Page 66 – Kanebridge News

April 6, 2022

The Case for Building Wealth With Stocks, Not Homes

Once upon a time, a young family bought a modest three-bedroom Cape, the worst house in the best location in a prosperous suburb. Many years later, during the housing frenzy of 15 years ago and after the kids had grown and moved away, they received an unsolicited cash bid—for 20 times what they paid. That became their nest egg, which provided a comfortable retirement.

It’s all true, but it might as well be a fairy tale. Such an escalation of home prices is unlikely to repeat, especially from here after their frantic climb. Over the long term, history shows the stock market has returned about twice as much as residential real estate. And it’s done so with far fewer headaches than the attendant expenses of upkeep, which have come as a shock to many recent home buyers.

Looking at the data assembled by NYU Stern School of Business professor Aswath Damodaran, stocks (as measured by the S&P 500) returned 12.47% annually from 1972 to 2021, versus 5.41% for residential housing (based on the Case-Shiller Index, through last October), a span that encompasses inflation’s liftoff after the dollar’s link to gold was severed. Looking at 2012-2021, which takes in the recovery from the housing bust that precipitated the 2007-09 financial crisis, stocks returned an average 16.98%, versus 7.38% for housing.

In a new paper prepared for the Brookings Institution, Robert Shiller, a creator of the housing index, and Anne K. Thompson found 72.4% of respondents in a survey said recent bidding wars had resulted in “panic buying that caused prices to become irrelevant.” That was attributed to the now-familiar story of buyers wanting more room, especially for a home office, in the suburbs. White-collar workers who could work from home were mostly unscathed or benefited from lower spending outlays during the worst of the pandemic.

Historically low mortgage interest rates further leveraged bidders’ buying power. With Freddie Mac’s average 30-year loan down to 3.05% in December, the monthly payment on the median-priced house of $408,100 in the fourth quarter, bought with a 20% down payment, would be US$1,385. With the jump in mortgage rates, to 4.67% as of March 31, that same loan would cost US$1,687 a month. The reduction in affordability is sure to slow home-price appreciation.

Shiller and Thompson found that recent buyers are realistic about near-term home-price trends, expecting some moderation, but may be “given to flights of fancy for the longer run.” Damodaran’s parsing of their data showed buyers at the peak of the previous bubble in 2006 didn’t recover fully from the ensuing bust for 10 years. That wasn’t the first time home buyers were stuck with losses. After the dip from the peak in 1989, prices didn’t recover fully until 1992. And those losing spans didn’t take into account transaction costs, which are huge for residential real estate.

It’s axiomatic that buying high lowers future returns. In human terms, stuff happens, from better job opportunities elsewhere—especially given the ability to work from anywhere for knowledge workers—to unfortunate circumstances such as death and divorce. The ability to pick up stakes with totally portable and liquid financial assets may provide more freedom in the near term, along with greater wealth over the longer span.

March 30, 2022

Global Luxury Spending Could Decline Due To The Ukraine War

Nearly one month after Russia’s military invasion of Ukraine, the conflict’s impact on global businesses has spread to luxury industries.

Most high-fashion brands, including LVMH Group, Burberry, and Kering, closed their stores in Russia earlier this month, while announcing their donations to international humanitarian efforts in Ukraine.

How the Russia-Ukraine conflict will eventually affect the global luxury industry will depend on how long it lasts, experts say.

“We see a more likely, immediate, and relevant impact on Russians personal luxury spending locally, strongly driven by local currency devaluation and restrictions in place,” says Claudia D’Arpizio, senior partner and global head of fashion and luxury at Bain & Co., a Boston-headquartered management consulting firm.

Russian luxury customers account for approximately 2%-3%, or about €7 billion (AU$10.28 million) of the total global luxury goods market, she says.

The war will also likely damp consumer confidence in European countries and North America because of increases in energy prices, stock market volatility, the interruption to tourism, and other economic uncertainties, says Federica Levato, a partner at Bain and leader of its luxury practice in Europe, the Middle East and Africa.

“Upon persistence of the crisis, financial stability could be also affected, particularly generating higher stock market volatility. American consumer confidence could potentially decline and eventually also their luxury spending,” she says.

Since Russia’s invasion, more than 19,000 have been killed, 10 million people have been displaced, and more than AU$119 billion in property has been damaged.

