Property tax system at center of New London's problems

As I witness New London's budgetary struggles it makes me think, "What ever happened to property tax reform?"

For years property tax reform was the big thing in Connecticut's public policy debates. Editorial pages, including this one, demanded it. Lawmakers said they would champion it. But like many big, difficult issues, the discussion never moved much beyond the rhetoric and the reports.

When the Great Recession hit and the state confronted an historic budget crisis, suddenly no one was talking about property tax reform. The state could not pay its own bills, never mind figure out how to assume more of the expenses from towns and cities so they could lower the property tax burden.

I thought about this because New London's fiscal problems are, most fundamentally, the result of Connecticut's property tax system. Though small by city standards, New London has all the expenses that come with being an urban center. It needs a paid fire department to protect its densely developed neighborhoods, many filled with older housing. It needs a paid police force to assure adequate public safety.

New London has a lot of public housing. Like most urban centers, a larger percentage of its populous is low-income as compared with its suburban neighbors, requiring more public services. These same demographics provide an additional challenge for its public school system.

The primary means to pay for these services is the property tax system, which is a lousy choice for New London. With about 5.5-square-miles of land, there is not enough property to tax. The city has no industrial park and no where to develop one. Its commercial real estate is relatively small. Trying to create more commercial property to tax was the motivation for razing an old neighborhood in the Fort Trumbull section to make way for redevelopment. That didn't work out well.

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Canary Wharf owner says demand for high end London offices hit by economic crisis

Songbird Estates, the property group behind Canary Wharf in London, said it hoped the 2012 Olympics would put its developments into the spotlight and encourage more businesses to move to the Docklands development.

However it admitted the current economic crisis meant demand for high grade office space across London had been falling, but it said it was in a strong position to take advantage when the situation improves. It said:

Euro and eurozone uncertainty overshadowed the year. Demand and supply were therefore both relatively constrained in the London market. However, though there was a greater level of fragility in the real estate office marekt in the last months of 2011, London remains perceived as a relatively safe haven for real estate investors.

The transfer of Shell employees and the phased movement of JP Morgan staff to Canary Wharf in 2012 means the development will have more than 100,000 workers for the first time.

Songbird said the impact on Canary Wharf's retail operations from the opening of the nearby Westfield shopping centre at Stratford had been muted so far.

In its full year figures, Songbird said its net asset value had climbed to 190p compared with 187p. Underlying profit fell to £4.6m from £28.8m, partly due to reduced rental income after the sale of two properties and partly as a result of a reduction in income from lease surrenders (including a £495m sale to JP Morgan in December 2010.)

Property developers learn from London's dukes and earls

(Reuters) - A record number of London developers looking to build bespoke neighbourhoods from scratch will be emulating the success of centuries-old aristocratic landowning dynasties who have helped transform the capital city in the past 50 years.

Developments like the 67-acre scheme in the King's Cross district and a 2,818-home plan for the Olympics site are among a dozen projects that have taken lessons from the likes of Grosvenor and Cadogan Estates, areas formed hundreds of years ago that have boosted property values in recent decades by being picky with tenants and improving public areas.

"Everyone increasingly realises that design and maintenance of the environment around the buildings is as likely to improve property values as anything else," said Sir Terry Farrell, who designed a 77-acre masterplan of shops, offices and homes in the Earls Court district of west London that will be ready in 2032.

"There is a much stronger move towards estate management, the kind of custodianship the great estates have done extremely well," he told Reuters.

South London Real Estate Attracting New Wave Of Investors

Low-maintenance living and cultural riches make London appealing to the new wave of empty-nesters. Once overshadowed by prime locales in Central and West London , the city's South Bank is also becoming a favorite of overseas investors — especially from the Middle East. See the following article from Property Wire for more on this.

London property market
Parents who swapped London for the Home Counties a generation ago in order to raise their children are heading back to the capital city, according to property consultants Cluttons.

With their children having left home for good and prices in some areas of London at a more affordable level than they have been for several years, Cluttons has seen an upturn in middle-age-to-retiree homebuyers looking to return to the buzz of a London lifestyle.

Nathan Kirsh’s KiFin Abandons Its Offer for Minerva (Update1)

(Adds Limitless bid in sixth paragraph, Minerva’s latest estimate of net asset value in seventh.)

By Simon Packard

Jan. 8 (Bloomberg) -- Nathan Kirsh abandoned his bid for London real estate developer Minerva Plc after fewer than 1 percent of shareholders accepted the offer.

KiFin Ltd., an investment vehicle controlled by Kirsh, didn’t improve or extend its 50 pence-a-share offer by today’s 1 p.m. deadline, according to a statement announcing that the offer had lapsed. It was the last opportunity to do so under U.K. takeover rules.

Investors bet Kirsh would be forced to raise his offer after Minerva’s management dismissed the bid as “derisory” and said it “significantly undervalues the company.” The shares closed yesterday at 76 pence, almost double the price on Nov. 16, the day before KiFin announced its offer.

