March 24, 2010 Conrad San Juan Condado Plaza 7:30 a.m. - 5:00 p.m.

Transcripción

1 March 24, 2010 Conrad San Juan Condado Plaza 7:30 a.m. - 5:00 p.m.

2 REAL ESTATE DEVELOPMENT ACTUAL AND FUTURE SCENARIO March 24, 2010 By: RAFAEL E. ROJO Past President PR Home Builders Association

3 HALF FULL? HALF EMPTY?

4 HALF FULL HEAD OF HAIR HALF EMPTY HEAD OF HAIR

5 ACTUAL SCENARIO 2009: UNPRECEDENTED LOW IN NEW HOUSING SALES SALES OF NEW HOUSING UNITS 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2, Primer Semestre 6,234 6,197 7,629 5,628 5,236 2,583 Total Anual 13,419 12,143 13,546 11,099 9,826 5,023 Fuente: Construction & Sales Activity Report, Estudios Técnicos, Inc.

6 ACTUAL SCENARIO EMPLOYMENT AND INVESTMENT IN CONSTRUCTION (oct) Sources: BLS, Estudios Técnicos, Inc. Empleo en Construcción 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% Participación de la Inversión en Construcción en PNB* (Años Fiscales) P.R. Estados Unidos Fuentes: Junta de Planificación (2009). Apéndice Estadístico 2008; BEA (2009), NIPA Tables (Junio)

7 ACTUAL SCENARIO STRONG DECREASE IN CEMENT SALES Yearly Cement Sales (In metric tons) 10% 0% -10% -20% -30% Sales have consistently been reducing since January % -50% Enero-08 Febrero Marzo Abr Mayo Junio Julio Agosto Sept. Oct. Nov. Dic. Enero-09 Febrero Marzo Abr Mayo Junio Julio Agosto Sept. Oct. Nov. Dic. Fuente: Junta de Planificación de Puerto Rico

8 ACTUAL SCENARIO not all graphs are pointing down!! MORTGAGE DELINQUENCY PERSONAL BANKRUPTCIES 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 2.85% 3.10% 5.27% 7.97% 6.96% 12.35% 10.05% 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 4,092 5,920 6,620 8, % - 2T06 3T06 4T06 1T07 2T07 3T07 4T07 1T08 2T08 3T08 4T08 1T09 2T09 3T09 4T

9 ACTUAL SCENARIO Excess inventory Años de inventario construido o en construcción * * Supone una demanda promedio de 6,000 unidades anuales. Actualmente hay entre 22,000 23,000 unidades en inventario de las cuales se estima que la mitad está sustancialmente construida o lista para entrega.

10 ACTUAL SCENARIO Construction loans portfolio are worst off in commercial delinquencies COMMERCIAL LOAN DELINQUENCY* 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 2T06 3T06 4T06 1T07 2T07 3T07 4T07 1T08 2T08 3T08 4T08 1T09 2T09 3T09 4T09 Total Hipotecario Residencial Consumo* Construcción Comercial e Industrial Tarjetas cred. Fuente: FDIC. * No incluye tarjetas.

11 ACTUAL SCENARIO 10% -10% -20% -30% -40% -50% 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0% 0 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 SALES OF NEW HOUSING UNITS Enero-08 Febrero Marzo Abr Mayo Junio Julio Agosto Sept. Oct. Nov. Dic. Enero-09 Febrero Marzo Abr Mayo Junio Julio Agosto Sept. Oct. Nov. Dic. 5% Primer Semestre 6,234 6,197 7,629 5,628 5,236 2, Total Anual 13,419 12,143 13,546 11,099 9,826 5,023 Primer Semestre 6,234 6,197 7,629 5,628 5,236 2,583 Total Anual 13,419 12,143 13,546 11,099 9,826 5, GOOD GRAPHS ARE DOWN! % 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Fuente: Construction & Sales Activity Report, Estudios Técnicos, Inc (oct) 50% 45% 40% 35% 30% 25% 20% 15% 10% 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000-0% 2T % 3.10% 3T06 4T06 1T07 2T07 3T % 4T07 1T08 2T08 3T % 6.96% 4T08 1T09 2T % 10.05% 3T09 2T06 3T06 4T06 1T07 2T07 3T07 4T07 1T08 2T08 3T08 4T08 1T09 2T09 3T09 4T09 Total Hipotecario Residencial Consumo* Construcción Comercial e Industrial Tarjetas cred. Fuente: FDIC. * No incluye tarjetas. 4,092 BAD GRAPHS ARE UP! 5,920 6,620 8, T09

