealthy clients.

Unlike publicly traded property trusts, in which investors are free to sell shares on an open market, private Reits are able to control withdrawals and avoid a fire sale of assets.

But investors have still managed to pull billions annually from the Starwood and Blackstone funds amid mounting concerns about property valuations.

Last year, investors withdrew $2.6bn from Sreit and $12.4bn from Breit, Blackstone’s property fund. While redemptions at Breit have slowed markedly in recent months, allowing it to meet monthly withdrawal requests in full for the first time since late 2022, redemptions at Sreit remain at record highs.

Blackstone has convinced some investors it will weather the storm in commercial property partly because it has less exposure than Starwood to sectors such as US apartments and more to hot areas such as data centres.

In the first quarter of 2024, Miami-based Starwood granted a diminishing portion of redemption requests. Investors asked for $1.3bn of their money back, but received only $501mn on a pro-rata basis because of a cap on quarterly withdrawals set at 5 per cent of net assets. In March, only about a quarter of such requests were satisfied.

The Reit’s overall liquidity stood at $752mn on April 30, made up of $446mn in cash on hand, the $225mn of available borrowing on its credit line and about $45mn of debt securities available for sale, according to a securities filing made on Wednesday. However, a separate filing on Monday showed that Sreit was due to meet almost another $200mn in redemptions on May 1, quickly depleting that cash balance.

“Liquidity isn’t something that people think about on the way up but it can become a concern suddenly,” said Phil Bak, chief executive of Armada Investors, which invests in listed real estate property trusts. “When it comes to private Reits, liquidity concerns have been dismissed and they will become paramount again.”

Starwood declined to comment.

A person familiar with the fund said it would have greater liquidity later this month after asset sales that would soon close. Starwood could sell other assets to raise cash, this person said. The fund has also announced a plan to dispose of $1bn of property through special tax-efficient deals with wealthy individuals.



The situation also throws a spotlight on leverage and valuation metrics at Sreit, which invests in residential housing, as well as industrial warehouses and self-storage facilities. The portfolio spans apartment blocks in Arizona and logistics centres in Norway. It also includes a loan provided to Blackstone for the acquisition of Australian hotel and casino group Crown Resorts.

US apartment rents could be under pressure this year as a record supply of new homes hits the market in 2024, according to Yardi Matrix, a real estate data provider. Such forecasts have weighed on the valuations of public Reits invested in US multi-family housing, with shares of Mid-America Apartments and Camden Property Trust, down more than a third from their late 2021 peak.

Starwood’s declared net asset value is down more than 16 per cent from its September 2022 peak at nearly $10bn. Private funds have broadly declined to mark down their net asset values as much as listed funds have fallen in value.

Starwood’s high debt load of $15bn also compares unfavourably to borrowings at public Reits, leaving it with a leverage ratio of 57 per cent of its gross assets, roughly twice that of public peers. Limits on how much more leverage it could take on complicate its task in meeting withdrawals: to keep its leverage ratio stable would mean selling about $1.1bn of property to generate $500mn for withdrawals, after debt repayments.

The group sold $2.2bn of property in 2023. Were it to make further property sales at lower valuations than it has assumed, a downward reappraisal of its asset value would also worsen its debt metrics.

Even after last year’s property sales, Sreit’s interest expense rose 12 per from the prior year to a record $154mn in the first quarter of 2024, fuelled by the additional borrowings from its credit facilities, on which it pays interest at more than 7.5 per cent.

Investors shun real estate as higher for longer fears bite

Global fund managers cut their property allocations to lows not seen since 2009

Global investors have slashed their allocations to real estate to a 15-year low as the sector struggles under the pressure of high interest rates.

A net 28 per cent of managers were underweight the real estate sector in May, down 13 percentage points on the previous month, according to Bank of America’s latest global fund manager survey. 

The commercial property market has undergone a painful shift away from ultra-low interest rates, compounded by uncertainty over the future of offices following the Covid-19 pandemic. Recent concerns that borrowing costs in big economies are set to remain higher for longer have weighed further on the sector.

“A change in interest rate expectations is a contributing factor to this change in sentiment, as fundamentally nothing has changed since March other than the inflation story in the US,” said Oliver Salmon, a director in Savills’ world research team. “Interest rate declines are needed for market sentiment to improve.”

