By Geoff Earle, Deputy U.S. Political Editor For Dailymail.com and Associated Press
21:47 26 Sep 2023, updated 23:07 26 Sep 2023
- Judge Arthur Engoron’s ruling came in Summary Judgment phase
- James found that the former president and his company deceived banks, insurers and others
- READ MORE: Trump demands judge REJECT gag order as ‘an obvious attempt by Biden to silence a political opponent’
A New York judge ruled former President Donald Trump and his companies engaged in fraud, in yet another legal setback for the former president as AG Letitia James’ $250 million civil lawsuit advances.
Judge Arthur Engoron ruled that Trump committed fraud for years while building the real estate empire that catapulted him to fame and the White House, after prosecutors charged he inflated property valuations with lenders and diminished them with tax authorities.
The civil trial begins October and could run through the end of the year, as Trump continues to lead the GOP field for the Republican presidential nomination.
The ruling Tuesday came in a civil lawsuit brought by James, even as Trump faces multiple criminal indictments in multiple jurisdictions related to his election overturn effort and other matters.
She sued last year, claiming numerous acts of fraud. Lawyers representing Trump and his company, as well as his adult children, asked the judge to dismiss the suit through summary judgement.
James found that the former president and his company deceived banks, insurers and others by massively overvaluing his assets and exaggerating his net worth on paperwork used in making deals and securing financing.
She said he boosted valuations by up to $2 billion, inflating the value of signature assets including the Mar-a-Lago club where he now resides and his Manhattan penthouse apartment at Trump Tower.
The decision, days before the start of a non-jury trial in Attorney General Letitia James´ lawsuit, is the strongest repudiation yet of Trump´s carefully coiffed image as a wealthy and shrewd real estate mogul turned political powerhouse.
Beyond mere bragging about his riches, Trump, his company and key executives repeatedly lied about them on his annual financial statements, reaping rewards such as favorable loan terms and lower insurance premiums, Engoron found.
Those tactics crossed a line and violated the law, the judge said, rejecting Trump’s contention that a disclaimer on the financial statements absolved him of any wrongdoing.
Manhattan prosecutors had looked into bringing a criminal case over the same conduct but declined to do so, leaving James to sue Trump and seek penalties that could disrupt his and his family´s ability to do business in the state.
Engoron’s ruling, in a phase of the case known as summary judgment, resolves the key claim in James’ lawsuit, but six others remain.
Engoron is slated to hold a non-jury trial starting Oct. 2 before deciding on those claims and any punishments he may impose. James is seeking $250 million in penalties and a ban on Trump doing business in New York, his home state. The trial could last into December, Engoron has said.
Trump’s lawyers had asked the judge to throw out the case, which he denied.
They contend that James wasn’t legally allowed to file the lawsuit because there isn’t any evidence that the public was harmed by Trump’s actions. They also argued that many of the allegations in the lawsuit were barred by the statute of limitations.
Trump has long accused James and other prosecutors coming after him of bias.
The judgment came in a case where Trump once again delivered potentially harmful statements during a deposition.
Trump under questioning compared his golf and real estate empire to the Mona Lisa and other priceless art works.
Trump made the extraordinary claim while describing his decision to hand off control of his business to his adult sons Don Jr. and Eric during his term as president – with New York AG Letitia James sitting across from him in a Manhattan courthouse for a deposition.
‘We have the Mona Lisas of properties,’ Trump told the prosecuting attorney in the April deposition unsealed Wednesday.
Then he bragged about his golf course in Turnberry, Scotland. ‘I could sell that. That’s like selling a painting. A painting on a wall that sells for $250 million,’ he continued.
‘I have great assets,’ Trump gushed – raving about Mar-a-Lago as well as his property at 40 Wall Street, which he said is ‘the best location,’ he told prosecutor Kevin Wallace in James’ office.
Prosecutors claim he has jacked up his net worth by between $812 million and $2.2 billion every year over a decade. James argues Trump inflated his valuations when seeking lending. Trump’s lawyers are asking a judge to toss the suit, calling it a ‘crusade’ over long-ago loans that have been repaid.
‘You don’t have a case and you should drop this case,’ Trump told James.
Nick Hoogwerf has been found guilty of disgraceful conduct by the Real Estate Agents Disciplinary Tribunal. Photo / LinkedIn
A realtor provided a false property valuation, going so far as to use the letterhead of a real company, to legitimise his purchase of a house at auction.
