http://newyork.construction.com/opinions/2011/0725-AsStaffsShrinktheRoleOftheOwnersRepGrows.asp
With the Poor economy forcing owners to make tough decisions about layoffs and budget cuts, one position they should not consider eliminating is the owner’s representative. That is because this job has become a vital tool in helping the owner save both time and money, especially as staff sizes shrink and the need for performance and quality-control monitoring rises…See ENR Link.
Let’s face it. Manhattan is the real estate center of the universe, especially as it concerns luxury apartments. The money flows into New York City because rich and successful people around the globe know that it is a cool place live.
If you are planning to buy a nice residence in Manhattan, here is a top ten list of questions you should ask –
- What are the views? This is key because better views command a premium and it is much easier to sell a Manhattan residence if it has good views.
- Is the building in a cool location? The upper east side, especially near Sutton Place is always in vogue. Any location around Central Park is also primo! Chelsea, West Village and Soho are hot also.
- Is the unit you are considering a condominium or co-op?
- Is the building new or has it recently been renovated? Does it have modern features such as interactive audio-video, gym/spa and security systems?
- Does the unit have proper light and air? Can you see yourself relaxing in it or is it stuffy?
- Does the building have a door man?
- How far is the nearest subway station? This may be a very important issue if you plan to commute to work in the city.
- Does the apartment come with tax abatement? If so, how many years are remaining on it?
- What is the social scene in the building? Is it family-oriented or does is it attractive to singles? Does it suit your lifestyle?
- Does the building come with parking? If parking is important to you, what are the available options?
Be sure to consider all the facts before buying. Manhattan is an exciting and energized place. But each building has it’s own unique characteristics. It must suit you. After you buy a unit, you will need to adapt to your surroundings. The building will not adapt to you.
We are at a crossroads of taxation in the U.S., as well as globally. The recent spread of anti-Government spending fervor in the U.S. has been spurred by the frustrations of taxpayers who are financially stressed, and are trying to cope with the new economic order. They have tightened their belts. But the Federal Government and the state governments have not yet gotten the message. Left to their own devices, governments will always spend more and tax more. That’s in the DNA of government bodies. Technology has started to change all of that. We have only seen the initial wave of resistance against excessive government spending and taxation. The real storm is brewing and its chief catalyst is information technology.
Technology has increasingly made location irrelevant, especially to corporations. Last week’s 60 Minutes story on how corporations can “relocate” key operations to countries with lower taxes and more attractive tax regulations was an eye opener. A software producer can shift the location of its source code; thereby instantly change its address.
High-speed communications also have made the delivery of services easier, faster and more complex. The delivery and exchange of services give rise to interesting phenomena. Services have exploded in the past decade. From software, to consulting, to professional services, small providers and individuals are now delivering value-added content. How does a government body accurately value these services? How does it track payment for said services? What if services are exchanged and the true cost is masked permanently? Clearly, there is a real threat to the ability of tax collectors to extract the tax revenues they need to sustain their bureaucracies.
The U.S. Government is under severe pressure and risks an ever-expanding migration of American companies to tax havens overseas. How will it cope with this loss of revenue AND loss of jobs?
Key megatrends to follow include –
1. The continued growth of small Internet-based businesses.
2. The inability of government bodies to track the torrential flow of information.
3. The threat that the ongoing economic problems in the U.S. will push dislocated professionals and blue collar workers to become digital entrepreneurs, resulting in a long-term disruption to tax collection conduits.
4. The growing irrelevancy of location and identification of businesses with their geographic origin.
This issue will impact all of us and therefore, I believe we should all be concerned. We know that by nature, governments depend on their ability to impose their will on a normally docile and captive tax base. Technology threatens that base and the means of control that have become increasingly obsolete. I foresee three eventual pathways that may evolve as a response to these megatrends. There are ominous possibilities which are Orwellian.
1. The tax reporting structure evolves globally as all nations realize that stability and enforcement are more important than competing with each other in a ratcheting down of taxes. This results in a “tax-equilibrium” where taxes are equalized globally with relative equality in corporate and personal marginal tax rates.
