While the scale of destruction and suffering caused by Hurricanes Harvey and Irma is staggering, history suggests the local economy and housing markets in the affected areas will bounce back relatively quickly.

Each natural disaster is tragic in its own way, but some commonalities are apparent. Generally, natural disasters don’t permanently change underlying housing market fundamentals; they just disrupt things for a number of quarters, including causing sudden price hikes in less-affected communities as a result of the influx of displaced people. After an initial dip, the economy gets a near-term boost from reconstruction, before things return to normal.

How might economic activity, specifically housing, be affected by these storms?

The delinquency rates will spike locally due to employment disruption, but will not cause distress in the banking sector due to record levels of high-quality capital and strong and improving performance in the rest of the country. Some bond or portfolio investors will be affected, but the overall impact will be manageable.

With respect to economic activity, past severe weather impacts on job growth were short-lived, with an immediate drop in employment followed by three months of significant bounce-back, according to research by Keith Phillips and Christopher Slijk at the Dallas Federal Reserve. Understandably, numbers for Irma are still being calculated, but Harvey and Irma are projected to reduce third-quarter GDP growth for the United States between one-quarter and one-half of a percentage point and then similarly boost GDP growth in the fourth quarter, then more modestly in early 2018.

While fires and tornadoes make the news, the greatest share of losses from natural disasters is generated by hurricanes. Hurricanes also have the highest average loss per event and are the most frequent large-dollar disaster event, which can be sobering, given that we had an active hurricane season. The impact of climate change is beyond the scope of this article, but it’s worth noting that loss estimates seem to double every 10 years as cities expand and storm intensities increase.

Similarly, impacts on home prices have typically been short in duration. In fact, home price trends do not appear to change fundamentally, suggesting people rebuild and get on with life. Research by Eli Beracha and Robert S. Prati found that “one full year following a hurricane, little evidence emerges suggesting a lingering effect on residential real estate prices.”

Researchers at the Dallas Federal Reserve similarly stated, “The typical hurricane strike raises real house prices for a number of years, with a maximum effect of between 3% to 4% three years after the occurrence. There is also a small negative effect on real incomes.”

Federal Housing Finance Agency researchers who looked at the impact of Hurricane Andrew specifically observed that “price appreciation rates were positively affected by Hurricane Andrew. After about two years, appreciation patterns in all of the regions fell to rates close to pre-hurricane levels.”

While home prices per se seem unlikely to be significantly affected in the long term, the scale of these storms suggests we could see some impact to the housing market. For example, housing starts could be delayed, as builders must wait for the saturated ground to dry out. The lack of flood insurance coverage for many residents affected by Harvey may also have an impact. Fewer than one in six residents of Harris County, home to Houston and the nation’s third-largest county, have flood coverage according to the National Flood Insurance Program. This will partially hinder the boost to the economy from rebuilding and make federal loans more important.

Finally, where we are in the business cycle affects markets and our ability to bounce back. The recovery from Hurricane Ike in 2008 was delayed because of the deep national recession, while Harvey struck when the construction industry was already experiencing shortages of labor and materials. Thus, we can expect to see a rise in the cost of construction materials and possibly even slight slowdowns nationally in new home builds as construction workers are diverted to rebuilding.

 

 

By Ralph DeFranco Bloomberg October 11 2017

 

 

The batteries resemble outdoor neighborhood junction boxes and can be put inside the house

Developers are getting ready to cut the cord on electricity, and a battery may take its place, according to the Wall Street Journal. Homes are incorporating batteries that resemble modern versions of outdoor neighborhood junction boxes, but these can be put inside the house, according to the Journal.

Up to 4,000 energy-efficient homes planned by real estate developer Mandalay Homes will use 8 kilowatt-hour batteries from German maker Sonnen, according to the Journal. The majority will be in Prescott, Arizona.

In Vermont, a partnership with Tesla Energy and Green Mountain Power is offering 2,000 of its customers a 13.5 kilowatt-hour battery called the Tesla Powerwall for $15 a month. The batteries cost $5,500, according to the Journal, but GMP CEO and President Mary Powell said the utility can afford to put them in homes because it helps the company save on grid infrastructure. GMP also uses batteries from Sonnen, SimpliPhi and Sunverge.

