Heathrow owner Ferrovial studies options for stake in Britain’s biggest airport: Sources
LONDON: Spain’s Ferrovial is looking at options for its 25 percent stake in London’s Heathrow, two sources told Reuters, and has held preliminary talks with external advisers on the future of its holding in Britain’s biggest airport.
The early stage discussions come amid interest in Ferrovial’s stake from private equity firm Ardian, which has held talks with its own advisers on a possible joint proposal with Saudi Arabia’s Public Investment Fund, these sources and another person familiar with the matter said.
Ferrovial has yet to take a final decision and the discussions may not result in a sale, all the sources said.
HIGHLIGHTS
Heathrow is worth about €24.3 billion ($25 billion), including debt.
Qatar Investment Authority, which has a 20 percent stake in Heathrow, is the second biggest investor in the busy British airport.
Shares in the Madrid-listed firm rose as much as 4.2 percent on the Reuters report. At market close they were up 3.7 percent, scoring their second best day in five months and making them the third best performing stock across the pan-European STOXX 600 index.
Ferrovial and Ardian both declined to comment while PIF did not immediately respond to a request for comment.
Heathrow is worth about €24.3 billion ($25 billion), including debt, JPMorgan analysts calculated in May. By JPMorgan’s estimates, Ferrovial’s Heathrow holding has an equity value of €611 million.
But Insight Investment Research analyst Robert Crimes had a less conservative approach and told Reuters the equity value of Ferrovial’s 25 percent stake in Heathrow could be close to €2 billion, well above analysts’ consensus. He said Ferrovial’s stock has yet to reflect the post-pandemic recovery in traffic volumes and inflation-linked returns.
Heathrow, which Aviation data firm OAG said was the world’s fifth busiest airport in July, was hard hit by coronavirus lockdowns, but raised its 2022 traffic forecast to 54.4 million passengers in June after a travel rebound.
Last month Heathrow, like some other airports in Europe, asked airlines to stop selling tickets for summer departures and capped passenger numbers to limit queues, baggage delays and cancellations as it struggled with pent-up demand.
Madrid-based Ferrovial, which controls Spanish transport infrastructure developer Cintra and has stakes in motorways in the US and Canada, has been invested in Heathrow airport for 16 years and ranks as its single largest investor.
Qatar Investment Authority, which has a 20 percent stake in Heathrow, is the second biggest investor in the busy British airport, while Caisse de dépôt et placement du Québec, Singapore’s wealth fund GIC and China Investment Corp. also have sizeable holdings.
QIA declined to comment while CDPQ, GIC and China Investment Corp. were not immediately available.
Heathrow owner Ferrovial studies options for stake in Britain’s biggest airport: Sources
LONDON: Spain’s Ferrovial is looking at options for its 25 percent stake in London’s Heathrow, two sources told Reuters, and has held preliminary talks with external advisers on the future of its holding in Britain’s biggest airport.
The early stage discussions come amid interest in Ferrovial’s stake from private equity firm Ardian, which has held talks with its own advisers on a possible joint proposal with Saudi Arabia’s Public Investment Fund, these sources and another person familiar with the matter said.
Ferrovial has yet to take a final decision and the discussions may not result in a sale, all the sources said.
HIGHLIGHTS
Heathrow is worth about €24.3 billion ($25 billion), including debt.
Qatar Investment Authority, which has a 20 percent stake in Heathrow, is the second biggest investor in the busy British airport.
Shares in the Madrid-listed firm rose as much as 4.2 percent on the Reuters report. At market close they were up 3.7 percent, scoring their second best day in five months and making them the third best performing stock across the pan-European STOXX 600 index.
Ferrovial and Ardian both declined to comment while PIF did not immediately respond to a request for comment.
Heathrow is worth about €24.3 billion ($25 billion), including debt, JPMorgan analysts calculated in May. By JPMorgan’s estimates, Ferrovial’s Heathrow holding has an equity value of €611 million.
