RealEstateNews 10.28.24
Weekly News Roundup
- Crypto Real Estate
- America’s Priciest Home
- Local Stores Pushed Out of Retail
Crypto Real Estate
Retired banker Rick Phillips likes investing in property. But instead of putting down a deposit for a place he has seen, or investing money into funds listed on the stock market, the cryptocurrency enthusiast chooses to buy digital tokens that represent ownership of physical properties. The Los Angeleno is one of a small number of investors testing the waters in property tokenisation, a nascent way to invest in rental real estate that gives would-be buyers the ability to hold a digital sliver of a bricks-and-mortar building. So far, Phillips has invested $20,000 across several properties.
An asset such as a house or hotel is sliced into digital tokens that represent ownership. Each token can hold information such as the asset’s ownership history, trading and regulatory details, and the tokens live on a blockchain, which essentially acts as a digital record keeper. Born from crypto and blockchain’s promise to democratise finance and broaden financial access, the niche investment method is slowly gaining popularity among crypto fans seeking new areas in which to invest their funds and use blockchain technology — and as high house prices in large cities like London and New York make investing in property outright increasingly unaffordable for many.
The enterprise sounds promising, offering a way to own a slice of a property and benefit from its potential to rise in value and its incoming rents. But there are a host of issues. Not least, investors complain, difficulties selling tokens and problems arising from tenant issues. A significant problem in the nascent market is the lack of secondary buyers. This raises the risk of getting stuck with an investment, or selling at a loss. Inevitably, being able to invest in properties with crypto raises significant issues such as money laundering and the reliability of customer checks that the tokenisation companies must address — US regulators continue to clamp down on crypto companies and traders acting illegally. Source: Financial Times
America’s Priciest Home
For commentary and insights… click on the above video
It is one of the most significant estates in Los Angeles. Built in the 1930s, the roughly 8.5-acre Casa Encantada in Bel-Air has twice set a record as the most expensive private home ever sold in the U.S., first in 1980 and then again in 2000. Now, its current owners, billionaire financier Gary Winnick and his wife, artist and author Karen Winnick, are trying to set the record for a third time, listing the property for a potentially record-setting $250 million. The current U.S. record of roughly $240 million was set in 2019 when hedge-fund titan Ken Griffin bought a penthouse on New York’s Billionaires’ Row. Source: Wall Street Journal
Local Stores Pushed Out of Retail
A lengthy stretch of scant new construction of retail real estate, combined with demand from expanding retailers, has reduced a longstanding property glut. Retail availability sits near record lows. Landlords, who struggled for years to fill vacant storefronts, now have the upper hand in rent negotiations. That is pricing out a lot of small businesses that can’t compete with deep-pocketed national chains for limited store space.
Nearly six in 10 small businesses said their rent had increased over the past six months, and more than half of independent retailers couldn’t pay their September rent in full, according to a survey by the business-networking platform Alignable. Rising rent prices come on top of other small-business hardships, such as the struggle to retain good employees and secure affordable business loans.
Everything else equal, property owners like the idea of renting to independent shops and restaurants. These businesses generate loyal local followings and help differentiate their properties from online offerings. But the prospect of higher rent is hard to resist. “A lot of it ties back to valuation,” said Conor Flynn, chief executive of the publicly traded shopping-center company Kimco. “You do need to have a credit-worthy tenant base to make your asset more valuable.” Source: Wall Street Journal