RBI hikes repo rates again in less than couple of months

The Reserve Bank of India, or RBI, has moved yet again in its ongoing fight against rising inflation, reports CNBC-TV18. It has hiked the Cash Reserve Ratio, or CRR, which is the portion of deposits that banks need to keep as cash with the central bank, by a steep 50 basis points. This hike will take effect in two stages. First, a 25 basis point hike on July 5, and another 25 basis point hike on July 19. By July 19, CRR will stand at 8.75%.

It has also hiked the repo rate by 50 basis points, which will be effective immediately.The central bank said there has been a turnaround in production of durables. “Consumption demand seems to be reviving.” The rise in non-oil imports reflects domestic demand pressure, it said. ”Aggregate demand pressures are strongly in evidence. The priority now is to eschew the build-up in inflation pressures.” Read More

Chinese real estate market may be starting to fade

We have heard and read a lot over the past year regarding the weakening U.S. real estate market, but what about the red hot Chinese market? Some evidence is starting to show that the Chinese real estate market is also starting to soften a bit.

For the past several years, the Chinese government has started to try to curb the rapidly surging housing market, which kick-started around the start of 2001. Now the first signs of a housing slowdown are starting to show themselves, as property brokers are scaling back their operations, or in some cases closing their doors altogether.

US Slow down good for Canadian Real Estate

The prospect of a U.S. recession has some homeowners and prospective buyers nervous about the impact on the real estate market in Canada, but one economist says a slowdown could actually boost activity in Canada’s housing sector.

It’s not surprising that economic uncertainty in the U.S. has been the focus of much discussion and speculation in recent days, since Canada has followed the American lead during four of the last six U.S. recessions.

But Gregory Klump, chief economist for the Canadian Real Estate Association, said it’s still an “open question” whether the U.S. slowdown will turn into a recession — as defined by two consecutive quarters of negative economic growth.

Kenya: Country Loses Shs 100b in Real Estate Alone

The highest loss reports following unrest in Kenya has been noted in the real estate sector where a whooping Sh100 billion could have been lost.

According to a fresh release last week, the losses accrued from looting and property destruction in residential, commercial and industrial areas.

GA_googleFillSlot(“AllAfrica_Story_Inset”);

The loss is also attributed to the plummeting of the value of real estate properties like houses and offices following security fears around the country. According to figures released by the Institute of Surveyors of Kenya (ISK), the sector is headed for tough times ahead as loss of confidence takes its toll on the East African country.

ISK chairman Mwenda Makathimo said most of the losses could have been avoided if government had formulated a revised national land policy.

According to Makathimo ethnic hatred is as a result of glaring inequities in land allocations in the country that took effect immediately after the country attained independence. “As a sector, we are counting losses in excess of Sh100 billion in the skirmishes. We feel the election results were just the ignition point but most of this fighting has to do with the land inequities in the country,” he said.

Addressing a press conference at their, offices in Nairobi, a new land policy and far reaching constitutional changes could save the country from future turmoil and ensure economic stability.

“In a business dictated by the forces of demand and supply like ours, a minute of insecurity translates into massive losses in value,” said Makathimo. Players in the real estate industry have long adapted to using their properties as loan collaterals, however, the chairman said most loaning institutions will be reluctant to accept this.

He said the institutions were citing the plummeting property values as the reason for denying them loans. Also decried was the wide spread loss of employment opportunities for thousands in the construction and real estate sectors as a result of the insecurity in the country.

Real Estate Regulatory Agency (RERA) Team Reviews Projects And Plans At Dubai Property Group Meeting

Dubai Property Group (DPG), Dubai’s only real estate professional association, today hosted Dubai’s Real Estate Regulatory Agency (RERA) team, at its monthly networking even. The team of RERA presented the Agency’s plans and projects to over 250 DPG members and other high ranking real estate professionals, urging all developers, brokers or real estate firms to register themselves with RERA immediately. The team included: Khawla Al-Tamimi, real estate researcher at RERA, Hamda Al-Shamsi, real estate studies specialist at RERA, Sheikh Jumah Al-Maktoum, RERA’s trust account manager, Judy Hely, project manager for real estate brokers at RERA.

GIC to invest $336M in Russian Realty

GIC Real Estate is partnering with Russia’s PIK Group to develop a large township in the city of Mytischi in Russia.

The 114-hectare site is located in the Moscow region to the northeast of the capital.

GIC Real Estate will acquire a 25 per cent stake in the project for US$233 million (S$336 million).

A CB Richard Ellis appraisal carried out 12 months ago valued the site at over US$1.3 billion.

The township will contain 50 high-rise apartment buildings and 13 low-rise commercial buildings.

There will also be five schools, seven kindergartens, two polyclinics and over 17,000 parking lots.

When completed in 2013, the development can house about 50,000 residents.

