Real Estate

Warren Buffett’s company is lending $1.5 billion to Home Capital and spending roughly $300 million to purchase nearly 40 percent of the troubled Canadian lender’s stock.

Berkshire said Thursday that the credit line will carry a relatively hefty 9 percent interest rate once Berkshire completes its initial stock investment later this month. The rate is similar to what Berkshire charged on loans it made during the financial crisis to companies including Goldman Sachs and General Electric.

Institutional investors in the UK and other developed markets are finally beginning to wake up to a truth that their counterparts in US, Germany and the Netherlands have long known: residential property is an attractive source of income that complements commercial property beautifully.

The bedrock of the appeal of residential is the shortfall of homes across most of Europe. Even if populations stay stable, there is already huge under-supply as a result of low development and this is exaggerated by the total number of homes required is growing, because the number of households is increasing: people are more likely to live alone and less likely have large families. In Germany, for example, the population has increased by only 12% since 1961, but the number of households has risen by 110%. Housing supply is notoriously unresponsive to changes in demand – certainly much less so than commercial property. Because of planning restrictions, particularly in countries in Europe with a strong tradition of preserving green open spaces, residential does not work like a free market. This supply constraint buoys rental incomes and, indeed, values.

The vacation apartment market in Switzerland has lagged that of Austria and France in recent years. Residential property prices have stagnated in the Alpine tourist destinations here since 2011. The strong franc has weakened domestic and foreign demand. At the same time, the success of the second home initiative has led to a building boom in the Swiss Alps, so that average vacancy rate has almost doubled in recent years.

The Swedish and New Zealand housing markets are the most at risk of a correction among the so-called G-10 economies, according to Goldman Sachs. In a report on house prices in G-10 nations – those with the 10 most-traded currencies in the world – Goldman finds they are most elevated in small, open economies such as Sweden and New Zealand.

A graph in the report shows that New Zealand’s probability of a housing bust is just above 40 per cent, while Sweden’s is just above 35 per cent. The risk of a bust in Canada is about 30 per cent, while in Norway, Australia and Switzerland the probability is assessed at 20-25 per cent.

The case: a tenant in Zurich neglected to tell the apartment’s owner that he intended to put the flat on online rental platform Airbnb. In October 2015 the man moved into the apartment for which he would pay a fixed monthly rent of 3,000 francs.

The Zurich Tenancy Court, a specialized court for disputes amongst tenants and landlords – ruled in a decision published last week that a tenant is basically allowed to provide his or her apartment via Airbnb to paying guests, thereby applying four tests: the tenant-host must obtain the general consent of the landlord and thereby disclose the conditions of the sub-rent. The subrental payments cannot be abusive and the landlord may not suffer any substantial disadvantages from the sub-rent.

The Swiss Federal Government intends to adapt the federal laws on the acquisition of real estate land by persons abroad, known as Lex Koller.
It focuses on the possibility that foreign investments – also by individuals immigrating to Switzerland – continue to drive up real estate prices in Switzerland. On March 10, 2017, the goverment opened the consultation process ending on June 30, 2017, by presenting the draft legislation.
The two most far reaching proposals have already been rejected by the parliament in 2014.

The top three most expensive cities to rent across the world are in the US – San Francisco, New York and Boston – closely followed by Hong Kong, the 2017 Rental Index, produced by British-based online realtor Nested, found.

The company’s Rent Affordability Index (RAI) ranks 87 cities based on “current market listings for all locations,” from San Francisco to Dubai to Zurich.

San Francisco has long had the highest rents in the country by almost every metric, but previous reports have declared the city more expensive than famously elite destinations abroad.

Geneva recorded the most expensive house prices in Switzerland, according to a report Thursday by real estate brokerage Engel & Völkers, based on sales data. The city’s cosmopolitan flair is reflected too in the level of demand from international clients, with around 40% of interested buyers resident beyond the borders of Switzerland.

The French-speaking city registered the highest price in the Alpine country, CHF70,000 ($70,807) per square meter. The data used in the ranking is based on residential property brokered by the company or transactions recorded on the market during 2016.