But Insight Investment Research analyst Robert Crimes had a less conservative approach and told Reuters the equity value of Ferrovial’s 25 percent stake in Heathrow could be close to €2 billion, well above analysts’ consensus. He said Ferrovial’s stock has yet to reflect the post-pandemic recovery in traffic volumes and inflation-linked returns.
Heathrow, which Aviation data firm OAG said was the world’s fifth busiest airport in July, was hard hit by coronavirus lockdowns, but raised its 2022 traffic forecast to 54.4 million passengers in June after a travel rebound.
Last month Heathrow, like some other airports in Europe, asked airlines to stop selling tickets for summer departures and capped passenger numbers to limit queues, baggage delays and cancellations as it struggled with pent-up demand.
Madrid-based Ferrovial, which controls Spanish transport infrastructure developer Cintra and has stakes in motorways in the US and Canada, has been invested in Heathrow airport for 16 years and ranks as its single largest investor.
Qatar Investment Authority, which has a 20 percent stake in Heathrow, is the second biggest investor in the busy British airport, while Caisse de dépôt et placement du Québec, Singapore’s wealth fund GIC and China Investment Corp. also have sizeable holdings.
QIA declined to comment while CDPQ, GIC and China Investment Corp. were not immediately available.
Saudi Arabia targets $3.3tr of cumulative investments till 2030, says deputy minister
RIYADH: Saudi Arabia has enacted over 600 economic reforms since the launch of the Vision 2030 blueprint in a bid to attract SR12.4 trillion ($3.3 trillion) of cumulative investment and SR1.8 trillion in foreign direct investment inflows between 2021 and 2030 as part of the National Investment Strategy, said a deputy minister from the investment ministry.
Speaking to Arab News Saad Al-Shahrani, the acting deputy minister for investment promotion in the Ministry of Investment of Saudi Arabia, said the Kingdom achieved an 18 percent increase in foreign direct investment in 2020, even as the global FDI declined by 35 percent due to the pandemic.
FDI flow in 2021 increased by 257 percent compared to 2020 largely driven by a SR46.5 billion infrastructure deal closed by Aramco with a global investor consortium in Q2 2021.
If Aramco’s huge deal is excluded, the Kingdom attracted SR5.3bn in Q2 last year.
Al-Shahrani added that the NIS launched in 2021 is a blueprint for turning the Kingdom into a global hub for business and talent.
During the interview, the minister revealed that FDI flow in the first quarter of 2022 increased 10 percent to SR7.4 billion compared to the same period last year.
He further stated that NIS helped MISA achieve 49 investment deals valued at SR3.5 billion in the second quarter of 2022, creating 2,000 jobs across industries.
“These figures are a testament to the sound execution of the government’s strategy and the impact of new reforms, initiatives and investment opportunities,” said the deputy minister.
He added: “The Kingdom has achieved remarkable progress in many economic and investment indicators, ranking third in Ease of Protecting Minority Investors Index out of 132 countries, for the year 2021.”
Fastest growing among G-20 countries
The deputy minister further noted that the Kingdom achieved the top spot among 22 countries in the May 2022 Ipsos’ Global Consumer Confidence Index.
Citing the International Monetary Fund’s World Economic Outlook 2022, Al-Shahrani said that the Kingdom is now the fastest-growing nation among the Group of 20 countries, with a growth rate of 7.6 percent.
“Saudi Arabia’s regulatory transformation is directly impacting the base economy. Alongside healthy demand and investor interest in the oil sector, our non-oil economy has shown strong growth,” he added.
The deputy minister said that flash estimates of real growth in the gross domestic product in the second quarter showed 11.8 percent year-on-year growth, the highest rate since 2011, supported by the growth in real GDP of oil and non-oil activities by 23.1 percent and 5.4 percent, respectively.
Industrial production on the rise
Commenting on the rise in Industrial Production Index, Al-Shahrani said: “The IPI expanded by 24 percent year on year in May 2022, with manufacturing growing by over 28 percent. These figures are a direct consequence of the government’s active diversification efforts.”
He also asserted that the Kingdom will become one of the world’s most competitive economies and attractive investment destinations by 2030.
