Archive for August, 2015

Airbnb to include small tourism tax on rentals

Monday, August 31st, 2015


The home-sharing company Airbnb has agreed to incorporate in its prices a small tourist tax on rental apartments in Paris — following a request by Paris authorities.

In a statement Tuesday, Airbnb said it would collect 0.83 euros ($0.95) per person per day to be paid by lodging tourists from Oct. 1.

That’s a move that could deter Parisian homeowners from opening their doors – and it’s a solution many Canadian investors hope could translate in the West.

One of the greatest issues investors face with home-sharing services is the liability they could encounter should a tenant sublet the space. A Vancouver-based landlord commenting in the CREW forum says that very scenario once played out at one of his rentals, adding that he now has tenants sign an agreement that explicitly forbids subletting unless approved by the landlord.

“AirBnB externalizes the cost of damages and tax loss, plus it spits in the face of city planning,” the anonymous landlord says. “Any of our 40 units found on AirBnB will result in eviction and a legal action.”

In Paris, City Hall said that the tax is a move to bring Airbnb more in line with city hotels – not property investors. Hoteliers already pay the tax and are bearing the brunt of increased competition. Parisian hosts are already required to pay income tax.

Paris — the most visited city in the world — is also the most popular city in the world for home-sharing services.

Copyright © 2015 Key Media Pty Ltd

Airbnb to include small tourism tax on rentals

Monday, August 31st, 2015


The home-sharing company Airbnb has agreed to incorporate in its prices a small tourist tax on rental apartments in Paris — following a request by Paris authorities.

In a statement Tuesday, Airbnb said it would collect 0.83 euros ($0.95) per person per day to be paid by lodging tourists from Oct. 1.

That’s a move that could deter Parisian homeowners from opening their doors – and it’s a solution many Canadian investors hope could translate in the West.

One of the greatest issues investors face with home-sharing services is the liability they could encounter should a tenant sublet the space. A Vancouver-based landlord commenting in the CREW forum says that very scenario once played out at one of his rentals, adding that he now has tenants sign an agreement that explicitly forbids subletting unless approved by the landlord.

“AirBnB externalizes the cost of damages and tax loss, plus it spits in the face of city planning,” the anonymous landlord says. “Any of our 40 units found on AirBnB will result in eviction and a legal action.”

In Paris, City Hall said that the tax is a move to bring Airbnb more in line with city hotels – not property investors. Hoteliers already pay the tax and are bearing the brunt of increased competition. Parisian hosts are already required to pay income tax.

Paris — the most visited city in the world — is also the most popular city in the world for home-sharing services.

Copyright © 2015 Key Media Pty Ltd


Condo boom for Toronto says RealNet

Monday, August 31st, 2015

Steve Randall

Presales data for condos in Toronto suggest that talk of a correction in the market is unfounded.

RealNet Canada says that almost 11,000 units were sold in the first half of 2015, the third best year on record.

With buyers choosing units nearing completion it’s helped ease the glut of unsold condos, which were far exceeding average levels at the start of the year and were highlighted as a concern by the Canada Mortgage and Housing Corporation.

Low interest rates providing reduced mortgage rates have many buyers decided that now is the right time to buy and one developer, Freed, told the Globe and Mail that it’s had its best year for two decades.

Peter Freed said: “We spent 10 years selling 2,000 units in King West and we’ve sold almost 2,000 units at Yonge and Eglinton in 24 months.”

Along with the favourable economic conditions for buyers, builders have also been increasing their incentives for new owners, including upgraded fittings, cashback and guaranteed rental schemes.

Copyright © 2015 Key Media Pty Ltd


Thursday, August 27th, 2015

Legally Speaking


On occasion, buyers become interested in properties that are subject to historical easements, some over one hundred years old. The Property Law Act provides that a court may cancel an easement where the easement is “obsolete.” Some buyers, and occasionally their advisors, assume that anything old must, for that reason alone, be obsolete and proceed to purchase those properties on the assumption that it will be easy to convince a judge that an old easement is an obsolete easement. Such is not always the case, as illustrated below.