Bulgaria’s real estate to appreciate 10%-15% in 2008

Bulgarian house prices are expected to increase by 10 to 15 percent in 2008, according to a forecast Monday by local Real Estate agency Address.    The sharp price movements which characterized 2007 are expected to level off in 2008, Katya Tsenova, managing partner of Address, told a news conference here.

    The agency’s experts predicted growing prices for suburban property and property with good characteristics.

    Prices will level off or grow slower for flats in blocks with prefabricated panels, it said.

    The growth of land prices will continue to influence housing prices, and the real estate market in towns with a population below 50,000 will become more active.

    House prices in 2007 in terms of actual deals were up 18.6 percent from 2006, Tsenova said, noting that the average price per square meter in 2007 was 737 euros (1083 U.S. dollars) while the figure in 2006 was 624 euros (917 dollars).

    Real estate in Rousse (on the Danube) appreciated the greatest in 2007 with a jump of 41 percent.

    The most expensive house sold by Address in 2007 was in the suburb of the capital and fetched 1.3 million euros (1.911 million dollars).

Good time for Mexico’s real estate market

“It’s a time of hope,” claims Ana Laura Pulido, a real estate broker in Mexico. While its northern neighbor remains in the depths of a housing meltdown, the Mexican real estate market has been booming.

Mexico has long found its economy overly sensitive to the happenings in the United States, so to see the country’s real estate market thriving despite the turmoil in America is a very encouraging sign for our southern neighbor.

And don’t think that American investors haven’t started to notice this new trend.

According to Clark McKinley, the spokesman for the nation’s largest pension fund, the California Public Employees Retirement System, his fund sees greater returns for its money in Mexico and has already decided to pump over $300 million into Mexican real estate funds.

Bulgaria attracts more FDI in Real Estate

Every day ex-communist Bulgaria proudly announces yet another foreign investment project for a new shopping mall, a golf course or a residential complex.

The real estate boom has created new jobs and the government boasts an economic growth of 6 percent a year. But investing in construction alone cannot bring long-term prosperity to the poorest European Union member.

Bulgaria’s problems, analysts say, include underinvestment in infrastructure and manufacturing, a large grey economy, eroding education, growing consumer indebtedness, crippling inflation and a ballooning current account deficit at a time of global credit jitters.

They say the Balkan country faces troubled times ahead if it does not move quickly to address the looming economic risks.

“We are seeing building of shopping malls and investment in real estate but not in product-generating sectors that can boost potential for the future. That is certainly a problem,” said Ivailo Vesselinov, senior economist at Dresdner Kleinwort. The European Bank for Reconstruction and Development (EBRD) said the investment pattern was worrying and Bulgaria was likely to feel a negative impact in the medium term.

“There should be more efforts in dealing with issues like human capital, education, the brain drain,” EBRD’s economist Fabrizio Coricelli said. Out of a total of 4.36 billion euros in foreign direct investment attracted last year, nearly 3.2 billion went into real estate and construction, financial services and trade. Manufacturing received just 804 million euros.

The World Bank warned recently that Bulgaria would never reach EU income levels if its labour productivity continues to rise by only 2 percent a year.

The share of services — banking, trade and real estate in particular — now makes over half of the country’s annual economic output, while industry’s share stays roughly unchanged at around 30 percent and agriculture has shrunk threefold.

With global borrowing conditions getting tighter, analysts expect the fast pace of property price growth in post-communist Europe — at an average annual of 20 percent — to slow down and investment to moderate.

A decline in foreign capital flows would hurt Bulgaria, which relies entirely on foreign direct investment to cover a yawning current account gap of over 20 percent of GDP this year, driven by surging imports.

“The credit crisis will not end tomorrow…over the years there will be a negative impact on Bulgaria,” said Daniel Gros of the Brussels-based Centre for European Policy Studies.

Another headache is racing inflation, which hit an annual 12.6 percent in November. Analysts warn that without some slowdown in explosive consumer lending and demand, Bulgaria’s emerging economy faces a serious risk of overheating.

Bulgarians readily run up debt in their zeal to buy flat screen TVs, new cars and houses after decades of communist austerity.

Inflation adjusted lending rates are negative or close to zero, which draws queues for more loans. Credits have jumped 60 percent by October, while deposits rose 30 percent.

The central bank, worried by the credit boom, urged banks earlier this month to raise lending rates and tighten rules in line with the international situation. It said it was ready to intervene with fresh measures to cool down the trend.

And while a financial crisis like the 1996/97 one that wiped out a third of Bulgaria’s banks is unlikely, the country could feel the pinch if western banks, which control most of the local sector, tighten funding for their arms, analysts said.

The Socialist-led government has repeatedly pledged to keep its prudent fiscal policy and run a budget surplus of over 3 percent of GDP next year to counter external risks.

But analysts say it remains to be seen whether the ruling coalition, whose popularity is waning, will not succumb to growing public pressure for higher wages.

The government’s main tool to steer the economy is fiscal policy as Bulgaria operates under a currency board regime, which limits monetary policy and fixes the lev currency to the euro. reuters