The deputy minister further noted that digital transactions are rising in Saudi Arabia, aligning with the government’s goal of having 70 percent of all transactions are digital by 2025.
“Policymakers have listened to the needs of investors and have responded appropriately to create an investment ecosystem that rivals the best in the world,” he continued.
Saudi Arabia’s future is tourism
The deputy minister further conveyed that tourism will soon become one of the prime drivers of the Saudi economy as the economic diversification effort continues.
He revealed that the Kingdom has already issued over 3,500 tourism investment licenses, a crucial leap to achieving 10 percent of the national GDP from tourism by 2030.
Al-Shahrani added that the Kingdom will welcome over 100 million tourists by 2030 and generate one million jobs in the sector.
“NEOM, The Red Sea Project, AlUla, Soudah, AMAALA and Diriyah Gate are massive opportunities for investors,” he continued.
The deputy minister further divulged that the Kingdom’s flag carrier SAUDIA will add 94 new destinations to bring visitors to the Kingdom by 2030.
Apart from tourism, MISA is also signing deals with companies in the renewables, logistics, and pharmaceutical sectors, the deputy minister added.
“It is quite clear that the headwinds souring global investor appetite are not blowing in the direction of Saudi Arabia. Government strategy, inspired leadership, talent at every level, well-executed reforms and a clear vision for the future have combined to make the Kingdom an investment powerhouse,” Al-Shahrani said.
The dizzying, bionic two years of a record-setting sales pace in Ottawa’s real estate market has certainly slowed and realtors describe a return to normal levels.
That return to normalcy though has stirred up fears and many misconceptions, says Taylor Bennett of Bennett Property Shop Realty.
Bennett is the co-host of The Bennett Real Estate and Wealth Show on Newstalk 580 CFRA and regular contributor to CTV Ottawa’s News at Noon.
“I spend a great deal of my time acting as a therapist for people who are worried about the market,” says Bennett
He says he hears many myths and misconceptions, many times a day, every day from nervous clients. He wants to correct them to help quell clients’ anxiety.
Taylor Bennett on Five Current Myths
Myth: “Sales are down, the market is crashing”
“While sales are down compared to last year, it’s important to put the last year into context – 2021 was the best year for real estate, setting both sales and price records,” Bennett says.
“So, a comparison to the best year on record is like comparing an NHLers season stats to Wayne Gretzky’s best year – it’s not going to look very successful. But when you pull back and take a broader look, we are currently on the same pace as we were in 2019 – the third best year on record.”
Myth: “There are no more multiple offers, I can low-ball sellers”
“While it’s true that there are fewer multiple offers than before, there are still some occurring on well-priced and unique homes. But even in transactions where it’s one seller vs one buyer, on average, homes are selling for $10,000 more than their list price so buyers should be prepared to pay the asking price,” Bennett said. “However, buyers do get an advantage as they now have the opportunity to perhaps work in a condition or two for added protection.”
Myth: “Homes are taking longer to sell, sellers are panicking”
“Homes are, in fact, taking 55 per cent more time to sell; but to add some context, the average days-on-market has increased by only one week from 13 days to 20. Again, we have become accustomed to seeing homes sell in less than a week, but that was extremely unusual for Ottawa,” Bennett says.
“In June 2019, on average it took over 35 days for a home to sell, and that was considered exceptionally quick at that time. Plus keep in mind, that there is a difference between the selling date and the closing date – many sellers are looking for closing dates in the 90-day range, so if a sale takes a few weeks longer they still have ample time for their desired closing date.”
Myth: “I missed the best opportunity to sell. There are no more record-setting prices”
“Since the end of 2019, prices in the Ottawa market have increased by over 64 per cent (From $441,693 to $727,556)! That type of growth would normally take almost 10 years to achieve, but it took only 30 months,” Bennett said.
“So, if you are still thinking of selling, while you may not set a record price for your neighbourhood, if you bought your home before 2019, your home has likely increased well beyond the value it would be if Ottawa had its typical increases.