In 1912, an owner sold part of his land on Vancouver Island. The only access to the parcel conveyed (Parcel A) was through the part retained by the seller (DL80). Unfortunately, no legal right of access was provided through the original transaction in 1912. In 1919, the lack of a legal right of access was addressed and the owner of DL80 granted an easement over DL80 for the benefit of Parcel A. The easement granted the owner of Parcel A, and her heirs and assigns, “the uninterrupted use of and passage in and along a 12 foot wide right of way with carts, vehicles or cattle at all times forever thereafter…” The recitals in the document indicated that the easement was being granted because the owner of DL80 “did not grant access to the land described in the said conveyance dated November 25, 1912…”

For over 85 years the easement was the only way to access Parcel A. In 2004, DL80 was subdivided and a road was built that provided direct road access to Parcel A. Despite the road construction, Parcel A’s owner — a developer — continued to advertise to prospective purchasers of strata lots on Parcel A that they would be able to use the easement for direct pedestrian access to the beach.

The owner of the DL80 parcel subject to the easement applied to have the easement cancelled pursuant to Section 35(2) of the Property Law Act which provides that an easement may be cancelled where the court is satisfied that “because of changes in the character of the land, the neighbourhood or other circumstances the court considers material the registered charge or interest is obsolete.”

The judge initially hearing the application to cancel the easement concluded from the recitals in the document that the right of access was limited to that which was necessary and convenient and due to the construction of the road, access over the easement area was no longer necessary. As such, she determined that the easement was obsolete and could be cancelled. The BC Court of Appeal (BCCA) disagreed and overturned her decision.1

The BCCA confirmed that recitals to an easement should only be referred to for the purpose of clarifying ambiguity. There was nothing ambiguous about the operative portion of the easement. There was no limitation on its duration. It was to be operative “forever thereafter.” There was no language suggesting that the easement would terminate upon the provision of alternate access.

The BCCA concluded that had that been the intention of the parties, the solicitor drafting the easement would have provided express language to that effect. In the absence of express limiting language, the easement remained in full force and effect. The BCCA cited a number of previous decisions which concluded that where an easement was still in use it did not become obsolete merely upon the availability of alternative access.2

A buyer purchasing property that is subject to an historical easement should never assume that, simply because the easement is old, it will be considered obsolete and thus cancellable. If the cancellation of the easement is of importance to the buyer, they should seek legal advice before purchasing the property.

Copyright ©2015 BCREA

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Tuesday, August 25th, 2015

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Landlords seek ban on Airbnb

Monday, August 24th, 2015

John Tenpenny

An ongoing saga continues to make headlines as a group of landlords in Quebec ask the government to curb the growth of short-term rental services such as Airbnb.

The Association des propriétaires d’appartements du Grand Montréal is asking the provincial government to amend the Civil Code and make it illegal to sublet an apartment or condo for less than a month.

Christian Perron, president of the 500-member, told the Montreal Gazette that the measure is needed to keep apartment buildings peaceful for other tenants and insurance affordable for landlords, who risk having claims denied or premiums hiked if the building is being used commercially without the insurer’s knowledge.

Perron, who oversees 150 rental units, said he was called to an apartment recently that the tenant had rented for two weeks to parties unknown. They were disturbing other occupants.

The idea, say landlords, is to redirect short-term and “tourism” business back where it belongs – hotels.

With short-term rental services and the sharing economy not going away anytime soon, the issues of safety and liability fall on landlords.

Still, the Quebec government has served notice it intends to legalize and regulate home-sharing and rental services and collect taxes from them.

Copyright © 2015 Key Media Pty Ltd

Realtors targeted in real estate audit

Monday, August 24th, 2015

Steve Randall

The real estate industry is the subject of a money-laundering audit by Canada’s finance intelligence unit Fintrac.

The Province reports that the audit has been ongoing for several months and that it could result in fines or even jail for any realtors found to have been under-reporting of large financial transactions and suspicious activity.

A Fintrac official said: “Our compliance people are not happy.”