Lloyds' Invista Real Estate In Offer Talks

LONDON (Reuters) - Invista Real Estate , a property fund manager majority controlled by Lloyds Banking Group, said on Monday it is in talks with a third party which may lead to a takeover offer, sending its shares sharply higher.

At 1:42 p.m., shares of Invista were up 43 percent to 72 pence each, giving the company a market capitalisation of about 191 million pounds.

"These discussions are at a highly preliminary stage and there can be no certainty that any offer will be made," said Invista, which is 55 percent-owned by Lloyds' HBOS Plc.

The potential takeover of Invista, whose next biggest shareholder is the Wellcome Trust with 24 percent, follows the RBS's sale of its non-core asset management businesses to Aberdeen , as part of its overhaul following the government rescue.

Big Lenders Take Stake in London Brokerages

riday, January 8th, 2010, 12:56 pm

Under the terms of a debt refinancing deal, Bank of America (BAC: 16.78 -0.89%) Merrill Lynch (BofA) and Japanese bank Mizuho will now jointly own a majority stake in the private equity firm that owns London-based mortgage brokerage Alexander Hall and real estate brokerage Foxtons, a source at Merrill Lynch confirmed to HousingWire.

In 2007, Mizuho financed £260m (US $416.2m) of the £360m leveraged buyout of Alexander Hall, the mortgage brokerage, and Foxtons, its sister real estate brokerage. Private equity firm BC Partners acquired the two companies using funding from Mizuho and BofA.

The restructuring arrangement cuts Foxtons’ debt from about £300m to £120m. Both banks will reportedly appoint representatives to sit on the company’s board, creating an atypical arrangement for a lender to assume control of the company to satisfy debt.

U.K. Commercial Property Investors to Get Price Relief in 2010

By Simon Packard

Jan. 7 (Bloomberg) -- Commercial property investors in the U.K, battered by more than two years of price declines, are likely to get relief in 2010. It may be short-lived.

Values of stores, offices and warehouses will rise 7 percent this year, according to the median estimate of 10 fund managers overseeing 65 billion pounds ($105 billion) of buildings in the U.K. Predictions ranged from a gain of as much as 15 percent to a 19 percent decline.

The global financial crisis pushed Britain into its longest recession on record, driving property values down by 44 percent from a mid-2007 peak, boosting vacancies and depressing rents. While lower values have revived investment demand, price increases may not last beyond the first half as lackluster economic growth forces tenants to cut jobs and demand rent reductions.

Decrepit London landmark shows property pain

LONDON (Reuters) - A gust of wind howls around Battersea Power Station, an industrial wasteland by the Thames whose coal-fired furnaces were once used by the Bank of England to burn millions of pounds worth of banknotes.

Housing Market | Lifestyle

A couple of tourists who have ventured off the beaten track around Buckingham Palace stand on tiptoe as they strain to photograph the gargantuan structure over a high screen.

As debt-laden developers face the ruins of recent extravagance, the Power Station -- Europe's largest brick building -- is a decrepit symbol of the past profligacy and present pain in Britain's real estate market.

In World War Two the central bank turned to Battersea to burn 120 million pounds of notes it had not had time to cancel as it introduced a new design against feared enemy forgeries.

Commercial sales red hot

The commercial real estate market in London and area ended 2009 with a bang.

After a dismal 18 consecutive months, the industrial market has taken off with sales and leasing topping $1 million in the last three months, said Peter Whatmore, senior vice-president of CB Richard Ellis, a commercial real estate firm.

"It is very exciting news," said Whatmore. "It has been such a challenging time but I feel confident we are in a recovery mode. It is slowly and steadily moving forward.

"This is a lot better than plant closings."

New businesses have been moving to the ING building on Roxborough Rd., which has leased about 100,000 square feet -- half of its available space. There are also new tenants on Highbury Ave., leasing more than 100,000 square feet of industrial space.

Britain's Most Expensive Streets

Residences on Britain’s most expensive street valued at 5.4 million pounds.

Residential properties in southern England’s priciest street are valued at more than four times the cost of the ones located on the most expensive street in the north, a real estate research has shown.

Quoted as being the most expensive place to reside in either England or Wales, Wycombe Square in Kensington and Chelsea, has an average house price of £5.4 million, according to real estate consultancy firm Halifax.

The research also exposed that the 20 priciest residential streets are in the Wycombe Square area and that Greater London possesses all of the 10 most expensive homes in the country.

Outside of southern England, the most expensive street is Withinlee Road in Macclesfield, where the average residential address costs £1.2 million.

British Land Buys 50% Stake in U.K. Shopping Malls From Segro

By Ross Larsen

Dec. 30 (Bloomberg) -- British Land Co. Plc, the U.K.’s second-largest real estate investment trust, purchased a 50 percent stake in two shopping centers from Segro Plc for 26.9 million pounds ($42.7 million) to expand its retail holdings.

British Land acquired Segro’s stake in a joint venture with retailer Tesco Plc in the Surrey Quays Shopping Centre in southeast London and the Clifton Moor Retail Park in York, the London-based company said today in a statement.