Near-term, the luxury brands have taken an economic hit from their decision to close stores in Russia.

In early March, LVMH temporarily closed its 124 stores in Russia. Other fashion houses—including France’s Kering, Chanel, Hermes International, Swiss group Richemont,, and Italy’s Prada—all announced that they had suspended their operations in Russia through their social media accounts.

However, it is unlikely that the luxury brands will stop doing business in Russia, says Kate Newlin, a principal of New York-based Kate Newlin Consulting.

“When you think about luxury, you think of Russian oligarchs as a major segment of customer,” Newlin says. “It will be a larger bet for LVMH to walk away than, for example, McDonald’s.”

LVMH did not respond to a request for comment. The conglomerate, which owns brands such as Dior, Fendi, and Louis Vuitton, donated €5 million to the International Committee of the Red Cross to help those affected by the war in Ukraine in early March.

British fashion house Burberry declined to comment on the war’s impact on its business. On March 11, it donated to two more organizations, Save the Children, and UNICEF, in support of their Ukraine humanitarian appeals, following an earlier donation to the British Red Cross Ukraine Crisis Appeal.

March 30, 2022

Have Bitcoin, Will Travel? 4 Strategies for Crypto-Holidays

MAYBE YOU’RE still flush with crypto cash. Or perhaps your Bitcoin portfolio is hemorrhaging value amid the recent turbulence. Either way, if turning digital assets into rest and relaxation sounds appealing, you have options. Marko Jovic, a 41-year-old telecom engineer from Belgrade, Serbia, began using crypto to pay for vacations in 2021. He said despite a recent fall in value he can pay for a lot of things with his crypto. “You can basically do anything you want with crypto,” said Mr. Jovic.

Now that you can get debit cards linked to cryptocurrency portfolios, it’s never been easier to use digital cash while on the move. But for travelers who want to avoid the extra fees associated with using a crypto card, the alternative is to seek out merchants willing to accept cryptocurrency like Bitcoin directly. Luckily, a growing list of companies, hotels and destinations are eager to do business with crypto consumers. Here, a few up-to-the-minute moves:

1. Book a trip via an online travel agency

Travala.com has emerged as the leader among the handful of online booking sites that accept crypto. It may offer fewer routes and destinations than traditional air-travel sites do and sometimes list slightly higher prices, said Mr. Jovic, who recently used it to book a flight to Budapest, but he finds the ability to pay with crypto outweighs those factors. While Travala co-founder and CEO Juan Otero, who worked at Booking.com in the late 2000s, agrees his company needs to be more competitive on airfare, he argues that its luxury hotel offerings compare well to rivals’. Of Travala’s monthly active users, Mr. Otero said, an-above average number opt for “four- and five-star hotels.” Omar Hamwi, a 37-year-old crypto professional from Washington, D.C., and self-described loyal customer of Travala, booked a stay most recently at the five-star Fairmont Orchid in Hawaii. “I have idle crypto so I generally do like to use it when I can,” he said.

2. Buy a flight ticket directly with the airline

You can book flights directly with at least one crypto-friendly airline—AirBaltic, Latvia’s premier carrier which services more than 70 destinations, primarily in the Baltics and Europe—but if you’re not flying out of Riga, it may be hard to take advantage. Still, according to the airline, since it began accepting crypto back in 2014, more than 1,000 customers have purchased tickets that way.

3. Reserve a swanky hotel

The Chedi, a chic luxury resort in the Swiss Alps lets guests pay with Bitcoin or Ethereum, as long as they’re spending more than $200 when paying for rooms or services like ski rentals and spa days—easily done since room rates generally start at $650 a night. The Pavilions Hotels & Resorts, a boutique hotel group with locations in Europe and Asia including Rome, Amsterdam, Bali and Phuket, also accepts cryptocurrency bookings. For travelers who prefer to spend their crypto gains stateside, there’s the Kessler Collection, whose portfolio include several hotels in the southern U.S., as well as a ski lodge in Beaver Creek, Colo.

