Lessons Learned from the Tokyo Commercial Real Estate Market

During the first quarter of 2014, Tokyo held the honor of having the largest commercial real estate market in the world, according to a report published by The Wall Street Journal. What is particularly astonishing about this news report is the fact that this marks the first time that the Japanese capital climbed to the top of the list since a survey of the commercial real estate market in major cities around the world was first launched 10 years ago. Much of the strong demand for commercial real estate in Tokyo has been driven by an increase in international investment, which surged by more than 70 percent year-over-year, catapulting Tokyo past both New York and London. Such growth is even more surprising considering that Tokyo has endured more than 20 years of continual price declines since a bubble collapse in the early 1990s. Prices finally began to increase in 2013 and have been further buoyed by a pro-growth economic program instituted by Prime Minister Shinzo Abe. As prices continue to rise in Tokyo, an increasing number of investors are turning their attention beyond the capital to seek out viable property investments. Higher prices have also encouraged some occupants to purchase the properties they previously rented. By comparison, the commercial real estate market in the United States has made significant strides toward recovery in the last year. According to data released by CoStar Group, commercial real estate represents $12 billion of the U.S. economy. Market value declined by 25 percent during the financial crisis as many businesses shut their doors, leaving office spaces empty. Recently, however, the demand for commercial real estate in the United States has strengthened and prices are finally returning, but have not yet managed to attain the same level of activity as that of Japan. So, what can U.S. investors learn from the Japanese commercial real estate market? With financial pundits predicting that commercial real estate recovery will continue to accelerate in 2014, investors should be prepared to jump ahead of the fray or be caught unaware. As prices continue to rebound, investors who have been sitting on the sidelines waiting to see how far the market will drop before jumping in should note that the time to take action could be now. While distressed properties may still remain on the market, they will likely become increasingly fewer. Foreign investment in commercial real estate is already on the rise in the United States, as foreign investors recognize the significant potential that remains untapped in the U.S. market. This is particularly true as a number of countries around the world face record inflation. While countries such as Russia, Japan, and China have traditionally had an interest in commercial real estate investments in the U.S., even the Israelis are now increasingly looking toward the U.S., with Israel becoming the third-largest foreign investor in American commercial real estate in 2013. With foreign investment in U.S. commercial real estate on the rise and prices poised to continue increasing throughout the remainder of the year, the United States could be in position to soon overtake Tokyo. Investors would do well to sit up and pay attention today.

Jim Rickards 9/11 was the most blatant case of Insider trading Ive ever seen, thats from a top legal economist Pentagon CIA advisor.

James G. Rickards is an American lawyer, economist, and investment banker with 35 years of experience working in capital markets on Wall Street. He is a writer and is a regular commentator on finance. Rickards has been advising clients, including the Pentagon and the CIA, of an impending financial collapse, of a decline in the dollar, and a sharp rise in the price of gold for years. Rickards is the author of The New York Times bestseller Currency Wars, published in 2011.

Marine Le Pen: EU will collapse like the Soviet Union

 

 Marine Le Pen "The interests of France lay in a deepening relationship with Russia and taking back Frances sovereignty"  She can lead France out of the EU zone.  She has the sovereign people of France behind her to take back the reins of their sovereignty , re-establish their national identities and usher in their own foreign policies that benefit their own countries and not the EU.

Let's not forget that the lofty purposes the EU originally set for itself included: to give Europeans the convenience of one currency, to enhance mutual prosperity, and to reduce political tensions after centuries of animosity and war. However the inconvenience of not being able to print your own money or set your own interest rates across massively disparate economies would seem to have been overlooked. Hence negating the second two ideals or even making the situation worse, due to the inertia, bureaucracy and cost of such a monstrous dystopian failure.

 

Nationalism is the future, even the left know this hence their hysteria at the mere mention of European countries regaining their sovereignty.

