Foreclosed Homes Sell at 27% Discount as Supply Grows

Homes in the foreclosure process sold at an average 27 percent discount in the first quarter as almost a third of all U.S. transactions involved properties in some stage of mortgage distress, according to RealtyTrac Inc.
By: Dan Levy: Bloomberg.com
A total of 232,959 homes sold in the period had received a default or auction notice or were seized by banks, RealtyTrac said in a report today. That’s down 14 percent from the fourth quarter and 33 percent from the peak a year earlier, the company said. The average price of a distressed property was $171,971, according to the Irvine, California-based data seller.

“The discount will probably stay between 25 percent and 30 percent as lenders carefully manage the number of new foreclosure actions in order to avoid flooding the market,” Rick Sharga, RealtyTrac’s senior vice president for marketing, said in an interview.

“We’re clearly creating more properties that will be sold at distressed prices than the market is absorbing,” Sharga said. There were more than 250,000 new bank seizures in the first quarter.

The discount reflects the average sales price of homes in the foreclosure process compared with the average sales price of properties not in distress. About 31 percent of all U.S. sales in the quarter were of homes in some stage of foreclosure, RealtyTrac said.

Rising Seizures

Home foreclosures set a record for the second straight month in May, with increases in every state, as lenders stepped up property seizures, RealtyTrac said earlier this month. Bank repossessions climbed 44 percent from a year earlier and will probably set a record in the second quarter, the company said.

Distressed sales totaled more than 1.2 million last year, a 25 percent increase from 2008 and a more than four-fold rise from 2007, according to RealtyTrac.

Such transactions accounted for 29 percent of all sales last year, up from 23 percent in 2008 and 6 percent in 2007. The average foreclosure discount was 25 percent in 2009, 22 percent in 2008 and 26 percent in 2007.

A “normal” market would show foreclosures accounting for less than 2 percent of sales, Sharga said.

Bank-owned properties sold for an average 34 percent discount in the first quarter, up from 32 percent both in the previous quarter and a year earlier. Such properties accounted for 19 percent of all U.S. home sales, up from almost 16 percent in the fourth quarter and down from 21 percent in the first quarter of 2009, RealtyTrac data show.

Short Sales

Properties in default or scheduled for auction sold for an average discount of almost 15 percent, up from almost 14 percent in the previous quarter and down from 16 percent a year earlier. These homes are often sold in short sales, where lenders accept less than the outstanding loan amount for the property, RealtyTrac said. Sales of properties either in default or headed for auction accounted for 12 percent of all sales.

The average price was $154,740 for bank-owned properties and $199,950 for homes in default or scheduled for auction, RealtyTrac said.

“The competing forces will be bank-owned properties and short sales,” Sharga said. “The more short sales, the lower the average discount is likely to be.”

Nevada had the highest proportion of distressed sales of any U.S. state, with 64 percent of all transactions involving properties in mortgage distress.

California ranked second, with such sales accounting for 51 percent of all sales and Arizona was third at 50 percent.

Discounts on distressed homes were highest in Ohio, Kentucky and Illinois, where they sold for an average of at least 39 percent less than non-foreclosures.

RealtyTrac sells default data from more than 2,200 counties representing 90 percent of the U.S.
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The End Is Near

And that’s a good thing – Macerich executives wondered if they’d ever complete the remodel of Santa Monica Place.
By: By Alexa Hyland: labusinessjournal.com
Macerich Co. traveled a long, hard road to renovate Santa Monica Place. But the mall is finally set to reopen in August.

Santa Monica Place is swarming with hundreds of plywood-toting construction workers feverishly working to complete the shopping mall for its August reopening.

And executives at Macerich Co., which owns the shopping mall, can’t wait for the dust to settle. That’s because it’s been a long – a very long – road to renovating the mall.

In fact, Macerich executives said there were moments when it seemed as if the project would never get done.

“You just didn’t know if there was a light at the end of the tunnel,” said Tracey Gotsis, executive vice president of marketing and development for Macerich. “But I can say it was well worth it all.”

The company first considered mall renovation plans in 2001. It spent several years on two plans – the last of which was so big it drew community outrage. So Macerich unveiled a scaled-down third proposal, which called for opening up the enclosed mall, removing its roof, and essentially making Santa Monica Place an extension of the Third Street Promenade next door. That plan received approval in late 2007.

But when construction finally started on the $265 million renovation in April 2008, the economy soon collapsed and consumer spending declined. That slowed things down again. The projected 2009 opening was put off.

The company found itself trying to pre-lease its 550,000 square feet of retail and restaurant space during a recession that has been hard on retailers.

“Timing wasn’t on our side,” Gotsis said.

Macerich finalized lease deals about a year later than planned. But the company has signed leases or received commitments for 70 of the more than 80 spaces at the mall. Retailers include Kitson L.A., Nike, Louis Vuitton and 7 For All Mankind.

Doug Roscoe, who became property manager of Santa Monica Place in 2008, said Macerich expects the reopening to make a big splash. But the real picture will become clear when the excitement dies down.

“After it is open a full year, we can start to get comparable sales and analyze were we are and what kind of benchmarks we’ve reached,” he said.

Santa Monica Place’s first year back in business still could be bumpy. Although the economy generally has improved, national retail sales dropped in May by the largest amount in eight months, suggesting that consumers still may not be in the mood to drop big bucks.

John Fransen, president of Newport Beach retail consultancy Fransen Co. Inc., said Santa Monica Place could fare better than other shopping malls because it will draw Westside residents tired of driving to less convenient shopping destinations.

“I would be ready for some impressive results,” he said.

Executives are enthused. At a conference held by the National Association of Real Estate Investment Trusts earlier this month, Macerich Chief Executive Art Coppola said the company is expecting Santa Monica Place to generate about $1,000 per square foot in sales. He said the company’s top 50 shopping malls generate about $500 per square foot.

“We think it will be one of the great centers in the United States,” Coppola said. “And one of the most exciting centers that will open for a several-year period.”

Macerich, the nation’s third largest mall owner and operator, purchased the Frank Gehry-designed Santa Monica Place in 1999 for $130 million. At the time, the mall had fallen out of favor with shoppers, too many of whom were only passing through on their way to the popular Third Street Promenade.

Soon after the acquisition, Macerich executives began thinking up ways to bring back the mall’s luster.

