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13 of the best places to buy a rental property in the US right now

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rental property

Rental properties give you, the investor, the power to determine your profits.

Let's be clear: Buying a home doesn't always give you the biggest return on your money.

From 1890 to 2012 the inflation-adjusted return on a house was 0.17%— a fraction of the 6.27% return for investments in the stock market over the same time period.

But there is a way to earn similar, or even greater, investment returns in real estate: owning a rental property.

In this case, you're getting paid to own something, rather than paying to own it. The mortgage is often covered by rental income, and if you play your cards right you'll profit after covering insurance, taxes, and maintenance costs.

That's different from expecting a big return when it comes time to sell a home you've been living in long-term. Owning a rental property is also different than buying a fixer upper you hope to sell for a profit, which isn't always the cash cow it's chalked up to be.

But like anything in real estate — whether you're buying or renting — it's all about location. HomeUnion, an online residential real estate investment management firm, recently released a list of the top markets for single-family rentals based on how they're expected to perform through 2017.

To compile the ranking, HomeUnion analyzed 30 rental markets to determine which have the best local economies, the highest annual investment returns after operating costs (including insurance, taxes, and maintenance), and the strongest real estate market conditions considering rent increases, rent-to-income ratios, turnover times, and supply of new construction.

Below are the 13 best places to buy a rental property right now. Based on the median investment home price, we've also included the average mortgage payment, assuming a 30-year fixed mortgage with a 20% down payment and a 5% interest rate.

SEE ALSO: HGTV's 'Fixer Upper' makes house flipping seem like a good investment — but there's a catch

DON'T MISS: A 27-year-old realtor who owns 8 rental properties reveals her best tip for becoming a real estate investor

13. Baltimore

Median investment home price: $145,000

Mortgage payment: $623

Median rent: $1,431

Annual return after operating costs: 6.7%



12. Nashville

Median investment home price: $166,300

Mortgage payment: $714

Median rent: $1,437

Annual return after operating costs: 5.4%



11. Chicago

Median investment home price: $235,000

Mortgage payment: $1,009

Median rent: $1,798

Annual return after operating costs: 5.2%



See the rest of the story at Business Insider

Tony Robbins takes us on a private tour of his massive beachfront mansion in Fiji

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While on a recent trip to Fiji, Tony Robbins took us on a private tour of his massive beachfront mansion.

Robbins recently hosted the winners of the Shopify Build a Bigger Business competition at his Fiji resort, Namale, where he invited Business Insider senior strategy reporter Richard Feloni for an inside look at the 525-acre property that he acquired when he was only 29.

According to Robbins, he purchased Namale for $12.5 million, and the resort is now valued at $52 million. Following is a transcript of the video.

Tony Robbins: My life was changed by coming to Fiji. And I fell so in love with the people here that I decided I want to have a piece of this and I want to find a way to bring people here. And then, you know, I eventually bought the resort. And then I started building it into the top resort in the country for the last ten years and top ten in the South Pacific.

Text on screen: The Namale resort spans 525 acres. This is Robbins' private home at Namale.

Robbins: How you guys doing? Welcome! Lomalagi — it's called "heaven" in Fijian. Come on in. 

I bought this place when I was 29, so it's been 33 years. I like to make something that feels like it's very relaxed but, you know, the scale of things is my scale-size chairs as you probably noticed. 

Richard Feloni: And what's your favorite spot in the home?

Robbins: I'll show you one of them. I'll show you a couple of them if you want. 

This is one of my favorite little hangout spots. Totally private, down by the water. I come down here and meditate or read and so forth. I actually have a set of stairs that go down under the caves, down to the beach but the last storm took that out, and it took out the other place I'm going to take you that's been my favorite, which is my upstairs bed up on top of the building. 

You know, I love to hang out up here where you have these unending views. And I have a giant bed that's here, that's covered that's an outdoor bed, which has clearly disappeared. It was ripped off, literally ripped out of the building. 

This is another hangout area that we really love. I've got outdoor beds everywhere around the house, too, that the wife and I love. I opened this up because I have "fish balls." I have these golf balls that are full of fish food and so we use these as holes here and we come out and knock balls here. And then they dissolve in the ocean and provide the food. So they're ecologically sound, but also, the fish love it.

Let's pop on the other side just so you see it real quick. I'll show you. 

My extra skinny bed. Just, you know, all of the beautiful little touches. There's a bathtub overlooking the ocean — like that. 

Feloni: When you got this property, was it kind of a bargain back then, or did you have to fight for it? Like, this property itself. 

Robbins: The first 125 acres that are part of this resort — it was a coconut plantation. And it was owned by a group of professors from Scripps Oceanography. This entire reef right here — they studied it for like 14 years – and found more diverse life than anywhere they'd studied. And they sold it to a couple of travel agents, and they didn't have enough money to finish it. Ten million bucks was one chunk and then another one was another five, but it was a giant stretch in those days. And then, gradually, as I became more and more financially astute and strong, I was able to put more and more into it.

Did you go up to the waterfall?

Feloni: Have we gone to the waterfall?

Graham Flanagan: No, we didn't make it to the waterfall. 

Robbins: Okay, we should run you up to the waterfall. Will you call them and ask them if they've got — my car is broken down, I think. I don't know if I can fit in this car. See if they've got somebody that can take us out to the waterfall real fast. 

I love this. 

[TONY LETS OUT A PRIMAL ROAR WHILE SWIMMING UNDER THE WATERFALL]

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Florida's risky real-estate game is protected by a billion-dollar insurance industry — but that could soon change

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florida home

After dodging the worst of Hurricane Irma, Florida’s coastal real estate boom shows no signs of slowing.

In Miami and nearby waterfront cities, a survey of local records show that more than 90 luxury high-rise apartment blocks are under construction or have been completed since 2015, increasingly financed by overseas investors looking for “safe” opportunities in a turbulent global economy.

Yet, since 1886, the Sunshine State has been hit with almost twice as many hurricanes as the next two states, Texas and Louisiana. Currently, 2.4 million people and 1.3 million homes sit just 1.2 meters above the high tide line and sea levels are expected to rise up to two meters by the end of the century.

What enables Florida’s staggering growth against environmental odds? The answer, in part, comes down to how property insurance protects the state’s real estate against disasters. In 2015, Floridians spent $10.8 billion on homeowners’ insurance to protect more than 6 million properties. The total insured value protected by the state’s homeowners’ market is a soaring $2.1 trillion, roughly equal to the annual economic output of India.

I have dedicated the past three years to researching how this massive market works – and whether it can really sustain Florida’s real estate boom in the long run.

florida flood

From risk to reward

Property insurance balances Florida’s unusually high vulnerability to natural disasters against the growth pressures of the state’s real estate and construction industry.