Nick Hoogwerf didn’t show up to a hearing of the Real Estate Agents Disciplinary Tribunal in Auckland on Wednesday to face charges of disgraceful conduct.
The tribunal found Hoogwerf guilty of the charges relating to a house in Mt Eden he wanted to buy in late 2021.
Hoogwerf visited the property on October 24 after making an inquiry by text, the charging documents state.
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Two days later the vendors signed a consent form allowing him as a realtor related to their listing agent, either through work or personal circumstances, to “acquire an interest in the property”.
It essentially meant Hoogwerf could bid on the property; however, for the consent form to be valid, Hoogwerf needed to supply the vendors with a registered valuation of the property.
That same day, Hoogwerf won the house at auction.
The following month Hoogwerf sent the vendors an email with the valuation report in it. However, it contained multiple errors and the vendors sent it back to him.
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In total, Hoogwerf sent four emails with incorrect information including photos that were not of the property, the wrong vendor and agency details, missing information in relation to the certificate of title, and an incorrect reference number.
It was alleged Hoogwerf prepared the valuation document himself and used the letterhead of a legitimate property valuation company.
That company – which was granted name suppression by the tribunal – said Hoogwerf never contacted them for a valuation and it never provided one for the property in question.
The listing agent for the property raised the issue with his manager but it was the valuation company that made a complaint to the Real Estate Authority.
When contacted by NZME for comment Hoogwerf said: “I was young with not much experience at the time.”
“I sincerely apologise for any harm that my actions have caused. I realise the gravity of my actions and I am committed to learning from my mistakes.”
The lawyer for the Complaints Assessment Committee prosecuting Hoogwerf in front of the tribunal, Sarah Farnell, told the panel on Wednesday he had submitted the false valuation in an attempt to convince the vendors he had contracted a third party to do it.
Farnell said he’d told the authority when questioned about it that he “took it upon myself to produce a valuation that may be acceptable” and that he’d then said: “I wrongly consulted a report I had paid for previously of a size and value similar to the subject property”.
However, Farnell said this was “implausible” because the incorrect details in the valuation he sent didn’t contain his name or the agency he worked for.
“There were glaring errors in the different versions,” Farnell told the tribunal.
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Farnell said text messages between Hoogwerf and the listing agent for the property showed there was mounting pressure on him to secure a valuation.
“He continually tells the listing agent that yes it will be done and he’ll send it when it’s complete and says that in multiple instances in these text messages.”
She said the valuation reports were altered and supplied to the vendor and amounted to disgraceful conduct for a licensed real estate agent to engage in.
Hoogwerf valued the Mt Eden property in his false valuation report as being $1.4 million, which was lower than what he ended up paying at auction.
Farnell said Hoogwerf had omitted certain pages from the valuation document in order to support the number he picked.
Hoogwerf didn’t attend the tribunal hearing on Wednesday and panel members noted he asked for it to be adjourned the day before. He did not provide the tribunal with a reason for his absence.
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The tribunal would issue its full decision, including any penalty, in writing in the next month.
Jeremy Wilkinson is an Open Justice reporter based in Manawatū covering courts and justice issues with an interest in tribunals. He has been a journalist for nearly a decade and has worked for NZME since 2022.
Pedestrians and office workers walk past the Bay St. entrance to Brookfield Place in Toronto’s Financial District, on July 12, 2022.Fred Lum/the Globe and Mail
Not since the Great Recession, Brookfield Asset Management Ltd. BAM-T says, have there been such attractive real estate investment opportunities.
Persistently high interest rates coupled with the rise of remote working means “the best real estate opportunities since 2009 are coming,” the Toronto-based investment company said Wednesday in a letter to shareholders published alongside its second-quarter results.
The company, which owns a one-quarter stake in the asset-management business that is 75 per cent owned by Brookfield Corp., is hoping to capitalize on plunging commercial real estate valuations. Other institutional investors are remaining on the sidelines and Wall Street banks are writing down billions of dollars in commercial real estate assets.
“Given the increase in interest rates, people were ill-prepared or unlucky with financing structures and that is where the opportunity is going to come,” Brookfield Asset Management CEO Bruce Flatt said on a Wednesday morning conference call with analysts. “Over the next two or three years, people won’t be able to pay their interest. Therefore, their capital structures will need to get fixed.”
