Tag Archives: market
EU Urges Energy Market as U.S. Shale Gas Widens Price Gap (1)
European Union leaders are set to urge faster integration of the bloc’s power and natural-gas markets to lower energy prices as the U.S. shale-gas revolution widens the EU’s cost gap with its largest trading partner. The 27-nation EU must accelerate efforts to implement energy legislation aimed at breaking down national barriers by 2014 and develop interconnections to end the isolation of some member states from networks by 2015, according to a new draft of conclusions for a leaders’ summit in Brussels today. The summit initiative comes after a record drop in private investment in Europe and the biggest-ever slump in the EU carbon market, designed to cut pollution and stimulate a shift to cleaner fuels. “The EU’s energy policy must ensure security of supply for households and companies at affordable and competitive prices and costs, in a safe and sustainable manner,” according to the conclusions obtained by Bloomberg News. “This is particularly important for Europe’s competitiveness in the light of increasing energy demand from major economies and high energy prices and costs.” At stake is an EU campaign to win energy-policy authority from national officials that compares with existing European powers over monetary, antitrust, trade and agriculture matters. Some governments, including the U.K., are lagging behind in introducing rules in line with EU legislation more than two years after a deadline passed. Price Gap If the EU becomes a fully integrated market, it could save as much as 35 billion euros ($45 billion) a year in electricity costs in 2015 compared with 2012, according to the European Commission, the bloc’s regulatory arm. Shale-gas production has contributed to a widening gap between U.S. and EU industrial prices for energy, according to a commission report prepared for the summit. “In 2012, industry gas prices were more than four times lower in the U.S. than in Europe,” the report said. As the EU’s oil and gas import dependency is set to increase to more than 80 percent until 2035, the U.S. is on its way to become a net exporter, according to the International Energy Agency. The increase in European energy prices is linked to the inconsistency of EU policies to boost the share of renewable energy, increase energy efficiency and cut greenhouse gases, as well as to national policies that distort the internal market, according to a study commissioned by BusinessEurope, a Brussels-based employers’ federation. ‘Cost Burdens’ “The U.S. industry already has a head start on global markets — this means that any additional cost burdens on European industry should be avoided if competitiveness is to be ensured,” Frontier Economics Ltd. said in the study. While companies such as Chevron Corp. (CVX) have begun drilling exploration wells in countries including Poland, shale-gas production in Europe won’t make the region self-sufficient in natural gas, according to a 2012 study by the EU Joint Research Centre. Under the best-case scenario declining conventional production could be replaced and import dependence maintained at a level around 60 percent, it said. Indigenous Resources As some member states and environmental groups are seeking stricter controls on shale gas exploration, EU leaders will say it’s crucial to “further intensify the diversification of Europe’s energy supply and develop indigenous energy resources,” according to the draft conclusions. Poland’s Prime Minister Donald Tusktold reporters today he was satisfied with the proposed wording as it treats shale gas as an opportunity and lets countries explore it as an option in national energy mixes. Europe needs to diversify its energy sources, boost efficiency, modernize infrastructure and complete the internal market, although shale gas development in Europe may not be a “silver bullet,” according to lobby group Shale Gas Europe, which is supported by companies including Royal Dutch Shell Plc. (RDSA), Halliburton and Statoil. Energy costs in the EU will remain above the U.S. because of differences related to infrastructure, rock structure and legislation, Iain Conn, head of BP Plc (BP/)’s refining and marketing unit, said March 16. ‘Cheap Coal’ “Europe is more dependent on imported energy and although Europe is benefiting — if I can call it that — from cheap coal coming from the U.S. as a result of this, Europe’s cost of energy for the economy is going to be higher than in the U.S. for the foreseeable future,” he said. As a net importer, Europe can boost energy efficiency, create a market based on smart infrastructure, exploit conventional and unconventional energy sources and bet on innovation in order to ensure secure and competitive prices, according to the commission. By 2020, the region needs to invest 1 trillion euros to reach its goal, the commission said. Financing investment in “new and intelligent infrastructure” should primarily come from the market, according to the draft summit conclusions. Private investment in Europe tumbled by a record 350 billion euros in 2007-2011, 20 times the drop in private consumption and four times the decline in real gross domestic product, according to a report by the McKinsey Global Institute published last