Experts split on British housing market

LONDON, Dec. 28 (UPI) -- Divided property experts expect home prices in Britain to rise as much as 4 percent or fall as much as 7 percent in 2010.

Real estate research firm Hometrack said prices would likely fall 1 percent in 2010, while Jones Lang Lasalle forecast a 7 percent drop, The Times of London reported Monday.

But the Center for Economics and Business Research, Chestertons and Hamptons are all predicting prices will rise 2 percent to 4 percent in 2010.

U.K. House Price Gauge Increases to Three-Year High, RICS Says

The number of real-estate agents saying prices increased exceeded those reporting declines by 35 percentage points last month, up from 34 points in October and the most since November 2006, RICS said in its monthly survey released today.

The property market is recovering from its slump as banks provide more mortgages and the economy shows signs of exiting the recession. Bank of England Chief Economist Spencer Dale said yesterday that low interest rates are helping consumers manage their debt and stave off joblessness.

“Despite modest increases in the number of properties coming on to the market, it is clear that this is not significant enough to keep pace with the levels of demand,” Ian Perry, a spokesman for RICS, said in a statement. “Buyer enquiries are continuing to grow and with the pace of job losses now easing, the risk is that the new year could see a further wave of interest in the market.”

Real Estate Acquisitions: Liftoff, or Dead Cat Bounce?

Property deals are rising, but is this the market taking flight…or dead cat bouncing? Deals involving premium property and players Canary Wharf, HSBC and Blackstone suggest that things are heating up for the high end of commercial real estate. At the same time, many believe that we may be seeing a bifurcation of this market, with the low end stagnating. Driving this shift are multiple factors, both legal and financial, and a whole lot of foreign money flowing in from places from Bermuda to Korea.

As backdrop, until recently the banking crisis has badly battered the commercial property sector in London. The market was doubly damaged by twin cyclones of falling property prices and a deflating banking and finance sector – a sector that central London property developers are heavily reliant upon. Amidst this trouble, a new level of activity has emerged for premium properties in particular.

Bank of England Says Property-Loan Default Risk Is Increasing

By Simon Packard

Dec. 18 (Bloomberg) -- U.K. banks face an increased risk of default on some of the country’s 250 billion pounds ($403 billion) of commercial real-estate loans, the Bank of England said today.

In the past year, the longest recession on record meant the “probability of default by U.K. real estate companies has increased significantly,” the central bank said in its Financial Stability Report, which is published every six months.

Property owners may struggle to service loans as the recession and mounting unemployment boost building vacancies and depress rents. Falling property values and larger down payments for new loans mean investors, particularly smaller companies, face “significant” challenges in refinancing 160 billion pounds of loans coming due through 2013, the bank said.

Direct investment in UK commercial real estate to stand at c. £23bn in 2009

UK - Jones Lang LaSalle expects total direct investment in commercial real estate in the UK to total around £22bn - £23bn by the end of 2009, which is comparable with turnover in 2001. Compared with 2008’s total of £21bn, this represents a 10% rise.

Julian Stocks, Head of Capital Markets England, Jones Lang LaSalle said: “2009 has been a year of two halves. The first six months of the year were characterised by low investment volumes, falling prices and worsening occupational markets. However, over the second half of the year investor sentiment dramatically changed and a confidence formed over the summer resulting in demand for stock outstripping supply. This wave of optimism has resulted in higher prices and rising activity.”

Tax future house price bubbles, Bank of England tells Treasury

A leading Bank of England policymaker has called on the Government to raise taxes to prevent housing booms in the future.

Adam Posen, an independent member of the Bank's Monetary Policy Committee, said in a speech yesterday that the authorities should seek to limit house price bubbles because of the damage they inflict on the rest of the economy when they burst. He also suggested that property speculators and second home owners be subject to additional restraints.

Adam Posen, an American economist who joined the MPC this year, said: "Real estate bubbles tend to have much higher real economic costs than equity bubbles, perhaps because they involve illiquid collateral and local spillover effects."

Mr Posen suggested that real estate taxes, which include stamp duty and capital gains on properties apart from a main residential home, could be used as "automatic stabilisers" – rising during a boom but falling in a slump.

Qatari firm buys U.S. Embassy building in London

LONDON, England (CNN) -- The U.S. State Department has sold its London embassy building to a Qatari real estate company, the embassy announced Tuesday.

The signing of the deal is another major step in the embassy's plans to relocate from its longtime headquarters in central London to a new site in Wandsworth, on the south bank of the River Thames.

It wasn't immediately clear how much Qatari Diar Real Estate paid for the embassy building in Grosvenor Square, whose 1960s facade was recently given listed status, meaning its design can't be changed.

Latest uk govt figures show property prices reach five year high

Residential property prices in England and Wales have reached a five year high, according to the latest land registry figures with others reporting a strong demand for prime real estate in London.

The Land Registry, which records all completed property transactions and is widely regarded as producing one of the most authoritative house price reports, says that prices increased 1.7% in July, the strongest monthly growth since July 2004.
It compares the price of properties sold now with the price paid when they were sold previously. But it does lag behind data from lenders and repossessions and property transfers following a divorce are excluded.