“But it’s important to keep in mind that setting a record price doesn’t necessarily mean you made the most profit – even though you may sell for less than your neighbour, if you paid less and/or put less money into your home (renovations, updates, etc.) than it’s likely your return-on-investment would be far greater than your neighbour.”
Myth: “With mortgage rates on the rise, people will default on their mortgages”
“The rising interest rates have undoubtedly had an impact on the market. In fact, that was one of the major reasons why the mortgage interest rates were increased, to help stabilize the markets. But mortgage rates are roughly at the same level that they were in 2019 – again, the third best year on record. The most recent increase was announced last week at 100 basis points, or one per cent. While one per cent may seem like an insignificant number, that rise decreased buying power by 10 per cent! But these increases weren’t announced overnight, many homeowners and buyers were able to lock in at the lower rates before they increased,” Bennett said.
“More importantly, when approving a mortgage loan, banks use a qualifying rate – which is approximately two per cent higher than your actual mortgage rate. Being risk-averse, banks build in this ‘buffer room’ to protect against an increase in the mortgage rates – which is precisely what is happening now. Which means, this recent rate increase shouldn’t impact current homeowners or any buyers who are working with a full-service brokerage and have locked in a guaranteed rate with a mortgage pre-approval. However, if you are a potential buyer shopping on your own and you simply used an online mortgage calculator to get pre-approved, it’s unlikely you have a guaranteed rate and this recent increase will have an impact on your purchase.”
The University of The Gambia (UTG) in collaboration with the African Regional Intellectual Property Organization (ARIPO) and the Registrar General of The Gambia at the Ministry of Justice on Tuesday convened a two-day seminar on intellectual property.
The seminar was designed to raise awareness among staff and students of academic institutions and contributors to innovation in The Gambia on intellectual property.
The event was held under the theme – ‘Fostering Creativity and Innovation for Economic Growth and Development in Africa.’
Speaking at the event, Dr Muhammed Lamin Sanyang, Director of Research and Consultancy at UTG, on behalf of the Vice Chancellor, said that in a low-income country like The Gambia, the role of research in an academic institution is significant for its sustainability and development, and it is imperative to have knowledge-driven growth-based on innovation to boost the country’s economy.
“The quest for knowledge advancement is the basic principle behind research. The quality of research work directly translates into the quality of teaching and learning in the classroom, thereby benefiting the students, the society, and the country.” he said.
The University of The Gambia, he said, should serve as a role model in innovations like that and the research department should take the lead.
“For any University to contribute meaningfully to national development and provide practical solutions to real-social problems, it is important to elevate research and innovation to a position of high strategic importance within its core function, hence under my leadership, UTG would continue to prioritise research and innovation as crucial components.” he added.
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Pierre Gomez, Minister of Higher Education Research and Technology (MoHERST), outlined the importance of intellectual property, saying his Ministry recognises the fact that innovation plays a fundamental role in building solid foundations to promote businesses and industries.
“And conscious of this, we are providing the policy environment that fosters innovation and to strengthen research and development capacities of developing countries to enable an economy based on human talent that generates higher value-added growth.”
Ahmed Ibrahim, Senior Examiner ARIPO, acknowledged that The Gambia is the second African country to conduct this type of seminar, challenging participants to take the sessions seriously to make changes in economic growth.
Dawda A. Jallow, Attorney General and Minister of Justice, said the Ministry is on track in developing the IP laws that contradict international standards.
“There is already a bill which has been approved by the cabinet and ready to be tabled at the National Assembly.”
The bill, he said, takes into account new trends in the file of intellectual property, adding that ‘if this bill’ is enacted it would significantly bring positive changes to the intellectual landscape in the country.
The Washington County Water Conservancy District announced a new water ordinance on Wednesday that aims to reduce future water consumption. (Jeffrey D. Allred, Deseret News)
Estimated read time: 3-4 minutes
ST. GEORGE — One of Utah’s — and the nation’s — fastest-growing areas is banning “nonfunctional grass” at any new commercial, institutional and industrial developments, limiting grass at new homes under a new ordinance.