By requiring property insurance to protect loans, US mortgage lenders and investors have created a massive insurance market in Florida – and a costly necessity for property owners.

The global insurance-linked securities (ILS) industry plays an increasingly important part in this story, converting Florida’s hurricane risk into an attractive financial asset class.

The catastrophe bond – the most widely used ILS product – was created after Hurricane Andrew’s Miami landfall devastated Florida’s homeowners’ insurance industry in 1992. “Cat bonds” and other types of “alternative” insurance turn investment capital – from pension funds and other firms – into reinsurance, or insurance for insurers.

hurricane andrew

Here’s how ILS works: insurance companies send a portion of the premium they collect from property owners to special trust companies in tax-friendly nations such as Bermuda, which then raise money from investors, who agree to repay a given range of losses if disaster strikes.

And if not, investors walk away with the property owner’s premium, plus a tidy profit.

This complex financial market provides nearly $90 billion of protection worldwide. Large institutions ranging from the World Bank to the Rockefeller Foundation celebrate ILS as a key financial solution to help humanity adapt to climate change, particularly in developing countries.

Meet the specialists

Despite these global prospects, Florida’s hurricane risk continues to be the bread and butter for ILS investors. According to one of the biggest cat bond investors, up to half of the ILS market’s capital is pooled in the Florida homeowners’ market.

The concentration of ILS capital in Florida can partly be explained by changes to the homeowners’ insurance market, in the 25 years following Hurricane Andrew.

Once led by national firms offering multiple insurance products, the market is now dominated by smaller firms that specialize in Florida homeowners’ insurance. Unable to spread their risk over a nationwide portfolio of business, these Florida “specialists” have become highly dependent on global reinsurers.

florida

Several Florida specialists have deep relationships with reinsurers, including direct ownership ties and their own private ILS “vehicles”, which enable them to directly transfer billions of dollars of Florida hurricane risk to buyers in dozens of countries.

Ultimately, Wall Street’s growing demand for insurance-based products may be changing the fundamental public purpose of property insurance, from one that aims to protect the wealth of communities, to one that sees insured risk as the fodder for financial speculation.

Some experts have pointed out unsettling parallels between these new financial mechanisms and the lending model that led to the 2008 subprime mortgage crisis.

A high price

The rise of ILS capital has made new financial resources available to Florida’s rocky property insurance market.

But this service has come at a significant cost to homeowners. Floridians pay the highest homeowners’ insurance rates in the nation, while stagnant wages and skyrocketing house prices make south Florida cities among the most unequal in the country.

The billions of dollars that Floridians spend annually on homeowners’ insurance secures financial protection for those fortunate to be property owners. But it does little to fundamentally change the state’s exceptional exposure to disaster.

Florida’s state officials have taken a limited, piecemeal approach to minimizing the state’s vulnerability to sea level rise, while continuing to encourage development in vulnerable areas and directly subsidizing the state’s property insurance market.

Hurricane Irma flooding Florida

The prospect of stronger and more destructive hurricanes, along with the potential for higher, risk-adjusted insurance rates, could put a massive strain on the affordability of Florida’s housing market in the future.

What’s more, the flow of global investment capital into Florida’s high-risk homeowners’ insurance sector may actually be making the state more vulnerable to hurricanes, by keeping insurers solvent and real estate markets in motion.

Indeed, Hurricane Irma appears unlikely to significantly upset the dynamics within the Florida homeowners’ insurance or global catastrophe reinsurance markets – even if at least one catastrophe bond may have to pay out. The ratings agency A.M. Best estimates that it would take a $75 billion insured loss to do so – up to three times the expected US insured losses for Irma.

So the ultimate limits of the multi-billion-dollar ILS market remain untested. But for now, the storm clouds have cleared, and Florida’s real estate boom continues.

SEE ALSO: 4 strategies for investing in real estate

Join the conversation about this story »

NOW WATCH: I won't trade in my iPhone 6s for an iPhone 8 or iPhone X — here's why

What a $1 million home looks like in 17 major cities across America

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Riverside

A million dollars will buy you a lot more house in Texas than in California.

In fact, a million-dollar home in Dallas is more than twice the size of a similarly priced house in Los Angeles, according to real estate listing site Trulia.

To find out how home sizes compare across America, we asked Trulia to gather million dollar listings — homes priced between $995,000 and $1,100,000 — for the largest metro areas in the US.

Below, check out how much square footage homebuyers get for $1 million in 17 major US housing markets.

SEE ALSO: Million-dollar ZIP codes are on the rise — and it could spell trouble for America's homeownership rate

DON'T MISS: How much you have to earn to be considered rich in every state

New York City

Listing price: $995,000

Square feet: 822

Price per square foot: $1,210



Los Angeles

Listing price: $999,000

Square feet: 1,407

Price per square foot: $710



Chicago

Listing price: $1,000,000

Square feet: 2,300

Price per square foot: $435



See the rest of the story at Business Insider

Take a tour of Amazon CEO Jeff Bezos' 5 giant homes and thousands of acres of land across the US

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Amazon CEO Jeff Bezos

It's safe to say that Jeff Bezos, founder and CEO of Amazon, has cash to burn. He's worth roughly $84 billion and owns 17% of the Amazon empire. So where does a man like Bezos rest his head at night? Although his company is headquartered in Seattle, Washington, Bezos own five homes across the country, and is the country's 25th largest landowner, according to the Land Report. 

Here are the five estates the Bezos clan calls home:

 

 

SEE ALSO: The fabulous life of Amazon CEO Jeff Bezos, the second-richest person in the world

Medina, Washington

In the same neighborhood as Bill Gates, Bezos owns two homes spanning 5.3 acres. According to the Wall Street Journal, he paid $10 million for the property in 1998. One home is a 20,600 square foot, five-bedroom, four-bathroom house, and the other a 8,300 square foot, five bedroom, four bathroom. Right on the shores of Lake Washington, the estate underwent a $28 million renovation in 2010 and boasts 310 feet of shoreline and a boathouse. 

 

Sources: The Wall Street Journal



Beverly Hills, California

Bezos bought this Spanish style mansion in 2007 for $24.45 million. The seven-bedroom seven-bathroom home is  advertised by Dream Homes Magazine as having a greenhouse, a sunken and lighted tennis court, a huge swimming pool, four fountains, and a six-car garage. The street is a hotspot for Hollywood stars, and is said to have been home to Jimmy Stewart, Donna Reed and Walter Matthau.

Source: The Wall Street Journal and Dream Homes Magazine 



Beverly Hills, California

Apparently the first house did not fit Bezos' space requirements. This past July he bought a comparatively modest four bedroom, 4,568 home for $12.9 million right next door to his first house. As you can see in the above picture, Bezos' property dominates the mansion-filled block. 