The BofA survey of 245 money managers with $642bn in assets under management suggests allocators are moving away from real estate and into consumer stocks, bonds and cash.

The global commercial real estate sector lost investors 4.1 per cent in 2023, the lowest annual return since 2009, according to MSCI’s Global Annual Property index. 

Some European real estate markets performed even worse last year than during the 2008-09 financial crisis. The office sector has been hit particularly hard, suffering high vacancy rates and uncertain demand as occupiers adjust to new working patterns.

Fewer rate cuts in 2024 would impact refinancing in the sector as costs increase and asset values decline. About $820bn of US commercial property loans are likely to mature this year, according to MSCI, including about $214bn in loans that were extended after maturing last year. 

“In the US, there is concern over a significant refinancing gap,” said Salmon. “The longer that rates stay higher, the more difficult it is to ‘extend and pretend’.”

Many owners are reluctant to sell their properties and crystallise sharp losses, in the hope that the market rebounds in the near future.  

Dealmaking has also slowed down. The global real estate market has seen seven consecutive quarters of falling transaction volumes, with dealmaking dropping 18 per cent year on year in the first quarter of 2024, MSCI’s data shows. 

The BofA survey showed sentiment among fund managers was at its most bullish since November 2021, with 64 per cent of investors saying they did not expect a recession in the next 12 months. Higher inflation is the number one “tail risk”, according to 41 per cent of investors.

Legal
El alud de concursos de particulares lleva al colapso a los juzgados mercantiles

Los tribunales de Barcelona piden refuerzos para tramitar 9.590 casos pendientes del 2023

Los juzgados mercantiles están colapsados ante el alud de concursos de acreedores de particulares y autónomos que, tras la reforma de la ley en 2022, han visto aumentar las posibilidades de obtener una exoneración del pago de sus deudas.

En el primer trimestre, la cifra de procedimientos en toda España se ha disparado hasta 8.199, lo que supone un 67,5% más respecto al mismo período de 2023, y un aumento del 41,8% respecto al trimestre anterior, según datos del Colegio de Registradores de España publicados esta semana.

Los tribunales de Barcelona ya alertaron el año pasado del aumento significativo de la carga de trabajo pero en los últimos meses, la situación se ha vuelto insostenible. “Hemos solicitado una comisión de servicio ante el Tribunal Superior de Justicia de Catalunya con el objetivo de obtener un equipo de refuerzo que nos ayude a tramitar los 9.590 concursos de personas físicas que nos quedan pendientes del año pasado”, aseguran fuentes judiciales.

La petición se llevó a cabo en abril y los juzgados de lo mercantil esperan recibir noticias en las próximas semanas. Se trata de una ayuda que también solicitaron, y obtuvieron, cuando hace unos años se vieron desbordados por el alud de reclamaciones del sector aéreo.

“Necesitamos refuerzos para desatascar la entrada de concursos de personas físicas. El tiempo que los deudores deben esperar para obtener una resolución ha pasado de 3 meses a un año, aproximadamente. Esta situación no es deseable ya que la mayoría de casos afectan a familias con serias dificultades”, alertan.

Los tribunales mercantiles de Barcelona también esperan la recuperación del desaparecido juzgado número 13

En paralelo, los doce tribunales mercantiles de Barcelona esperan ganar músculo recuperando el desaparecido juzgado número 13. “Llevamos tiempo solicitando esta ampliación al departament de Justícia. Todo apunta a que este año debería llegar, aunque las elecciones en la Generalitat pueden paralizar el proceso”, reconocen.

Con el mismo objetivo de reducir el gran volumen de trabajo, los juzgados de Barcelona han impulsado un proyecto para introducir una herramienta de Inteligencia Artificial que automatice tareas repetitivas y agilice la tramitación de concursos sin masa activa. “Estamos llevando a cabo la iniciativa junto a la Universidad Pompeu Fabra. De momento, estamos esperando los permisos del departament de Justícia que deben permitir a los ingenieros acceder a los expedientes concluidos para poder construir algoritmos necesarios para que la herramienta sea fiable”, comentan fuentes judiciales, impulsoras de esta iniciativa digital.

1 big thing: The inflation cooldown is (maybe) back on

After a series of too-hot-for-comfort inflation readings to start 2024, the April Consumer Price Index finally brought some relief.