Washington County Water Conservancy District announced the new changes Wednesday, which also bars new golf courses unless the developers can provide their own nonpotable water source for irrigation and require secondary and reused water for outdoor irrigation “where available,” a practice the county already used for parks, government facilities and some residential neighborhoods.
The new ordinance is projected to help conserve nearly 11 billion gallons of water over the next decade, according to the district.
“We can’t risk running out of water. Prolonged drought has threatened our only water source,” said Zach Renstrom, general manager of the Washington County Water Conservancy District, in a statement. “We have to make changes to how our community uses its water to protect our economy and quality of life.”
Other new requirements listed include:
- Hot water recirculation systems
- Water-sense labeled fixtures
- EnergyStar appliances
- Submetering of multi-unit facilities
- Restrictions on water features including misting systems
- Water budgets for golf courses
- Limits on water used by car wash facilities
Every respective municipality in the county will enforce its new ordinance, district officials added. It’s up to cities to review any water waste complaints and monitor metering data, as well as issue any penalties to customers who don’t comply with the ordinance.
The district said an additional fee for “higher water use” will be charged beginning in 2023 with the hope that it will help encourage compliance. Money generated from those fees will go toward water conservation programs, such as providing rebates to allow residents to replace grass with water-efficient landscaping.
St. George, the county’s largest city, is the fastest-growing metro area in the nation, according to 2021 population estimates released by the Census Bureau earlier this year. The entire county experienced a 6.1% jump in population to a little over 190,000 overall, the bureau added. That growth follows a 30% jump in population between the 2010 and 2020 censuses.
But the area has also come under fire for its water practices, especially for a county that has experience drought conditions in 16 of the last 20 years — and is currently listed in extreme drought by the U.S. Drought Monitor.
For example, comedian John Oliver singled out the St. George area in a segment about water use in the West on “Last Week Tonight” back in June, calling out its desert golf courses and the controversial Lake Powell Pipeline project, which would send water from the struggling Lake Powell to southwest Utah.
However, Utah Gov. Spencer Cox said he commends the county’s new ordinance and its efforts to cut back water use. In a statement Wednesday, the governor said that it helps set a “higher development standard in the state.”
“Our future depends on every community in Utah making water conservation a top priority,” he added.
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Okaz/Saudi Gazette
RIYADH — A total of 9,546 Saudi men and women have been hired in five sectors during the first quarter of the year 2022, according to a recent report by the Ministry of Human Resources and Social Development. This figure is less than the targeted number of jobs in these sectors.
The targeted jobs in the sectors of legal consultancy, driving schools, and customs clearance stood at 15,000 jobs while the actual jobs given in these three sectors accounted for 6964 during the three-month period.
According to the monitoring of the ministry’s report by Okaz/Saudi Gazette, the decision to localize the legal consultancy professions resulted in the employment of 3,523 Saudis during the first quarter of the current year, while the targeted employment in this sector during the period accounts for 5,000 Saudis. The number of Saudis hired in the driving school sector reached 2,764 instead of the targeted 8000 jobs whereas the customs clearance sector employed 677 Saudis in place of the targeted 2,000 jobs. The decision to localize engineering technical professions has contributed to the employment of 1,864 jobs, while the localization of the Al-Baha region contributed to the employment of 718 Saudi men and women.
The ministry revealed that a platform was launched to receive applications for licenses of workers in the sector of gold and jewelry. There would be a mechanism to follow up on the compliance of the regulations by the establishments and detect violations on their part.
The ministry stated that it has finalized a program aimed at regulating expatriate workers in accordance with their nationalities and their activities in the labor market by fixing the percentages of workers from each nationality in the labor market according to the size and type of the activity concerned.
SANDY, Utah — Utahns shopping for a home this summer have more options and less competition compared to during the home-buying fever of the last few years, according to the Salt Lake Board of Realtors.
The number of active, statewide listings on UtahRealEstate.com on July 28 totaled more than 9,300. That’s a 160% increase from the same time last year when there were only about 3,600 active listings, the board said.