 

 

 

QE And Ultra-Low Interest rates don’t fight deflation – they CAUSE Deflation

Sure, Japan is the template for the West and prime example, 25 years of printing yen with Zero rate bank rates. The RE market is still 80% below it's 1990 peak and struggling to tread water along with the Nikkei stock market which is around 70% down from its heady 1990  >40,000 peak. Low bank rates + QE leads to deflation

“I Died Defending Junk Economics and Market Fundamentalism”

JIM WILLIE BOMBSHELL: CHINA & RUSSIA HAVE ACCUMULATED OVER 40,000 TONS OF GOLD RESERVES FOR USD REPLACEMENT!

Jim Willie Interview providing some of his BOLDEST & MOST SHOCKING Information

• Willie dissects the Holy Grail Gazprom gas deal, which he states is an OPEN DOOR for the dumping of Treasury bonds in exchange for energy
• Russia Liquidating T-bonds through Euroclear in Belgium to acquire gold
• Big Surprise Coming for London Boys: Frankfurt to Become Financial Hub For All of Europe & Asia- Willie reveals insider details
• Large sovereigns (Russia, China, India, Saudi Arabia) now working together to source massive gold reserves for gold-backed USD replacement
• China & Russia Have Accumulated Over 40,000 Tons of Gold Reserves for USD Replacement!!

Rigging the price of Gold interview with Lars and Bill

A fascinating interview with Lars and Bill discuss gold price suppression and the flawed policies of the world’s central banks.

Bill’s understanding of the gold market is second to none, so if you have an interest in the yellow metal, you’ll want to watch this...

What If China Has a Fukushima?

What If China Has a Fukushima?

China has never suffered a Three Mile Island-like nuclear power plant accident, much less a Chernobyl meltdown or a Fukushima disaster.

But now that the government under Premier Li Keqiang has put the country on a fast-track for nuclear power development, with dozens of new reactors scheduled to launch by 2020, the insurance industry is focusing attention on the difficult question “what if?”

China’s insurers have been taking a cue from the National People’s Congress, the nation’s top legislature. A special panel under the NPC’s Environmental and Resources Protection Committee was recently ordered to draft a nuclear safety law, the nation’s first, with a built-in framework for power plant accident compensation.

NPC Standing Committee Vice Chairman Shen Yueyue said in February the law has reached the legislative agenda.

Zuo Huiqiang, general manager of the Chinese Nuclear Insurance Pool, expects the law to be enacted within two years. The 15-year-old CNIP is a collaborative effort of 25 Chinese insurance companies including China Reinsurance Group, Peoples Insurance Company of China and Ping An Insurance Co.

“During the early period for nuclear power development,” Zuo said, “coming up with plans for what to do if something goes wrong is the responsible thing to do.”

Certainly, there’s plenty of work to be done in the insurance arena to make sure China’s has a compensation response plan in place before an accident occurs. For example, liability caps for China’s nuclear accident insurance policies are now the lowest in the world.

Under a 2007 State Council directive spelling out nuclear accident compensation plans, any of China’s 19 nuclear power plant operators such as China Guangdong Nuclear Power Holding Co.(CGN), operator of the Daya Bay Nuclear complex in the southern province of Guangdong, and China National Nuclear Corp. (CNNC), which runs the Qinshan nuclear power plant in the eastern province of Zhejiang, must have insurance that covers financial losses and injuries up to 300 million yuan. If a legitimate compensation claim exceeds that maximum liability, the central government will provide up to 800 million yuan extra to cover the costs.

“Liabilities of 300 million yuan or less are to be assumed by nuclear operators, and the government is responsible for the next 800 million,” Zuo said. “Even though there’s no clear wording for anything over 1.1 billion yuan, the public nature of nuclear accidents almost definitely means that the government will bear the burden.”

Thus, the 2007 directive in effect is a form of government policy support for the nation’s nuclear plant operators. But because of the nation’s liability caps, the level of support is relatively modest compared to what’s in place in other countries that use the atom to generate electricity.

China’s limited liability insurance system stands in sharp contrast to the unlimited liability coverage that protects the public in Germany, Switzerland, Japan, Belgium, Russia and the United States.

All other countries with nuclear power around the world, including Britain and Spain, have a limited liability system like China’s.

