Market News

Australia

The Australian government blocked the sale of the nation's largest private land holding, a collection of cattle ranches owned by S. Kidman & Co., to a Chinese-led consortium. Kidman's land covers more than 100,000 square kilometers in four states and represents 1% of Australia’s total land area.

Canada

In a survey conducted at the end of March, 39% of respondents said they expected Canadian real estate prices to continue rising. At the same time, the average national home sale price topped C$500,000 (US$399,000) for the first time.

A new survey (PDF) by Canada Mortgage and Housing Corporation, the national housing agency, shows that foreign ownership of condominiums in Canada ranged from 0% in Regina to 3.3% and 3.5%, respectively, in Toronto and Vancouver. The survey also showed that foreign buyers prefer new condos located near the city center.

A market assessment (PDF) from CMHC states, “Vancouver is now assessed as showing strong evidence of overvaluation.” The report also notes that there is “strong evidence of problematic conditions” in Toronto, Calgary, Regina and Saskatoon.

In March, 5,173 homes sold in the Vancouver area, with an average price of C$815,000, up 23% from a year earlier. It was the first time that more than 5,000 homes changed hands in a single month.

For the second time this year, a Vancouver home sold for more than C$1 million above the vendor’s asking price. There are suspicions that the home—which was offered for $3.188 million and sold for $4.19 million—was deliberately under-priced to create a bidding war.

The connection between Chinese money and Vancouver real estate caught the attention of the New York Times this month. Meanwhile, a Shanghai-based real estate agent is listing homes and arranging tours for Mainlanders interested in buying  a home in Vancouver. And another agent in Shanghai tells Bloomberg that inquiries about Canadian real estate from Mainland buyers are up 134% over last year.

Finally, Ian Young in the South China Morning Post has an interesting look at how a C$16 million parcel of land in Vancouver was flipped for C$60 million, and then C$68 million all within a matter of weeks.

China

In China, the state owns all land. Individuals may own their homes, but lease the land underneath from the government, normally for a period of 70 years. There has been much speculation about what will happen when these leases expire, as there are no provisions for automatic renewals or formulas for determining the cost or duration of an extension. However, some residential leases in Wenzhou, Zhejiang, have 20-year terms. These leases are now coming up for renewal, and the way the government handles the renewal process could set a precedent for the 70-year leases, which are far more common and underpin China’s property market.

Average new home prices in 70 large Chinese cities rose 5% in March, with Shenzhen gaining 62% and Shanghai rising 25% on a year-on-year basis. Meanwhile, land sales by China’s local governments fell 22% in 2015, to RMB3.4 trillion. Shenzhen, where land sales rose 37% YoY, was one of a handful of cities to report an increase.

In an effort to prevent a subprime crisis, Shanghai’s banking regulator temporarily halted mortgage lending by seven bank branches. The regulator also froze business between commercial banks and six property agencies.

For the first time, a Chinese military aircraft has landed Firey Cross Reef, a disputed island in the South China Sea. The flight was for a medical evacuation, but analysts are concerned that China may base warplanes on the reef.

Hong Kong

Hong Kong home prices fell 1.3% in March, the sixth consecutive month of declines. Lower prices have resulted in a spike in the number of homeowners in negative equity, with 1,432 cases on March 31, up from 95 on December 31, 2015. In dollar terms and transaction numbers, home sales in Hong Kong fell more than 45% YoY in March.

Developers, including Sino Land and Wheelock, cut prices on several new projects in Hong Kong.

Japan

On April 14, a magnitude-6.5 earthquake struck Kumamoto City, Kyushu. Two days later, the region was rocked by a magnitude-7.3 quake. Forty-nine people died and 3,000 were injured.

Kyodo News (paywalled) reports that sales of new condominiums in the Tokyo area (including Chiba and Kanagawa) fell 14% in the year ended March 31. The average price rose 10%, to ¥56 million (US$522,000).

The Tokyo municipal government plans to implement a new, streamlined method for assessing property taxes by 2021. Tokyo faces a shortage of assessors and the current, cost-based method can take up to two years to complete. The city hopes the new system will make Tokyo property more attractive to foreign buyers.

Japan’s Nuclear Regulation Authority accepted the opinion of geological experts that Hokuriku Electric Power’s Shika plant may be sitting on an active geological fault. The NRA’s decision increases the likelihood that the Shika plant may have to be decommissioned. Japan Atomic Power’s Tsuruga plant in Fukui and Tohoku Electric Power’s Higashidori plant in Aomori are also above active faults.

Trends and Ideas

Architectural Videos

The Arts & Culture Bureau—which includes the Louvre, the Centre Pompidou and the Musée d'Orsay—has produced more than 50 videos profiling important buildings around the world, such as the Cologne Cathedral and Japan’s Yoyogi Olympic Gymnasiums. Each of the 26-minute videos is narrated in English and available on YouTube.

Automation

Two years ago, Google's Nest subsidiary bought Revolv, in a deal that was reportedly designed to acquire Revolv’s engineers, not its products or clients. Revolv's main product is a US$300, cloud-based hosted home automation hub. In April, Nest announced that it was disabling the servers that run the hub, leaving angry owners “with a $300 brick.”

The BBC looks at how sensors are being used to control heating and lighting systems in office buildings, producing cost savings of 20%–50%. The story also looks at the privacy aspects of the technology, which architect Rem Koolhaas describes as “potentially sinister.” See the Landed News section, below, for more.

Millionaire Migration

A report by consulting firm New World Wealth shows that Paris, Rome and Chicago lost 7,000, 5,000 and 3,000 millionaires, respectively, in 2015. France, China and Italy were the top three sources of millionaires, while the United States, Australia and Canada were the top three destinations. Tel Aviv saw large inflows of wealthy people from Europe, especially France, where the authors see rising religious tensions as a key migration motivator.

Solar Power

Citylab has assembled a checklist for homeowners thinking of installing a solar power system. While the article is written for an American audience, it covers issues that apply to all solar installations.

Meanwhile, in San Francisco has introduced legislation requiring the installation of solar power on new commercial and residential buildings. The new law takes effect in 2017.

Landed News

Landed China

Landed China is now available in PDF format.

Real Estate and Technology

On April 25, I moderated an event about real estate and technology that was organized by the Canadian Chamber of Commerce in Hong Kong. Several interesting things came out of the presentations and discussions, which featured a management consulting company and technology company and two businesses selling overseas property. For more information click here.

Newsletter No. 7 was published on May 2, 2016.