4. Visit a ‘cryptopia’

If anything close to a crypto Utopia exists, it’s the surf town of El Zonte, El Salvador, otherwise known as “Bitcoin Beach.” There, travelers can grub on pupusas after a day of surf lessons at El Zonte’s point break, and pay for it all with Bitcoin. “Most of the merchants accept Bitcoin,” said Carol Souza, a Brazilian influencer focused on educating people about crypto. Other cities are expected to follow suit. Earlier this month, the small picturesque city of Lugano, Switzerland, announced it is also adopting cryptocurrency as legal tender.

March 30, 2022April 20, 2022

Global Art Market Soars By 29%

The global art market rebounded strongly in 2021 despite the challenges of the pandemic, according to a global art market report released Tuesday.

Aggregate sales, including sales by dealers and auction houses, jumped 29% from 2020 to an estimated US$65.1 billion last year, surpassing pre-pandemic levels in 2019, according to the annual report jointly published by Art Basel and UBS and authored by Clare McAndrew, founder of Dublin-based Arts Economics.

“The art market has demonstrated incredible resilience in 2021, with a strong uplift in aggregate sales, despite still operating under some very challenging conditions,” McAndrew said in the report. “Dealers and auction houses successfully adjusted to a new two-tier system of online and offline sales and events, and the rising wealth of the high-net-worth collectors helped to support demand at the higher end of the market.”

The median expenditure by high-net-worth individuals (HNWIs), those who have a net worth of more than US$1 million, excluding real estate and private business assets, reached US$274,000 in 2021, more than double the level in 2020, according to the report.

Further, 74% of HNWIs surveyed bought art-based non-fungible tokens, or NFTs in 2021, with a median price of US$9,000 each, the report said.

The findings are based on a survey of 2,339 wealthy individuals across 10 major markets, and represent one element of the wide-ranging report on the state of the global art market.

Sales by dealers amounted to approximately US$34.7 billion in 2021, increasing 18% year-on-year. Public sales by auction houses, excluding private sales, reached an estimated US$26.3 billion in 2021, an increase of 47% from a year ago, according to the report.

Geographically, the U.S. still dominates, accounting for US$28 billion, or 43% of the total global sales of art and antiques in 2021. Greater China was the second largest with a market share of 20%, or US$13.4 billion in sales.

August 26, 2021August 26, 2021

Singapore Buys More Australian Real Estate Than China

Although a small city-state, Singapore is weighing in on Australia’s real estate market.

In the two years to July 2020, Singaporean investors spent $19.3 billion on Australian property, according to the latest Foreign Investment Review Board (FIRB) data.

That’s $6.1 billion more over the same period than China.

Another view is that Singapore makes up 17 cents of every foreign dollar spent on local property, versus China’s 13 cents – despite Singapore’s economy being approximately 44 times smaller.

Singapore is now the second-largest investor in Australian real estate, behind only the United States.

These figures come as foreign investment into Australian real estate has doubled in the last here years – largely at the hands of institutional investors and large scale projects.

Geographically – and in times of unrestricted borders – the tie between Australia and Singapore makes sense, with Perth, amongst other Australian capitals, a short flying distance away for Singaporeans.

This enormous figure also boosts Singapore’s standing across all industries, now representing the third-biggest source of foreign investment for Australia – behind only the U.S. and Japan.

June 15, 2021April 20, 2022

Do We Need to Be in Hong Kong?’ Global Companies Are Eyeing the Exits

Apprehensive about Hong Kong’s future as the best place to do business in China and beyond, multinational firms are pulling up stakes, adding to uncertainty about the outlook for one of the world’s premier commercial cities.

Buffeted by political upheaval, an authoritarian crackdown by mainland China and the pandemic, global companies and professionals are heading to rival business cities such as Singapore, and to Shanghai, the Chinese commercial hub some see as a better place to profit from the nation’s vast economy.

Ever since the U.K. returned Hong Kong to China in 1997, the city’s leaders have billed the semiautonomous territory as “Asia’s World City”—an open society with a British-style legal system where foreign professionals could feel at home. Today, Hong Kong is becoming less open and more fused to the mainland economy.

Some companies, including banks and other financial institutions, still view Hong Kong as crucial to their China-focused business models and are digging in for the future. Others are eyeing the exit, concluding the city no longer holds the prospects it once did.

“Being in Hong Kong always used to be a no-brainer,” said Frederik Gollob, chairman of the European Chamber of Commerce in the city. “Now, for the first time, businesses are having discussions around, do we need to be in Hong Kong?”

