Flipping the calendar

Flipping the calendar

A new year brings a new twist to U.S. real estate investors; Germany's growth gathers steam, and Singapore sees a sign of smooth sailing ahead.


"Even [a rise of] 200 basis points is not an issue…It’s still cheap."
Gisbert Rühl, chairman of German steelmaker Klöckner & Co., on investing in its 50 U.S. business sites in the face of rising U.S. interest rates.

US housing: Lots of flipping The financial crisis left many a housing development high and dry, with half-built dwellings abandoned by builders, banks and individual buyers. But the resumption of demand, combined with a shortage of new developable land, has led some investors to get back into “flipping” properties -- but this time, with a focus on purchasing and reselling abandoned developments, neighborhoods and lots rather than individual houses.

According to a National Association of Home Builders, two-thirds of builders reported a low or very low supply of available lots in their markets -- a finding echoed in a second  study which found the supply of vacant developed lots has decreased more than 20% across more than 80 major markets since 2011.

One result: the median price for a single-family-home lot has hit a record high of $45,000, surpassing the previous peak of $43,000, reached in 2006. That’s made it attractive for early investors in abandoned developments to sell to developers who appreciate that in, many cases, zoning, approvals and some infrastructure are already in place from the initial rounds of work.

 

Singapore: Turnaround ahead? Singapore's economy, tied to trade-related services and exports (such as higher-end manufacturing of pharmaceuticals and electronics and global shipping, especially oil) has had a difficult year: GDP shrank 1.9% in the third quarter. Not surprisingly, the 9.1% annualized growth figure in the fourth quarter of 2016 drew   much attention,  Unfortunately, these figures overstate the good news; the growth rate was only 1.8% higher than Q4 2015, thanks to a 6.5% pickup in manufacturing year on year, vs. last year's -6.7% year-on-year contraction.

Nonetheless, the figures have a significant impact on the lives of its small population of 5.9 million – as does the pace of global trade.  Given the uncertainties facing trade in the year ahead, the continuation of the "neutral" stance taken by the Monetary Authority of Singapore in its semi-annual policy statement in October may be warranted.

 

German economy: Faster pace A sign of Germany's continued recovery: the headline annual inflation rate for December of 1.7% was the biggest jump on record, much higher than November's year-on-year figure of 0.7% and notably higher than expectations.  Another sign: unemployment for December fell by a seasonally-adjusted 17,000 to 2.638 million, vs. an expected fall of only 5,000. The jobless rate stayed at 6%, matching the lowest rate since reunification.in October 1990.

Germany's inflation rate is now within range of the European Central Bank (ECB)'s target of about 2%, raising some questions about the ECB's recent decision to extend its quantitative easing program. But since the pickup in inflation appears to be tied to rising oil prices rather than other factors, the case for caution may be overstated.

 

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