Cash transactions above $10,000 and anything that may be considered suspicious must be reported to Fintrac, but the data disclosed to The Province showed that only two such reports were made between January 2012 and May 2015, while records from financial institutions show over 1.25 million.

There were also more than 8,000 suspicious transactions, but only five were reported to Fintrac. B.C. realtors say that they do not generally handle cash transactions, which is why reporting numbers are low.

Copyright © 2015 Key Media Pty Ltd

Singapore – property price curbs introduced by the government have created a soft landing for Singapore’s housing market

Sunday, August 23rd, 2015

When will the Singapore market recover?

Adrian Bishop

The eight rounds of government cooling measures have hit Singapore’s property market over the last few years, have certainly taken their toll and the bad news for those in the industry is that things are unlikely to get better soon.

The measures have seen private property sales fell around 50% in June 2015 Urban Redevelopment Authority (URA) data showed and prime property prices in Singapore have fallen 15% year-on-year, according to the latest Knight Frank Global Prime Global Cities Index, making it the worst performer for the sixth consecutive quarter.

It’s true that for the latest figures published, for July 2015, Singapore home sales reached a two-year high, but almost three-quarters of those were for the competitively-priced High Park Residences project and the general opinion in the industry is August’s figures will be down again.

With an election possibly taking place some time in September, although a date has not yet been confirmed, National Development Minister Khaw Boon Wan is relieved the property curbs introduced by the government have resulted in a ‘soft landing’ for the once overheated housing market, which was a big issue in the last election. But property professionals are unlikely to be displaying similar emotions.

OPP.Today questioned Excell Chua, Business Development Director at leading Asian website PropertyGuru, about how the sector is likely to recover and how agents and developer sales are being affected.

Question: When do you expect the Singapore market to turn around?

Answer: The Singapore property market is unlikely to have a quick recovery. The Monetary Authority of Singapore (MAS) mentioned just last month that it’s too premature to ease the policies. We are probably looking at a period of stagnation for the next two years. Factors dragging the property market include increasing private housing inventory (surpassing the demand), rising vacancy rate, lower GDP growth, slower population growth, slower labour productivity growth and increasing restrictions on foreign talent, among other things.

Question: Is the market losing developers and agents as a result? If so, how many?

Answer: Our market is seeing a growing number of local anbd regional developers expanding their developments businesses abroad. (They either buy sites or have joint venture partners in Malaysia, Australia, UK, US & Thailand). This is because when they develop in Singapore, developers normally make 5% to 10% profit margin, but when they develop abroad their take home profits would average between 25% to 35%. On the other hand, we saw an exodus of over 2,000 property agents leaving major real estate agencies. There were 26,014 agents as of end of 2014, it’s now down by 8% to 23,947 agents as of the first of April this year.

Question: Is this a good thing or a bad thing for buyers?

Answer: It’s a buyers / renters market now so it’s definitely a good thing for the buyers. More property owners or bargain hunters are trying their luck at auctions these days. A recent Colliers International report showed that a total of 378 properties were put on auction during the first half of 2015, an increase of 38.5% from H2 2014’s 273 listings. According to Colliers, the auction rooms this year continued to be jam-packed with some sessions seeing an attendance of over 200 people but sales figures remain moderate as potential buyers prefer to go for private negotiations after auctions. On the other hand, the real estate agency business is not looking positive, recent reports show that only three or four big real estate players in Singapore are making profits this year (there were at least 1,425 registered agencies in Singapore as of 2014).

Question: If more Singaporean investors are looking to overseas property, which countries are they turning to?

Answer: Singaporean investors continue to be attracted to safe haven markets like London, Sydney & New York. There’s also a strong interest for investing in neighbouring countries (or emerging markets) such as Malaysia, Thailand, Philippines, Tokyo, Cambodia and Vietnam. Their major drivers for investing in overseas properties include: kids are in the universities, diversification of portfolio, second / holiday home, good rental returns & good capital growth.

Question: How long will it take for foreign investors to regain interest in Singapore and what will be the catalyst?