 Source: The Wall Street Journal and the Los Angeles Times



See the rest of the story at Business Insider

We went to New York City's most expensive neighborhood — home to Wall Streeters and celebrities like Taylor Swift — and saw why it's so popular

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New York City, Tribeca NYC

New York City is home to some of the most expensive real estate in the world. The most expensive place to own a home in this expensive city, however, is Tribeca.

While back in the 1970s, the neighborhood attracted artists because of its many large lofts, today its relatively quiet streets entice the city's wealthiest businesspeople, as well as mega-celebrities like Beyoncé, Jay-Z, and Taylor Swift, who purchased a penthouse in the neighborhood for a reported $20 million in 2014. 

Today, according to StreetEasy data, the median sale price in Tribeca is $4.525 million. 

I recently strolled through the neighborhood to see why its real estate repeatedly tops the market. From its cobblestone streets to its plentiful restaurants, shopping, and parks, there seems to be very little reason to ever leave Tribeca once you've settled in.

SEE ALSO: This little-known Silicon Valley neighborhood is suddenly one of the hottest housing markets in America — take a look

DON'T MISS: A hedge funder once paid nearly $800,000 in rent to stay at this fashion mogul's home in the Hamptons — and now you can buy it for $45 million

"Tribeca" is an abbreviation for "Triangle Below Canal Street." Originally, the name referred only to a single block on Lispenard Street between Church Street and Broadway. Today, the neighborhood is understood to include the streets south of Canal down to Vesey Street, and from the West Side Highway to Broadway.

Source: Curbed



As for public transportation options, the neighborhood is serviced by the 1, 2, 3, A, C, E, N, Q, R, and W subway lines.



On the market in Tribeca right now are some of the city's most historic homes. This row of townhouses on Harrison Street was originally built in 1819 and made an official city landmark in 1966. Home 27A is currently on the market for $6.5 million.

Source: Douglas Elliman



See the rest of the story at Business Insider

Trump's tax plan could hurt homeowners

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Homeowners

If you’ve been pondering how you as a home owner or buyer might fare under the new Republican tax overhaul plan, here are a few points to consider.

Although the tax proposal got fattened up a little over the summer — moving from a White House “outline” of barely one page to a “framework” now consisting of nine pages — there’s been minimal meat added to the bones regarding housing.

Yes, the mortgage interest deduction will still be preserved, but with the doubling of the standard deduction to $12,000 (single tax filers) and $24,000 (joint filers), many current itemizers taking the mortgage writeoff are likely to opt for the standard deduction.

That may sound fine to you — there are undeniable attractions to the idea of simplifying the tax code by allowing taxpayers to take a single, large deduction instead of itemizing multiple smaller ones — but it may not be a net benefit for you, depending on the final details. If, as expected, you lose the current personal exemption of $4,050, plus you’ve got kids, a spouse, a house and other key deductions are eliminated, you could end up paying more in federal taxes, not less.

If most people take the standard deduction, the homeownership stimulant effects of the mortgage interest writeoff could be diminished and have an impact on home prices. A study by auditing and consulting firm PricewaterhouseCoopers earlier this year found that reducing the number of taxpayers who claim the mortgage deduction — along with eliminating local tax writeoffs and factoring in lower marginal tax rates — could lower the investment value of homes and depress prices by an average of 10.2 percent.

The study was commissioned by the National Association of Realtors — hardly a disinterested party in the tax debate. But some academic studies also have concluded that there is a tax-subsidy component built into home values that would be depressed if tax incentives such as the mortgage interest deduction were cut or removed. Last year a study by a Federal Reserve economist estimated that totally eliminating the mortgage interest deduction would cause the average household in the country to lose 10.9 percent of its home value.

The lack of detail in the Republican tax framework makes it difficult for anyone — especially home owners — to calculate what the changes would mean for their personal federal tax bill. The framework offers to collapse the current seven marginal tax brackets into just three — 12 percent, 25 percent and 35 percent — but does not provide income cutoff points associated with each bracket. So you can’t be sure where you end up.

The framework is also coy about just which deductions currently taken by millions of individuals no longer would be permitted. It only identifies two personal deductions that would survive the cuts — charitable contributions and mortgage interest.

This leads to the inevitable conclusion that one of the biggest and most politically sensitive writeoffs, state and local taxes, would not survive. In fact, the elimination of that deduction appears to be an essential element in the plan, because it would help defray the gushing revenue losses elsewhere in what President Trump has described as his administration’s “giant, beautiful, massive, the biggest ever in our country, tax cut.”

State and local tax writeoffs are an important part of the financial calculus for many home purchasers and owners. Their elimination would add an estimated $1.3 trillion to federal tax revenues over the next 10 years.

State and local deductions are most heavily claimed in areas with higher than average property and income tax rates, such as Washington D.C., Maryland, New York, New Jersey, New England, Virginia, California and Illinois, among others. They are a big deal to local governments and they are certain to be fought for passionately by congressional members from the states most affected, including Republicans.

So where’s this all going and how fast? Think about the acrimony of the health care debate, add in legions of well-funded and politically powerful lobbies each protecting their industries’ most prized tax code subsidies — real estate high on the list — plus a short legislative calendar left this year, and you are easily into next year, which happens to be a congressional election year, when all bets are off.

Retiring Sen. Bob Corker (R-Tenn.) summed up the prospects aptly: “Tax reform is going to make health care look like a piece of cake.” Whether you like whatever cake eventually pops out of the oven is an entirely different story.

SEE ALSO: MAPPED: The US cities with the biggest economies

Join the conversation about this story »

NOW WATCH: Why you won't find a garbage can near the 9/11 memorial

Trump's tax plan could hurt homeowners

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0
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Homeowners

If you’ve been pondering how you as a home owner or buyer might fare under the new Republican tax overhaul plan, here are a few points to consider.

Although the tax proposal got fattened up a little over the summer — moving from a White House “outline” of barely one page to a “framework” now consisting of nine pages — there’s been minimal meat added to the bones regarding housing.

Yes, the mortgage interest deduction will still be preserved, but with the doubling of the standard deduction to $12,000 (single tax filers) and $24,000 (joint filers), many current itemizers taking the mortgage writeoff are likely to opt for the standard deduction.

That may sound fine to you — there are undeniable attractions to the idea of simplifying the tax code by allowing taxpayers to take a single, large deduction instead of itemizing multiple smaller ones — but it may not be a net benefit for you, depending on the final details. If, as expected, you lose the current personal exemption of $4,050, plus you’ve got kids, a spouse, a house and other key deductions are eliminated, you could end up paying more in federal taxes, not less.

If most people take the standard deduction, the homeownership stimulant effects of the mortgage interest writeoff could be diminished and have an impact on home prices. A study by auditing and consulting firm PricewaterhouseCoopers earlier this year found that reducing the number of taxpayers who claim the mortgage deduction — along with eliminating local tax writeoffs and factoring in lower marginal tax rates — could lower the investment value of homes and depress prices by an average of 10.2 percent.