12 ACTUAL SCENARIO 10% -10% -20% -30% -40% -50% 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0% 0 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 SALES OF NEW HOUSING UNITS Enero-08 Febrero Marzo Abr Mayo Junio Julio Agosto Sept. Oct. Nov. Dic. Enero-09 Febrero Marzo Abr Mayo Junio Julio Agosto Sept. Oct. Nov. Dic. 5% Primer Semestre 6,234 6,197 7,629 5,628 5,236 2, Total Anual 13,419 12,143 13,546 11,099 9,826 5,023 Primer Semestre 6,234 6,197 7,629 5,628 5,236 2,583 Total Anual 13,419 12,143 13,546 11,099 9,826 5, GOOD GRAPHS ARE DOWN! % 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Fuente: Construction & Sales Activity Report, Estudios Técnicos, Inc (oct) 50% 45% 40% 35% 30% 25% 20% 15% 10% 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000-0% 2T % 3.10% 3T06 4T06 1T07 2T07 3T % 4T07 1T08 2T08 3T % 6.96% 4T08 1T09 2T % 10.05% 3T09 2T06 3T06 4T06 1T07 2T07 3T07 4T07 1T08 2T08 3T08 4T08 1T09 2T09 3T09 4T09 Total Hipotecario Residencial Consumo* Construcción Comercial e Industrial Tarjetas cred. Fuente: FDIC. * No incluye tarjetas. 4,092 BAD GRAPHS ARE UP! 5,920 6,620 8, T09

13 OVER HALF OF THE COMPANIES LISTED IN 2009 s FORTUNE 500 WERE FOUNDED DURING A RECESSION

14 LEGISLATION IMPROVEMENT NEW PERMIT LAW Agility and Certainty Signed Dec. 1, 2009 Establishes new centralized (one stop-shop) and specialized permits office, should be up and running by end of this year. Reduces 50% of permits and establishes timeline for approvals. Requires an injunction bond for anyone who while contending a permit intends to stop a project under construction. Only a court of law can revoke an approved permit

15 REGULATION IMPROVEMENT NEW HOME SALES REGULATIONS IMPROVED DACO modifies option contract rules Signed October 29, 2009 New rules establish home buyer accountability through stricter rules and penalties for buyers who bail out of option contracts. Rules should reduce speculation allowing investors and banks to have a more certain feel of the market on pre-sales.

16 WHAT TO EXPECT Real estate should hit bottom soon Expected bank consolidation Property values will depend on policy, regulators and banks. Even though there is sitting inventory, there is still healthy demand for new affordable housing projects. New housing projects struggle to find interim financing. Consumers also struggle to qualify for home mortgages. Credit availability went from one extreme to the other. Viable projects with proven and capable investors behind must be financed to generate jobs and jump start the economy.

17 OPPORTUNITY / CHALLENGE AREAS New Construction High labor and material costs, lower incomes Affordable housing Subsidy and financing availability Low income Rental Market Fair market rent adjustments Second Home High living costs and high tax for homeowners Resort Development Finance availability, destination marketing BELOW MARKET BARGAINS Effect on island-wide values

18 THANK YOU RAFAEL E. ROJO

19 March 24, 2010 Conrad San Juan Condado Plaza 7:30 a.m. - 5:00 p.m.