Answer: Since MAS mentioned that it’s too premature to ease the policies…  I doubt it if ABSD (Additional Buyers’ Stamp Duty) for foreigners will be relaxed anytime soon (at least not next year). Foreign buyers need to pay an ABSD of 15% to buy private properties in Singapore since the government cooling measures were introduced in mid-2013. Foreign investors who plan to make Singapore their home or plan to stay in Singapore for a mid to long term period may not mind absorbing the ABSD fees, in my view. Some foreigners may find buying a Singapore property a viable option (than renting one). Also, most High Net Worth Individuals or Ultra Wealthy Foreign Investors that Singapore tends to attract won’t mind paying for the extra 15% taxes as most of these buyers are buying Singapore properties as their trophy homes. The beauty of investing in Singapore properties is that there is no Capital Gain Tax here, so this is a plus point! Singapore has always attracted world’s billionaires – one of them would be Eduardo Saverin (the former Founder of Facebook) who renounced his US citizenship in 2011 and moved to Singapore.

© OPP Ventures 2014.

A Plunge in China Rattles Markets Across the Globe

Sunday, August 23rd, 2015


Stocks around the world tumbled in volatile trading on Monday, leaving investors to wonder how much government officials can and will do to insulate the global economy from the turmoil.

The upheaval in the markets began with another rout in China that drew comparisons to the 1987 crash in the United States known as “Black Monday.”

Concerns about China’s ability to be a powerful engine of global economic growth have added to worries about the potential impact of higher interest rates in the United States, driving stocks sharply lower in Asia and Europe.

But early Tuesday, after a three-day rout that erased nearly $3 trillion in value from stocks globally, markets showed signs that selling pressures were easing.

Volatility continued to dominate early trading in Asia, but many regional markets swung from losses to gains on Tuesday for the first time in days. Stocks in Japan opened sharply lower but had recovered by late morning, while shares in Australia, Hong Kong, Singapore and South Korea were staging a modest rally.

Across Asia, the free-fall of the past few days appeared to have ended — except in China, where Shanghai stocks opened 6.4 percent lower after Monday’s 8.5 percent plunge.

The tumult has had many analysts grasping for explanations, given the lack of any significant new data that would explain the big market moves.

On Monday, the steepest losses in the New York markets ended within minutes after opening, with share prices spending the rest of the day sharply rising and reversing course multiple times. When the day’s roller-coaster ride ended, the benchmark for stocks, the Standard & Poor’s 500-stock index, was down 3.9 percent. That left the index off 11 percent from its May high, in what in market parlance is called a “correction,” its first since 2011.

Beyond the questions about what exactly caused Monday’s moves, the recent market turmoil has now led many investors to turn their focus to the government officials who have become the most important players in the market since the financial crisis.

In particular, there is a growing debate among market participants about whether the Federal Reserve will still follow through with plans to push interest rates higher, an action that was expected to begin in September. The market turmoil has led some, including Lawrence H. Summers, a former chief economic adviser to President Obama, to call for the central bank to reconsider those plans.

“Everything is going to be dictated by government policy,” said Kevin Kelly, the chief investment officer of Recon Capital Partners. “Whatever noise is coming from policy makers is going to determine the next couple weeks.”

Fed officials could give some indication of their thinking later this week when they gather for an annual conference in Jackson Hole, Wyo.

At an event on Monday, the president of the Atlanta Fed, Dennis Lockhart, said that recent developments “are complicating factors in predicting the pace of growth,” though he said he still expected rates to rise this year.

Investors have also been looking to Beijing. Over the weekend, there were expectations that the Chinese government would take more aggressive steps to stem the recent declines in the Chinese stock market and the renminbi, the country’s currency.

Previous moves, though, did little to beat back concern about a weakening Chinese economy, and Chinese officials declined to do anything significant on Monday.

The debates in both China and the United States have often turned to more worrying questions about whether the levers that central bankers use to influence the markets are losing their power after years of extensive intervention.

With all the hand-wringing, however, many investment advisers have been urging clients to ignore the recent swings.