In its initial concept, Macerich wanted to extend Third Street Promenade through the building of the enclosed mall, construct the parking garages underground and add 14-story towers with residential and office space. But executives nixed the proposal because they didn’t think the design would bring foot traffic to the second-floor shops.

Macerich introduced a second and even more ambitious proposal in 2004, which called for tearing down the mall and replacing it with retail space, three 21-story residential towers, an office building, three underground parking levels and park space. But the plan sparked fierce opposition from Santa Monica residents and some city officials who were outraged by the highly dense design.

Kathleen Rawson, chief executive of the Bayside District Corp., a public-private management company that oversees downtown Santa Monica, said Macerich realized the mixed-use project was too much.

“I think the community spoke to Macerich directly about the plan,” Rawson said. “They had tried to be innovative. Santa Monica wasn’t ready for that kind of approach.”

Gotsis admits that Macerich misjudged the psychology of Santa Monica residents, who’ve historically opposed large-scale projects.

“So we had to take a breather and put the site plans away,” she said.

At the same time, Macerich had to wait for Federated Department Stores, which had acquired May Department Stores Co., to determine whether it would close Robinsons-May, one of two anchor tenants. That store was shuttered, which allowed Macerich to purchase the building in May 2006 and later lease the space to Nordstrom Inc.

Through 2007, Macerich was working with community members and city officials on a third plan.

“That was a year of reconciliation with the community,” Gotsis said. “We got feedback on what we could do.”

Macerich teamed up with Jerde Partnership, a Venice architecture firm, to design a scaled-down plan. The proposal called for removing the rooftop to create an open-air dining deck and connecting the mall to the Third Street Promenade. There was to be no residential units and no substantial office space, and the retail space, at 550,000 square feet, was about 20,000 square feet less than the old mall.

Community members and city officials endorsed the plans, and the California Coastal Commission and Santa Monica’s Architectural Review Board gave the project approval in December 2007.

Macerich also had to overcome resistance from restaurant owners, who were wary about setting up shop on the third-floor dining veranda. Although the veranda has ocean views, it is away from foot traffic.

Restaurateurs also were concerned by plans for seven upscale restaurants on the deck – more competition than usual for such a mall. What’s more, there has been a decline in the restaurant industry as consumers cut back spending.

Roundtable discussions

But Macerich assured restaurateurs that the Santa Monica market could support them. It held some roundtable discussions with them and helped develop a shared marketing plan. Macerich also pledged to hold regular events on the third floor to drive traffic.

So far, Macerich has leased six of the seven restaurant spaces.

“A lot of sweat equity was put into the mix and business planning with each individual restaurateur,” Gotsis said.

Macerich is now working to secure leases for the Market, on the third floor with the restaurants, set to open in late 2010. The section is comparable to San Francisco’s Ferry Building, which includes gourmet food stores and cafes.

Finally, Macerich now has to do some marketing to let consumers know that the mall soon will be open for business again.

“That’s a big challenge for us, to get out there and say Santa Monica Place is now open and it’s new and different and a place to hang out,” she said. “It will take us a year to get that new vibe out there.”
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One Palace, Never Used

Now shy of glitz, owner to sell mansion.
By: By Daniel Miller: labusinessjournal.com
C. Frederick Wehba Sr. spent $65 million to build a palatial home on Sunset Boulevard. Uncomfortable with the conspicuous show of extravagance, he wants to sell before he ever moves in.

Businessman C. Frederick Wehba Sr. has spent fours years and $65 million building perhaps the most conspicuous mega mansion in Los Angeles County.

And now that it’s almost finished, he doesn’t want to live there.

Wehba, founder of Century City real estate company Bentley Forbes Group LLC, earlier this month put his Beverly Hills house on the market for $68.5 million. At that price, it would be the biggest sale in that city’s history and one of the biggest ever for a home in the Los Angeles area.

The businessman said he and his wife, Suzi, have decided to sell the 36,000-square-foot home because such a prominent display of wealth no longer made sense during the protracted economic slump. The couple also planned to use the home for charity and political fundraising events, but the recession has put a damper on that sort of entertaining.

The couple is active at Bel Air Presbyterian Church, a large evangelical church on Mulholland Drive, as well as four others. The home was built with a large music room to accommodate church events; there is a relief of a cross above the front door.

“We were never trying to flaunt, but it looks like it now,” said Wehba, 63. “We were trying to have it as a house that is open for fundraising for our church so that people can enjoy it. Maybe times will come back like that, but times are recessionary.”

The nine-bedroom mansion at 9577 Sunset Blvd. was supposed to be completed last year but is still under construction; work is expected to be finished in the next 45 days. Unlike many mansions in Beverly Hills, hidden behind hedge walls, the Wehbas’ home opens up to Sunset on two acres between Rexford and Alpine drives, so passers-by have been able to chart its progress since construction began in late 2006.

These days, a crew of 40 to 50 workers is putting the finishing touches on the mansion, which is clad in Portuguese limestone and includes French gardens, a pool pavilion and tennis court. While many parts of the house are complete, some fixtures are still being installed, including a hand-carved marble fireplace in the library, an 11-foot by 9-foot crystal chandelier in the two-story circular foyer and 24-karat, gold-plated front door knobs that weigh 15 pounds apiece.

The Wehba mansion hit the market June 7, just days before news broke that businessman Mohamed Hadid had sold his 48,000-square-foot Bel Air estate for more than $49 million. That sale is believed to be the highest price for a home in the United States in 2010.

The Wehba residence joins a handful of other high-priced mega mansions on the market, including the Holmby Hills estate of Candy Spelling, priced at $150 million. There has already been interest from buyers in Asia and the Middle East.

The pool of prospective purchasers may be smaller than it was before the recession, but she said there are still plenty of buyers who could afford the asking price.

“This certain group of people is not really impacted by that,” .

The home

The French classical design of the home was inspired by Versailles, which the Wehbas visited 20 years ago.

The home was enlarged several times during construction and ultimately became something the couple no longer wanted or needed, Wehba said.

It was designed by architect Brian Biglin of Biglin Architectural Group in Beverly Hills, who refined an American beaux-arts design of a previous architect. As the home got bigger and more ornate, the cost ballooned from about $40 million to $65 million.

“We thought it would be a smaller house and it became, ‘Well, OK, why not?’” said Wehba, chairman of Bentley Forbes, a large, privately owned commercial real estate investment firm. “We kept on adding and adding and it got kind of out of hand. It’s just so big right now. It’s more than we really wanted. The times have changed a bit.”