OR
2. We stay in a two-tiered system where countries such as the U.S. remain high tax environments and struggle to defy the tide of tax migration.
OR
3. The Orwellian nightmare comes true and governments everywhere impose strict sanctions and controls over communications (a la the Chinese model). Governments then control transactions and add taxes at every level. This model would greatly discourage innovation and freedom of information. It would also restrict the growth of business and exchange of services.
The next two years will most likely reveal much about how disruptive information technology will be to the existing tax structures.
Communication is the cornerstone of good project management. Good things happen when project managers communicate!
By: Darren Schumer, President, Descom Projects
As we near the end of the first quarter of 2011, the level of optimism for the NYC real estate industry is growing. Brokers are busy finding the right space for their clients (and negotiating the best deals). Architects are busy creating space plans, and are now hiring again as new work has finally filtered through. However, my brokerage sources tell me that two nagging factors continue to impede their ability to act swiftly. Financing difficulties and protracted decision making continue to delay deals, resulting in delayed construction starts.
Financing for renovation projects seems to be getting better as funding has become available for 2011 capital projects. At Descom Projects, we provide timely budgetary information very early during conceptual design. We provide value by advising our clients on the costs for their overall project, and we apprise our clients on the status of the schedule. Their lenders and equity partners receive timely and accurate cost and schedule updates, thereby facilitating accurate forecasting.
When we provide budgets for a project, we rely on our experience on past projects and on current market conditions to create a construction and development budget. These include what are known as “Soft Costs” such as design fees, permits and expediting fees, and various consultant fees. They also include “Hard Costs” such as contractor costs, furniture, security and IT equipment, moving costs, etc.
Along with budgeting costs, a time frame must be established which corresponds to the project scope. It is driven by current lease expiration, a new lease start date, or dates preferred by the client or tenant. A preliminary schedule is created that includes milestone dates to keep the process moving so opportunities are not lost. The value of a project management team that works for the owner is that it acts independently on behalf of the owner. The project management team’s interests are aligned with those of the owner. This not only benefits the owner, but also the project team, ie., the broker who needs decisions on space and lease terms, and the architect who needs design and provides scope direction. The project manager can work with the tenant as an advisor to expedite decisions regarding leasing, scope development, construction plans and move-in schedules.
I expect that owners and banks will increasingly rely on project management consultants as providers of value-added services. If executed properly, this trend should enable owners to realize economic value on their real estate and construction investments.
Prudent investors know that you have to understand what you are investing in. NRIs are often disadvantaged when investing in Indian real estate because they do not understand the local market, business environment, legal statutes and underlying bureaucracy involved with getting things done. Indian residents understand these things and are better-equipped to navigate through the slippery aspects of real estate transactions.
While India is a dynamic and vibrant place to do business, and offers growth potential rivaled only by China, it is fraught with risks for the individual (NRI) real estate investor. NRIs are highly pursued by public and private institutions in India for their purchasing power and strong links to their home country. That’s the good news. The bad news is that these same NRIs, buoyed by their success in America, and no doubt energized by the prospect of owning real estate in India, often fail to grasp the nuances of the investment landscape. The TOP SEVEN reasons why NRI’s should not invest in residential real estate in India:
1> NO TITLE INSURANCE – Unlike the U.S., which has the strongest property ownership laws in the world, India has not yet developed a title insurance system. This means that buyers are exposed to fraud and manipulation which can jeopardize their investment.
2> WEAK LEGAL SYSTEM – NRIs that intend to keep their flats vacant should be aware that squatters have significant rights, and the legal system generally does not facilitate quick resolution.
3> EXTREME CORRUPTION AT THE REAL ESTATE DEVELOPMENT LEVEL – Local developers understand the local systems and know how to delay property closings, cut corners, increase costs and transfer risks to buyers. So BUYER BEWARE!
4> EXTREME CORRUPTION AT THE LOCAL GOV’T LEVEL – Not much needs to be said about this is except for good luck!