“The fact that we now have more inventory means that there are more options, and instead of facing 20 people, you’re maybe facing two or three,” Dejan Eskic, the board’s chief economist and senior research fellow at the Kem C. Gardner Policy Institute, told KSL TV.
In addition, the number of home sales in Salt Lake County fell by 15% during the second quarter of this year. Along the five counties comprising the Wasatch Front, single-family home sales dropped 10% compared to last year’s second quarter.
“After two years of a frenzied market with multiple offers tens of thousands of dollars above asking price, Utah’s real estate market is approaching normalcy,” Eskic said a prepared statement. “Instead of a home taking a couple days to sell, it probably will take a few weeks.”
Also on Friday, the Salt Lake Chamber released an updated economic outlook in conjunction with the Gardner Institute showing that homes prices have started to moderate.
“Right now, for the first time, we saw just a slight bend in that upward curve where housing prices are starting to stabilize,” said Ginger Chinn, the chamber’s vice president of public policy.
The economic dashboard from the Salt Lake Chamber pointed out that Utah’s median home sales price fell slightly from $535,000 in May to $530,000 in June. However, June’s statewide median sales price was still an 18% increase from June of 2021.
“The economic dashboard is starting to show signs of tapering growth as inflation and interest rate hikes weigh on consumers,” said a statement from Derek Miller, the chamber’s president and CEO.
Miller’s statement went on to say that Utah’s economy is strong. The report noted that Utah’s 2% unemployment rate is the third lowest in the country.
“We are so diverse and the job growth is showing strong upticks in every one of our sectors,” Chinn told KSL TV. “We’re not seeing a decline in any one of our sectors right now. That makes Utah very unique.”
However, the July report noted concern over a sharp decline in consumer confidence in Utah and across the nation.
“Utah’s broad economic growth continues to power our economy forward in the face of changing monetary policy and slipping consumer confidence,” said a statement from Natalie Gochnour, director of the Kem C. Gardner Policy Institute. “The dashboard shows our economy is stabilizing in key sectors like housing and job growth. Along with sustained air travel and retail sales, we remain positioned for moderate growth, despite the economic dislocation other states are experiencing.”
Estimated read time: 4-5 minutes
Temperatures are rising and you’re ready to get out of town. But when it comes to planning out your trip and accommodations, is Airbnb really the best option?
It’s true that short-term rental companies like Airbnb and VRBO offer a wide variety of destinations and amenities. But their prices and fees have really gotten out of control. What if instead of spending big to stay in someone else’s home, you could pay yourself to go on vacation?
Ember, a new startup based in Lehi, Utah, is solving this problem through vacation home co-ownership.
⅛ of the home, 100% of the experience
Historically, not everyone could afford a vacation home—especially in top destinations like Newport Beach, California or southern Utah. And even for families that could commit to a vacation property, studies show that they are only using the home for three to six weeks out of the year.
With Ember’s co-ownership model, you can buy a luxury vacation home in portions—and only pay a fraction of the cost. Each Ember home is divided into eight parts. Co-owners get 44+ nights for every part they purchase. Owners looking for maximum time can buy up to half of the home.
Each buyer enjoys exclusive access to the home during their stays and can even let friends and family vacation there if they can’t use all the time.
Ember’s innovative approach to vacation homeownership promises a five-star experience from start to finish—free from hassle and disappointment. If you’ve ever stayed at an Airbnb that didn’t live up to expectations, you know it only takes a few things going wrong to ruin a vacation.
The service of a five-star hotel in your home
Each home is professionally designed and exquisitely furnished so you can simply show up and instantly enjoy the space. A 24-hour property concierge is available for any issues that may arise. Is the wifi giving you problems? Did you lock yourself out? The on-call concierge will be there in minutes.
When staying in a short-term rental, it’s rare to get assistance when things go wrong.
With Ember, their commitment to your experience continues even after you leave. They maintain your vacation home so you don’t have to worry about a thing. The home is cleaned, linens are washed, lawn is mowed, and pool is maintained so the property is turnkey ready for your next stay.
