UAE’s $35 Billion Egypt Deal Marks Gulf Powers’ Buying Spree
Crown jewels including resorts and a gas station chain are up for grabs. Saudi Arabia mulls purchases.
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Crown jewels including resorts and a gas station chain are up for grabs. Saudi Arabia mulls purchases.
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The delinquency rate for US small businesses climbed to a three-year high this month, reflecting the impact of rent spikes and declining revenue, according to a monthly survey.
Sep 20, 2019
Bloomberg News
,(Bloomberg) -- Rent caps are starting to put pressure on apartment-building prices in the country’s most-expensive real estate markets.
Multifamily properties in states where lawmakers this year have passed tougher restrictions on rent growth are seeing their value erode as investors demand higher returns for the risk of owning the apartments. Capitalization rates -- a measure of investment yield that rises as prices fall -- climbed in the second quarter in New York, California and Oregon, all states that have enacted rent caps, according to an analysis by Real Capital Analytics Inc.
“I don’t think it’s a coincidence,” said Jim Costello, a senior vice president at the data firm. Investors “are saying that the opportunity for future growth is going to decline, and if I’m paying a price for it today, I need something extra.”
Rising rents have unleashed a pro-tenant fervor among lawmakers in some of the country’s priciest coastal markets as they wrestle with ways to curb unaffordability. In New York, rules were rewritten for about 1 million rent-regulated properties, making it almost impossible for their landlords to raise rates, even after investing in capital improvements. Building sales began declining before the final bill was passed, as investors were uncertain how to price in potential restrictions.
Oregon lawmakers imposed statewide rent regulation on all landlords, limiting increases to 7% annually, in addition to inflation. California had toyed with rent control for more than a year, with the legislature eventually approving a 5% cap, plus inflation, this month.
While the investment-yield increases are small, they might just be the beginning, as buyers establish a new way of valuing apartments in those states, Costello said.
“I do think it can go higher,” he said. “Asset values have changed.”
To contact the reporter on this story: Oshrat Carmiel in New York at ocarmiel1@bloomberg.net
To contact the editors responsible for this story: Rob Urban at robprag@bloomberg.net, Christine Maurus, Daniel Taub
©2019 Bloomberg L.P.