And although a number of American companies stand to be hurt by any weakness in China, recent data has suggested that the economy in the United States is continuing to gain strength.

Even apart from the problems in China, many analysts have said that high-flying American stocks were due for a pause after the steady upward climb that has characterized the American stock market over the last four years.

Still, the violent swings in stocks have left many investors unnerved.

“We take the sell-off very seriously as this unfamiliar mix of emerging market uncertainty, deflationary pressure, central bank interference and extreme volatility is hard for global markets to digest,” Mark Haefele, the chief investment officer for the UBS wealth management arm, wrote in a note to clients.

Wall Street’s so-called fear gauge, theVix, rose Monday morning to its highest level since 2009.On Monday, the Shanghai composite index closed down 8.5 percent. In Europe, benchmark indexes in Germany, Britain and France fell nearly 5 percent or more. A number of emerging markets were also lower, with leading indexes in Brazil and Indonesia both down around 4 percent.

In the United States, the Dow Jones industrial average plummeted 1,000 points before regaining ground. It ended the day down 3.6 percent, or 588.40 points, to 15,871.35. The Standard & Poor’s 500 index fell 3.9 percent, or 77.68 points, to 1,893.21. The Nasdaq composite index closed down 3.8 percent, 179.79 points, to 4,526.25.

The Treasury market was a beneficiary of the fear in stocks. The demand for bonds pushed the yield on the benchmark 10-year Treasury note to as low as 1.90 percent before it settled at 2.01 percent.

The recent market tumult began two weeks ago when the Chinese government unexpectedly allowed the value of its currency to drop, partly in response to indications that the country’s economy is weakening.

The Chinese moves played into the continuing drop in the price of oil, which has taken the price of a barrel of crude oil down 65 percent over the last year. On Monday, the price of oil, as measured by a benchmark New York contract, dropped below $40.

Get news and analysis from Asia and around the world delivered to your inbox every day in the Asian morning.The selling in China has accelerated despite extraordinary government intervention in the last two months aimed at propping up share prices. On Sunday, the Chinese government said that the country’s pension funds would be allowed to invest in stocks for the first time. But the slide on Monday highlighted that the new policy, and several similar recent moves, have not been successful.

Many investors are now hoping that the central bank, the People’s Bank of China, will cut the ratio of deposits that banks are required to keep on reserve in a bid to encourage lending and spur economic growth.

In the meantime, there are big questions about whether China’s stock market plunge will make the Chinese economy, the world’s second-largest after that of the United States, even weaker.

Xu Sitao, the chief China economist in the Beijing office of Deloitte, said in a speech in Hong Kong that the effect on the economy could be muted because equities represent only 7 percent of the overall wealth of urban Chinese households, which continue to rely heavily on real estate in their holdings.

In the United States, too, economists were hopeful that the activity in the markets would not spread to the broader economy.

“For now we believe the positive factors will win out,” Mr. Haefele of UBS wrote in his note to clients. “But market shocks of this magnitude have the potential to overpower fundamentals so we need to remain vigilant.”

© 2015 The New York Times Company

Why confusion reigns over Indonesia’s foreign property rules

Wednesday, August 19th, 2015


Overseas property professionals and buyers have been encouraged by press reports suggesting that Indonesia is considering removing the current price restriction limits on foreign buyers.

The media quoted minister of land and spatial planning Ferry Mursyidan Baldan, saying the Indonesian government will not set a minimum value on homes that foreigners could buy as long as they were not state-subsidized dwellings. Previously, it was proposed that overseas buyers would only be allowed to purchase property at Rp5billion ($373,500) or above. “I don’t think we need to have that minimum value,” the Jakarta Mail reported the minister as saying.

But the situation may not be as simple as it seems. When OPP.Today asked Hasan Pamudji, of Knight Frank, Indonesia, if the ‘no limit’ proposal was likely to be adopted, he was cautious. He says there is no certainty of the proposal coming to pass and that the comments have created confusion for buyers and officials.