Where luxury meets logic
But the biggest benefit to co-owning a premium vacation home is building equity. Ember homes appreciate in value just like other properties on the market. And should you decide to sell your portion down the road, you name the price and capture any potential appreciation.
With Ember, you’re paying yourself to go on vacation, which is impossible when traveling through Airbnb and other nightly rental platforms. On top of that, because you own a minimum of 13 percent of the house, your costs are offset by 87 percent thanks to the other co-owners. And with potential future appreciation, costs are even further offset, in part, by your gains.
Another significant benefit is that Ember is all about ownership, not renting. Ember owners love this aspect of the model. Because short-term rentals often cause wear and tear on the property at a faster rate, Ember owners collectively agree not to rent out the home. This no-renting policy keeps your home’s quality and condition at the highest level possible.
You’ll also love that, like Airbnb, scheduling is flexible and easy. Owners can book a last-minute stay for the next day or up to two years in advance. Ember’s mobile app makes sure each co-owner can access the home equitably—and no one can monopolize the calendar. Ember even guarantees holiday stays and a seven-night booking for every co-owner during peak seasons.
Ultimately, Ember’s co-ownership model was designed for one thing: to help more families enjoy hassle-free vacations in beautiful homes—that they own, not rent. Start by browsing the available properties and find the perfect vacation home for you. Then talk with an Ember advisor to get all your questions answered and finalize your purchase. You’ll be able to book your first stays and arrive at your Ember home in as little as 24 hours. From there, it’s all about making memories that you’ll cherish forever with the people you love.
Ember Advisors are available for call or chat from 7 a.m. to 11 p.m. Mountain Time.
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Real estate investment firms purchased 9.6% of residential homes in King County in 2021. Slightly higher percentages were recorded in Pierce and Snohomish Counties.
Those percentages follow a nationwide trend: with inflation rates rising — the Consumer Price Index recorded a 9.1% year-over-year price increase across all consumer items as of June — investors have looked to real estate acquisition to hedge against inflation, with residential rentals and their annually variable rental prices attractive to investment firms looking to get ahead of the curve.
Across the U.S., investment firms acquired 13.2% of residential homes in 2021, up from 11.8% in 2020. The tri-county area rests slightly below that national average. Independent analysis conducted by the National Association of Realtors (NAR) offers the idea that a relatively high number of households, a density of minority groups and Millennials, and a disproportionate percentage of renters are market conditions most compelling for “institutional buyers” of residential homes, defined as companies, corporations, or LLCs.
“A big portion of homes that otherwise will be sold to first-time homebuyers, institutional buyers purchase this home,” Nadia Evangelou, NAR’s senior economist, told MyNorthwest.
“We also see, for example, in areas with a higher market share of institutional buyers, they’re purchasing homes above the median price compared to all buyers, so they increase the home prices … they offer all cash. First-time homebuyers cannot compete with, for example, international buyers because first-time homebuyers … don’t have equity … They do not have this equity to make a downpayment … While rents are rising fast as well, this also means a downpayment is becoming more challenging for first-time homebuyers.”
All cash offers have obvious benefits for sellers, with institutional buyers also guaranteeing sales and waiving the inspection process, according to a NAR survey.
Seattle loses nearly 3,000 rental properties in less than a year
Institutional buyer shares are higher in areas with disproportionate numbers of renters: counties with renter shares closer to 30% recorded the highest percentages of investment acquisition. Of note, areas with relatively high numbers of institutional investments had roughly twice the number of black and minority households.
At the national level, 42% of properties sold to institutional investors were converted into rental properties, according to a NAR random sample of approximately 50,000 residential transactors. 45% were sold back or “flipped.”
More locally, a MyNorthwest analysis of King County real estate excise tax affidavits processed by the recorder’s office for June 1, 2022, through June 30, 2022, found that RedfinNow Borrower LLC acquired the most property of any buyer, purchasing 15 of the 5,630 properties recorded by the county for that month. The second most prolific buyer was the City of Seattle, purchasing 12 properties in June of 2022.