Top Stories S'pore 5th costliest among 12 cities to live, work in Savills index puts live-work cost per employee here for a year at US$76,000 Source: Business Times / Singapore SINGAPORE has emerged fifth in a field of 12 world cities in the amount it would cost to set up an employee in terms of renting residential and office space for a year. The live-work cost per employee here for a year is US$76,000, 11 per cent more than five years ago, says the Savills World Cities Live-Work Index. The average per-year live-work cost for the 12 cities in the index is about that amount - nearly US$76,000 - which makes Singapore just about average in live-work costs.
This figure is 21 per cent more than in 2009, when most city rental markets bottomed out. -By Lisabelle Tan http://www.straitstimes.com/premium/money/story/spore-ranked-5th-costliest-city-work-live-20140304 Productivity schemes should be fine-tuned: MPs Source: Today Online / Singapore SINGAPORE — As the Republic continues to grapple with low productivity, schemes that have been introduced in recent years should be reviewed and fine-tuned to help companies — especially small and medium enterprises (SMEs) — to reap the full benefits, said several Members of Parliament (MPs) yesterday. While they welcomed more funding under this year’s Budget for businesses to raise productivity and spur innovation, the MPs noted, among other things, that due to the strict qualifying criteria, the impact of the Productivity and Innovation Credit (PIC) scheme is limited. There were also suggestions on improving the mergers and acquisitions scheme, creating shared facilities, rewarding firms for productivity improvements and getting them to beef up staff engagement programmes. Non-Constituency MP (NCMP) Gerald Giam and Bishan-Toa Payoh GRC MP Zainudin Nordin questioned the impact of productivity measures that had been introduced in recent years. Mr Giam reiterated that productivity growth over the past three years has been disappointing, despite the Government putting in “hundreds of millions of taxpayer dollars” into grants for companies for the past four years. “We need to examine these schemes to see what adjustments need to be made to produce more positive outcomes,” he said, adding that he favoured a less stringent approach to evaluate the applications even though some firms could abuse the grants. Mr Giam noted that the iSprint scheme, which promotes adoption of productivity-enhancing technology, requires SME applicants to answer many questions and write lengthy business proposals. “Many SMEs may find that it is not worth the time and effort to apply for such funding,” he said. He pointed out that only 500 SMEs — out of more than 154,000 SMEs here — have benefited from the scheme. Also calling for a review of the schemes, Mr Zainudin said pertinent questions should be asked. “Are we getting traction in the industry and also among our workers? Are we moving in the right direction? Are the resources spent on the many productivity initiatives bearing the fruits that we want?” he said. East Coast GRC MP Jessica Tan and NCMP Yee Jenn Jong noted that most claims under the PIC scheme were for staff training and purchase of equipment. In contrast, few claims were filed for investments for research and development. Citing his personal interaction with technology companies, Mr Yee said: “They had not been successful in claiming PIC for their R&D manpower based on the strict PIC definition. I hope (the Government) can review the criteria and work on a more market-oriented definition of research and innovation and to drive more adoption by companies in this area.” He also suggested providing incentives under the mergers and acquisitions scheme for companies to acquire small and micro enterprises, he said. Nominated MP Teo Siong Seng, who is the Immediate Past President of the Singapore Chinese Chamber of Commerce & Industry, felt that micro-enterprises and traditional industries, which are facing challenges such as rising rental and manpower costs, did not benefit much from the Budget. He urged the Government to consider their difficulties when implementing policies. West Coast GRC MP Foo Mee Har suggested that the Government offer “juicy carrots” — and not just “big sticks” — to productivity laggards such as the construction industry.