The Chinese insurance pool’s direct underwriting capacity is a respectable US$ 898 million, behind only Japan, Britain and Switzerland. In terms of compensation caps, Belgium has the highest at US$ 1.5 billion, followed by Japan and Switzerland at US$ 1.2 billion each.

In China, a lot more money would be needed to cover damage in the event of a major catastrophe.

“If there’s ever a problem, this liability limit will certainly be too low,” said Liu Yubo, CNIP’s deputy general manager....

*** caixin / link

Thomas Piketty is a rock-star economist — can he re-write the American dream?

Thomas Piketty is a rock-star economist — can he re-write the American dream?

When the movie is made about the fall of Western capitalism, Thomas Piketty will be played by Colin Firth. Piketty, whom the Financial Times called a “rock-star economist”, isn’t a household name — but he should be, and he has a better shot than any other economist. He is the author and researcher behind a 700-page economic manifesto, titled Capital in the 21st Century, that details the path of income inequality over several hundred years.

This sublime nerdishness is, somehow, a huge hit. It is now No 1 on Amazon’s bestseller list and sold out in many bookstores. When Piketty spoke on a panel this month at New York’s CUNY with three other economists — two of them Nobel-prize winners, Joseph Stiglitz and Paul Krugman — the Frenchman was the headliner. The event was so packed that the organizers had to create three overflow rooms. Weeks after the release of Capital, intellectuals are still salivating, even calling Piketty the new de Tocqueville.

This is quite a burst of stardom for a man who, despite his understated Gallic charm, is very much the bearer of bad news. Piketty’s sublimely nerdy book, packed with graphs, statistics and history, is all evidence for an immensely depressing theory: that the meritocracy of capitalism is a big, fat lie.

Piketty’s research, which is immaculate, reaches back hundreds of years to establish a simple thesis: the American dream — and more broadly, the egalitarian promise of Western-style capitalism — does not, and maybe cannot, deliver on its promises. That, he writes, is because economic growth will always be smaller than the profits from any money that is invested. Economic growth is what we all benefit from, but profits from invested money accrue only to the rich.

The consequences of this are clear: those who have family fortunes are the winners, and everyone else doesn’t have much of a shot of being wealthy unless they marry into or inherit money. It’s Jane Austen all over again, and we’ve just fooled ourselves that the complicated financial system has changed a thing.

This is a deep point. Many American households, if they are lucky, will grow their wealth at the same rate as the economy. But, because the wealthy are growing their fortunes at a much faster rate, no one else can ever catch up.

Let’s repeat that: no one else can ever catch up.

This is where Piketty adds more nuance: it’s not just inequality of wealth and income that we’re struggling with, but inequality of opportunity. That’s of far more concern. In essence, he is saying, we’re lying to ourselves if we believe that hard work will lead to wealth. Mainly, wealth reliably leads to wealth. Everything else is chancy. The middle class is playing the economic lottery to improve their lot in life, while the wealthy have a sure thing.

This is clearly fraught — and to some, like the New York Times columnist David Brooks, it sounds like class war (he calls it “angry progressivism”). Piketty’s purpose is not to point out that inequality exists, or that it’s growing — both of which have been established ad nauseum by everyone from President Obama to Pope Francis. Piketty’s point is that we are actually doomed to inequality.

It’s hard to argue with this, really — Piketty’s research is too good, too sprawling, too complete. It’s as good as fact. It codifies what many suspected. Piketty’s point is accepted wisdom in most of Europe, where, in France and Germany, the morality of capitalism is regularly questioned.

But there remains a lot of controversy anyway. Why? Because Piketty wants to change the lever on income inequality by putting a tax on wealth — not on income, which is the stuff of the middle class, but on fortunes themselves, on the money that is invested and reinvested and compounded and grown....