The study was commissioned by the National Association of Realtors — hardly a disinterested party in the tax debate. But some academic studies also have concluded that there is a tax-subsidy component built into home values that would be depressed if tax incentives such as the mortgage interest deduction were cut or removed. Last year a study by a Federal Reserve economist estimated that totally eliminating the mortgage interest deduction would cause the average household in the country to lose 10.9 percent of its home value.

The lack of detail in the Republican tax framework makes it difficult for anyone — especially home owners — to calculate what the changes would mean for their personal federal tax bill. The framework offers to collapse the current seven marginal tax brackets into just three — 12 percent, 25 percent and 35 percent — but does not provide income cutoff points associated with each bracket. So you can’t be sure where you end up.

The framework is also coy about just which deductions currently taken by millions of individuals no longer would be permitted. It only identifies two personal deductions that would survive the cuts — charitable contributions and mortgage interest.

This leads to the inevitable conclusion that one of the biggest and most politically sensitive writeoffs, state and local taxes, would not survive. In fact, the elimination of that deduction appears to be an essential element in the plan, because it would help defray the gushing revenue losses elsewhere in what President Trump has described as his administration’s “giant, beautiful, massive, the biggest ever in our country, tax cut.”

State and local tax writeoffs are an important part of the financial calculus for many home purchasers and owners. Their elimination would add an estimated $1.3 trillion to federal tax revenues over the next 10 years.

State and local deductions are most heavily claimed in areas with higher than average property and income tax rates, such as Washington D.C., Maryland, New York, New Jersey, New England, Virginia, California and Illinois, among others. They are a big deal to local governments and they are certain to be fought for passionately by congressional members from the states most affected, including Republicans.

So where’s this all going and how fast? Think about the acrimony of the health care debate, add in legions of well-funded and politically powerful lobbies each protecting their industries’ most prized tax code subsidies — real estate high on the list — plus a short legislative calendar left this year, and you are easily into next year, which happens to be a congressional election year, when all bets are off.

Retiring Sen. Bob Corker (R-Tenn.) summed up the prospects aptly: “Tax reform is going to make health care look like a piece of cake.” Whether you like whatever cake eventually pops out of the oven is an entirely different story.

SEE ALSO: MAPPED: The US cities with the biggest economies

Join the conversation about this story »

NOW WATCH: Meet the three women who married Donald Trump


One real estate bubble that isn’t going to burst anytime soon

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A little over four years ago, I was doing the rounds of the real estate scene in Xian, home of the famous Terracotta Army, and the ancient capital of China, located in present-day Shaanxi Province. We were visiting a few housing and commercial projects and checking on the mood of the market (looking at things like prices and sales volumes). Xian is a Tier 2 city (generally defined as cities in China with roughly 3 to 15 million people), with a population of around 8 million (about the same size as London or New York). Having checked out a low-rise completed development on one side of the city, we drove through the centre to another development under construction on the other edge of town.

2017 10 10 image1

Development in Xian at the time was in full flow. There were cranes everywhere. The city’s development had lagged behind the country’s Tier 1 cities and many of the Tier 2 cities as well. Xian was now catching up with a vengeance. I casually started counting cranes. It wasn’t easy given the number of them. But I ran out of steam at a little over 200 cranes during the 30-minute ride across town. Moreover, we had travelled east/west across the middle of the city, and had not ventured into the suburbs, where I am sure the crane count continued. Nor had we done a north/south crossing of the city.

Given that each crane probably meant one high-rise apartment block, the inescapable conclusion was that there was an awful lot of building going on. Yes, the city had lagged behind in the development stakes, but I hadn’t seen this scale of building before.

It was clear to me that Xian was about to experience a massive oversupply of property that would pressure the market for years. Well, that was partially correct. It did produce a substantial oversupply and an overhang of unsold property inventory equivalent to more than 22 months of average monthly sales. That kind of overhang could be expected to cause price declines and take a very long time to absorb. For a couple of years, policy concerns centered around how to get inventory down and avoid financial problems in the local banks and other financial institutions.

Fast forward to mid-2016, and property prices in Xian had not moved much. There had been no crash, despite the big overhang. But unsold inventory was down substantially to almost “normal” levels of around 14 months of average sales.

Scroll forward to August 2017 and we see a totally different picture again… one that looks more like a property bubble than the supply-induced meltdown that I had been fearing earlier. In the year to end of August, average home prices in Xian have soared by 66 percent to around US$1,670 per square metre (US$155 per square foot) according to real estate data provider and consultancy China Real Estate Information Corp.

Banks and policymakers are scrambling to change tack

Xian is a typical example of how quickly real estate markets in China can go from huge oversupply to bubble conditions. We have seen this happen on numerous occasions in many cities.

So after policy prescriptions that were focused on absorbing excess supply and preventing financial distress associated with excess real estate inventory, local policymakers in Xian are now focused on curbing a massive housing bubble… all in the space of less than three years.

The city has tightened controls on the property market four times in the past nine months in an effort to rein in skyrocketing housing prices. Xian has joined many other Tier 2 cities that have seen property prices soar as they did earlier in the bigger Tier 1 cities.

The controls include:

  • Prohibiting residents from buying third homes
  • Restricting non-residents from buying a second home
  • Prohibiting resale of new homes within five years of purchase
  • Tightening bank scrutiny of borrowers
  • Effectively banning lending to non-residents
  • Banks extending the loan application and agreement period substantially

If experience of other bouts of tightening in recent years and experience of other cities in this recent cycle are anything to go by, Xian will see some slowing of the pace of sales, and the pace of price increases will slow. But whether prices will go into reverse, and actually fall in the coming year, is less than certain. This has not happened in other cities in the past year or so where tightening has occurred.

Investors may have noticed that China’s housing market has gone through three cycles since the Global Financial Crisis in 2008. The current cycle is peaking (and has already peaked in some cities). In recent cycles, any downside on an annual basis has been very modest… no more than a few percentage points.

This is a “cooling,” not a “crashing”

China’s policymakers are constantly tweaking the real estate markets at both the national and local levels. They ease the reins if things are slowing down, and apply the brakes when the pace is getting too fast. Policy setting is more focused on the latter today across most of the larger Tier 1 and Tier 2 cities. The objective is not to generate a big tumble in the market, but to dampen enthusiasm that might pose risks to banks and also housing affordability.

The measures are working. For the top 26 cities in China, the year-on-year pace of sales of new housing is down around 20 percent from a year ago. For Tier 1 cities, prices have flattened out but are still moving up at this point in Tier 2 and 3 cities. Prices in smaller cities have lagged way behind the moves in the big Tier 1 cities in the past two years.