In a survey of members of the American Chamber of Commerce in Hong Kong released last month, 42% of the 325 respondents said they were considering or planning to leave the city, citing uneasiness over China’s new security law and a pessimistic outlook of Hong Kong’s future.

Dozens of international companies have moved regional headquarters or offices from the city since 2019, government data show. That has contributed to the highest rate of commercial real estate vacancies in 15 years, with more than 80% of the vacant space surrendered by international companies, data compiled by Cushman & Wakefield show. All told, more people—expatriates and locals—departed the business hub in 2020 than any year since the global financial crisis.

In January, VF Corp., owner of Timberland, the North Face and other brands, said it was shutting its 900-person Hong Kong office after 25 years in the city. Japanese videogame maker Sony Interactive Entertainment has moved regional executives to Singapore. European luxury-goods company LVMH said it was relocating some Hong Kong-based employees from its Moët Hennessy liquor unit. French cosmetics giant L’Oréal also said it was relocating some staffers from its Hong Kong headquarters.

Hong Kong boosters predict that, once the pandemic lifts, the city will emerge stronger as its businesses profit from deeper integration with the mainland. Pessimists see it gradually atrophying around a few core industries useful to China, such as finance.

Hong Kong Commerce Secretary Edward Yau said the majority of foreign firms still believe that Hong Kong is the place for doing business, encouraged by growing opportunities with major Chinese cities. “We will continue to monitor the situation and provide the best help we can offer,” he said at a recent press conference, referring to the American Chamber of Commerce survey.

Under China’s long-term plan, Hong Kong will become part of a 70 million person “greater bay area” economic zone that includes the neighboring tech city of Shenzhen and the gambling mecca of Macau. Stephen Phillips, who runs Hong Kong’s investment promotion bureau, InvestHK, said that arrangement will become the economic engine for growth and a major business opportunity in the coming years.

He said the biggest issue for Hong Kong is getting through the Covid epidemic, and that China’s new security law for Hong Kong hasn’t had a major impact on business. “Each business will make its own decision,” he said. “But the vast majority don’t see it as a risk.”

Changed view

Hong Kong once pitched itself as a bridge between East and West. Now, for some businesses, Hong Kong is no longer global enough to serve as a regional headquarters. For others focused on doing business in China, the city isn’t as tapped in to the mainland economy as Shanghai.

Denver-based VF is moving the Hong Kong positions responsible for its China sales and marketing to Shanghai, where they will be nearer the stores and giant online retailers crucial to its business. Employees responsible for managing its regional network of manufacturers and suppliers will relocate to Singapore, a Chinese- and English-speaking country of 5.7 million people with a strong business infrastructure. Although Singapore’s laws also limit free speech, it has an established free-market approach to business.

VF said its move reflected changing economic trends and efforts to better serve consumers, not China’s intervention in the city.

L’Oreal said it is building up in Singapore and Shanghai as it reduces its presence in Hong Kong. The restructuring, it said, is designed to give greater coherence to its business by creating a Southeast Asia, Middle East and North Africa zone run from Singapore, and a North Asia zone run from Shanghai.

Sony Interactive and Moët said they have moved some employees to Singapore. Both declined to comment further on their moves.

Hong Kong’s transformation accelerated in 2019 with mass demonstrations against Beijing’s intervention in the island that was meant to largely govern itself under a concept known as “one country, two systems.” Months of clashes between police and students shook the city’s reputation as a safe and stable place to do business.

Beijing cracked down on the protests in June 2020 and pushed through a national security law that granted the Chinese government power to intervene in Hong Kong’s legal system, while authorizing its secret police to enforce vague statutes such as against foreign collusion. On Friday, thousands of people defied a huge police presence and threats of jail to commemorate the 1989 Tiananmen Square massacre.

After China announced its crackdown, South Korean internet search company Naver Corp. said it was deleting its Hong Kong-based backup servers and moving them to Singapore to protect user data.

Technology companies including Facebook and Alphabet Inc.’s Google dropped plans to connect Hong Kong and the U.S. with undersea data cables after U.S. security officials signaled opposition to the plans.

At Asian Tigers Hong Kong, a relocation firm serving international executives, moves into Hong Kong have declined 50% since 2019, while moves out increased by 30%, said Chief Executive Rob Chipman, an American who moved to Hong Kong in the 1980s.