The shift toward renewable energy is a trend among builders and developers as more residential buyers slowly consider environmentally-friendly options, despite the added cost. Popular states looking to revamp their grids include New York, California, Massachusetts, Hawaii, Vermont and Arizona.

Prices for solar panels in Florida have fallen by 64 percent over the past five years, according to the Solar Energy Industries Association. South Miami recently became the first Florida city to mandate the installation of solar panelson all new homes. [WSJ] – Amanda Rabines

For more information on Green innovations contact us.

 

Does eco-tourism have a sustainable future?
by Lois Avery

Leonardo DiCaprio is almost as well known for environmental activism as he is for acting so it comes as no surprise that his luxury resort venture in Belize is creating a new vision for eco-tourism.

He first set eyes on Blackadore Caye, his 104-acre unpopulated island off the coast of Belize, a decade ago and bought it with a partner for a reported US$1.75 million. Once work is complete in 2018, it will house luxury villas and all the frills associated with five-star hospitality in one of the most beautiful corners of the globe.

But there appears to be more to this venture than financial gain. “The main focus is to do something that will change the world,” DiCaprio says in press reports. “I couldn’t have gone to Belize and built on an island and done something like this, if it weren’t for the idea that it could be ground breaking in the environmental movement.”

Plans for Restorative Island, as it will be known, show a large raised platform that stretches in an arc over the water, with artificial reefs underneath. The island will grow indigenous plants to support a manatee conservation area, and mangrove trees will be replanted. This vision is the result of 18-months of work from a team of designers, scientists, engineers and landscape architects but this labour of love extends beyond the last year-and-a-half. Apparently, DiCaprio spent a decade searching for the perfect hotel operator to partner with and he settled on Restorative Islands L.L.C., which is owned by Paul Scialla, founder of Delos, a global company known for its work on ‘well building’ designs.

“Delos, the partner in this development is the founder of the WELL building standard – they are positioning this as a rating tool for wellness in the same way that LEED/BREEAM etc. are to environmental sustainability,” says Matthew Clifford, Head of JLL’s Energy and Sustainability Services, Asia Pacific.

He explains that the WELL accreditation is still very new to the hotels industry but its implementation is a growing trend as developers, operators and consumers alike become more conscious of responsible travel.

An eco-tourism choice for all budgets

While the WELL standard may be new, the concept of an environmentally sustainable hotel is not. “Aside from DiCaprio, Marlon Brando conceived something similar in Tahiti and, whilst relatively well-known, we’ve also had the experience of Soneva and Six Senses in Asia for a number of years with their eco-resorts. Australia, Caribbean, Central America, North America, Scandinavia and the Alps are also markets where eco-resorts have been created; in truth, they can be found on all continents,” says Bob Merrigan, Executive Vice President, Hotels Project Services, JLL Asia Pacific.

From luxury resorts championed by wealthy individuals, to the back to basics eco-lodges that promote community living, eco-travel caters to all budgets. Yet it’s affluent travellers who are driving the larger scale resort developments. According to a 2012 Four Seasons survey of luxury travel trends, “the affluent put much more thought into their purchasing decisions to determine whether a product or service will intrinsically improve their lives.”

And when it comes to developing these resorts at the higher end, a significant investment is involved and funding often comes from private wealth.

Clifford adds: “Any development project will focus closely on how they can generate a buzz and, ideally, pre-sales. Developers are pretty smart at lowering their risk, and these days most major projects won’t go ahead without some level of pre-commitment. The celebrity endorsement is another way to generate a lot of interest, and I would be quite surprised if these didn’t sell out in rapid time.”

It’s clear that eco sells but Merrigan maintains that the market remains relatively niche: “There are the savvy entrepreneurs who see opportunity for which some will remain true to the eco-friendly spirit and others will play lip service interested only in the commercial returns.”

Ultimately, the hotels industry is driven by consumers. “Overall, environmental and sustainability issues continue to grow across all property types – it is not uncommon for guests to check the carbon footprint of their air travel to a destination,” Merrigan says. “Others may favour green policies such as obtaining all consumables within a specific radius of a property.”

A recent TripAdvisor study found that the ‘green’ travel trend is gaining momentum among its members; 71 percent said they plan to make more eco-friendly choices in the next 12 months compared with 65 percent who said the same a year earlier.