Most of the big picture demand and supply indicators for the housing market are looking OK:

  • Completed inventory has fallen by around 25 percent to about 330 million square metres
  • Inventory as a percentage of annual sales has fallen from more than 40 percent to 23 percent
  • Floor space starts have fallen from a peak of around 1,500 million square metres per annum to about 1,100 million square metres
  • Floor space starts as a percentage of sales has fallen from a peak of around 153 percent to around 86 percent today
  • Real estate investment has also slowed from around 103 percent of annual sales to about 69 percent.

These figures show that the supply overhang that worried investors and policymakers back in 2013 has been reduced… and will likely stay low (or fall even lower). The pace of investment in real estate has slowed, and for that reason there will be fewer starts and a lower supply of new units.

So what does that mean for investors?

There are good reasons to stay invested in the big Chinese property companies listed in Hong Kong.

They are consolidators in a very fragmented industry. Many are absorbing companies and projects held by less well-financed players. For example, one company I am closely involved with acquired eight projects via this route in the first half of this year. The top ten listed property companies now have about 28 percent market share compared with about 20 percent a year ago, and about 14 percent five or six years ago. This could go to around 35 percent by 2019.

These top companies will post sales growth in the region of 30 percent on average in 2017. Compound annual net profit growth in the three years to the end of 2019 is likely to be around 25 percent, and could be higher. Visibility of 2018 earnings is good.

Stocks have rallied from historically low valuations of around 4-5 times forward earnings to around 7.5 times forward earnings today. They are cheap against their global peers, which trade at around 16 times forward earnings. Return on equity (at 13.5 percent) is almost twice the global average. And these stocks will give investors a very respectable 4.5 percent dividend yield versus about 2.5 percent globally.

Gearing has been a concern in Chinese companies. The average net gearing for Chinese property companies is around 70 percent versus about 68 percent globally.

I also like that many of these companies are growing their investment property portfolios strongly, which should produce reliable and steady long-term rental income. Government policy is encouraging property companies to build more housing for long-term rental to meet the demand from those who do not want to own their own homes, or cannot afford to do so.

The long and short of this? Stay invested in China’s property sector via Hong Kong-listed companies.

Good investing,


Peter Churchouse

SEE ALSO: China's Golden Week has started and that means half the nation's 1.38 billion citizens are going on vacation

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Go inside New York City's most expensive rental, which will set you back $500,000 a month

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NYC Priciest Rental

The Pierre, a legendary hotel in New York, is home to one of the city's most dubious distinctions.

The entire 39th floor of the 41-story hotel overlooking Central Park is again being offered as a rental for $500,000 a month, making it the city's priciest rental listing once more.

As part of the Pierre Hotel Residences program, interested tenants can sign a lease for as little as 30 days, or for as long as they need. 

Renters have the option to make their monthly payments by credit card if they choose.

The six-bedroom residence was last offered in February 2017, though it's been on and off the market several times. It's now back for the same exact price.

The best part of living in this swanky hotel may be the many luxury services The Pierre offers. Residents are given complete access to the butler service, pet pampering, twice-daily maid service, and the hotel's chauffeur-driven Jaguar.

The listing is being handled by Andres Perea-Garzon of Corcoran.

Asta Thrastardottir contributed reporting to an earlier version of this article.

SEE ALSO: Ivanka Trump's Manhattan apartment just got another major price chop — take a look inside

Welcome to the legendary Pierre Hotel, located on New York's Upper East Side. Former permanent residents of The Pierre include Elizabeth Taylor and Yves Saint-Laurent.

Photos by Donna Dotan Photography



The rental offers all of the services of a luxury five-star hotel, including a 24/7 concierge service.

Photos by Donna Dotan Photography



The property consists of the hotel's two-bedroom Presidential Suite and several other hotel rooms.

Photos by Donna Dotan Photography



See the rest of the story at Business Insider

Dropbox just signed the biggest office space deal in San Francisco history — 736,000 square feet

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The Exchange on Sixteenth San Francisco Dropbox

Dropbox has made a name for itself as a leader in file sharing and cloud storage.

Now it's taking the lead in a completely different area: real estate. 

The company has agreed to lease 736,000 square feet of office space in the Mission Bay neighborhood of San Francisco. The deal is the single largest office lease in the city's history.

The Exchange is a still-under-construction $570 million four-building complex that is being developed by Kilroy Realty Corporation. In addition to office space, the complex will also have 14,000 square feet of retail space which will be leased to other companies. 

Dropbox's lease will last 15 years, starting at the end of 2018. The company didn't say how much it will pay to rent the space. 

“We’re excited to partner with Kilroy to create a new home for our growing team," Drew Houston, CEO of Dropbox, said in a statement. "The Exchange is a space that will reflect our creative culture and inspire us to continue building great products for our users." 

Dropbox's current office, where it moved in April 2016, is in San Francisco's South Beach neighborhood — about a 25 minute walk from the new building.

The company's current office features a 5-foot-tall chrome panda statue in the entry way — rumored to cost around $100,000 — which came to represent a shift in the company from a buoyant darling of Silicon Valley excess to a serious business with an eye on profitability.

A representative for Dropbox declined to say whether or not the panda will move to the new office.

Take a peek at what Dropbox's new building will look like:

SEE ALSO: Tour Dropbox's luxe Austin office, which has its own gym and music room

Dropbox's new offices will be located at 16th and Owens St. in Mission Bay.



The four-building complex will include both offices and retail space.

They'll also feature courtyards, bike paths, and gardens.



The ground-level retail space is 14,000 square feet and will be leased by other companies.



See the rest of the story at Business Insider

The battle over gentrification is heating up around the US

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In July, a group of long-time, mostly Latino residents of Los Angeles’s Boyle Heights neighborhood staged protests outside a trendy new coffee shop called Weird Wave Coffee, holding signs that read “Amerikkkano” and “WHITE COFFEE.”

Across the country in Brooklyn’s rapidly gentrifying Crown Heights neighborhood, locals lashed out over a new restaurant with decor that included fake bullet holes and a menu that offered a drink called “40 ounce rosé” (malt liquor and wine) served in a paper bag.

Over the past few decades, gentrification debates have migrated from the pages of academic journals into the streets and the mainstream press.

The word, in many ways, is tinged with negativity. And for good reason. In tight real estate markets, it can lead to development that privileges profits over community and shuts people out of neighborhoods they have lived in for decades.

But what about cities struggling to overcome the threat of bankruptcy like Hartford? How does gentrification look in New South cities like Austin and Nashville, where midcentury urban planning destroyed residential communities and left downtowns largely unoccupied?

While doing research on the economic health of Hartford, one of us asked the head of a downtown Hartford nonprofit about gentrification. Her response? “We could use some of that. But we are so far away from it, it’s not even an issue.”