“I saw a lot of longtime Hong Kong stayers who were leaving, people like me who came out for a usual three-year stint and 30-years later are still here, loving it, married with kids, owning businesses,” Mr. Chipman said. “So even some of those people are saying, ‘Wait a minute, something’s going on here. Maybe it’s time to leave.’ ”

Some 40,000 more Hong Kong residents departed the city in 2020 than those who entered intending to reside there, government figures show. All told, Hong Kong’s population of about 7.5 million shrank by 46,500 in 2020—the second contraction since it was returned to China.

Sandra Boch, an Austrian mother of one who moved to Hong Kong 15 years ago to set up a specialty fabrics and stationery business, left in November. While the 2019 unrest disrupted her business, the 2020 national security law, she said, was the last straw. She packed up her business and moved to Singapore.

The law, she said, “was a clear sign from China that they are taking control of Hong Kong now, and everything will get more controlled from that point out. We no longer felt safe.”

British authorities have opened the doors for local holders of pre-handover U.K. passports to immigrate permanently to the U.K., and they estimate more than 300,000 Hong Kongers—about 4% of Hong Kong’s total population—may come over five years.

New entrants

Hong Kong boosters predict companies that closed offices will be replaced by other firms moving in, including from mainland China. In the 12 months ending June 3, 2020, the latest information available, mainland Chinese companies opened 63 new regional headquarters and offices in Hong Kong, an increase of 12% from the year-earlier period. During the same period, U.S. companies—the biggest international presence in Hong Kong—closed 45 headquarters and offices, or 6% of their total, government figures show.

Falling rents in Hong Kong have attracted others to enter or expand, said Mr. Phillips of InvestHK. Japanese food retailer Don Don Donki and the French sporting-goods seller Decathlon both expanded in Hong Kong.

Hong Kong remains attractive to the financial-services industry. With its modern markets, freely convertible currency and connections to the mainland, Hong Kong is unrivalled when it comes to financing China. Mainland China’s newly minted superrich are an attractive target for Hong Kong-based wealth-management firms. A string of stock offerings by Chinese tech giants have put the Hong Kong exchange in the No. 3 spot globally for such listings.

U.K.-based banking giant HSBC Holdings PLC said in February it would invest $6 billion in its Hong Kong-based Asia business, of which Hong Kong is by far its most lucrative market.

Last year, HSBC’s Asia-Pacific head, Peter Wong, demonstrated support for Beijing’s national-security law after a Hong Kong politician said the bank could be punished unless it did. Later that year, it froze accounts of a prominent Hong Kong democracy activist who had fled the city.

Facing criticism from U.K. lawmakers who accused the bank of appeasing China, HSBC Chief Executive Noel Quinn told them that the bank didn’t drop customers or freeze accounts for political reasons, and reiterated the bank’s commitment to Hong Kong. HSBC declined to comment for this article.

Some large banks, although optimistic about continuing to do business in Hong Kong, are quietly running contingency scenarios to ascertain what they would do if they lost access to their Hong Kong infrastructure and had to operate out of another city, people familiar with such plans said.

“People ask, can I still do whatever I want and say whatever I want?” said Allan Zeman, a foreign-born real-estate developer who has advised Hong Kong’s current government and years ago gave up his Canadian passport for a China-issued one. “Yes. I still do whatever I want and say whatever I want, as long as I choose not to be an antagonist.”

Corrections & Amplifications
Hong Kong’s currency is freely convertible but is pegged to the U.S. dollar. An earlier version of this article incorrectly said the Hong Kong dollar was free-floating. And Sandra Boch, an Austrian mother of one who moved to Hong Kong 15 years ago to set up a specialty fabrics and stationery business, left in November. An earlier version of this article misidentified her nationality, the number of her children and the month she left Hong Kong. (Corrected on June 7)

June 9, 2021June 9, 2021

House Prices Increase At Highest Quarterly Rate In A Decade

Australian house prices are rising at the highest quarterly rate in 10 years, according to the latest Real Estate Market Facts report from the Real Estate Institute of Australia (REIA).

According to REIA President, Adrian Kelly, the weighted average capital city median price increased by 6.8% for houses and by 2.7% for other dwellings.