5> POOR or NON-EXISTENT BUILDING WARRANTIES & GUARANTEES – Major building construction quality issues can erode value for investors and can permanently impair investments. Research into the integrity of insurance coverage and developer track-record is a must.
6> IT IS CHEAPER TO RENT IN INDIA – You can preserve your capital, and come and go as you please.
7> INCONSISTENT INFRASTRUCTRE – This presents a huge problem for NRI’s and could lead to major “buyers remorse” issues. Locals understand that India is a developing nation and are more adaptable to problems related to LESS-THAN-ROBUST infrastructure such as electrical, water, sewer, transportation, schools, hospitals and recreational facilities. NRIs may have unrealistic expectations regarding infrastructure and should proceed with caution and do their homework.
The best investors are informed investors. I posit that all things being equal, NRIs are better-off investing in the America where the terrain is familiar and the systems are buyer-friendly. They can always rent in India at a reasonable cost, without incurring unnecessary risks.
The unrest in Egypt during the last two weeks further demonstrates the power of information technology in promoting and sustaining activism in nations where totalitarianism was deeply entrenched. Mubarek’s knee-jerk response was to cut-off Internet access. What dictators and and tyrants fail to grasp is that choking information is not an intelligent and viable long-term solution. We live in a world where information “wants to be free”. Cutting off Internet access may have slowed down the pace and organization of the protesters, but the price that was paid was very high. The Internet and social media are now part of the economic fabric of global trade and economics. The cost to the people of Egypt for this misstep will be in the billions of dollars.
Those that govern with the intent of controlling information access should study the effects of doing so on their nations’ economic vibrancy. Pervasive information and telecommunications technologies are facilitating change and serving as platforms for dissent. This will frighten those that want to impose their will upon people without really serving them. The good news for proponents of democracy and freedom is that ultimately, the information age will continue to undermine the old guard of autocratic leaders and will promote trade and a free exchange of ideas and innovation.
If leaders insist on tightly controlling information access, they will likely find themselves on the wrong side of history. One example is China, a nation that wants desperately to drive innovation and grow their economic powerhouse. Although the Chinese have learned how to reverse-engineer products and processes, they cannot truly build great leadership in innovation while imposing restrictions on information access and “thought control”. Innovation thrives where the culture is one of free information access and knowledge sharing. Fear and intimidation are the enemies of innovation.
P.S. Last week Goggle and Twitter created an alternative avenue for Egyptians that wanted to express their views but had lost Internet access. A hot line service was established that enabled Egyptians to call in and leave a voice messages. These messages are converted into Twitter posts! That’s innovative!
Podcast: Bruce Kirsch From Real Estate Financial Modeling
Bruce Kirsch is the founder and principal of Real Estate Financial Modeling, a solutions provider for Excel-based financial models, training and financial modeling consulting. He began his career at CB Richard Ellis where he marketed high-rise office buildings in New York City for redevelopment. He’s held a few different positions with well established companies working [...]
By Hao Li | 12/11/2010 9:25 PM HKT
Jim Chanos, founder of hedge fund Kynikos Associates, is arguably the most well-known short-seller in the world, having predicted the high-profile demise of companies like Enron. Now, Chanos is setting his sights on China, the world’s second largest economy. In a CNBC interview, he makes a compelling case for why the country is in big trouble
First, contrary to popular assumptions, China is a real estate-driven economy, not an export-driven one. He said real estate construction accounts for over 60 percent of the GDP while exports make up about only 5 percent of it. Moreover, this real estate construction isn’t done to meet actual demand from the market. Instead, they are propped up by distorted incentives and result in empty offices and residential buildings.
To read the rest of the article, please go to -
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By Deepti Chaudhary & Devesh Chandra Srivastava, Mint, New Delhi
Dec. 28–More real estate private equity (PE) investors are turning developers, investing money from their funds into their own projects to shield themselves from the vagaries of the sector.A lack of transparency, the murky nature of land transactions in India and project delays that are holding up their exits are forcing PE investors to take the reins into their own hands…http://bit.ly/eexG1M