If residential patterns and urban areas vary, so too must the story of gentrification. In other words: Have big cities hijacked the gentrification debate?

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The origins of gentrification

“Gentrification” is a term coined by the British sociologist Ruth Glass in 1964 to explain the return of the middle class to London’s center city.

In the U.S., academics and urban planners first started extensively talking about and debating gentrification in the 1970s. Between 1950 and 1970, urban manufacturing went overseas and white middle-class city-dwellers moved to the suburbs. Concerns over blighted urban centers grew. Sociologists, planners and geographers found new cultural and economic trends to study related to the rise of artist and middle-class loft living and the return of capital investment to urban centers.

Today, the meaning of gentrification no longer refers to the “return to the center.” Instead, it usually means that new and affluent residents or developers are investing in a neighborhood.

This infusion of capital changes the relationships within and between communities. Demand increases and property values rise; poorer residents are displaced as wealthier people move in; new shops appear and the public image of the neighborhood changes. High demand can incentivize landlords to evict residents, at times using egregious practices – like hiring someone to harass renters – in order to escalate rental prices.

Extreme gentrification takes place in the highest-rent, highest-demand places like San Francisco or New York’s Greenwich Village. Rents in New York’s once-booming Bleecker Street have become so astronomical that vacancy is now a problem of too much demand, rather than not enough: Property owners now keep their storefronts empty, hoping a major chain will want to locate in the high-visibility district.

Gentrification isn’t all negative. In an influential and counterintuitive study, Lance Freeman and Frank Braconi, who study urban development, found that poorer residents were less likely to move out of gentrifying neighborhoods than nongentrifying neighborhoods. Safety improves with gentrification, and so can services and amenities.

While some neighborhoods experience positive outcomes, gentrification studies are mostly concerned with access to housing, public space and the loss of community. It seems impossible not to view New York, San Francisco, Los Angeles or Boston through the lens of skyrocketing real estate and displaced residents.

What about other kinds of places?

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The urban in-between

When cities experienced population and economic decline decades ago, some, like New York and Boston, found ways to rebound. Others, like Detroit or Connecticut’s largest city, Hartford, did not.

Hartford continues to experience unusual and difficult financial circumstances.

The city has low home-ownership rates and high poverty rates. But maybe more significant is that the city is the state’s capital.

Half of the city’s real estate is made up of government buildings, educational facilities or hospitals – all of which are nontaxable. With a US$65 million deficit, Hartford is now on the verge of bankruptcy.

Where is Hartford’s gentrification? Or, more precisely, is there a kind of gentrification that would be welcomed in a place like Hartford? A place like Hartford could learn from smaller cities, which are less afflicted by the bloated real estate and speculation that plague places like New York and San Francisco.

In a deindustrialized small city like North Adams, Massachusetts, for example, gentrification is welcomed. The old mill city near the Berkshire Mountains had its sprawling electrical manufacturing plant, Sprague Electric, transformed into a contemporary fine art museum, MASS MoCA.

The museum, in turn, helped transformed the city from a shrinking post-industrial community into an arts and cultural destination. The museum injected $34.4 million into the local economy in 2015, drawing tourists, lowering unemployment levels and creating opportunities for new businesses.

Tourism jobs are not the skilled union jobs Sprague Electric once offered. But without other opportunities, the community welcomes this kind of gentrification. The town was built for 20,000, but only has 13,000 residents. The community wants – indeed, it needs – more people.

There is also what we could call “empty lot” gentrification. Gentrification doesn’t always displace existing populations. Consider cities like Nashville, Tennessee and Austin, Texas, where suburbs bloomed in the postwar era. The center cities never housed the heavy manufacturing of northeastern and Rust Belt cities; until recently, they remained sites of light manufacturing, parking garages and empty lots.

In the early 2000s, former Austin mayor (and real estate entrepreneur) Will Wynn sought to build more residential properties in downtown Austin, and Austin has since seen dramatic residential growth. Empty lot gentrification has its own issues: It can create downtowns for elites. Concerns over gentrification beyond Austin’s city center have grown, and Austin’s famed music venues are getting priced out.

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A tale of two kinds of cities

In bloated real estate markets like New York or San Francisco, critics of gentrification see even the smallest changes – a new park or a new coffee shop – as harbingers for inevitable neighborhood ruin.

For cities needing gentrification, the issues are different. The conversation about popular cities has made academics and policy analysts timid about gentrification. Ailing small cities need to increase visibility to attract more people and develop a stable tax-base.

Hardly a call for free market-driven housing policy, there is no reason policies that minimize the negative effects of gentrification – rent controlmixed income housing and limited equity cooperatives – cannot be combined with efforts to attract the middle class.

The gentrification debates should also not blind us to what made New York and San Francisco attractive cities in the first place. The principles of urban activist Jane Jacobs for healthy city life still hold: diverse uses of streets and public places, mixed-use buildings, a variety of economic and commercial opportunities and local excitement about community building.

But simply getting people into the city cannot be overlooked. In North Adams, new opportunities come from investing in the arts. In Pittsburgh, an openness to technical innovation, museums, universities and a dynamic restaurant culture are creating national buzz about a city that continues to lose population. Detroit just hired the nation’s first chief story-teller to help move the narrative away from stale stereotypes. Throughout European cities, night mayors are charged with inspiring excitement around urban nightlife.

Hartford will never become New York. But why not look to North Adams, Pittsburgh or Columbus for examples of a different kind of gentrification?

Weird Wave Coffee, in other words, might be welcomed in Connecticut.

SEE ALSO: Amazon could detonate a gentrification ‘prosperity bomb’ in the mystery city of its new headquarters

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Inside a $185 million Switzerland mansion that has walls covered in 24-karat gold

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This week, CNBC's "Secret Lives of the Super Rich" went inside what anchor Robert Frank called "the most amazing home we have ever shot."

The seven-floor home, located at the St. Moritz ski resort in Switzerland, was "designed to make a billionaire's jaw drop," listing agent Senada Adzem of Douglas Elliman Real Estate told "Secret Lives of the Super Rich." At $185 million, it's the most expensive home on the market in Switzerland at the moment and is reportedly owned by an unnamed billionaire.

With perks like a private ski lift to the slopes, a $1.3 million home theater, an underground lake, and rooms that surround you with 24-karat gold walls, this home is truly a playground for the wealthy.   

SEE ALSO: An enormous ranch that's bigger than New York City just hit the market for $100 million

The floor-to-ceiling windows are 35 feet high and reveal a sweeping view of the Swiss Alps.



Mink fur covers one wall from top to bottom in the living room.



In the library, red velvet hugs the walls, and a hidden office can be revealed with the flip of a switch.