“Over the March quarter, the weighted average median house price for the eight capital cities rose to $873,911 with all cities increasing except Canberra. At $1,309,195, Sydney’s median house price continues to be the highest amongst the capital cities, 49.8% higher than the national average. At $500,000, Perth has the lowest median house price across Australian capital cities, 42.8% lower than the national average.

“Over the 12 months to the March quarter, the weighted average capital city median house price increased by 11.1%.

“The weighted average median price for other dwellings for the eight capital cities increased to $621,313, a quarterly increase of 2.7%,” said Mr Kelly.

Mr Kelly also added that median prices for other dwellings increased in Sydney, Melbourne, Perth, Hobart and Darwin, remained steady in Brisbane and Canberra but decreased in Adelaide.

The median rent for 3-bedroom houses increased in all capital cities over the March quarter to a median of $452.50 per week.

“Over the past 12 months, the median rent increased in all capital cities except Melbourne where it remained steady. Darwin had the highest annual growth at 17.3% and now has the second highest rent at $538.50 a week with Canberra the highest at $570 per week.

According to the report, the national capital city vacancy rate is at 3.3% primarily up due to Melbourne’s rate of 6.1%.

Mr Kelly concluded the growth coincides with the April 2021 Lending to Households and Business figures released by the Australian Bureau of Statistics which show that the value of new loan commitments for housing rose for the second consecutive month after a brief fall in February which came after eight consecutive months of growth.

June 8, 2021June 9, 2021

Three Melbourne Penthouses For Sale

True to form, Melbourne’s luxury penthouse market is awash with effortlessly appointed elegant abodes.

Here, we’ve collated three of the best on the market right now.

Level 59, Aspire Residences, 299 King Street, Melbourne

Arriving in timeless style is this full-floor 5-bedroom, 5-bathroom, 4 car garage residence. Located above Aspire Melbourne, the upper-most 14 levels are dedicated to some of the most luxurious apartment living on offer, with level 59 – listed here – offering the full floor.

Uninterrupted views of Flagstaff Gardens, Melbourne CBD, Port Phillip Bay and beyond are at hand, while the residence’s central location puts it at the fingertips of the best Melbourne has to offer.

Inside, cutting-edge contemporary style permeates the 639sqm apartment, which has been designed by acclaimed interior architect David Hicks. Here, the lift opens to the apartment’s private lobby and formal lounge, dining room, cocktail lounge, complete with a fireplace.

The open plan kitchen arrives with the butler’s pantry and includes top of the range Gaggenau appliances and fully integrated Sub-zero refrigeration.

Elsewhere the master bedroom offers views across Melbourne CBD and Port Phillip Bay and features expansive customisable robes as well as a master ensuite with custom curved bath and double vanity.

The luxurious penthouse is set for completion early 2023 with an asking price of $9,983,000; aspireresidences.com.au

The Penthouse, 7 Bowen Crescent, Melbourne

Located in a prestigious Gurner development that encompasses the city skyline arrives yet another David Hicks penthouse.

The spectacular in scale entrance foyer features dark stained parquetry floors that leads one through to the open plan living, dining and entertaining space surround by 270-degree full height glass affording sensational views.

From here, the living area extended to a mammoth private sun-terrace, perfect for entertaining.

The premium kitchen is a chef’s delight arriving in Carrara marble with Gaggenau and Liebherr appliances throughout.

A lavish main bedroom lands with a dressing room, marble ensuite alongside two additional bedrooms with coordinating ensuites and built-in robes.

Up the curved staircase, or via the private lift, one arrives at the 4^th bedroom or retreat with a built-in robe.

Situated within walking distance to the Botanic Gardens, the Domain a, Albert Park and more, the home features a 4-basement car space and access to Albert Place’s hotel-style amenities.

The listing is with Marshall White’s Nicholas Hoo with a price guide of $7-$7.7 million; marshallwhite.com.au

Residence 6.01/409 St Kilda Road, Melbourne

Positioned on the corner of Toorak Road West and St Kilda road this podium floor residence arrives with sweeping north facing views of the CBD, Botanic Gardens and Fawkner Park.

The oversized, 3-bedroom, 5-bathroom, 5-car parking podium Penthouse offers 530sqm of internal living plus a further 200sqm external. Arriving with soaring ceilings, the main living space is decorated with European oak timber flooring in a herringbone pattern and floor to ceiling windows to take in those expansive views.