The Government could reward construction firms by reducing the foreign workers’ levies in return for the adoption of technology, for example, she said. -By Ng Jing Yng & Xue Jianyue http://www.todayonline.com/singapore/productivity-schemes-should-be-fine-tuned-mps?singlepage=true MND seeking to make town councils more accountable Current framework gives MPs ‘much latitude’ and residents may find it hard to exercise oversight over operations Source: Today Online / Singapore SINGAPORE — The Ministry of National Development (MND) is studying what can be done to ensure better protection of public funds entrusted with town councils, even though there are several safeguards in place, its minister Khaw Boon Wan said yesterday. Responding to a question from Chua Chu Kang GRC Member of Parliament (MP) Alvin Yeo, Mr Khaw told Parliament that the Town Councils (TCs) Act and the Town Councils Financial Rules give the elected MPs “much latitude and autonomy” to run the town councils while being accountable to their constituents. The minister pointed out that there are only three offences stated in the Act: The misuse of town councils’ funds, contravention of the Town Council Lift Upgrading Programme rules and the wilful withholding of information required by an auditor without reasonable cause. The town councils can be fined for committing these offences. “While the TCs Act may have limited enforcement powers, the actions of TC officials as individuals are of course subject to the laws of the land beyond the TCs Act, no different from any other person,” said Mr Khaw. “Criminal and civil liabilities apply when their actions amount to transgressions of such laws.” The National Development Minister can also, in extreme cases, intervene in a town council’s operations and appoint someone else to perform its duties, such as when a town council fails to maintain the estate properly or if there is a need to remove any imminent danger to residents, Mr Khaw said. Mr Yeo’s question came after Finance Minister Tharman Shanmugaratnam had, at Mr Khaw’s request, directed the Auditor-General on Feb 19 to audit the accounts of the town council run by the Workers’ Party. The town council’s independent auditors identified 13 items to be issues of concern, which led them to give a disclaimer of opinion on its FY2012/13 financial statements. Pointing out that town councils are “entrusted” to deliver essential municipal services and manage large sums of public monies, Mr Khaw said: “While residents can hold their town councils to account in areas such as cleanliness and maintenance of the estate, it is difficult for residents to exercise effective oversight in other areas of town council operations, such as financial management.” To ensure public accountability, the MND publishes the Town Council Management Report so that residents know how their town councils are performing. The ministry also makes public its concerns and observations on town councils’ annual audited reports so that residents are kept informed and can hold them to account.
The MND said, in response to queries, that it has been studying the current administrative and regulatory framework for town councils — including the TCs Act and various subsidiary legislations such as the Town Councils Financial Rules — to see what can be done to ensure better protection of public funds and residents’ interests. -By Woo Sian Boo
http://www.todayonline.com/singapore/mnd-seeking-better-protect-town-council-funds-says-khaw M² mall to include hotel, FairPrice supermarket Mall to open for business in the second half of 2015 Source: Business Times / Singapore MACPHERSON Mall (M²) has confirmed that NTUC FairPrice will be its anchor tenant and ibis Styles its hotel operator when it opens for business in the second half of 2015. The 53,000 square foot freehold mixed development is located at the junction of Aljunied Road and Macpherson Road, and takes the place of the former Windsor Hotel. It has three shopping levels above ground and one basement level, and targets the corporate crowd.
The NTUC FairPrice supermarket will be on the mall's second floor, while the nine- storey economy hotel will sit on top of the shopping mall. -By Jaira Koh 3 industrial sites - 1 in Food Zone - for sale Source: Business Times / Property [SINGAPORE] Three industrial developments were put up for sale yesterday, including one in the JTC Food Zone which houses a corporate office, a research laboratory, a factory floor and cold rooms. The four-storey property in Pandan Loop, which has an asking price of $17 million, has a gross floor area (GFA) of 90,762.6 sq ft and sits on a 100,070.90 sq ft site. It has been zoned for Business 2 use with a plot ratio of 2.5, and has a tenure of 18 years left. Formerly occupied by a global flavours producer which has moved into a new and larger facility, the site is being marketed by Jones Lang LaSalle (JLL), which is holding an expression-of-interest exercise ending on April 16.
Nicholas Ng, the local director of investments at JLL, said: "The factory would be a good fit for companies looking to expand in an area with established infrastructure that is centrally located to their customers and the port.The facility has the potential to be refurbished and redeveloped to maximise its plot ratio by an additional 159,414.7 sq ft of GFA." -By Goh Kang Shiong http://www.businesstimes.com.sg/specials/property/3-industrial-sites-1-food-zone-sale-20140304 Sengkang West 'not quite
Jalan Kayu' Source: Straits Times Seletar residents are up in arms over the naming of a new dual two-lane road where a portion of Jalan Kayu used to stand. They say the names - Sengkang West Avenue and Sengkang West Way - bear little geographical and historical significance.
http://www.straitstimes.com/premium/singapore/story/sengkang-west-not-quite-jalan-kayu-20140304 Real Estate Companies' Brief Centurion Corp Source: Business Times Within Singapore's workers accommodation business, an additional 50,000-60,000 beds are expected to be delivered by the end of this year. This will increase the total supply of dormitory beds to 200,000-210,000, which falls well short of the demand created by the 500,000 work permit holders in Singapore.
http://www.businesstimes.com.sg/premium/singapore-markets/others/brokers-take-20140304 Views, Reviews and Forum Growth v greenery: Where will Singapore's priorities lie? Source: Straits Times The pursuit of economic growth has always necessitated accepting some degree of impact on the living environment. Conversely, the preservation of the living environment will always involve forgoing some measure of economic growth.
