Charleston: Makes Top 20 Hot Markets for Real Estate Investors

Charleston - Market Analysis:


Charleston is a coastal city in South Carolina with thousands of miles of waterways, and a year-round climate that allows for outdoor recreation of all types. Beyond the beauty, Charleston has emerged as a surprising economic success story that is luring buyers.

Over 250 small-scale tech and digital companies have set up home in the Charleston area, making it one of the 10 fastest growing cities for software and Internet technologies in the nation.

Halsey Park, a new community being sold in Harleston Village features row houses with private rooftop decks and harbor views. This is one of the last developments in the heart of downtown Charleston. Row houses are all priced in the $1.4 million range. In the historic core, prices can easily top $10 million all of which helped make Charleston a Top 20 Hot Market for Real Estate Investors.

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Zambia: Makes Top 20 Hot Markets for Real Estate Investors

Zambia - Market Analysis:



Zambia - This southern Africa nation has huge virgin tracts of agricultural land being opened up by the government, which is attracting foreigners looking to invest.

Agriculture is booming in Zambia, with wheat, soy, corn and cattle all strong investments. Farms and lodges are as low as $130 to $2,500 per acre. For sale right now is Mumbuluma, 6,000 acres in Kafue National Park priced at $10 million, all of which helped make Zambia a Top 20 Hot Market for Real Estate Investors.

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Houston Real Estate Market Ranks Top 5 Worldwide as Boom Continues

International real estate investors are falling in love with Houston, a fast-expanding energy hub that’s luring buyers from Toronto to Tel Aviv seeking properties with lower costs and higher returns than buildings in the priciest U.S. cities.

Firms from outside the U.S. acquired $2.83 billion of Houston (OFCRAHOU) office buildings in the past three years, according to Real Capital Analytics Inc. They were the largest net buyers of any investor class, spending four times more than U.S. real estate investment trusts, which ranked second. Last year, Houston for the first time was among the top five global cities in an annual survey by the Association of Foreign Investors in Real Estate that dates back to 1994.

“Houston has gained broad acceptance as a top-tier market,” said Greg Kraus, managing director at Atlanta-based Invesco Ltd. (IVZ), a global adviser for pension clients including QSuper Ltd., an Australian fund for public-service workers. “It’s reflected in job growth, more gas refineries, more oil out of the Houston port and a true international feeling.”

The boom in and around the fourth-largest U.S. city stretches from downtown high-rises and boutique offices in the Galleria district to the “Energy Corridor” along the Katy Freeway, where Texas’ Lone Star symbol adorns overpasses and construction cranes swivel beside a rush of commuter traffic.

Houston investors bullish on local economy

Houston-area high net-worth investors are more bullish on the state economy and more skeptical of the national and global economy than the average U.S. investor.

According to a Morgan Stanley (NYSE: MS) investor survey, Houston’s local investor base is more optimistic than the national average — and more in love with Houston real estate than even the city’s dominant energy sector.

Besides real estate, Houston’s favorite industry sectors for investment include energy, natural resources, technology, biotechnology and pharmaceuticals, the survey said.

Capitalization Rate

One of the first equations you will come across in real estate investing is Capitalization Rate (CAP Rate). The CAP Rate simply looks at the potential return of the investment. The higher the percentage, the larger your return. In its simplest form, it looks at the ratio of gross yearly income generated divided by the cost (value) of the property:




Example:
For instance, if we located a $310,000 property that was expected to generate $2100/month in rent, our gross CAP Rate would be:


Real estate investors use the CAP Rate in a similar manner in which stock investors use the P/E Ratio*. These formulas allow for basic, quick calculations to be made to help a person quickly determine if an asset is priced at an attractive valuation.

On the surface, a company sporting a P/E Ratio below 10 usually looks to be cheap. Similarly, a CAP Rate of over 10% will look to be a good deal.

Home Sales Continue to Climb

The National Association of Realtors reported home sales edged up 0.6% to an annual pace of just under 5 million homes. Compared to a year ago, the pace of sales was up nearly 10%.

The pace of sales would have exceeded that level were it not for tight credit and insufficient houses for sale to meet rising demand, the group said.

