News from the NAR: The U.S. Ripple Effect on Foreign Investment

This morning the National Association of Realtors released the news report of a rippling effect on foreign investment as a direct result from the mortgage crisis and resulting housing crunch. Here is what they had to say this morning:

As the U.S. begins moving out from under the housing crunch, other world markets are just beginning to feel the “overseas aftershock” of the global financial system, according to the Sept. 4 Business Week online magazine.

What do bad home loans in Alpharetta, Ga. have to do with office buildings in London or Tokyo? “Plenty,” says Business Week. Global lenders, wary of further credit problems are denying credit to many builders and/or instituting tougher terms on commercial property loans. This, in turn, impacts employment markets, which impact rents and causes developers to rethink plans. The whole global commercial property market has slowed with the value of commercial real estate transactions worldwide at only $306 billion for the first six months of 2008–about half the amount for the same period in 2007, according to Real Capital Analytics.
But it’s not just the U.S. subprime mortgage situation at play.
An overall softer economy and weak consumer confidence has hurt smaller developers–particularly those is markets that heated up quickly, including those servicing U.S. outsourcing (think IT); a U.S. sector that is slowing along the overall economy. In spite of all this, Business Week notes that opportunities exist, especially for those with cash.

Sovereign wealth funds (SWF), which are state-owned entities that manage savings for investment purposes, are key players in commercial real estate and are flush with cash. According to an article in the April Real Estate Forum, SWF have grown from about $500 billion to more than $3 trillion since the 1990s, with projections of tripling that amount by 2012. Go to pg. 10 to read the full article:
***End of News Report***



State keeps two Seattle construction cranes shut down

In a recent news brief aggregated by LoopNet and originating from the Puget Sound Business Journal, three construction “hybrid” cranes remain closed down after the state L&I Department first closed them down earlier this month. According to a June 5th news article by Sonia Krishnan at the Seattle Times, the state took action because they perceived “potential safety problems.” Krishnan explained that the department cited, “possible electrical and structural issues with the cranes, which were all manufactured by the same Chinese company, Sun Cranes, and distributed by a Texas company” (Krishnan).

Krishnan reported that the decision to close down the cranes came after “an analysis from independent engineers showed the electrical system in all three cranes had not been ‘evaluated and approved for use,”’ which was information she found in a department news release. Krishnan asserted that a faulty system can lead to dropped loads or other problems. Some of the hazzards she cited from the department’s news release included an incident where a worker was “badly burned on one of the cranes in January” (Krishnan). Luckily, these cranes are the only three erected in this state.

According to a July 6th blog by The Faber Law Group, a crane collapsed in Bellevue (2006) killing a person who lived across the street from the construction site. The firm also reported in the aftermath of the incident that the Department of Labor and Industries is drafting a new safety law concerning the regulation of crane operators. However, they mentioned that such a law would not go into effect until approximately the year 2010.