“It is hard work buying tough assets and reworking them,” he said. “What is really lucrative is when you can buy great assets at discount prices just because they have bad capital structures.”
Lenders to U.S. industrial and office real estate investment trusts (REITs) that supplied credit-risk assessments to data provider Credit Benchmark in July said companies in the sector were now 18 per cent more likely to default on their debt than they were six months ago.
Pressure from short-sellers, meanwhile, is increasing as a July report from data provider Hazeltree found the volume of real estate stocks lent by institutional investors to support shorting activity has grown by 93 per cent in North America over the previous 15 months.
Major banks such as Goldman Sachs GS-N and Wells Fargo WFC-N have revealed spiralling losses stemming from their commercial property holdings during the first half of 2023. They have warned of further writedowns in the months ahead.
Much of the negative outlook stems from historically high office-vacancy rates as many employers, particularly in Canada and the U.S., struggle to persuade their workers to give up the benefits of working remotely. In downtown Toronto, for example, landlords have been forced to offer discounted rents to retain their tenants.
The uncertain environment has led some major institutional investors to avoid real estate. AustralianSuper, a pension fund with A$300-billion in assets under management, said in May it would suspend new investment in unlisted office space and retail assets because of poor returns.
Mr. Flatt said roughly 20 per cent of real estate assets, such as “traditional, non-premium office or offices in some cities” are “not so good” and he acknowledged “there is real estate that does not have good fundamentals.”
But 80 per cent of real estate properties “have fundamentals that are really good,” he said.
The company’s South Korean, Dubai and São Paulo office portfolios are 99 per cent full with record high rents, Mr. Flatt said, while rents for logistics properties grew 11 per cent in 2022 and “hotel rooms are full almost everywhere.”
“Over the next 12 to 18 months, you are going to see some very significant transactions by us or others, hopefully us,” Mr. Flatt said. “Then people will say, ‘Ah, we’ve hit the bottom of the market and the opportunity is now.’ ”
In 2009, the company launched the US$5.6-billion Brookfield Real Estate Turnaround Fund, which delivered a 35-per-cent net rate of return. Four iterations of the Brookfield Strategic Real Estate Partners fund have been launched since then – each producing double-digit rates of return though none approaching the level achieved by the 2009 fund – and the company is currently raising funds for a fifth.
The company is also raising money to invest in funds related to infrastructure, renewable power and private credit. In total, Brookfield Asset Management said Wednesday it is on track to raise a record US$150-billion of capital in 2023.
Company president Connor Teskey said on Wednesday’s call that the latest real estate fund has the potential to be one of the company’s best. Asked by Scotiabank analyst Mario Saric whether he was referring to the size of the fund itself or its potential returns, Mr. Teskey replied “let’s hope it is both.”
With files from Reuters
A crippling $41 million loss for investors in a property syndicate-style scheme has prompted a shareholder advocate to sue a company and directors who sold shares to fund the failed West Auckland homeware
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THE PRICES of old dwellings in housing companies continued to decline from the previous year but rebounded from the previous month in June, reveal preliminary data released on Friday by Statistics Finland.
The data indicate that the prices of old dwellings in housing companies declined by 7.3 per cent year-on-year but increased by 0.3 per cent from May 2023.
The prices came down by 8.0 per cent from the previous year in large cities, including by 10.0 per cent in Helsinki, 6.4 per cent in Espoo and Tampere, 6.1 per cent in Vantaa, 4.4 per cent in Turku and 2.0 per cent in Oulu. Compared to the previous month, though, the prices experienced a slight upturn in all large towns except for Turku.
Statistician Petri Kettunen highlighted on Twitter that in Helsinki the decline in house prices has lasted longer than during the financial crisis of 2008–2009. House prices, however, remain considerably higher than during the crisis.
Between April and June, the prices of old dwellings in housing companies fell sharply especially in the capital region, with the prices of one-room flats falling by about 11 per cent and those of two-room and larger flats by about 9 per cent from the corresponding period in 2022.
Nationwide, the prices of one-room flats fell by 9.2 per cent, those of two-room flats by 7.5 per cent and those of larger family flats by 7.1 per cent. The year-on-year decline was more modest for old dwellings in terraced houses, 5.5 per cent.