Why it matters: In a sense, the best news is in what the report didn't say. The April cooldown helps reduce fears that inflation may be reaccelerating.

But it is not definitive evidence that price pressures have resumed the downward trend seen in 2023, and Federal Reserve officials will want to see more evidence of disinflation before cutting interest rates.

What they're saying: "The first downside surprise in inflation since the turn of the year will be a relief to the niggling concerns that inflation was starting to trend upwards again," Seema Shah, chief global strategist at Principal Asset Management, wrote in a note.

By the numbers: In the 12 months through April, CPI rose 3.4%, a smaller gain than the 3.5% the prior month.

Core CPI, which excludes energy and food costs, rose 3.6% compared to 3.8% in March.

Over the last three months, core CPI rose at an annualized rate of 4.1%. That's down from 4.5% in March but still higher than that seen throughout the latter half of 2023 and far above the levels consistent with the Fed's 2% inflation target.

The intrigue: Housing is the wildcard that might keep inflation from returning to a more palatable level. It was the largest factor in core CPI's 0.3% monthly increase.

Rent prices rose 0.4% for the third straight month — a still-rapid pace that does not reflect the disinflation trends seen in private sector data.

Fed chair Jerome Powell told reporters earlier this month that he was confident housing disinflation would eventually show up in the government data, "but not so confident in the timing of it."

Other service sector price increases look sticky, too. Auto insurance costs, for instance, rose 1.8% alone last month. Hospital service costs, too, are still rising sharply.

Between the lines: The April data alone will likely not convince Federal Reserve officials that inflation is decisively falling in a way that makes them comfortable lowering interest rates this summer.

But the numbers are finally moving in a direction that — if sustained — put September rate cuts squarely on the table.

MONEYWATCH
The Fed is struggling to break the back of inflation. Here's why.

The Federal Reserve's two-year battle to tame inflation is turning into a drawn-out war, with the central bank grappling with prices that have run surprisingly hot this year. A major reason: stubbornly high housing and rent costs that have sapped household budgets across the U.S.

The Fed will be scrutinizing the latest Consumer Price Index report on Wednesday morning for signs that its campaign to finally extinguish runaway inflation by pushing up interest rates is working. Wall Street expects a slight improvement, with economists forecasting that the CPI in April rose 3.4% from a year ago, a tick lower from March's 3.5% increase, according to financial data company FactSet.

Still, 3.4% remains far higher than the Fed's target of 2% inflation. Fed Chair Jerome Powell on Tuesday acknowledged that his confidence that inflation is set to ease "is not as high as it was."

One major driver of inflation is housing, which contributes about one-third of the CPI and which economists predict could remain a thorn in the Fed's side throughout 2024. That's creating something of a catch-22, given that the Fed is holding off on cutting interest rates until it sees more progress on inflation; that, in turn, is keeping borrowing costs elevated, including mortgage rates, which are now near a 20-year high.

The so-called shelter portion of the CPI is capturing the price shock of people who are moving into new apartments after remaining in place for years. Such renters are more likely to experience a sharp increase in their housing costs as they jump from lower-cost apartments to market-rate rents, Zillow chief economist Skylar Olsen told CBS MoneyWatch.

"The big 'a-ha' is that the full CPI is capturing the people that haven't moved in a while," Olsen said. "The fact we keep having people move who haven't moved in six to eight years, that will keep that growth up."

But aren't rents cooling?

It could take years for such data to cycle through the housing portion of the CPI because some renters continue to move from their long-term — and cheaper — housing into market-priced apartments, Olsen noted.

But as many apartment hunters may know, rents are actually cooling now, thanks in part to new rental units built in recent years to meet growing housing demand. In some cities, rents are actually falling — but don't expect that to show up in the CPI data for a while longer, economists said.

As of April, the monthly rent for a typical 1-bedroom apartment around the U.S. was $1,486, down 0.6% from a year ago, according to listing service Zumper, while 2-bedrooms hovered around $1,843.

At a May 1 press conference, Powell hinted at this dynamic, noting that the Fed has been surprised by the length of time it's taking for the CPI's data to reflect the cooler rental market. He added that while he's confident the CPI's housing data will eventually reflect that decline, he's "not so confident in the timing of it."

"Those market rents take years, actually, to get all the way into rents for tenants who are rolling over their leases," Powell said. "It's complicated, but the story is it just takes some time for that to get in."