Balancing act in reining in property prices Source: Straits Times The Finance Minister made the right call in his Budget that property cooling measures should be retained, despite slowing sales. It is a never-ending balancing act to ensure that the usually volatile real estate component does not destabilise an open economy. Overall economic health has to override the competing interests of owners, investors, buyers and developers.
http://www.straitstimes.com/premium/opinion/story/balancing-act-reining-property-prices-20140304 Contractors must take action to control construction dust Source: Straits Times We thank Mr Edward Lim for his letter ("Construction dust a problem"; last Tuesday). Contractors are supposed to take appropriate dust control measures at their construction sites, such as enclosing the buildings with canvas and netting, spraying water to reduce dust nuisance and paving areas used by vehicles.
Global Economy and Global Real Estate GLP inks tie-up with Bank of China Global Logistic Properties (GLP) has signed a strategic partnership agreement with Bank of China, under which the bank will provide supply chain financing to customers of the Singapore-listed logistics space provider. GLP in supply chain financing partnership Source: Business Times / Companies GLOBAL Logistic Properties (GLP) will collaborate with Bank of China to provide GLP's customers with supply chain financing, the mainboard-listed company said yesterday. Bank of China can track and monitor goods being used as collateral inside GLP's warehouses, allowing it to provide "better financing alternatives to GLP's customers". This is the first such partnership for GLP.
Said Ming Z Mei, chief executive officer of GLP: "This win-win partnership provides a one-stop logistics platform for GLP customers as they can now simultaneously access our best-in-class facilities and the best supply chain financing." -By Raphael Lim http://www.straitstimes.com/premium/money/story/glp-inks-tie-bank-china-20140304
China property trusts face rising default risks The trust funds must repay 634b yuan of debt this year, up 50% from last year Source: Business Times / Property [SHANGHAI] China's property trusts, grappling with repayments equivalent to the size of Puerto Rico's economy, face rising default risks as a former central bank adviser dubs real estate the biggest threat to the economy. The trust funds must repay 634 billion yuan (S$130.84 billion) of debt this year, up 50 per cent from last year, according to estimates from Haitong Securities Co, the nation's second-biggest brokerage. The yield on the 2014 notes of Myhome Real Estate Development Group Co, based in the central city of Wuhan, jumped 185 basis points in the past year to 7.78 per cent. That compares with 3.13 per cent on property bonds globally, according to Bank of America Merrill Lynch indices.
The real estate market is "the root of all risks" as falling prices erode local governments' ability to raise funds for spending that helps the economy, Li Daokui, former People's Bank of China adviser, said last Tuesday. -From Shanghai, China Chinese are top property buyers in Australia Investments rise 42% as they face tighter buying rules at home Source: Business Times / Property [SYDNEY] Chinese buyers have overtaken Americans to become the biggest investors in Australian property, drawn by the nation's strengthening housing market, as their government tightens rules on buying at home. Chinese investment in Australian residential and commercial real estate surged 42 per cent to A$5.9 billion (S$6.7 billion), compared with an 85 per cent slump to A$4.4 billion in purchases by US buyers, according to an annual investment update from the Foreign Investment Review Board on its website. Home prices in Sydney and Melbourne, the most popular cities for Chinese property investors, rose 13.4 per cent and 11.9 per cent respectively in the year ended Jan 31, according to the RP Data Home Value Index. Chinese buyers are flocking to overseas markets to escape government measures to rein in escalating home prices, including restrictions on buying more than one home and higher capital gains taxes.
"Chinese buyers are a rising tide," said Andrew Wilson, senior economist at Sydney-based real estate data company Australian Property Monitors. "We'll continue to see a lift in Chinese investment into this country as the Australian dollar continues to fall and as residential property continues to strengthen." -From Sydney, Australia http://www.businesstimes.com.sg/specials/property/chinese-are-top-property-buyers-australia-20140304 Soros, Paulson buy stake in Spanish Reit Source: Business Times / Property [MADRID] Hedge fund managers George Soros and John Paulson have both taken a 92 million euro (S$160.6 million) stake in a new Spanish property investment vehicle called Hispania, the Financial Times reported citing sources close to the deal. Hispania, created by Spanish-based private investment firm Azora, last week announced plans to list on the stock exchange and launch a share offering in order to raise 500 million euros from qualified investors. It will operate as a real estate investment trust (Reit) - listed vehicles that typically invest in income-producing assets, such as rental properties. Azora, Mr Soros and Mr Paulson were not immediately available to comment. Reits are taking off in Spain, where they are known as Socimis, as foreign investors hope to cash in on the country's economic recovery and search for real estate bargains following a 30 per cent property price slump since a real estate bubble burst six years ago. Outpacing Hispania, Spanish family-owned real estate company Grupo Lar said last week it would list on the stock exchange in a 400 million euro deal, priced at 10 euros per share.