The Wehbas bought the land on Sunset in 2004 for about $6.7 million. The lot is the larger piece of a bisected parcel once owned by Saudi Sheik Mohammed al Fassi. The mansion drew headlines and became a tourist attraction in the late 1970s when the sheik painted its nude classical statues in flesh tones. The mansion burned in 1980 and was demolished in 1985. The smaller, 1.6-acre portion of the sheik’s former property is also the site of a new mansion. That home, at 901 N. Alpine Drive, has also been under construction for several years and remains unfinished.

Eric Johnson, senior project manager for Finton Construction, which is building the Wehba home, said the project has in some ways been more akin to a commercial development. At times, the construction crew has numbered 100 people, and scheduling is organized using computer software; commercial-level contractors have been employed for some work. “It’s a ton of fun. It’s rewarding,” he said.

Even in the competitive playing field of opulent mansions, the home’s almost Old World craftsmanship sets it apart. The exterior is made of hand-carved limestone quarried in Portugal and sent to China for finishing. (Only about a half-dozen Los Angeles homes feature exteriors of hand-cut stone, including the 52,000-square-foot Spelling mansion.) The doorknobs were fabricated at the same French workshop that has maintained Versailles. A relief above the front doorway is so detailed that toenails of the angels in the carving can be clearly seen.

Other special touches include 24-karat, gold-plated door and window hardware throughout the house; an 800-square-foot master bedroom with a ceiling slot for a 60-inch descending television; and massive his-and-her master bathrooms clad in exotic stonework.

Wehba said he and his wife still plan to decorate the home with custom-built pieces and antiques from France that they’ve already purchased, which at least will make it more attractive when shown to potential buyers.

But Wehba admitted that some of the home’s flourishes were chosen during the housing boom “back when this concept was a little bit more accepted.”

The market

Wehba’s company, which owns marquee properties such as the infamous Watergate complex and the tallest office building in Atlanta, has not been immune from the bust. He acknowledged the last two and a half years have been “trying” but strongly denied financial troubles prompted the sale of the home.

And even if financial issues are in play, the sale wouldn’t do much to resolve them. If the home sells at its asking price, the profit will be slim – about $2.5 million, Wehba said, chuckling. “And we will probably pay it to the brokers.”

Some wonder if there is a market for the home.

First there is the attention-grabbing ornate design, which a prominent real estate broker termed “Fairfax rococo” in a 2008 Business Journal story about the property. Then there’s the location – visible from busy Sunset – which could be a turn-off for the ultra-rich who often prefer the security of isolated compounds.

“The high-end people want privacy, they don’t want a statement or exposure,”

A deal at list price would be a record for Beverly Hills but not for Los Angeles County. That was set when former Global Crossing Ltd. Chairman Gary Winnick bought an eight-acre Bel Air estate for about $95 million in 2000.

“Normally in this price range you don’t get multiple offers – but it could happen,”

It isn’t even the only house the Wehbas are trying to sell. They have also listed for sale the 10,000-square-foot Beverly Hills home that they’ve lived in for more than a decade, though Wehba said they don’t plan to leave Los Angeles. Instead, if they sell one home, the plan is to live in the other – though the goal is to unload the Sunset mansion.

He said he’d feel a tinge of sadness when the home sells, though he noted that he and his wife have built about a dozen homes before. This one may not be the last.

“We will probably do it again.”

Attention to Detail

The Wehbas’ 36,000-square-foot, nine-bedroom residence includes detailing and features fit for the Palace of Versailles. Among the appointments:

• All door and window hardware is plated in 24-karat gold. The front door knobs are intricately carved and weigh 15 pounds. One shower has a gold-plated fixture that weighs 35 pounds.

• Many of the marble columns are topped with capitals gilded in gold; one room includes recessed columns with capitals gilded in gold and platinum.

• Each room features different types of exotic stonework. A bathroom suite includes a large

shower made out of green onyx, while another room features red and purple Calacatta Viola marble.

• A 12-foot-tall bronze sculpture of angels, cherubs and minstrels is the centerpiece of a fountain that fronts the mansion.

• The home’s electrical and security systems are connected by about 30 miles of wiring. The 800-square-foot master bedroom has a slot in the ceiling from which a 60-inch television will descend.
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Hill and McGraw Sell Home for $9.55 Million

Singers Faith Hill and Tim McGraw have sold their Beverly Hills, Calif., home for $9.55 million. The home, in Beverly Park, was originally listed in 2008 for $14.8 million, and later cut to $10.8 million.
By: CANDACE JACKSON: wsj.com
The 11,000-square-foot house, on three acres, has six bedrooms and eight baths, and expansive views of downtown Los Angeles. The Mediterranean-style home has a large master suite with his and hers bathrooms and comes with a fitness center, gardens and a pool.

Ms. Hill's hit pop and country songs include "This Kiss." Her husband has sold more than 40 million albums, and his hits include "I Like It, I Love It." Both have also appeared in films.

Dennis Miller Lists
Comedian and television-radio personality Dennis Miller has listed his Montecito, Calif., estate for $17.5 million.

The home was designed in 1895 by Stanford White, who designed the Washington Square Arch in New York. The Millers' 3.76-acre property includes a 10,000-square-foot main house with nine bedrooms and a second, smaller house on the property, built in 1917, with two more bedrooms.

The estate, a five-minute drive from the ocean, includes a pool, a tree house, a sunken trampoline and a tennis court. Mr. Miller and his wife bought the main house in 1993, according to public records. It was restored in 1994 and renovated again in 2002. Mr. Miller hosts a three-hour daily radio show and appears as a commentator on Fox News.

James Patterson Sells
Thriller writer James Patterson has sold his Palm Beach, Fla., home for $10.3 million to Robert Greenhill, Greenwich, Conn.-based founder and chairman of Greenhill & Co., an investment banking advisory firm. Mr. Patterson originally listed the property for $14.95 million in November and bought it for $5.2 million in 1999.

The nearly 11,000-square-foot colonial plantation-style house has five bedrooms and 7½ baths. The house has a heated pool and a boat dock, along with 136 feet of waterfront on the Intercoastal Waterway. The 1955 home was expanded in 1993.