Homeownership and affordability

The CPI has another quirk when it comes to tracking housing costs: It doesn't actually track home prices, because it considers housing values to be an asset, similar to stock prices, which also aren't tracked by the inflation index, noted Lawrence Yun, chief economist at the National Association of Realtors.

Instead, the CPI measures homeownership costs by tracking what it calls owners' equivalent rent, or the hypothetical amount that a homeowner would pay to rent their house in the current market.

But that's also sparked debate among some economists, given that most homeowners are locked into 15- or 30-year mortgages at fixed interest rates and thus aren't subject to the pricing whims of the housing market.

"Homeowners aren't feeling any impact of the housing rents, because their monthly payment is absolutely fixed," Yun noted. "Their mortgage costs aren't rising according to the inflation number, but it's not part of the CPI."

Home prices, of course, are very important for first-time buyers who want to make their first home purchase, although that's not a figure that is reflected by the CPI, Yun added.

The Fed's decision to delay cutting rates may be contributing to stubborn housing inflation, said Rakeen Mabud, chief economist of Groundwork Collaborative, a progressive advocacy group that is urging the central bank to start cutting rates.

"When the Fed raises interest rates, mortgage rates rise too," Mabud said in a social media post. "That means that many prospective homebuyers are priced out of the decision to buy a home. Where do these potential buyers go? Back into the rental market, increasing demand among renters and pushing up rent costs."

Putin to Visit China to Discuss Energy Ties

Russian President Vladimir Putin is set to visit China on May 16-17 for discussions with President Xi Jinping, in part to discuss expanding energy and trade partnerships.

The state visit, initiated by Xi, will cover topics such as China's Belt and Road Initiative as well as the situation in the Middle East and Asia, and Ukraine.

Putin will be accompanied by key officials including Defense Minister Andrei Belousov, Foreign Minister Sergei Lavrov, Security Council Secretary Sergei Shoigu, foreign policy adviser Yuri Ushakov, and executives from major Russian companies such as Sberbank, VTB, Rosneft, and Novatek. They will engage in informal meetings and discussions, highlighting the strategic partnership between the two nations.

The visit also includes a gala evening commemorating the 75th anniversary of the Soviet Union recognizing the People's Republic of China. This relationship, now more critical than ever, sees China challenging U.S. dominance across various sectors, including quantum computing, synthetic biology, and military power.

A key focus of Putin's visit will be discussions with Chinese Premier Li Qiang on trade and economic cooperation. Putin will also visit Harbin, a city with historical ties to Russia, further strengthening regional connections.

Trade between China and Russia reached a record $240 billion in 2023, a 26.3% increase from the previous year, according to Chinese customs data.

China has bolstered its trade and military relations with Russia amid Western sanctions. Russia has become China's top crude oil supplier, with exports to China increasing by over 24% in 2023, despite the sanctions imposed by the West.

In March, China was expecting to import record-high volumes of crude oil from Russia as multiple cargo of India-bound Russia’s Sokol crude were stranded due to Western sanctions, before finding a new destination in oil-hungry China.

HSBC and Deloitte latest to pull job offers from UK grads due to new immigration rules

HSBC and Deloitte have reportedly withdrawn job offers to foreign graduates of UK universities, according to reports, as the impact of new visa rules continues to disrupt recruitment across the economy.

The retractions have been driven by a significant uptick in the salary that a “skilled worker” needs to be paid – from £26,200 to £38,700 for those under 26 years of age- in order for them to stay in the country.

KPMG pulled a similar move last month.(...)

Ukraine war live updates: Under heavy Russian fire, Ukraine withdraws troops from parts of besieged Kharkiv region

Ukraine’s military said it has withdrawn troops from several fighting hot spots in Kharkiv to avoid losses, as Russian forces continue to make incremental gains in their new offensive in the northeast of Ukraine.

“The situation in the areas of hostilities remains difficult,” Ukraine’s General Staff said in an update on Facebook late Tuesday, adding that as a result of Russia’s assaults and artillery bombardment, the military had moved troops from around Lukyantsi and Vovchansk “to more advantageous positions” in order to save its personnel’s lives.

Ukrainian President Volodymyr Zelenskyy postponed all scheduled foreign visits for several days, a spokesperson announced on social media.

Zelenskyy was due to travel Spain and Portugal later this week.(...)