“There has been a growing consciousness of the need to protect these beautiful locations, rather than paving them all over, or ruining them with cookie cutter, or environmentally destructive resorts,” adds Clifford.

“Perhaps this is a way to avoid this destructive trend, by developing these beautiful locations, but in a way that keeps it beautiful and special for the long term.”

What makes a hotel ‘eco’?

• A carefully selected site: It must take advantage of positive local features, such as proximity to sustainable transport, rather than requiring people to fly in. Eco-sites mustn’t destroy areas with endangered species, high value agricultural land etc.

• A holistic design and delivery: the process must consider the full life cycle costs, not just up-front costs. For example, it may cost more up front to make the building efficient in terms of water, waste, recycling and energy, but these can pay for themselves over the lifecycle of the asset. Something which takes into consideration other macro-trends like climate change. What happens to your luxury resort if hurricanes, floods, coastal erosion, or sea level rise continue? And the project must be managed well to maintain the design goals. For example, don’t design an eco-hotel and then serve unsustainably fished seafood in the restaurant.

• A positive impact on the community: This might include helping to bring renewable energy investment to a remote area, which may not otherwise happen without the support of a developer. Or to create jobs for locals.

By Ina Cordle, The Real Deal

 

SoLē Mia Miami, the $4 billion planned mixed-use project in North Miami that marks a joint venture between Turnberry Associates and LeFrak, will have South Florida’s first patented “Crystal Lagoon,” The Real Deal has learned. The 10-acre Crystal Lagoon at SoLē Mia represents the first in Miami for Miami-based Crystal Lagoons, a company that touts itself as able to “transform any destination into an idyllic beach paradise.”

Turnberry Associates and LeFrak also have an option to develop a second Crystal Lagoon in the future at the same site — a former landfill — the lagoon company said. SoLē Mia Miami, between Northeast 139th Street and Northeast 151st Streets, is a 183-acre master-planned community located on one of the largest remaining undeveloped parcels in South Florida east of Biscayne Boulevard.

The massive project, zoned for 4,400 residential units, is also expected to feature a dine-in movie theater, high-end bowling and entertainment venue, 37 acres of community parks and recreation, upscale shopping and dining, commercial office space, as well as other amenities. Biscayne Landing languished for many years after an attempt to develop it fell apart early last decade. Developer Michael Swerdlow sold his stake in the mixed-use project to Boca Developers in 2005.

The company was not able to get the project started before the real estate and financial markets collapsed. Swerdlow helped revive the development in 2012, forming a partnership with LeFrak to build the master-planned project over a 16-year span. LeFrak brought in Turnberry Associates earlier this year. Crystal Lagoons’ technology uses disinfection pulses that allow using up to 100 times less chemicals than swimming pools, and also uses an ultrasonic filtration system that allows using up to 50 times less energy than for conventional filtration systems.

Uri Man, CEO of Crystal Lagoons US Corp. said the technology allows for the construction and maintenance of unlimited-size lagoons. The beachfront and blue water create a venue for swimming, kayaking, paddle boarding, sailing and windsurfing, he said. “We’re revitalizing real estate development. Now, you can create your own location,” Man told TRD. “Our lagoons are really transforming the lifestyle of these communities with access to the beach.” The lagoons at SoLē Mia will be anywhere from six to 12 feet deep, he said.

 

“Our lagoons provide real estate developments with substantial quantifiable benefits such as increases in pricing, sales velocity, higher rents and in many cases the lagoons are being used to transform otherwise non-viable development sites into viable development sites,”

Man said. The first Crystal Lagoon was built 17 years ago in Chile at San Alfonso del Mar. Patented in 160 countries, Crystal Lagoons currently has a portfolio of more than 300 projects in 60 countries worldwide including the United States, Saudi Arabia, Indonesia, Egypt, Singapore, Thailand, Brazil, Mexico, Argentina, Peru, Paraguay, Uruguay and Colombia. The SoLē Mia Miami project follows the lagoon company’s recently announced U.S. projects including partnerships with real estate developers such as Tavistock Development Group in Orlando, Metro Development Group in Tampa, and more projects planned for Texas, Arizona, California, Nevada, and Hawaii. The company said it has 35 projects in negotiation in the United States, valued at $20 billion.