Mr Soros has in recent weeks stepped up his investments in Spain and in European real estate. He was last month an investor in the European property unit of US real estate investment fund Kennedy-Wilson Holdings Inc, which plans to make acquisitions in Britain, Ireland and Spain. He also made headlines in January after buying shares into Spanish building company FCC. - Reuters -From Madrid, Spain Billionaire Paulson Plans to Invest in Spanish Real Estate IPO Source: Bloomberg / Personal Finance Paulson & Co., the hedge-fund firm founded by billionaire John Paulson, is joining Pacific Investment Management Co. in betting on a recovery in Spanish real estate. Paulson & Co. will invest in Hispania Activos Inmobiliarios, a Spanish real estate company that plans to raise as much as 550 million euros ($757 million) in an initial public offering this month, according to an IPO prospectus approved by regulators today. The shares will be priced at 10 euros each. Spain’s benchmark stock index gained 27 percent in the past year amid signs that the economy is recovering from two recessions. Private-equity companies including Apollo Global Management LLC have entered the country’s real estate market after house prices fell by more than 40 percent, while the bad bank created to cleanse lenders of toxic real estate investments is finding buyers for its assets. Hispania Activos, which will be managed by Azora Gestion Inmobiliaria SL, will become a Socimi, similar to a real estate investment trust. The company plans to raise 500 million euros through an institutional placing. Hispania Activos may offer an additional 10 percent of the IPO by using what’s known as an over-allotment option. If so, more than 40 percent of the shares would be freely traded. Hispania Activos has received commitments totaling 314 million euros. Other investors include Quantum Strategic Partners LP, Moore Capital Management LLP, APG, Cohen & Steers Inc. and the Canepa group, according to the prospectus. Pimco, based in Newport Beach, California, will own as much as 12.5 percent of Lar Espana Real Estate Socimi SA after the Spanish company sells shares to the public for the first time this month. -By Sharon Smyth http://www.businesstimes.com.sg/specials/property/soros-paulson-buy-stake-spanish-reit-20140304
US rental homes: Daiwa House to invest 150b yen Firm will develop leasing properties in Texas as Japan's population shrinks Source: Business Times / Property [TOKYO] Daiwa House Industry Co, Japan's biggest homebuilder by market value, plans to invest 150 billion yen (S$1.9 billion) in US rental housing, three times more than it had aimed to allocate to overseas investments, to boost revenue. Daiwa House will acquire and develop leasing properties in Texas and allocate the funds over the next three years, the Osaka-based company said yesterday. The homebuilder targets 50 billion yen of revenue in the US by the year ending March 2019, it said. Japan's shrinking population has prompted the country's homebuilders such as Daiwa House to seek new revenue sources. Texas is the most that Daiwa House is investing overseas for rental housing and compares with the 50 billion yen that the company had announced for investments abroad in its mid-term plan in November.
"The investment amount is very aggressive and it seems risky," said Masahiro Mochizuki, an analyst at Credit Suisse Group AG via telephone. -From Tokyo, Japan UK home price rise quickens at fastest pace in seven years London leads recovery spreading across the country Source: Business Times / Property [LONDON] UK house-price growth accelerated in February to the fastest in seven years as London led a recovery that's spreading across the country. Prices in England and Wales rose 0.7 per cent from the previous month - the most since April 2007 - with values in London up 1.1 per cent, property researcher Hometrack Ltd said. Fifty-one per cent of postcodes reported gains, the biggest share in almost a decade. Bank of England (BOE) chief economist Spencer Dale said in a Bloomberg News interview last week that the revival in the property market is good for the economy, and is still in the early stages in many areas outside London.