Mr. Patterson's more than 60 novels have sold 200 million copies world-wide; "Private," which he wrote with Maxine Paetro, is to be released later this month. Mr. Patterson says he decided to sell because he found a new place "with massive windows on the ocean," which he bought last summer for $17.45 million.
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Fed Chief Cautiously Optimistic about Economy

The U.S. economy is in a moderate recovery and should continue growing through next year, but the unemployment rate is expected to remain higher than usual, and it will take “a significant amount of time” to replace the jobs that have been lost in the recession, Federal Reserve Chairman Ben Bernanke said recently.
By: Kevin G. Hall: RISMEDIA
In testimony before the House Budget Committee, Bernanke offered a mix of optimism and reality check. He pointed to numerous signs of improvement in the economy, but cautioned that improvement in the vital housing sector has been shallow and remains vulnerable.

The Fed’s release of the Beige Book, a survey of economic conditions conducted by its district banks, later confirmed Bernanke’s views. The survey found all 12 Fed districts reporting economic growth, the first time that’s happened since a deep recession began in December 2007.
Private forecasters shared Bernanke’s growing optimism.

Mark Zandi, the chief economist for Moody’s Analytics, recently released a report on economic conditions in the nation’s largest metropolitan areas that was encouraging.

“The economic expansion is broadening out across the country, with nearly two-thirds of the nation’s metro areas now out of recession,” Zandi told McClatchy Newspapers. “The strongest areas are mostly in the South and Midwest, as the economy is benefiting from the strong turn in manufacturing activity, a solid farm economy and more stable housing markets.”

In another positive sign, the Labor Department reported that job openings leapt in April to their highest level in 16 months, signaling that the private sector is ripe for a return to hiring.

“We’re still expecting that the job machine gets cranked up and pushes the unemployment rate a few tenths of a percentage point lower by the end of the year,” said Chris Varvares, the president of Macroeconomic Advisers LLC, the influential St. Louis forecaster. The firm expects 3.7% growth this year and unemployment, now at 9.7%, to dip to the low 8% range next year.

The Fed expects the economy to grow in the range of 3.5% this year, Bernanke said, and faster next year as stimulus spending by the government gives way to business and consumer demand for goods and services.

“This pace of growth, were it to be realized, would probably be associated with only a slow reduction in the unemployment rate over time. In this environment, inflation is likely to remain subdued,” Bernanke said. He later added, “In all likelihood, however, a significant amount of time will be required to restore the nearly 8.5 million jobs that were lost over 2008 and 2009.”

The economy has been growing steadily, and the nation has added jobs in five of the last six months. There also have been less publicized improvements. “Real consumer spending has risen at an annual rate of nearly 3½% so far this year, with particular strength in the highly cyclical category of durable goods,” Bernanke testified. “Consumer spending is likely to increase at a moderate pace going forward, supported by a gradual pickup in employment and income, greater consumer confidence and some improvement in credit conditions.” That’s all likely to increase the demand for goods and services, fueling further economic growth in what economists call a virtuous cycle, he suggested.

“Looking forward, investment in new equipment and software is expected to be supported by healthy corporate balance sheets, relatively low costs of financing of new projects, increased confidence in the durability of the recovery, and the need of many businesses to replace aging equipment and expand capacity as sales prospects brighten,” Bernanke said. “More generally, U.S. manufacturing output, which has benefited from strong export demand, rose at an annual rate of 9% over the first four months of the year.”

For all the positive signs, however, a dark cloud remains over the real estate and construction industries. The temporary boost from a home buyer tax credit is likely to fade now that the April 15 deadline for the program has passed.

The Fed chairman said that “looking through these temporary movements, underlying housing activity appears to have firmed only a little since mid-2009, with activity being weighed down, in part, by a large inventory of distressed or vacant existing houses and by the difficulties of many builders in obtaining credit.”

As if to cement that point, the Mortgage Bankers Association reported that mortgage applications fell last week to their lowest level since 1997. It was a clear sign that the expiration of tax credits reduced incentives for home sales.

Things aren’t much better in commercial real estate, Bernanke suggested, as spending on nonresidential buildings has been curtailed because of high vacancy rates, low property prices and difficulty in obtaining loans.

“Meanwhile, pressures on state and local budgets, though tempered somewhat by ongoing federal support, have led these governments to make further cuts in employment and construction spending,” he said.

Bernanke expressed confidence that the growing debt crisis in Europe won’t slow growth in the United States and pitch the economy back into recession, suggesting that events in Europe will have only a modest impact so long as the U.S. economy continues to grow.

Mounting government and private-sector debt in Europe has led to concerns of default in several European Union countries, and, given the swelling U.S. federal budget deficit, Bernanke warned lawmakers to get U.S. borrowing under control.

Once economic conditions have returned to normal, Congress and the president must address the structural problems in the nation’s health and welfare programs as baby boomers, the 75 million Americans born from 1946 to 1964, enter retirement and strain government programs, Bernanke said.

The Fed chief also took a victory lap of sorts. When House Budget Committee Chairman John Spratt, D-S.C., asked him whether he thought that unpopular government spending and bailout programs helped speed a turnaround, Bernanke said, “Yes, Mr. Chairman, I do.”
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Jobs key to housing recovery

The U.S. labor market will hold the key to a recovery in the hard-hit housing sector, according to a Harvard University report released on Monday.
By: Al Yoon; Editing by Leslie Adler: reuters.com
Record high foreclosures and a high jobless rate both pose significant challenges to the housing market, but some recovery in labor markets and record low mortgage rates could partly overcome other pressures, said the study from the Joint Center for Housing Studies at Harvard.

"If history is a guide, what happens with jobs will matter the most to the strength of the housing rebound," Eric Belsky, executive director of the center, said in a statement.

"Right now, economists expect the unemployment rate to stay high, but if employment growth surprises on the upside or downside, housing numbers could too."

The researchers noted that homeowners would feel poorer with real household wealth declining on a per household basis to $486,600 from $503,500 over the past 10 years, in "the lost decade." Foreclosures have reduced some mortgage debt but the level of debt relative to equity still started 2010 at a record 163 percent, the report said.

Despite falling home prices, loan modifications, and softening rents, the share of borrowers with severe housing cost burdens climbed, it said.
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Wealthy homeowners seeking privacy are increasingly buying adjacent properties

Compounds are the hottest commodity in L.A.'s high-end real estate market, brokers say.
By: By Lauren Beale: latimes.com
A huge retaining wall stretches along Nimes Road in Bel-Air, one of the Westside communities where wealthy homeowners seeking privacy are buying adjacent properties to create their own residential compounds.

In the Middle Ages, moats were the thing. More recently, the rich have taken refuge behind tall hedges, view-obscuring walls and guarded gates.