Compared with the first quarter of the year, the prices increased in seven regional centres, led by Mikkeli (8.0%), Jyväskylä (7.7%) and Joensuu (5.5%). Mikkeli was the only regional centre to see a year-on-year increase in old house prices in the second quarter of the year – one of 2.4 per cent. The most dramatic year-on-year drops were recorded in Kokkola (17.9%), Lahti (12.3%) and Kouvola (11.4%).
Statistics Finland also reported that the sales of old dwellings in housing companies slowed down in the second quarter of the year, with the number of sales brokered by real estate agencies falling by almost a third from the previous year.
The sales of new dwellings in housing companies similarly remain slow, with the number of transactions crashing by 66 per cent from the previous year.
The prices of new dwellings, meanwhile, rose by 3.1 per cent in the second quarter of the year as the 8.8-per-cent jump registered in the capital region more than offset the 0.2-per-cent drop registered in other parts of the country.
Aleksi Teivainen – HT
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Bernard Lewis (left), vice-president of operations at Vicwest Building Properties, and Mark McIntosh, national coordinator of the company’s energy savings and environmental programs examine rooftop solar panels in Stratford, Ont. The company installed 1,206 panels this year.
Jennifer Lewington
Rooftop solar panels spanning the equivalent of seven football fields are set to be installed this fall in phase one of a 3.3-million-square-foot industrial park in Milton, Ont.
The $825-million James Snow Business Park, developed and designed by Oxford Properties, puts sustainability at its core, including LED high bay lighting fixtures, electric-vehicle charging stalls, and parks and connections to local walking trails. The solar installation is Oxford’s largest yet.
The development highlights growing interest by property owners in solar power as a financially feasible option to address rising electricity costs, help reduce the carbon footprint of buildings – a major contributor to greenhouse gas emissions – and attract preferred tenants.
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At the James Snow project, the rooftop solar panels will generate power for tenants at a predictable price without them necessarily relying on the provincial grid.
“[Solar] is increasingly important as [tenants] look to reach and meet their own ESG [environmental, social and governance] goals for their companies,” says Jeff Miller, Oxford’s head of industrial. “We see this as a differentiator. There is not a lot of solar on buildings in the Toronto market.”
What accounts for solar’s raised profile?
Plenty, says John Staneko, president and chief executive officer of Green Integrations Inc., Toronto-based provider of turnkey renewable energy and cleantech projects.
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He cites technical improvements and declining costs of solar equipment, rising electricity prices and the federal government carbon tax. Meanwhile, a new federal clean technology investment tax credit equal to 30 per cent of eligible equipment, including renewable energy and storage, combined with other rebates, could cut the payback period on solar panels to between five and seven years, he estimates.
“[Solar power] is perhaps one of the biggest opportunities in commercial real estate in the next decade,” he says. “It is because these buildings are owned by commercial real estate companies and commercial landlords, and are the ideal properties for housing the energy infrastructure of the future.”
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A rendering of the James Snow Business Park in Milton, Ont.. The rooftop solar panels will generate power for tenants without them relying on the provincial grid all the time.
Oxford Properties (Supplied)
Still, barriers remain.
“The lack of affordable and efficient storage technology – that is a big headwind,” says Tonya Lagrasta, head of ESG for Colliers Real Estate Management Services in Canada. “Existing electricity grids might not be able to handle the input of solar energy, which could create some technical challenges.”
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Meanwhile, companies are still trying to respond to federal greenhouse gas emission targets for 2030 and 2050. “How are we going to get there is the multibillion-dollar existential challenge that people are faced with now,” she says. “So, on-site solar is one of the options.”
Another barrier is lack of knowledge, says Curtis Craig, president of Inferno Solar, an Edmonton-based turnkey provider of solar installations. Solar panels generally have a life expectancy of up to 25 years, but clients know little about their durability.
”We see this as a differentiator. There is not a lot of solar on buildings in the Toronto market.”
— Jeff Miller, head of industrial at Oxford Properties
With rising electricity rates in Alberta, he says, businesses now see solar power as a cheaper alternative to the supply from the provincial grid.
“The pitch to tenants is that their electricity costs will either stay the same or go down,” Mr. Craig says.
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As developers incorporate solar in projects, understanding tenant energy needs is crucial.