*** The Guardian / link

Tier 1 Chinese cities begin property discounting

Tier 1 Chinese cities begin property discounting

“Two weeks ago the price fell 200,000 yuan,” “6 hours ago the price fell 100,000 yuan,” …… Yesterday, the sites of real estate companies show homes in the east, south and west Third Ring large area, about thirty percent of listings are marked with The green arrow indicates the listings with price cuts have almost quadrupled since the period before Spring Festival. Such a situation from two weeks since the beginning of April, the city is currently at this largest second-hand housing sales real estate agent are starting to tell homeowners who ask for high listing prices, “no.” Every home exceeding the average price for the area is being persuaded one by one to cut their asking price, otherwise they will be removed from the website, “off the shelf.”

Reporter survey found that many hot spots in the district, real estate agencies have taken as much as 40% of the properties off the market, resulting in an eyeful of lower prices online. Meanwhile, statistics from “Love My Home” (and other agencies show that in April, Beijing region through its stores traded second-hand housing transactions , the average transaction price of 31,265 yuan / square meter, with a full month of March compared to the average trading price fall about 4%.

“My agent told me to drop the price by 100,000 yuan because no one has looked at it over a week.” Put yourself in public last week, Ms. Liu lowered her second-ring road second-hand asking price, still no one came to see it. From the beginning of the month, she has cut her 80 square meters two-bedroom apartment by nearly 20,000 yuan.

Liu is not only one, the reporter in the chain of home listings online Yuanjianmingyuan district saw, more than 90 sets listed online listings, nearly 30 percent of listings are marked with green price sign — ranging from a few (a few 10,000s), to as many as 200 to 300,000 yuan. Statistics show that all of these homeowners lowered the price in the last two weeks.

“Through our efforts, the district where many homeowners have recently lowered the listing price, and are basically starting with cuts of 50,000 yuan. Doing so mainly to prevent the new sellers from comparing to the online listings high offer, thereby pushing overall pricess. Realtor Wu said for new listings, the owners will make reference to similar sized residential listings with price quotes given. For example, Yuanxianmingyuan less than 52,000 yuan average residential price, but individual owners if quoted 55,000 yuan, the new majority owners will refer to this listing higher offer, and then increase the average housing price.

A South Third Ring Road, East Third Ring Road real estate broker, said that after consultation with the homeowner, they reduced second-hand housing significantly more in April, accounting for almost 30% of the total valid listings. In contrast, those who insist on asking high prices have become invalid listings.

Reporter survey found that, after half a month of busy introducing broker, the city used some hot area of online listings leaving only 50-60% of the peak listings. In other words, the remaining approximately 40% for whatever reason haven’t adjusted their price are temporarily off the market. Yesterday agents at several real estate brokers said persuading the old and new homeowners to lower their price has become their main job, in the task of “discouraging” listings, stands at about 50% of the online total listings.

“For example Xishanfenglin 1-4 there was about 90 listings, after removing the high prices homes, there are about 40 to 50 listings now.” Xishanfenglin district real estate agent Chen said. Similar Xishanfenglin phenomenon of mass removed expensive listings in the rings are very common. However, although online shows decreased listings, but in fact, the proportion of listings ready to deal has greatly improved. “Late last year, if a customer came to look at homes, we have the key for several, if a customer comes now, if he wants to see 10 homes a day, no problem.” He said.

After some adjustments, the agency’s online listings actually increased rather than decrease, but also with brokers “hard to stay” exclusive listings are not unrelated.

“Call me last weekend intermediary brokers have seven or eight people, half of which advised me to check with the stores ‘exclusive quick sales’ contract.” Pang said the public, in accordance with the broker’s recommendation, if the homeowner with the agency signed an “exclusive quick sale” contract, which is equivalent to bind listings from this agency does not allow homeowners and then selling through other intermediaries, and intermediaries mouth so-called “quick sale” is its commitment within three months the house is sold, the seller will otherwise receive compensation of 1,000 yuan. According to sellers’ reports, signed with the agency if the “exclusive quick sale” contract, which would not have strict restrictions on listing price, the equivalent of all the parties agreed to make some concessions....