But today's super-wealthy, seeking even greater privacy, are increasingly buying adjacent properties as a buffer zone around their mansions. And that's made the compound the hottest commodity on L.A.'s high-end market, real estate brokers say.

On the Westside, the growing list of compound owners includes movie industry titan Terry Semel, financier and producer Tom Gores and corporate housing kingpin Howard Ruby, founder of Oakwood Worldwide.

Divorcing Dodgers owners Frank and Jamie McCourt maintain two compounds, one in Holmby Hills and another in Malibu.

"If you don't have a neighbor anymore, you create more privacy," said Kurt Rappaport, co-founder of Westside Estate Agency, with offices in Beverly Hills and Malibu.

Not that the "buffer" homes are vacant. Some house family, friends, guests or staff. But these aren't mother-in-law cottages or little guesthouses like the one Kato Kaelin holed up in at O.J. Simpson's old place in Brentwood: Think multimillion-dollar mansions — next door, behind or even a few doors down.

The adjoining properties may be used during major fundraisers or large-scale entertaining, Rappaport said, to create more parking or as a place to stage the catering during lavish events. Some buyers have been known to tear down well-known homes for more elbow room.

Property records don't fully capture the trend. Owners typically want the flexibility of selling the parcels individually, and so they usually don't apply for a lot merger to create a formal compound. Still, veteran real estate agents say high-end buyers are increasingly looking to snap up adjoining properties.

"We've never seen this much activity going on," said Drew Mandile, who works as a team with Brooke Knapp at Sotheby's International Realty, specializing in Bel-Air.

Mandile and other agents said there were perhaps two or three compounds in Bel-Air 10 years ago. Today, there are at least nine.

"A decade ago, the idea of combining properties was extremely rare," Rappaport said. "Now in the ultra high end it's the norm to strategize about amassing multiple properties."

In part, the trend reflects an economic reality: The super-rich are getting super-richer, said Elizabeth Currid, an assistant professor at USC who studies cultural shifts among the wealthy. The average net worth of the world's billionaires increased $500 million in the last year to $3.5 billion, Forbes magazine reported in March.

"In a class-conscious society, people find new ways to demonstrate their status," Currid said. "The middle class may be able to buy Louis Vuitton bags and nice holidays, but they can't buy two mansions in Bel-Air. This is a way the global elite differentiate themselves."

The trend hasn't extended to other high-end Southern California areas such as Manhattan Beach, the Palos Verdes Peninsula and coastal Orange and San Diego counties, according to agents who specialize in luxury properties.

"We don't have as much of that type of wealth down here," said Greg Noonan, a veteran Prudential California Realty agent in La Jolla.

Along with more wealth, L.A.'s Westside also tends to have smaller lots, since many of the great old estates in the area were subdivided decades ago.

But it's not just billionaires who are buying the block. Among the new generation of L.A. compound-dwellers are actors and actresses yearning to live a paparazzi-free lifestyle, including Melanie Griffith and Antonio Banderas; Brad Pitt and Angelina Jolie; and Ben Stiller.

Baseball's McCourts are embroiled in a high-profile divorce, but in happier times they were among L.A.'s most active compound builders. The Bostonians were quick to assemble nearly five acres in Holmby Hills after their arrival in 2004. They purchased a Palladian-style villa of 20,000 square feet for about $25 million as a main residence and picked up the 8,400-square-foot mini-mansion next door before the year was out for $6.5 million.

They repeated their double play in Malibu three years later with the purchase of a John Lautner-designed architectural trophy home for more than $27 million, according to the Multiple Listing Service. The 5,500-square-foot Segel residence (yes, for that price it comes with a name) has about 80 feet of beachfront. The couple gained an additional 66 feet of sand months later by buying a smaller house next door for $19 million.

Agents to the elite such as Rappaport don't rely on luck to make these purchases possible.

"I have clients whose neighbors didn't have their homes on the market, and we turned them into sellers," he said, by paying substantially more than market value. One client in Malibu paid almost double for a lot next door that was valued at $6 million. The resulting compound is worth more than the separate properties were, Rappaport said.

Internet pioneer David Bohnett combined three lots to create his four-acre-plus island of privacy in Holmby Hills after he sold the GeoCities Web-hosting service to Yahoo Inc. in a $3.9-billion stock deal more than a decade ago. (Yahoo shut down GeoCities last year.)

First, Bohnett bought the late actor Gary Cooper's longtime home, then talent manager Ken Kragen's residence and, finally, the site of singer Barbra Streisand's former mansion, which had been razed by the seller. Combined price tag: roughly $17 million. Today a lush lawn and landscaping occupy the rise of land that was the former Streisand home site, ensuring that no one is looking down on Bohnett's house. The entire compound is for sale, priced at $18.9 million.

The estate compound has become such a sought-after commodity among the wealthy that some have been known to tear down historic homes in favor of a little more lawn.

One of the largest land grabs in Holmby Hills centered on Owlwood, whose previous owners have included early 20th Century Fox Chairman Joseph Schenck, actor Tony Curtis and 1960s singing sensations Sonny and Cher.

The Tuscan-style mansion, built in 1936, is the only mansion remaining of three that were combined in 2002 for a total of 10 acres by the late billionaire Roland Arnall, founder of Ameriquest Capital Corp., and his wife, Dawn. They tore down the Pink Palace, a sparkly Sunset Boulevard landmark owned by singer Engelbert Humperdinck and, earlier, actress Jayne Mansfield. They also bulldozed the house of film star and competitive swimmer Esther Williams. A temporary gate now closes off what used to be accessible South Carolwood Drive. Arnall's widow still owns the property.

Compound building isn't new. Before his days as California's governor, Arnold Schwarzenegger bought several adjoining houses to create his Pacific Palisades compound. Its four parcels contained five homes, a pool and a tennis court on more than five acres. He eventually sold the lots — separately — in favor of a Brentwood estate.

For those less inclined to the amass-your-own approach, there are a few sizable lots and estates available for purchase on the Westside.

A graded eight-acre site above the Bel-Air Country Club, with 360-degree views of the ocean, city and mountains, is on the market for $49.5 million. Encircled by retaining walls, about half the compound-ready knoll is flat.

Before it was developed, the site consisted of three hillside parcels, said Christine Martin, who shares the listing with Tiffany Martin at Hilton & Hyland, Beverly Hills. She envisions an owner-occupant buyer and has received inquiries locally and from abroad.