See the rest of the story at Business Insider

A little-known Brooklyn neighborhood was named one of the world's coolest places — here's what it's like

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Town homes in Sunset Park, Brooklyn

Sunset Park is having a moment.

Earlier this year, Lonely Planet revealed its list of the coolest neighborhoods to visit in the world, and Sunset Park, a formerly industrial neighborhood in South Brooklyn, made the cut.

Recent property developments in the neighborhood — including a $136 million city investment toward a Made In NY Campus, and warehouses that have been repurposed into what is now called Industry City — are eerily similar to what you'll see in Sunset Park's better-known neighbors to the north, like the once-industrial but now-gentrified Williamsburg

In March, a home in Sunset Park sold for a record-breaking $2.05 million, and brokers are predicting that more luxury properties will be built. According to StreetEasy's August rent report, the median asking price for homes in Sunset Park has gone up 22.9% year over year — and still, buyers being pushed out of nearby neighborhoods like Park Slope are looking to Sunset Park for homes within their price range.   

We ventured into Sunset Park to see how the neighborhood is changing and what it has to offer.

SEE ALSO: We went to New York City's most expensive neighborhood — home to Wall Streeters and celebrities like Taylor Swift — and saw why it's so popular

Sunset Park is located in South Brooklyn, just below Greenwood and north of Bay Ridge.



You can access the neighborhood via public transportation using the N, R, and D subway lines. It takes about 35 minutes to get to the southern tip of Manhattan by subway, and it's a roughly 20-minute drive via the Brooklyn-Battery Tunnel.



Sunset Park is a diverse neighborhood. According to census data, 39% of Sunset Park is Hispanic, and 33% is Asian.

Source: Census Reporter



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Here's the best time of year to buy a home — but you have to start house hunting months beforehand

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open house signs

It's house-hunting season.

Between October and December each year, starter home inventory in the US gets a 7% boost, according to new data from Trulia.

In 70 of the 100 largest US metros, the number of starter homes on the market reaches its annual peak during this time, meaning those looking to buy their first home will have more to choose from this time of year.

Trulia defines a starter home as any listing priced below $232,751, based on weighted averages from the 100 largest metro areas in the US. In the third quarter of 2017, the median listing price of a starter home was $171,624.

The next tier, trade-up homes, are categorized as any listing priced between $232,752 and $360,469. A listing above that threshold is considered a premium home.

The number of homes available for first-time buyers the US tends to fall between July and September, when trade-up and premium home inventory is at its peak.

Since 2012, starter home inventories in the summer months have declined by as much as 20.4%, driving prices up and rendering homeownership unattainable for many young Americans.

Starter home inventory peaks in fall, but the best time to buy a home is winter.

Though starter home listings begin to increase and reach a peak during the fall, buyers looking for their first home will find better deals by waiting to make an offer until after the holidays. By the time January rolls around, according to Trulia, prices for all categories of homes drop to their lowest prices.

Think of it as shopping the sale rack — swimsuits are moved to the clearance rack when stores need to make room for winter coats. Homeowners who have had their house on the market since summer or fall will be extra motivated to sell during winter, even if that means accepting a lower price.

According to Trulia, the average first-time homebuyer has to put nearly 40% of their income toward their mortgage payments — 2.3% more than last year. That's a far cry from the standard measure of housing affordability, which says Americans should spend 30% or less of their pre-tax income on housing.

For first-time homebuyers in particular, house hunting during peak inventory season — but waiting to buy — could pay off. You'll be able to explore what's out there and refine your list of "wants" and "needs" before you have to act fast when prices are low after the holidays.

SEE ALSO: 7 of the dumbest things people do with their money before they buy a home

DON'T MISS: Everything you need to know about buying a home, in 7 steps

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Hilarious listing photos show what not to do when putting your house on the market

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Andy Donaldson has been running the Tumblr "Terrible Real Estate Agent Photos" since 2013.

Ever since he went through his own house-hunting experience, Donaldson has been blogging about the most unflattering photos of homes he comes across online.

Below, see a collection of this year's worst photos, showing sellers what they shouldn't do while prepping their home for a photo shoot by realtors. 

SEE ALSO: An enormous ranch that's bigger than New York City just hit the market for $100 million

Homeowners, you can't trick potential buyers into thinking your garage is a dining room.

 



Four walls around a bathroom are usually considered an essential part of a home.

 



You may want to clean up a bit before pulling out the camera.

 



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Trump was 'the most notable loser' on Forbes' list of wealthiest Americans

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Donald Trump golfing

President Donald Trump's net worth fell $600 million to $3.1 billion over the past year, according to Forbes Magazine's calculations, putting him 92 spots lower on the list of America's wealthiest than he was in 2016. 

Forbes wrote that Trump was "the most notable loser" on its list of the 400 wealthiest Americans.

Forbes attributes the drop to a decline in the value of his Manhattan real estate, his $25 million settlement to resolve a class action lawsuit filed against Trump University, and the $66 million he spent on his presidential campaign.   

Trump's New York City real estate is worth $1.6 billion, his real estate elsewhere amounts to $500 million, his golf courses and clubs are worth $570 million, his brand businesses are worth $200 million, and his cash and personal assets are estimated at $290 million, according to Forbes. Trump is now ranked number 248 on Forbes's list. 

Bloomberg was less generous in its estimation, putting the president's wealth at $2.86 billion this year

In February 2017, Forbes pegged Trump's net worth at around $3.5 billion, down $1 billion from the previous year. The magazine has listed Trump among the 400 richest Americans since it began publishing its ranking in 1982. 

Trump made his wealth and business acumen key pillars of his 2016 presidential bid. He kicked off his campaign by saying he was "really rich" and claimed he was worth at least $10 billion.

But the real estate mogul's wealth has long been a subject of debate among journalists and financial experts who have accused him of consistently inflating his net worth without evidence. 

During a 2007 deposition, Trump said his estimation of his wealth depends on his feelings. 

"I'm worth whatever I feel," he said, adding, "I would say it's my general attitude at the time that the question may be asked. And as I say, it varies." 

Former New York City Mayor Michael Bloomberg, who's $45 billion fortune puts him at number six on Forbes' list, took a shot at Trump's claims about his wealth during a July interview

"Let me phrase this carefully so you get the message: I don't know how wealthy other people are," Bloomberg told Germany's "Der Spiegel."

"You mean that Trump may not be a billionaire?" the reporter asked.

"I didn't say that," Bloomberg said. "You said that."

Sonam Sheth contributed to this report. 

SEE ALSO: Michael Bloomberg takes a shot at Trump, implying he's not a billionaire

SEE ALSO: We finally know a lot more about Donald Trump's 'massive' net worth

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The number of retail leases in New York City fell by nearly 25% last quarter

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Times Square

  • New leases in New York City's borough of Manhattan fell by almost 25% last quarter 
  • Times Square was the hottest zone for new leases, CBRE said. 