year. Carbon Market “This makes it all more important to have a well-functioning carbon market and a predictable climate and energy policy framework post-2020 which is conducive to mobilizing private capital and to bringing down costs for energy investment,” according to the draft conclusions. EU leaders will return to the issue of 2030 energy and climate rules in March 2014, after the commission comes forward with a “more concrete proposals,” they said in the draft document. By then ministers will have discussed policy options in that regard, taking into account objectives set for a global climate deal sought in 2015, the document showed. Prices in the European emissions trading system tumbled to a record low of 2.46 euros a metric ton last month amid a surplus of allowances and concerns that lawmakers may fail to reduce the glut. That compares with 25-30 euros expected by policy makers when the cap-and-trade system was created in 2005. EU leaders will call on the commission to study how energy prices are affecting Europe’s competitiveness and what response is needed. The EU will need to look at innovative financing methods, improved liquidity in the energy market and the issue of the contractual linkage of gas and oil prices, they said in the draft statement. To contact the reporter on this story: Ewa Krukowska in Brussels at ekrukowska@bloomberg.net To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net Continue reading
New Biofuel Proposals Could Have ‘Severe Implications’
22 April 2013 A PROPOSAL to reduce the market size for biofuel production in Europe will damage farmer confidence and reduce the incentive to produce for food, feed and fuel, the NFU has warned. The warning comes following the publication of a draft opinion on the indirect land use change (ILUC) proposal by French MEP Corinne Lepage. As the European Parliament’s lead rapporteur on the Environment Committee, Ms Lepage will set the tone for forthcoming debates on the contribution biofuels can make to the Renewable Energy Directive targets, which currently require member states to achieve 10 per cent renewable transport fuel by 2020. The draft opinion seeks to introduce ILUC factors on biofuel production and tightens the cap proposed by the European Commission to 4.27 per cent for biodiesel produced from oil crops. International land use modelling has provided a wide range of results and the NFU believes the EU Commission has chosen one modelling result, which includes some basic errors that bias results against biodiesel, on which to base its proposal. NFU crops board member Brett Askew said: “The consequences of this for arable production could be devastating and a further blow to UK and EU agriculture, with an estimated reduction of one-third in the cropped area of EU and UK oilseed rape and the impact of losing an important rotational crop on UK wheat yields. “It is clear Ms Lepage has failed to consider the severe implications of her opinion on productivity and biodiversity on-farm. Picking winners, as she has done in proposing a cap on biodiesel production, fails to reflect the interdependence of these feedstocks on-farm.” Mr Askew said the decision to introduce ILUC factors to control a ‘hypothetical conflict of food versus fuel naively confuses two issues of agricultural production and the original ILUC greenhouse gas savings’. “This simplistic approach fails to reflect the factors behind increasing production on farm, for all markets,” he added. “Simply destroying demand will not lead to an increase in future stock levels but instead a decline in production as markets correct themselves to reflect economic supply and demand levels.” Continue reading
Miami Price
http://www.ft.com/cms/s/2/556a2266-b334-11e2-b5a5-00144feabdc0.html#ixzz2TQjHFljI By David Kaufman The city’s prime property market is thriving – but is the bubble about to burst? Back in 1991, Columbia University sociologist Saskia Sassen coined the term “global city” to describe an urban area crucial to the world’s overall economic, cultural and political development. Although Sassen initially wrote of cities such as London, Tokyo and New York, 20 years later she declared Miami to be one of the era’s most “exceptional” example of global city growth. Nothing better confirms Sassen’s observations than Miami’s rapidly ascendant real estate market. Hard-hit by oversupply and underfinancing after the 2008 crash, Miami has not merely survived, but is now thriving at record levels. Last summer, a 10-bedroom/30,000 sq ft compound on Miami’s Indian Creek Island sold for a record $47m; while in March, US “infomercial” entrepreneur Ajit Khubani reportedly paid $34m for a 16,000 sq ft penthouse at developer Ian Schrager’s 26-unit Miami Beach Edition project – a record for a Florida condominium. An 18,253 sq ft penthouse is now on sale for $50m at nearby Faena House, where 45 condominiums are being designed by Foster + Partners, and a 17,000 sq ft penthouse on top of South Beach’s 10-year-old south tower of Continuum is now listed for $39m. “Unlike before the recession, luxury Miami developers are building far fewer ‘mass-market’ projects with hundreds or even thousands of units,” says Peter Zalewski, of local property consultancy Condo Vultures. “They’re focusing on