Dream Industrial REIT, which set a company-wide target of net-zero emissions by 2035, has so far put rooftop solar on 16 buildings in Canada, with seven installed in 2022-2023 at a cost of $4.5-million.
Rooftop solar power helps landlords supply electricity to tenants at a lower, more dependable price than the provincial grid, says Bonnie Crews, director of sustainability and portfolio management at Dream. “It makes economic sense, it enables us to build stronger relations with tenants and gives us a competitive edge,” she says.
The company has about 1.3 million square feet in the pipeline in Canada and Europe “where we are exploring future solar opportunities,” she says. “We are committed to continuing the pace going forward.”
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Rabba Fine Foods is currently installing solar panels on the the roofs of two of the company’s distribution warehouses.
John Bregar Photography
In Calgary, Hopewell Development first included solar in its commercial building designs in 2021, vice-president of construction Derek Fox says, with five solar-included projects currently under construction. For tenants, he says, “providing them something that will offset their ongoing expenses is going to be beneficial in the long run and allows them to tie that to their own ESG metrics.”
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As companies set carbon reduction targets, some are rethinking how to get there.
For example, Vicwest Building Products, headquartered in Burlington, Ont., previously relied on carbon offsets to reach its targets.
But since 2020, the company has looked in-house to achieve its carbon-cutting goals, with solar one part of the solution.
“Rather than investing in carbon offsets, we put the money into an opportunity that will solve the problem, not just mask it,” says Bernard Lewis, Vicwest’s vice-president of operations. By 2030, the company aims to have 60 per cent of its energy requirements powered by direct renewable energy, generated from rooftop solar and Hydro-Quebec’s hydroelectric grid.
This year, at its Stratford, Ont., facility, Vicwest installed 1,206 rooftop solar panels expected to produce 86 per cent of its power. By 2030, the company expects to install solar panels in all its wholly owned facilities.
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“Solar is our number one opportunity for reducing carbon emissions across the country,” Mr. Lewis says.
A new rooftop installation at Rabba Fine Foods in Mississauga illustrates the evolution in thinking about solar.
Several years ago, the family-owned company hired Mr. Staneko’s firm, Green Integrations, to install LED lighting. After several years of discussions with Mr. Staneko, Rabba executives concluded they could save on energy costs with solar.
With solar panels currently being installed on the roofs of two Rabba distribution warehouses, company president Rick Rabba says, “we are generating enough solar-backed electricity without importing it from the grid,” save for some exceptions in winter.
He views his company’s $2-million solar project as “future-proofing against risks such as electricity rate hikes.” For companies expecting to stay in their buildings for decades, he adds, solar is “a no-brainer.”
Properly cofounder Anshul Ruparell is pictured with a Toronto property for sale in this file photo.Galit Rodan/The Globe and Mail
Upstart real estate brokerage Properly Inc. has hired an investment bank to consider options including a sale, just a few years after rapidly expanding in Ontario.
Properly is the second real estate entrant that has been forced to change course after the country’s housing market slowed when the Bank of Canada aggressively hiked interest rates.
Properly cofounder Anshul Ruparell confirmed to The Globe and Mail that his brokerage hired investment bank Raymond James to help with the process.
“We received inbound acquisition interest, and have hired Raymond James to help us evaluate,” Mr. Ruparell said in an e-mail.
He declined to respond to questions on who had expressed interest; what price he would be willing to accept; why he wanted to sell; and whether he would remain in the real estate sector if he sold his company.
It is unknown how much the brokerage is worth. Properly had positioned itself as a tech company with online analytics to help determine valuation, as well as a real estate firm with innovative products that were not offered by the traditional players like Royal LePage and Re/Max.
Its main feature, called sales assurance, offered home sellers a guaranteed sale and price. It was designed to act as a backstop for home sellers by providing them with a firm purchase agreement to buy their property at a set price.
But earlier this year Properly paused sales assurance citing “unprecedented volatility in the Canadian housing market.”
It once had ambitious plans to triple its staff and expand across Ontario and other major Canadian cities. Properly now has 79 employees, which is about half the staff it had in mid-2021, according to LinkedIn. Late last year, the company axed 71 jobs citing the rapid slowdown in the housing market. At the time, Mr. Ruparell apologized to his staff and said conditions had “deteriorated much faster” than anticipated and that he could not predict when the market would recover.