"Without these frictions, existing-home sales easily would be well above the 5-million unit pace," said Lawrence Yun, the Realtors' chief economist. He said that customer traffic is up 31% compared to a year ago, showing greater demand than actual sales.

The recovery in the housing market so far this year has been a major driver of overall economic growth, lifting not just the pace of home building but also retail sales. Near record low mortgage rates coupled with improving unemployment, a drop in foreclosures and a tight supply of homes for sale have all combined to lift home prices.

The median price of a home sold in April was $192,800, up 5% from March and 11% from a year ago. And the number of homes on the market represented a 5.2-month supply at the current sales pace. While that is up from March it's down from a 6.6-month supply a year ago.

The percentage of sales considered distressed sales -- homes in foreclosure or short sales in which the seller owes more on the home than the selling price -- now represents only 18% of sales, down from 28% a year ago.

The pace of new home sales has been rising every month for nearly two years. The latest sales reading is the strongest level since November 2009, when sales were inflated by a short-term home buyer's tax credit.

Cash-On-Cash Return

Definition of 'Cash-On-Cash Return'
A rate of return often used in real estate transactions. The calculation determines the cash income on the cash invested.
Calculated as follows:




'Cash-On-Cash Return' Explained
For example when you purchase a rental property, you might put down only 10% for a cash down payment. Cash-on-cash return would measure the annual return you made on the property in relation to the down payment.

Assessed Value

Definition of 'Assessed Value'
The dollar value assigned to a property for purposes of measuring applicable taxes. Assessed valuation is used to determine the value of a residence for tax purposes and takes comparable home sales and inspections into consideration. It is the price placed on a home by the corresponding government municipality to calculate property taxes. In general, this value tends to be lower than the appraisal fair market value of a property.

Florida Leads U.S. in Foreclosures

Florida is the nation's foreclosure state, and Miami is the foreclosure capital.

The greater Miami area posted the highest foreclosure activity of any large city in the nation in the first quarter, with one in every 79 residences receiving some type of foreclosure filing, RealtyTrac said.

Miami's foreclosure activity was more than three times the national average.

Florida continued to rank No. 1 among the 50 states in the first quarter, with more of its homes getting foreclosure filings than in any other state, according to the Irvine, Calif.-based real-estate data firm.

Six other Florida metro areas also ranked in the top 10 in the nation in foreclosure activity in the first quarter. They are: Orlando (No. 2, with one in 86 housing units receiving a foreclosure filing); Ocala (No. 3, with one in 92); Tampa (No. 5 with one in 100); Jacksonville (No. 7, one in 105); Palm Bay-Melbourne-Titusville (No. 8 with one in 109); and Lakeland (No. 10, one in 128).

During the first quarter, 85,671 Florida residences got some sort of foreclosure filing. That was one in every 104 residences -- a rate nearly three times as high as the national average of one in every 296 residences, RealtyTrac said.

Foreclosure activity in Florida increased 7 percent in the first quarter from the prior period and jumped 17 percent from the year-earlier quarter, the firm said.

The increase reflects a step-up in activity by lenders who had held off on pressing foreclosures during the "robo-signing'' scandal that spotlighted an array of improprieties in the way lenders handled cases. Since last year's major legal settlement between 49 state attorneys general and five big banks, lenders have clearer parameters on how to handle foreclosures and have been working through their backlogs.

Worries that a mountain of foreclosures in Miami would flood the market and derail the housing recovery have proven unfounded so far. Amid a shortage of homes and condominiums for sale and a growing crowd of eager buyers, distressed properties are getting snapped up quickly. Housing prices in the area are posting steady gains.

Bahrain's Investcorp Spends $200 Million On US Real Estate

DUBAI —Investcorp, a Bahrain-based investment firm, bought five office properties in the Washington, D.C., Denver and Houston metropolitan areas for about $200 million through its U.S.-based real estate arm, it said on Tuesday.

The properties total more than a million square feet and are located in "markets characterized by economic growth and low unemployment," the company said in an emailed statement. The three properties are the Tysons Commerce Center in Tysons Corner, Virginia, Westmoor Place in Denver and One Westchase Center in Houston, the statement said.