*** macrobusiness / link

GPIF Shakes Up Committee With Three Abe Panel Members

GPIF Shakes Up Committee With Three Abe Panel Members

Japan’s government pension fund overhauled its investment committee, adding three members of a state panel that urged it to cut bonds, as the balance of power shifts at the world’s biggest manager of retirement savings.

Yasuhiro Yonezawa, who sat on the group handpicked by Prime Minister Shinzo Abe that recommended a strategy and governance revamp at Japan’s 128.6 trillion yen ($1.25 trillion) Government Pension Investment Fund, will join the committee, the health ministry said. Yonezawa, 63, is expected to be named head, according to media reports. Sadayuki Horie and Isao Sugaya were also appointed, with only two of 10 previous members remaining and the committee’s size reduced to eight.

“Several stages are needed to change GPIF’s governance structure, and the first is to change its investment committee members,” Takatoshi Ito, who headed the advisory group, said in an interview on April 17. “Our panel advised that the investment committee should hold more power, as the fund currently has no board of directors.”

The appointments suggest the ministry is heeding the directives of Ito’s group amid mounting pressure on GPIF to cut reliance on domestic bonds as pension payouts swell and Abe and the Bank of Japan seeks to spur price gains. GPIF has already implemented several of the panel’s recommendations, including readying to diversify into areas such as infrastructure, adopting benchmarks like the JPX-Nikkei Index 400 for domestic stocks and preparing to hire in-house investment experts at market rates.

The health ministry appoints the members of the committee, which monitors the implementation of GPIF’s policies and advises the president.

Yonezawa, a professor at Waseda University’s Graduate School of Finance, is also on a 21-member advisory group helping the ministry of health conduct a five-yearly review of public pensions due this year, which may lead to a change in asset allocations. He sits on a 10-member ministry committee that set GPIF’s new return target of 1.7 percent plus the rate of wage growth last month and said the fund no longer needs a domestic-bond focus.

“I’m convinced that he will work in line with our panel’s report to enhance GPIF’s investment and strengthen its risk management and governance,” said Masaaki Kanno, chief Japan economist at JPMorgan Chase & Co., who was also a member of Ito’s group.

Yonezawa is expected be named chairman of the investment committee, according to reports by the Nikkei newspaper and Kyodo News on April 19.

Horie is a senior researcher at Nomura Research Institute Ltd. and previously worked for Nomura Asset Management Co. Sugaya, 61, is managing director at the Japan Trade Union Confederation, known as Rengo.

Two women have been appointed: Junko Shimizu, a professor of international finance at Gakushuin University in Tokyo, and Yoko Takeda, chief economist at Mitsubishi Research Institute Inc. Also joining the group is Setsuya Sato, a professor in the English communications department at Toyo University who also served as a financial adviser to the World Bank and public policy director at UBS AG.

The remaining two are Hiromichi Oono, a board member at Ajinomoto Co. and Kimikazu Noumi, president and chief executive officer at Innovation Network Corporation of Japan.

Ito’s panel recommended in November that legislation be enacted to give GPIF independence from the health ministry, which has ultimate responsibility for the fund. As a transitional measure until the law is passed, multiple members of the investment committee should be hired full-time, according to the panel. The health ministry’s statement made no mention of full-time officials.

A system where GPIF’s head has sole decision-making power and responsibility “may fail to function adequately,” Ito’s panel said in its report in November. Takahiro Mitani, the fund’s president, currently has sole authority.

GPIF and the health ministry should “quickly and steadily” enact necessary policies following the recommendations by Ito’s panel, according to a cabinet decision on Dec. 24.

“The cabinet is the driver of change” for GPIF, Ito told Bloomberg News. “The cabinet is going to keep pushing.”...

*** bloomberg / link

The Downfall of Rome: Can a New Mayor Stop the City’s Decline?

The Leonardo Express rumbles from Rome’s airport right to the city center. After 32 minutes, it arrives at its final destination, Termini, the city’s central station. An ad in a pedestrian tunnel at the station reads, “Roma Termini — a Place to Live.” Some have taken the message quite literally.