The Manhattan retail market saw leasing activity fall nearly 25 percent during the last quarter to 506,000 square feet, though there are signs the sector is steadying.

While leasing and renewal activity fell during the third quarter from 673,000 square feet during the three months prior, the number of ground-floor availabilities on Manhattan’s busiest shopping strips continues to decline from the peak registered earlier this year, according to CBRE.

There were 197 ground-floor availabilities during the third quarter on the 16 major retail corridors the brokerage tracks, falling for the second quarter from the peak of 212 spaces in the beginning of the year, according to CBRE.

The overall average asking rent fell 13.4 percent year-over-year to $711 per square foot.

“The retail market in Manhattan is still finding its new level,” CBRE research director Nicole LaRusso said. “The modest decline in the number of available spaces is a positive sign, though rents continue to decline.”

LaRusso pointed out that availability remains high, and a large portion of new deals – about 20 percent – are short-term leases of three years or fewer. That’s a sign that retailers are cautious about opening new stores in Manhattan.

“Short-term leases are becoming an increasingly important factor in helping to absorb available space,” LaRusso said.

Times Square saw the most activity with nearly 64,000 square feet worth of deals, bolstered by the Madrid-based Parques Reunidos signing a 45,000-square-foot lease at SJP Properties’ 11 Times Square for a Lionsgate Entertainment-themed entertainment center. 

SEE ALSO: Why nearly a quarter of Manhattan rental applications are rejected

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Trump's legal team is battling with Beverly Hills over a hedge

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  • A hedge outside of Donald Trump's Beverly Hills mansion is taller than the city allows.
  • Trump's representatives insist that the hedge's height is a matter of security.
  • Trump has reportedly paid at least $1,128.90 in fines for the property.

 

There's a problem with Donald Trump's wall. 

Not the one he hopes to build along the United States-Mexico border, but a hedge, outside his Beverly Hills mansion, that exceeds the six-foot maximum height that the city allows, according to Forbes. Beverly Hills residents can apply for permits for hedges that would otherwise violate the ordinance, but neither Trump nor his representatives have done so.

As a result, Beverly Hills Code Enforcement Officer Josh Charlin has inspected the hedge and surrounding property at least six times since the violation was reported by an anonymous resident in February, and Trump has paid at least $1,128.90 in fines for the hedge through the Trump National Golf Club in Los Angeles.

In response to Charlin's inspections, Trump's property manager called the law that restricts hedge height "ridiculous," and Trump's lawyer, Jill Martin, explained that the Secret Service believes the matter to be a security issue, Forbes reported. In a letter to Charlin, Martin wrote, "We believe that the hedges subject to the Citation are a necessity for the provision of proper security to the owner and his family." 

She indicated that the Secret Service would be "performing a threat and security assessment in the coming weeks to determine the necessity of the hedges," and according to correspondence between Charlin and Beverly Hills Code Enforcement Manager Nestor Otazu, the assessment concluded with the decision to keep the hedge at its current height.

When the Beverly Hills police department contacted Trump's property manager, the manager replied that the Secret Service "has not drafted any letter defending the height limit of the property's trees and has no intention of drafting any letter whatsoever."

For now, the hedge still stands, and the fines will continue to rack up.

SEE ALSO: Melania Trump has a Secret Service agent who looks strikingly similar to her — and it's fueling a wild conspiracy theory

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NOW WATCH: We talked to a UBS behavioral finance specialist about how emotions get the best of even the most experienced investors

The richest real estate developer in the US wrote a letter to Amazon CEO Jeff Bezos offering to pay for the insanely sought-after HQ2

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  • Proposals are due on Thursday from all cities vying to become the future site of Amazon HQ2.
  • Donald Bren, the richest real estate developer in the US, wrote a letter on behalf of his company to Jeff Bezos, offering to finance the entire $5 billion project.
  • Irvine, California is already home to hundreds of other top tech companies, as well as a 1,200-person Amazon outpost.

 

The fight for Amazon's HQ2 has reached a fever pitch.

Proposals are due on Thursday from cities across the US and Canada interested in becoming the future site of Amazon's second headquarters, and one Southern California city is taking desperate measures to clinch Amazon CEO Jeff Bezos' attention.

Donald Bren, the multi-billionaire owner of the Irvine Company, wrote a letter to Bezos on behalf of his company and in companion with the city of Irvine.

In it, he offers to finance the entirety of HQ2 — which Amazon projects will cost about $5 billion — if the e-commerce giant chooses Irvine. The offer is billed by Bren as "a one-click shopping opportunity" for Amazon.

Bren writes:

"With the Irvine Company proposal, Amazon will not be required to invest capital for land acquisition, buildings, or entitlements to build your new business campus. Our company has the long-term real estate assets, capital resources, and flexibility to deliver all your required workspace with lease durations of Amazon's choosing.

"In essence, you would have a one-click shopping opportunity and be able to capitalize on our inplace property development rights, thus avoiding potential delays, because Irvine Company has invested more than 60 years master planning 93,000 acres of land, and designing and overseeing the creation of the largest new city in America…Irvine, California."

Over 250,000 people live in Irvine and it's often regarded as the epicenter of Orange County, an affluent coastal community sandwiched between San Diego to the South and Los Angeles to the North.

Amazon says its new HQ2 will eventually house 50,000 mostly white-collar workers making an average of over $100,000 a year. That's currently about the average income for workers in Irvine.

Bren — who's worth a cool $17 billion— is the chairman of the Irvine Co., which owns about one-fifth of the land in Orange County spread across office, retail, and apartment space, as well as golf courses and hotel resorts.

In the letter, Bren positions Irvine as the ideal candidate for Amazon because "Irvine is ranked by various sources as America's fastest growing, most desirable, best educated, safest, and healthiest large city," he writes.

More than 900 tech companies, such as Google, Broadcom, Blizzard Entertainment, UBS, and Verizon have offices in Irvine, and Amazon already has a 1,200-person outpost in the city.

Southern California is home to the biggest pool of STEM workers in the US, according to the Irvine Company proposal. The University of California, Irvine, a top-ranked public university located in Orange County, awards 42% of its undergraduate students with STEM degrees annually.

At the end of the letter, Bren makes one final plea to his fellow billionaire: "It's 74 degrees on this beautiful October day, the sun is out and the surf's up at our spectacular beaches. Please come join us! The water, like the place, is the perfect temperature."

Read Donald Bren's letter to Jeff Bezos in full below:

SEE ALSO: Donald Trump is not America's richest real estate tycoon — it's another Donald who's worth almost $17 billion

DON'T MISS: Amazon's new HQ2 could come with a scary consequence for renters — here are the cities most at risk

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