maximum pricing rather than maximum capacity.” Such figures represent the top end of the Miami market but prime property values have grown at all levels, from Atlantic-front South Beach across to Downtown and the Miami Design District, northward to Mid-Beach and up to Sunny Isles Beach. Indeed, agent Knight Frank says high-end Miami real estate prices rose by 19.5 per cent last year – the highest in North America and the fourth highest in the world, after Dubai, Bali and Jakarta. Prime Miami real estate (defined by Knight Frank as the top five per cent of the market) now averages between $1,300 and $1,440 per sq ft, with average sector condominiums now $1.57m and single-family homes $2.02m, according to a mid-April report by Douglas Elliman Real Estate. The firm says Miami’s high-end market begins at $730,000 for condominiums, and $850,000 for single-family homes. Already costlier than metropolises such as Tokyo or Mumbai, Miami prices are predicted by Knight Frank to grow by five to 10 per cent this year as more buyers enter an increasingly shrinking premium property pool. Although domestic buyers, particularly New Yorkers, have shown interest in the highest-end projects such as Faena House and Edition, foreign buyers – notably Brazilians, Argentines and Venezuelans – remain the strongest players in Miami. Last year, foreigners comprised some 60 per cent of the city’s total market, according to the Miami Association of Realtors. “Certain key prime markets have bounced back stronger than ever and Miami is one of them,” says James Price, Knight Frank’s head of international residential development. “Aided by international buyers, the level of [over]supply that had brought the market down has completely reversed itself.” A recent report by realtor Douglas Elliman found that Miami’s property inventory shrunk 12.5 per cent in the first quarter of 2013 compared with 2012 – and a full 30 per cent from 2011. The number of distressed properties – the short-sales and foreclosures that dominated recession-era sales – fell nearly 25 per cent from last year and almost 50 per cent since late 2010. Today, says Ron Shuffield, head of Christie’s affiliate EWM Realty International, Miami’s property inventory hovers between four and six months, well below the nine to 12 month threshold required to maintain market health. “Building in Miami came to a near-halt for almost five years,” he says. “We have a substantial number of projects being built but they’re still two to three years from completion.” According to CVR Realty, across South Florida nearly 125 towers with 17,700 units are either under construction or in the development stages – nearly half in Miami itself. As in New York, Miami developers are associating many of their highest-end projects with top architects: Foster’s Faena House, John Pawson at Edition, Denmark’s Bjarke Ingels at the Grove at Grand Bay, Mexican Enrique Norten at South Beach’s One Ocean and 321 Ocean, Zaha Hadid’s One Thousand Museum and Herzog & de Meuron at Jade Signature. Developers are also thinking bigger: units at Hadid’s building will reportedly start at roughly 4,500 sq ft, while apartments at Norten’s One Ocean average roughly 3,000 sq ft. “Buyers want larger spaces; simpler spaces that are functional from moment one,” says Edgardo Defortuna, founder of Fortune International, which is building Jade Signature. “Adding a name like Herzog & de Meuron takes it to the next level” – and adds roughly 20 per cent to the price. With dozens of new projects now in development and apartments at Edition and Faena now topping $3,000 per sq ft, Miami’s undersupply could shift into overabundance – or at least overpricing. “The ingredients and conditions are certainly there for another bubble,” says Condo Vulture’s Zalewski. “Two-thirds of all Miami sales are still under $300,000, so it’s hard to see the highest prices continuing to appreciate at such rapid rates.” Yet with prices still 37 per cent below their pre-recession peak, local agents say Miami may even be undervalued – at least compared with premium markets in London, Hong Kong or New York. Meanwhile, bank financing has now become far scarcer across the US, helping Miami’s market to develop what Shuffield calls “its own set of checks and balances” to ensure new projects remain solvent. “The bulk of new condo buyers are purchasing in cash – with deposits of 50 to 70 per cent. These new terms are giving the market far greater stability.” ——————————————- Buying guide ● Florida has no restrictions on foreign ownership – but the US Internal Revenue Service levies a 10 per cent withholding tax on foreign-owned property ● Florida accounts for 26 per cent of all sales to foreigners in the US, says the National Association of Realtors ● Florida is one of nine US states with no personal income tax ● Of the 22,000 pre-recession condos built in downtown Miami only 600 remain unsold What you can buy for: $500,000 A two-bedroom/two-bathroom 1,129 sq ft apartment in a five-year-old building in Miami’s Downtown ($515,000) $1m A two-bedroom/ two-bathroom apartment at the Palau at Sunset Harbour, which opens in 2014 ($1.059m) $5m A two-bedroom/ two-bathroom, 2,338 sq ft condo at Faena House with 1,190 sq ft of outdoor space ($5.15m) Continue reading