In the gated community of Beverly Park, a comparatively affordable two-dwelling compound with 18 bedrooms and 28 bathrooms, including staff quarters, is listed at $21.995 million. Sited on three acres, the double-your-pleasure, double-your-fun affair has two driveways, two garages, two two-story foyers, more than 29,000 square feet of living space, a swimming pool, a sundeck and a changing cabana.

The two-family site comes with architectural drawings to combine the houses into one, said listing agent David Kramer of Hilton & Hyland. It sits in a neighborhood where several residents own more than one home.

"There are always people looking to buy nearby properties in any market," Kramer said.

"I just had one call from someone in the flats of Beverly Hills wanting to buy the house across the street," he said, for when their kids get older.

Until then? "They will just rent it out," he said.
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Compound interest: L.A.'s ultra wealthy buying the houses next door

latimes.com
As an added layer of privacy through increased acreage or as a way to tell the world they have arrived, L.A.'s wealthiest residents are increasingly buying up houses next door or adjacent to their homes to increase their personal space - particularly on the Westside and in Malibu.
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Trading Down: Can It Still Bankroll Your Retirement? .

Trading down to a smaller home is a retirement-planning staple. According to an April study by the Society of Actuaries, 20% of not-yet retirees say they plan to downsize after the last child leaves the nest.
By: M.P. MCQUEEN: wsj.com
But it is getting a lot harder to do, even for wealthier people.

A study by the Joint Center for Housing Studies at Harvard University, scheduled to be released on Monday, shows that while mobility has slowed across all age groups during the real estate bust, "mobility rates among seniors have posted the sharpest drop." Trade-downs in March comprised about 8% of total home sales, down from 12% in October 2008, the first year for which there are historical comparisons, according to the National Association of Realtors.

Why are pre-retirees staying put? The housing crash has pounded the higher end of the market, to which many 50- and 60-somethings have graduated. That has narrowed the price gaps between the upper and middle markets, meaning smaller homes aren't always much cheaper.

Making matters worse, people took an enormous amount of money out of their homes during the bubble—$358 billion in the peak year of 2005 alone, according to Goldman Sachs. So-called cash-out refinancings raised mortgage burdens sharply. That, combined with the price plunge, has wiped out trillions in home equity during the bust, making empty-nesters unable to trade down easily.

Other factors, such as job complications and dealing with adult children, are getting in the way, too.

"Unless they live in a megamansion, I haven't seen enough in savings" to justify trading down, says Steven Levey, a financial planner in Denver.

The logic of downsizing is simple. Middle-class Americans devote 20% to 50% of their budgets to housing costs, says John Henry Low, a fee-only financial planner in Pine Plains, N.Y. So people who reduce that figure significantly can improve their spending power accordingly.

Laurence Kotlikoff, an economist at Boston University and president of Economic Security Planning Inc., has developed financial-planning software to help people figure out how much they need to save for retirement. According to his calculator, which is available at www.esplanner.com/basic, a couple with a combined preretirement income of about $200,000 and living in a $900,000 paid-off home could boost their annual retirement spending from $40,314 to $47,289 just by trading down to a $450,000 home. That translates into a 17.3% higher living standard for the next 42 years, says Prof. Kotlikoff.

But Diane Saatchi, senior vice president at Saunders & Associates, a real-estate firm in Bridgehampton, N.Y., says downsizing nowadays "costs more than people have in mind." In her area, she says, total transaction costs easily exceed 10% to sell and buy simultaneously. When you add in the possibility of capital-gains taxes and moving costs, she says, "you need a big spread to make it worth the effort, and sellers often think they're going to get more than they can for the sale."

Kay Carpenter, 59 years old, and her husband Robert, 58, wanted to sell their 5,900-square-foot, seven-bedroom house in Windsor, Colo., and buy a home about half that size in Denver, where Mr. Carpenter currently commutes to his job as a hospital laboratory director.

But their current home, which they purchased for $810,000 in 2003, has received only one offer, for $575,000. "It is difficult to sell because it is a large home," Ms. Carpenter says. The couple, whose last child left the nest in 2005, are finding that they will have to spend about $450,000 for a suitable house. Throw in the transaction costs, and the financial benefit of downsizing basically disappears.

Trading down is a bit easier in some parts of the country, like the Chicago suburbs, where there is a mix of housing types and lower-tax communities co-exist with higher ones. "It's actually very typical, a classic scenario here," says Richard C. Gloor, a real-estate broker/owner in Oak Park, Ill. "More traditionally, people wait until the last kid is out of the house, five or 10 years. But now the last child is in college still and people say they don't need the space and especially don't need the taxes."

In pricey coastal cities like New York, Washington and San Francisco, desirable lower-cost housing is often hard to find in neighborhoods of upscale homes, real-estate experts say. In many affluent neighborhoods where aspiring retirees want to be, the supply of smaller homes is limited, due to zoning restrictions and high land prices. As a result, many homeowners find they would have to move a considerable distance to reduce their housing costs significantly.

Other hurdles beyond the slumping real-estate market are getting in empty-nesters' way, too. Many people of retirement age are still working, for example, and need to stay near their jobs, meaning out-of-state moves are out of the question. Some are in two-income households, complicating the decision to relocate even more.

What's more, adult children are becoming more of an issue than they used to be. In the aftermath of the Great Recession, "more and more kids are moving in with parents and grandparents," says Jim Gillespie, president and chief executive of Coldwell Banker Real Estate LLC.

Some adult children object to their parents' selling the home they grew up in because they are afraid it will cut their inheritance, says Prof. Kotlikoff. One way to address that problem: Give the children some of the sales proceeds right away.

Other strategies for living better in retirement might include paying off the mortgage, working longer or postponing taking Social Security, or increasing taxable contributions to a Roth individual retirement account, some financial planners say.

Charlie Horne, 71, a semiretired real-estate broker, and his wife, Barbara, 61, may have to use one of those strategies now that their downsizing move has turned out to be less advantageous than they had hoped. The couple recently sold their 3,000-square-foot, three-level house in Holliston, Mass., to move into a 2,200-square-foot condominium in a nearby development restricted to people 55 and older.

Their mistake: making a down payment on the new place before selling the old one. It took 11 months for the Hornes, who had owned their house for five years, to sell it, and it fetched just $540,000, far less than the $730,000 at which it was appraised the year before. The condo cost about the same with upgrades. "We thought it would be no problem [to sell]. I've been a Realtor for 52 years, and I've seen six recessions already," Mr. Horne says.