His company is among the many in the tech space that have suffered from cooling demand from customers who sought out their services during the pandemic lockdowns and low interest rate era. Over the past year and a half, tech companies have cut more than 360,000 jobs in a bid to slash costs as borrowing costs have soared, cooling investor interest in early-stage tech companies. Valuations of public and private technology companies have crashed and venture capital investment has dropped sharply, echoing past downturns.
Earlier this year, financial services firm Desjardins Group shut down its real estate brokerage FairSquare Group Realty and blamed the housing slowdown. It had bought FairSquare, which was previously called Purplebricks, in the first year of the pandemic but failed to gain any traction outside of Quebec.
With the Bank of Canada resuming interest rate hikes in June, it is unclear whether the four-month rebound in home sales and prices will continue. Activity had quickly picked up after the central bank said in January that it would take a break from raising interest rates. Now, the bank is warning that the housing recovery along with a tight job market and robust demand for goods and services are signs of persistent inflation.
Mr. Ruparell started Properly in 2018 in Calgary where he grew up. He expanded to Ottawa and Toronto in 2020 as the real estate market boomed with interest rates near zero.
Properly had attracted high profile financiers and well known investors such as Bain Capital LP’s venture financing arm, as well as a $100-million credit facility from Silicon Valley Bank to help fund any purchases that were needed through its sales assurance.
Silicon Valley Bank has since failed after a run on deposits. Its Canadian loan business is now being auctioned off and it’s not certain what if any appetite a new owner would have for financing Properly’s business model.
Huawei Technologies Co said on Tuesday that protecting intellectual property is the only way to achieve innovation and charging reasonable licensing fees for using its patented technology is the result of innovation rather than the purpose of production.
The company made the comments after Japan”s Nikkei Asia reported that Huawei has approached about 30 small to mid-size companies in Japan to seek licensing fees for use of its patented technology.
Huawei said in a statement to China Daily that the company aims to promote innovation and protection of intellectual property rights through licensing its patented technology.
Mutual recognition of intellectual property among enterprises can create a positive innovation cycle of “invest-return-reinvest” in high-value technology research, enhance the sustainable innovation ability of the industry, and provide consumers with more competitive products and services, Huawei said.
Currently, Huawei is one of the world’s largest patent holders, thanks to its sustained investment in innovation. According to Clarivate, a leading global IP consultancy and analytics firm, by the end of 2021, there were a total of 46,322 declared 5G-standard essential patent families, and Huawei was tops, owning 5,108 patent families with a share of 18 percent.
And Huawei was once again the most active patent applicant at the European Patent Office last year, surging 27.1 percent.
“When we looked at the figures, we were very struck by this development. Huawei is about 1,000 applications ahead of the second most active applicant. It’s a remarkable effort made in 2022,” Aidan Kendrick, chief business analyst at the EPO, told China Daily.
Huawei’s jump is in line with a broader trend of growing technological prowess among Chinese companies. Patent applications from Chinese companies at the EPO grew by 15.1 percent last year, marking the highest growth rate among the leading 20 patent-filing countries.
China is likely to soon overtake Germany and Japan as the country filing the second most patents with the EPO, as Chinese companies continuously grow in innovation prowess and embrace the international intellectual property system for IP protection, Kendrick said.
The United States remains the top patent filer with the EPO.
Xiang Ligang, director-general of the Information Consumption Alliance, a telecom industry association, said it is common practice for tech companies to charge fees for the use of their patents, and royalty rates Huawei charges are lower than those of its competitors such as Finnish telecom company Nokia and Sweden’s Ericsson.
According to its official website, Nokia said in 2018 that it charges up to 3 euros ($3.58) per phone for its 5G standard essential patent portfolio. Ericsson said on its website that it charges $2.50 to $5 per device.
Xiang said Huawei deserves a reasonable return for its long-term investment into research and development.
According to Huawei, in 2022 alone, the company invested 161.5 billion yuan ($22 billion) into R&D. And from 2010 to 2019, it spent a total of about $90 billion on R&D.
Song Liuping, chief legal officer at Huawei, said earlier that royalty fees will not be a major revenue source for the company, and Huawei will continue to focus on developing telecom products and services.
“Protecting IP is key to protecting innovation. We are eager to license our patents and technologies to share our innovations with the world. This will help broaden the innovation landscape, drive our industry forward and advance technology for everyone,” Song said.