Also here is the large, luxuriously appointed kitchen featuring stunning oak cabinetry, top-grade marble, Gaggenau and Sub Zero appliances and a Christopher Boots pendant light as a feature.

The bedroom wing is informed by a large master with marble ensuite and bathtub, walk-in robes, while two more large bedrooms with ensuites while a guest room rounds out the offering.

Residents of The Muse will have the ability to access hotel-style services and facilities including 24/7 concierge services, 5-star wellness centre including spa, retreat, gym, swimming pool and also a luxurious club lounge with private meeting room facilities.

The listing is managed by Daniel Cashen, with an asking price of $16,500,000; themusemelbourne.com.au

June 8, 2021June 8, 2021

Mystery Buyer Pays Over $200 Million For Two Condos On New York’s Billionaires’ Row

Two condos at New York’s 220 Central Park South have sold for a combined approx. $203 million (US$157.5 million). It is one of the city’s priciest residential transactions of all time.

Property records show a buyer paid approx. $106.3 million (US$82.5 million) for a unit on the 60th floor and approx. $96.6 million (US$75 million) for the floor above. The purchase was made through a limited-liability company; the identity of the buyer couldn’t immediately be determined.

Both units are resales and the sellers, whose identities were also shielded by limited-liability companies, made significant profits. Last year the lower level traded for US$50.9 million, while the upper level sold for US$51.4 million, records show.

The mega-tower currently holds the record for the priciest sale in the U.S. In 2019, hedge funder Ken Griffin purchased a penthouse for roughly US$238 million, The Wall Street Journal reported.

Designed by Robert A.M. Stern Architects, 220 Central Park South has attracted other high-profile buyers including Daniel Och of Och-Ziff Capital Management and musician Sting and his wife Trudie Styler.

June 8, 2021

The Endless Cleanup at China’s Most Indebted Property Developer

Dogs bark, horses neigh, and investors worry about the financial health of China’s most leveraged property developer. The pattern is almost uncannily routine, but the latest drama at China Evergrande Group still bears watching.

The most recent wobble relates to the company’s relationship with Shengjing Bank, a regional lender in which it began buying a stake five years ago. Mainland Chinese media reports suggested that regulators are examining the bank’s transactions with Evergrande. Last week Chinese regulators warned that some small and midsize banks had exploited restrained property lending by their larger peers to expand their own exposure.

The company said on Monday that its financial links with Shengjing Bank were legally sound. Last week, Evergrande Chairman Hui Ka Yan promised to get on the good side of one of the government’s three red lines for property-developer leverage by the end of the month, doubling down on plans in the company’s last annual report.

Markets don’t seem entirely convinced that all is fine. On Friday, the yield on Evergrande’s dollar bonds maturing in March next year reached 19.8%. That is not anything like the near-30% levels of September last year, during the last panic about the company’s financial future, but it is up by more than 10 percentage points in the past two weeks.

For investors, Evergrande has been both a dream and a nightmare. The company’s stock is borderline uninvestable for bulls and bears alike, swayed regularly by buybacks and highly concentrated ownership. But its bonds, perpetually priced as if the company is at serious risk of collapse, have been enormously profitable for iron-stomached believers in the company’s political nous.

That doesn’t mean its frenetic business model won’t catch up with it eventually. Paying down some of its mountain of debt sounds like a good idea. So why hasn’t Evergrande done it before? The simple answer is that the company’s business model requires relentless growth and constant financing. Its compound revenue growth rate over the past decade is around 35% a year, outstripping that of U.S. tech giants like Apple and Amazon.

Paying off its debts is not a matter of simply trying harder; it needs to find money to do so. The most obvious route is to lean on less organized creditors instead of banks and bond investors. At the end of 2020, the company had over 1 trillion yuan (A$201 billion) in trade payables and contract liabilities, owed to suppliers and home buyers respectively, up almost 20% from a year earlier. The contract liabilities figure is one to watch in particular.

Unless bearish investors think they have some specific political insight that has escaped even the sector’s insiders, there is no point trying to guess which minor crisis might finally deal the company a more serious blow. But just because it can’t be timed, doesn’t mean that the day won’t eventually come.