The couple's mortgage is about $380,000, or $3,900 a month. That, along with common charges of $310 per month, add up to just about as much as their old first and second mortgages and taxes. On the plus side, "the taxes were higher on the house than the condo," says Mr. Horne, who adds that he is saving money on maintenance.

Still, Mr. Horne says, if he had it to do over, he would sell the house first. "My timing was wrong," he says.
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Tax Credit Extension Could Help Tax Cheaters

Everett CollectionAs we reported Thursday, Congress is considering a proposal from Sen. Harry Reid (D., Nev.) to extend the closing deadline on the tax credit of up to $8,000 for home buyers.
By: James R. Hagerty: wsj.com
One risk of this proposal: It could help people who are trying to cheat Uncle Sam.

To qualify for the credit, buyers must have made a contract to buy the home by April 30. They are then supposed to complete the transaction by June 30. Because of the rush of people to close by then, mortgage companies and closing agents may have a hard time getting all the paper work done on time. So Realtors are pushing Congress for an extension. Sen. Reid has proposed to extend the deadline for closings to Sept. 30, so long as the buyers were under contract in April.

The danger is that this extension would also give more time to people who are merely pretending they were under contract in April and intend to backdate their documents.

Some real estate brokers see signs of dubious behavior. Glenn Kelman, chief executive of Redfin Corp., a Seattle-based broker that operates in nine states, says he started to wonder if tax fraud was on the agenda after hearing from some customers who were very insistent on closing by June 30 even though they went under contract after April 30.

Schahrzad Berkland, an agent for Fidelity Pacific Real Estate in San Diego, who helps produce analyses of that market, found that the number of homes listed as pending sales agreed upon in April continued to rise over the past few weeks. Normally, that number should decline as some deals fall through. Ms. Berkland thinks some buyers are backdating to April.

Beware: The Internal Revenue Service wants to see the paper trail. A spokesman for the IRS says people claiming the credit are required to “attach a copy of the pages from a signed contract to make a purchase showing all parties’ names and signatures, the property address, the purchase price, and the date of the contract.”

Backdating a contract would be both wrong and risky. “That would be fraud on the federal government,” notes Mark Fiedler of Coldwell Banker Legacy, Rio Rancho, N.M. “As a broker, I would not participate in that activity, although there may be others who might. My license enables me to earn a living, and the FBI is not someone I want to cozy up to.” Besides, Mr. Fiedler says, the FBI is “busy putting people in jail for mortgage fraud right now, so let’s not overwork them.”

Terry Smith, an agent at ReMax Integrity, Fort Worth, Texas, also thinks backdating is a bad idea. She says the IRS could demand to see fax dates on contracts, dates of emails discussing the deal and the date that the buyer put up a deposit as “earnest money.”

And is there really honor among thieves? Kevin Duffy, an analyst at ReMax Unlimited in Cincinnati, says: “First you would have to have all parties in agreement to fudge the dates, then hope no one gets mad and turns the (other) party into the IRS.”

Even without cheating, the tax credit will be expensive for Uncle Sam. The National Association of Realtors estimates that 4.4 million people will seek the credit at a cost of more than $30 billion.
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Banks Face Short-Sale Fraud as Home `Flopping' Spreads

Two Connecticut real estate agents found a way to profit in the U.S. housing bust: Buy low, sell fast. Their tactic was also illegal.
By: John Gittelsohn: bloomberg.com
Sergio Natera and Anna McElaney are scheduled to be sentenced in Hartford’s federal court in August after pleading guilty to fraud. Their crime involved persuading lenders to approve the sale of homes for less than the balance owed -known as a short sale - without disclosing that there were better offers. They then flipped the houses for a profit.

The Federal Bureau of Investigation, the California Department of Real Estate and mortgage finance company Freddie Mac have warned that such schemes may be spreading after a plunge in values left homeowners owing more than their properties are worth. The scams threaten to deepen losses for lenders that are increasingly agreeing to short sales as an alternative to more costly foreclosures.

“Short sales are an important tool that can help both the bank and the borrower,” said Morgan McCarty, executive vice president for mortgage servicing at Birmingham, Alabama-based Regions Bank, which lost money in the Connecticut case. “It’s just that criminals are always trying to find ways of profiting.”

Barofsky Report

An Obama administration effort to boost short sales may increase incentives for fraud, Neil Barofsky, special inspector general for the Troubled Asset Relief Program, wrote in an April 20 report to Congress. The government, through its Home Affordable Foreclosure Alternatives Program, that month began offering as much as $1,500 to servicers, $2,000 to investors and $3,000 to homeowners who close short sales.

“It appears that the program may lack necessary antifraud protections,” Barofsky wrote.

A prevalent scam involves a practice called “flopping,” Barofsky said. In that scheme, investors or home buyers hire brokers to assess a home for less than its market value and convince banks to accept a sale at that level. The buyer conceals from the lender that he has lined up a higher offer and then quickly resells the property for a profit, as in the Connecticut case.

“Flopping” occurs in more than 1 percent of short sales and may cost lenders $50 million this year, according to estimates from CoreLogic Inc., a real estate data and research company in Santa Ana, California. About 12 percent of existing home sales, or almost 622,000 houses, were short sales in the 12 months through April, data from the National Association of Realtors show.

Quick Profit

“A majority of the short-selling fraud is related to LLCs and investment companies trying to make a quick profit,” said Tim Grace, vice president of fraud analytics at CoreLogic. LLCs refer to limited liability corporations.

The Treasury has “put reasonable protections in place” to prevent short-sale fraud, requiring that the buyer and seller have no hidden relationship and banning most resales within 90 days, said Laurie Maggiano, policy director of the department’s Homeownership Preservation Office in Washington.

Suspected property-valuation fraud almost doubled from the end of 2007 through the first quarter of this year, according to a June 8 report by Interthinx Inc., an Agoura Hills, California- based company that sells mortgage fraud detection software.

In addition to banks losing money, “flopping” may hurt homeowners who complete a short sale and face higher deficiency judgments as lenders seek to recover unpaid mortgage balances, Ann Fulmer, vice president of Interthinx, said in an interview today on Bloomberg Television.

‘On the Hook’

Borrowers are “on the hook for larger deficiencies,” she said. “And there are indications that banks are increasingly turning to collection agencies and to civil lawsuits.”