“In the past few months, it has been talks or rumours said generally by the Indonesian ministers or officials regarding the potential revision on the foreign property ownership regulation. It also has created confusion among the officials themselves and the general public.  Whether the no limit proposal likely to be implemented, it remains in question. There is no certainty.

“All in all, it is a good start for the Indonesia’s property market, giving more positive news. However, there are no clear indications of what the revised regulations would be specifically. It is difficult to judge at this moment as it can change anytime.”

Demand is currently highest from buyers in Australia, France, Singapore, Japan, China, South Korea, USA, Hong Kong, Malaysia and other countries. Indonesian destinations that already have high overseas visitor numbers are likely to benefit from any freeing up of purchase regulations, he says.

“Demand for property in Indonesia from foreigners has been quite strong. However, it is subject to several factors. If the revised relaxed policy comes into effect, the potential new demand would not be so robust.  In addition, Bali, Batam and Bintan may get the benefit of the revised rules as these places have been attracting more foreigners in the past years.

“The first question to ask is why and for what purpose the Indonesian government is opening up to foreigners the ownership of properties in Indonesia. Positive motivations could be to boost revenues and be good for the domestic economy as well as relationships with other countries.

“There may be two types of foreign buyers. The first buyers are foreigners who have strong attachments with Indonesia such as through marriages with Indonesians, relatives, works, businesses and other reasons. This type of people may buy properties under revised rules due to necessity, needs and social attachment with Indonesia despite high transaction costs. Though, these people now may have already owned properties in Indonesia through nominees, marriages and PMA (Foreign Investment Company).

“The second type of buyers is rich individuals who want to invest or buy as second home buyers. These buyers may not want to invest as the transaction costs are very high. Other countries may provide more appealing investment terms. Also, other than Bali, Batam, Bintan, Lombok and other popular resort islands for foreigners, other areas may not receive strong demand.”

There are several important factors to be considered in any regulations, concerning what foreign investors and buyers are looking for, including transparency and certainty in ownership regulations, Mr Pamudji says.

1)    A permit to stay – is it easy to process and obtain?

2)    Land right status (freehold, leasehold, etc.)

3)    What length of terms can be given for those land rights

4)    Any additional property taxes imposed for foreigners.

“All in all, are these competitive enough to be appealing for foreign investors as compared to other neighboring countries?

The criteria for High-Net Worth Individuals to invest in second-homes in Indonesian destinations considered true ‘Global Cities’ should also be decided. Other examples around the world are Singapore, New York, London, Hong Kong, Sydney, Paris, Shanghai, Beijing, Miami, Geneva, Berlin, etc.

How is a Global City defined? he asks?

  • Economy. Including economic output, income per head, financial and capital market activity and market share, together with the number of international business headquarters in each city.
  • Politics. Political stability, the number of headquarters for national political and international non-governmental organisations, along with the number of embassies and think-tanks in each city.
  • Quality of life. Ratings are calculated based on several measures including personal and political freedom, censorship, personal security, crime, political stability, health facilities, public services and transport, culture and leisure, climate and the quality of the natural and man-made environment.
  • Knowledge and influence. Consideration based on each city’s knowledge base — assessing the number of national and international media organizations and news bureau, and the international market share of locally based media.

“Other issues such as political, social, economy may influence the outcome of passing the revised regulation. Those are quite complex issues and may invite strong oppositions from local people. Concerns of property bubble and affordability for locals beyond reach remain strong.”

In addition, overseas property demand has suffered due to the imposed additional luxury tax for locals, he says, which could drive buyers to purchase properties in Singapore, Australia, Malaysia, and other areas where the cost is lower, Mr Pamudji points out.

“The property market is currently undergoing the consolidation period and is under pressure due to global and domestic economic slowdown, currency depreciation and high interest rates as well as rising inflation.

“Buyers are more cautious and play a wait and see game until there is a clear sign where property prices and the domestic and global economy are heading, which is not expected until end of this year. Uncertainties remain high. Meanwhile, infrastructure development efforts are still lacking or are minimal from the government side.”

© OPP Ventures 2014