Policymakers will probably leave their key interest rate unchanged at a record low this week while the jobless rate hovers above the 7 per cent threshold for considering an increase. -From London, UK Vornado to Sell Springfield Mall to Pennsylvania REIT Source: Bloomberg / News Vornado Realty Trust (VNO) agreed to sell the Springfield Town Center in Virginia to Pennsylvania Real Estate Investment Trust in a $465 million transaction. Pennsylvania REIT, based in Philadelphia, will take over the mall in exchange for $340 million in cash and $125 million of partnership units, Vornado said in a statement today. The deal will be treated as a tax-free exchange for income tax purposes. New York-based Vornado expects to record a non-cash impairment of about $20 million in the first quarter. Vornado has been selling assets for almost two years to focus on its New York and Washington office properties and Manhattan street retail investments. Last week, Chairman Steven Roth told analysts the company had about $1.1 billion of assets for sale, “and we have more on deck.” Vornado will complete a renovation under way at the 1.4 million-square-foot (130,000-square-meter) Springfield mall. About $130 million will be spent on the project this year and another $22.4 million next year, the company said in its annual report. The project is expected to be done by the end of 2014, with closing of the Pennsylvania REIT (PEI) transaction projected for no later than March 31, 2015. The mall, in the northern Virginia suburb of Springfield, southwest of Washington, serves a population of about 800,000 with an average household income of more than $117,000, according to its website. Vornado will be a passive investor in Pennsylvania REIT after the deal, subject to an equity ownership limit of 9.9 percent, Pennsylvania REIT said in a separate statement. -By David M. Levitt http://www.bloomberg.com/news/2014-03-03/vornado-to-sell-springfield-mall-to-pennsylvania-reit.html Daiwa House to Invest 150 Billion Yen in U.S. Rental Housing Source: Bloomberg / Luxury Daiwa House Industry Co. (1925), Japan’s biggest homebuilder by market value, plans to invest 150 billion yen ($1.48 billion) in U.S. rental housing, three times more than it had aimed to allocate to overseas investments, to boost revenue. Daiwa House will acquire and develop leasing properties in Texas and allocate the funds over the next three years, the Osaka-based company said in an e-mailed statement today. The homebuilder targets 50 billion yen of revenue in the U.S. by the year ending March 2019, it said. Japan’s shrinking population has prompted the country’s homebuilders such as Daiwa House to seek new revenue sources. Texas is the most that Daiwa House is investing overseas for rental housing and compares with the 50 billion yen the company had announced for investments abroad in its mid-term plan in November. “The investment amount is very aggressive and it seems risky,” said Masahiro Mochizuki, an analyst at Credit Suisse Group AG via telephone. Daiwa House plans to invest in Texas because of its rising population and it will target “Generation Y,” those born between 1975 to 1989, an age group seen to support demand in the leasing market, the company said in the statement. The investment plan revealed in November for overseas investments was “just a tentative estimate,” Eiji Matsuda, a spokesman at Daiwa House, said by telephone today. Rental BusinessDaiwa House plans to boost its rental housing revenue by 35 percent to 800 billion yen by the year ending March 2015, the company said in November. The rental housing business, the biggest contributer to the homebuilder’s revenue, is almost double that from the home construction division, it said. The developer raised as much as 137.9 billion yen from a share sale in July. “Daiwa House has plenty of cash,” said Yoji Otani, an analyst at Deutsche Bank AG in Tokyo. “The management doesn’t think Japan has much growth prospect so they are investing overseas. The healthy balance sheet that Daiwa has enables them to take on such risk.” Shares of Daiwa House gained 0.4 percent to 1,853 yen at the close of trading in Tokyo. The stock has declined 8.9 percent so far this year. -By Kathleen Chu TARP Funds Demolish Homes in Detroit to Lift Prices: Mortgages Source: Bloomberg / Luxury In Flint, once a thriving auto-industry hub, excavators with long metal arms and shovels have begun tearing down 1,500 dilapidated homes in an attempt to lift the housing market. The demolitions in this Michigan city of about 100,000 people are part of the stepped up efforts by officials in several Midwestern states to rid their blighted neighborhoods of decayed housing that’s depressing prices. The funding for the excavator work comes from a surprising source -- the Hardest Hit Fund of the Troubled Asset Relief Program, or TARP, created in 2008 to stabilize to the financial system. The $7.6 billion Hardest Hit Fund was intended to help troubled property owners avoid foreclosure and keep their homes. As foreclosures fall in most parts of the country, the fund is using the unspent $3.2 billion to remedy the crisis of abandoned homes. In Detroit alone, 70,000 dwellings, or about 19 percent of the total, may need to be torn down, according to the city. While demolition wasn’t explicitly part of the initial program, policymakers