It’s 11:10 p.m. Stranded people from around the world are wrapped up in their sleeping bags as they lay in front of the exit on the north side of the station. On some nights, up to a hundred homeless huddle together like freezing people in front of a fire. Many of those who sleep here are African refugees.

During the daytime, Roma from Romania represent the majority in and around the station. Left largely unchecked by the local authorities, they aggresively try to squeeze money out of foreign tourists.

A comment by one British tourist recently got posted on the Facebook page of Ignazio Marino, who became the city’s mayor in June. The tourist said she had never before experienced “a more wretched hive of scum and villainy” than when she arrived in Rome by train. For safety reasons, she wrote, it is advisable to “spend as little time as possible” at Termini.

Marino takes criticism seriously, but also in a sporting manner. As he sits at his desk in Rome’s Palace of the Senate on Capitoline Hill, a building once remodeled by Michelangelo, he exudes the aura of a man at peace with himself. Two months ago, he was still cursing his opponents who, he says, wanted to let the Eternal City go up in flames just as Emperor Nero did. At the time, Marino made clear that he wasn’t prepared to play the role of the “capital city’s liquidator-in-chief.”

What had happened? Rome was on the verge of bankruptcy and the mayor said the only way to possibly rescue the city would be for the national government to jump in with emergency aid to the tune of €600 million ($829 million) within 24 hours. Marino got his wish and the city didn’t go up in flames. Standing beneath a photo that shows him in an intimate embrace with Pope Francis, the mayor now says he wants to move forward. After all, he adds, “spotlights from around the world will be shining on Rome” on April 27, and 2 billion people will be watching on their televisions.

On Sunday, the two most popular popes of the 20th century — John XXIII and John Paul II — are to be canonized on St. Peter’s Square by Pope Francis. Catholic pilgrims from around the world plan to attend, and hotels in the capital city are almost entirely booked out.

For at a short time at least, Romans will be “able to dream of living in a truly European city,” because the metro, for once, will finally operate at night to help accommodate the expected 3 million visitors, the local citizen’s advocacy group Residents of the Historical Center notes caustically.

The old Roman establishment feel they are being ignored by politicians and that they have been forced to look on powerlessly as one fast food restaurant or bed and breakfast after the other has replaced the last remaining artisan shops in the heart of the city.

More than 12 million tourists visited Rome last year, and this despite the fact that the city once known as Caput mundi, or the capital of the ancient world, has since lost much of its splendor. That, at least, is what many residents say.

Novelist Mauro Evangelisti warns visitors, like the pilgrims who are about to descend upon his city, that they must brace themselves for “an old airport, crooked cab drivers, swindlers, pickpockets” and streets full of potholes like in Havana. In an open letter published prior to the last municipal election, 21 Roman intellectuals lamented what they saw as signs of the city’s downfall and “cultural gloom”.

Meanwhile, Carlo Verdone, one of the leading actors in the movie that took this year’s honor for Best Foreign Picture at the Oscars, “The Great Beauty,” even goes so far as to describe his city as a true to scale likeness of a “totally failed country.”

Matteo Renzi, Italy’s new prime minister, is now calling for radical reforms. Since it narrowly averted insolvency at the end of February, the capital city has, to a certain extent, been under the yoke of the national government and the mayor has been ordered to undertake draconian austerity measures. This is the last remaining opportunity for turning the city around, Renzi’s state secretary for the economy recently said. Rome, he said, should become a shining example for the rest of Italy to follow.

But where to begin? Upon their arrival, the first thing some pilgrims to Rome will see is a five-and-a-half-meter (18 foot) tall bronze statue of Pope John Paul II. In what appears to have been wise foresight, the former leader of the Catholic Church has his back turned to the station forecourt, which is littered with drug addicts’ syringes and grocery store shopping carts that homeless people have filled to the brim.

A wiry, bald-headed man walks right through the turmoil on a recent morning and says, “The first thing that needs to be done is for the city to reconquer its public spaces. There is not a single street left in the entire city where you have the feeling you’re in Europe — I mean, where everything works as it should.”...

*** der spiegel / link