Real Estate Headline News
Weekly News Roundup
- Thriving Retail Real Estate Means no Discounts
- Evergrande Liquidation Bad News for Chinese Real Estate
- Rise of the $100 Million Trophy Home
Thriving Retail Real Estate Means no Discounts
Retail property owners are shedding the discounts and other concessions they offered struggling tenants during the depths of the pandemic, the latest sign that competition for retail real estate is intensifying. It is a fairly recent turn of events for retail real estate, which for years struggled with retailer bankruptcies, changing shopping habits and the rise of e-commerce. Landlords’ increasing leverage is another sign of retail real estate’s recent strength. Store openings outpaced closures for the second straight year in 2023 after years of net closures, according to research firm Coresight Research.
Consumer spending remained resilient last year despite high inflation and recession concerns, and Americans’ views on the economy are improving at the start of 2024. This, coupled with scant new construction of retail real estate, leaves landlords optimistic that retailers will be vying for limited available space for the foreseeable future. Vacancies at U.S. shopping centers fell to 5.3% in the fourth quarter, the lowest level since real-estate firm Cushman & Wakefield began tracking the metric in 2007. Average asking rents rose to $23.70 a square foot and are now nearly 17% above 2019 levels. Source: Wall Street Journal
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Evergrande Liquidation Bad News for Chinese Real Estate Market
A Hong Kong court ordered Evergrande’s liquidation after creditors once again failed to reach a deal on restructuring its debts. Saddled with about $300 billion in liabilities, Evergrande stopped paying its debts more than two years ago and has been negotiating a restructuring with its creditors ever since. Since its first default, more than 50 developers have followed suit and failed to meet debt payments.
Real estate is now a major drag on growth. China’s economy expanded 5.2% in 2023, one of its weakest rates of growth for decades aside from the three pandemic years when it was all but closed to the rest of the world. Real-estate investment tumbled 9.6% last year, according to official data, pushing overall private-sector investment into negative territory.
Alongside its direct effect on growth, the sector’s woes are also holding back consumer spending, many economists say, as falling prices and sales bite into household wealth and persuade consumers to sock away cash. Another problem is that the crunch has gutted local government finances, depriving them of revenue and leaving them ill-equipped to finance the infrastructure spending that remains one of Beijing’s primary tools to meet its growth goals. Source: Wall Street Journal
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Rise of the $100 Million Trophy Home
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