THE PRICE DEVELOPMENT of new residential units has been weaker than official statistics suggest due to gaps in the statistical monitoring of prices, Juhana Brotherus, the chief economist at the Federation of Finnish Enterprises, stated to Helsingin Sanomat on Wednesday.
Brotherus believes the prices of new dwellings in housing companies dropped much more sharply in the first quarter of the year than the two per cent suggested by official statistics.
“[The drop] was much closer if not bigger than the one for old dwellings,” he said.
The prices of old dwellings in housing companies decreased by 5.5 per cent year-on-year between January and March, according to data released by Statistics Finland. The data also show that the sales of newly built dwellings decreased by more than 70 per cent from the corresponding period in 2022.
Brotherus, formerly the chief economist at the Mortgage Society of Finland (Hypo), is suspicious about the reported drop for new dwellings partly because prices have fallen especially for houses coveted by investors and located in more expensive neighbourhoods.
“Investors prefer new units and new units are more expensive than the rest of the housing stock. I’d be very surprised if the price development of new units was stabler than old units,” he said to the newspaper.
Another reason for his suspicions is the different type of data used to compile the price statistics for old and new dwellings.
Price statistics for old dwellings are based on information and transfer tax reports submitted to the Tax Administration, meaning the underlying data consist of almost all sales. Statistics for new dwellings, by contrast, are incomplete as they are based on reports made by real estate agencies and construction companies to the price monitoring service of the Federation of Real Estate Agency (KVKL).
“Statistical monitoring for new houses is of significantly lower quality than the really high-quality, transfer tax report-based monitoring for old houses,” Brotherus stated to Helsingin Sanomat.
The quality concerns stem from the fact that, unlike old dwellings, new dwellings are typically sold directly by construction companies – although they are increasingly turning to real estate agencies for help amid the market slowdown. Brotherus viewed that construction companies have an “obvious interest” to report high house prices but not low prices because they realise that agencies and households use the information to evaluate the market prices of vacant dwellings.
“It’s an open secret that price statistics for new dwellings aren’t of particularly high quality,” he said.
Construction companies also seek to fuel sales with various financial incentives that are not necessary reflected in the official price statistics.
Units built for the Housing Fair in Loviisa by Vantaa-based Cubesta, for example, include two years of free use of a Tesla 3, with a yearly maximum mileage limit of 15,000 kilometres, if the sale is finalised by the end of July.
“Honestly, I have to say that house sales are rather slow,” Ilkka Rainio, the managing director of Cubesta, explained the motivation behind the campaign to Helsingin Sanomat on Saturday, 3 June.
Brotherus on Wednesday pointed out that such offers are fundamentally price cuts.
“Price cuts are often not implemented as price cuts per se, but as cuts in maintenance fees or promises to pay for remodelling. Technically they’re price cuts,” he argued.
Aleksi Teivainen – HT
City asked to reconsider role in commercial developments
Recently, I responded to the City of Flagstaff (COF) appeal to residents regarding current budgeting priorities and objectives. Earlier this year I had the opportunity to attend the City of Flagstaff’s budgeting retreats. Over multiple days, I learnt a great deal regarding the anticipated spending on operations and capital projects for fiscal year 2023-2024. The days were filled with charts, tables and diagrams.
At the end of one day, a COF staff member presented the refurbishing and rebuilding of a commercial property owned by the COF. The property is located before the entrance to Buffalo Park and it is primarily leased to the USGS. He proceeded to tell the budget meeting attendees, City Council and City Staff primarily, that a new investment in the USGS buildings would cost over $50 million. This amount was higher than prior year estimate of over $35 million! But not to worry, USFS and the COF were close to agreeing to a five-year lease with a five-year renewal! Not one question from the audience! Not a peep! Not a graph, table or diagram! I was stunned! I do not believe any commercial developer would spend over $50 million with a potential five- or 10-year lease in the future.
Developing commercial property is NO WHERE to be found in the Flagstaff Key Community Priorities and Objectives used in the COF budgeting. The COF mission does not mention the COF developing commercial property.
If the COF remains in commercial building business, this presents numerous conflicts of interest for the COF. This situation today is like having the fox guarding the hen house given the COF enforces and creates the building codes!
The COF should divest all commercial property; the residents tax dollars can be better spent on actual COF’s Priorities and Objectives.
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