are right to use the money to remove decaying properties, said Raphael Bostic, director of the Bedrosian Center at the University of Southern California. “When a lot of these mortgage-relief programs were set up, demolition was not an acceptable use,” said Bostic, a former assistant secretary at the U.S. Department of Housing and Urban Development. “There are a number of places -- Detroit, Flint, for example -- where there are just far more houses than people to live in them.” Predatory LendingThe populations of cities such as Detroit and Cleveland have been declining for decades as people moved to suburbs and other states with better job markets. They sometimes left behind abandoned houses. The number of empty dwellings has grown since the housing crash as people lost their homes to repossession, according to a February report by Griswold Consulting Group in Lansing, Michigan. The group examined the effect of demolishing distressed buildings in Cleveland from 2009 to 2013. “Predatory lending and the fallout of the mortgage crisis hit Cleveland hard,” emptying more homes, according to the report. “The mortgage crisis merely exacerbated a pre-existing condition for the Cleveland region and countless other older industrial cities across the American Midwest.” Detroit ShrinksA thriving auto-making center of 1.85 million people in 1950, Detroit has a population of only 700,000 today, leaving huge swathes of the city empty. In Detroit’s Brightmoor neighborhood, many blocks in the four-mile-square area (6.4 kilometers) have only one or two occupied dwellings. The few carefully maintained homes contrast with burned out shells next door and debris strewn across lots. Homes lack doors or windows. Detroit, which filed the biggest U.S. municipal bankruptcy last year, is getting about $52 million from the Hardest Hit Fund. The city plans to use money for demolition of houses in stronger markets where the land could be redeveloped, according to the Detroit Land Bank Authority, a government group that acquires, manages and disposes of tax-foreclosed and vacant properties. Newly elected Detroit Mayor Mike Duggan has centralized the city’s efforts to tear down buildings and fight blight with a new Department of Neighborhoods, he said in a Feb. 26 state of the city speech. Mayor’s Program“How many neighborhoods in this city do we have a solid block and one burned out house that is depressing the values of everyone else in that community?” Duggan said in the speech. The city is going to “start to roll through the community and take down those houses and start to bring those blocks back.” The Hardest Hit Fund is deploying $48 million more in Flint, Grand Rapids, Pontiac and Saginaw. Genesee County, where Flint is located, plans to flatten 1,600 homes using the financing, and another 3,500 should be destroyed, according to Douglas Weiland, executive director of the Genesee County Land Bank Authority, a government agency that manages tax-foreclosed properties. In Cuyahoga County, which includes Cleveland, more than 6,000 troubled properties have been torn down since mid-2009, and about 10,000 to 15,000 blighted homes remain in the region, according to the Griswold report. “The victims of the foreclosure crisis are not only the people who were given predatory loans -- it’s also their neighbors and the communities they’re in,” said Ed Herman, a Cleveland attorney and consultant to Thriving Communities Institute, a group that works with local governments to help neighborhoods hurt by vacant homes. Tipping-Point NeighborhoodsOhio will use $60 million from the Hardest Hit Fund to demolish structures in “tipping point neighborhoods,” where homeowners remain and removing blight can have a stabilizing effect, according to Cindy Flaherty, the director of homeownership at the Ohio Housing Finance Agency. Illinois also is considering using some of its Hardest Hit money for demolition, said Rebecca Boykin, a spokeswoman for the Illinois Housing Development Authority. Indiana said on Feb. 3 that the Treasury Department gave it approval to use $75 million of Hardest Hit money for taking down housing. A growing economy and rising house prices have helped reduce foreclosures, freeing money from the Hardest Hit Fund for demolitions. The U.S. foreclosure rate dropped to 2.9 percent in the fourth quarter from 4.6 percent three years earlier, according to the Mortgage Bankers Association. The S&P/Case-Shiller index of property prices in 20 cities was up 24 percent in December from its March 2012 low. Fewer ForeclosuresDestroying abandoned properties has many beneficial effects, according to the Griswold report. Some of the buildings may be used for illegal activity, including storage of stolen goods, arson, drug abuse and prostitution. Once the eyesore of dilapidated housing is gone, neighbors are more likely to maintain their own properties, Herman, the Cleveland attorney, said. Neighborhoods cleaned up by demolitions have steeper declines in mortgage-foreclosure rates than those that don’t remove the blight, according to the Griswold report. “Ultimately you create a fresh piece of dirt that could be used in another way that might make economic sense in the future.” said Mark Dotzour, chief economist at the real estate center at Texas A&M University in College Station, Texas. -By Brian Louis and Jeff Green |