Investors often use real estate broker opinions, which may rely on drive-by inspections instead of full appraisals, to persuade lenders to sell at a low price, Fulmer said in a separate interview. She suggested an Internet search of “How to influence a broker price opinion,” which yielded 74,800 results.

Near the top of the list is a video hosted by Mark Walters of CashFlowInstitute.com in Glendale, Arizona. It shows Walters feeding carrots to a pot-bellied pig while advising how to influence brokers to reduce their valuation. Among his tips: provide prices of comparable short sales to make the broker’s job easier, and be clear you want a low price.

Swaying Favor

“See if you might be able to sway what they do in your favor,” Walters says on the video.

Walters didn’t respond to e-mails, a fax and phone messages requesting comment. In the video, Walters says he learned about influencing broker price opinions from Dean Edelson, owner of Elysium Investment Group Inc. in Sedona, Arizona.

Edelson said efforts to influence broker price opinions, or BPOs, are needed to counterbalance lender pressure to inflate values. Brokers often form an opinion based on a street view of a home, unaware of hidden flaws, he said. Attempting to influence their opinion is legal as long as there is no pressure or payment to get a desired outcome, according to Edelson, who says he has completed “a few hundred” short sales since 2003.

“How is influencing a BPO fraud?” Edelson, 53, a former producer of promotional trailers for television shows including “Seinfeld” and “Frasier,” said in a telephone interview. “What’s fair market value? It’s determined by what a buyer is willing to pay for the property.”

Investors can help the real estate market by paying cash to lenders, preserving property prices by reducing vacancies and helping homeowners avoid foreclosure, Edelson said.

“Investors move inventory and help prevent market values from declining,” he said.

Taxpayer Losses

By allowing broker price opinions, the Treasury exposes taxpayers to short-sale fraud after $49 billion of government bailouts for housing, Barofsky wrote to Congress.

“As constituted now, the program permits home valuation, the key vulnerability point for a flopping scheme, without a true appraisal,” he wrote. “No program of this type and scale can be considered well designed without robust protections of taxpayer funds against the predation of criminals, particularly given the inconsistent treatment of home valuation.”

Requiring a full appraisal instead of a broker opinion doesn’t guarantee getting the accurate value, the Treasury Department’s Maggiano said.

“It’s all in the integrity of the person doing the valuation,” she said. “Clearly there are poor quality appraisers, licensed or not, and there are poor quality real estate agents, licensed or not.”

Smaller Losses

Lenders usually lose less from short sales than foreclosures, because there’s less property deterioration and repossession cost, Maggiano said. In April, the average loss in principal for prime loans that went into foreclosure was 42 percent, compared with a 33 percent loss for short sales, according to Amherst Securities Group LP, an Austin, Texas-based company that analyzes home-loan assets.

At Bank of America Corp., the largest U.S. mortgage servicer, completed short sales are on pace to more than double this year from 2009, Jumana Bauwens, a spokeswoman for the Charlotte, North Carolina-based bank, wrote in an e-mail. She declined to provide more specific data.

“We have language in our short sale approval letter that prohibits the flipping of a property and after closing we will audit transactions to identify ‘flips’ or ‘flops,’ ” Bauwens wrote. “It’s not in the best interest of our investors or communities at large to encourage or allow flipping.”

Regions Bank, a unit of Regions Financial Corp., completed 498 short sales with $175 million in unpaid principal balances in 2009, double the value of its 2008 transactions, McCarty said. The lender completed 303 short sales worth $93 million this year through May.

Short Sale Requirements

The company requires a full appraisal before a resale, McCarty said. It also demands short-sale buyers sign statements affirming the transactions are arms length, with no hidden buyer-seller relationships, and that there are no agreements to resell the property.

In the Connecticut case, Regions Bank in April 2008 agreed to a short sale of a Bridgeport house for $102,375, unaware that Natera and McElaney had a bidder willing to pay $132,500, according to the plea agreements. Eight weeks after the bank sold for a loss, the pair resold the house for a $30,125 gain.

Natera’s phone has been disconnected and he couldn’t be reached for comment. Arnold Kriss, his defense attorney in New York, declined to discuss the case before sentencing.

McElaney declined to comment when reached by phone. Her New York-based attorney, Mark Bederow, said he couldn’t discuss specifics of the case.

“The mere act of a buyer in a short sale selling again quickly isn’t per se fraudulent,” he said. “That’s business.”
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Pending home sales race to 6-month high

Pending sales of previously owned homes rose more than expected in April, scaling a six-month high as prospective home owners took advantage of a popular homebuyer tax credit, a survey showed on Wednesday.
By: Lucia Mutikani, Editing by Chizu Nomiyama: Reuters.com
The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in April, increased 6.0 percent to 110.9, the highest since October.

It was the third straight month of gains in the index, which leads existing home sales by a month or two. Pending home sales rose by a revised 7.1 percent in March, a figure previously reported as a 5.3 percent increase.

Analysts polled by Reuters had forecast pending home sales rising 5.0 percent in April.

Compared to April 2009, the index was 22.4 percent higher.

Pending home sales were boosted by a government tax credit for home buyers. Prospective buyers had to sign contracts by the end of April and close by the end of June to be eligible for a federal tax credit.

Pending home sales are measured at the time of contract signing. Existing home sales, which are counted at contract closing, are likely to increase until next month.

Given that the tax credit has pulled forward some sales, activity is expected temporarily slacken, but the strengthening economy and job market are seen supporting the housing market in the absence of additional government aid.

"The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs," said Lawrence Yun, chief economist with the NAR.
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Wealthy Investors Bet on Property, Stocks as Caution Reigns, Barclays Says

Wealthy investors globally are avoiding derivatives and hedge funds and turning to property and stocks following the global financial crisis and economic downturn, Barclays Wealth said, citing a survey.
By: Sophie Leung: bloomberg.com
More than half of the investors surveyed said they are more cautious than they were before the crisis, Barclays said in a statement in Hong Kong today.
About 2,000 wealthy investors who have more than 1 million pounds ($1.47 million) in investments from 20 countries participated in the survey in February and March, it said.

“The uncertainty around the prospects and timing of the global economic recovery is causing investors to favor” equities and real estate, Joanna Chu, managing director and head of North Asia at Barclays, said in the statement.

Almost 90 percent of the surveyed investors in Singapore said the property market is likely to perform well in the next 12 months, while 68 percent of the Australian respondents said they are positive on equities, according to the survey.
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