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International Realty News & Trends

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  • Re : International Realty News & Trends

    Fitch cuts China’s property developer Guangzhou R&F to ‘restricted default’

    Reuters
    Published July 18, 2022
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    Fitch Ratings on Monday downgraded China’s Guangzhou R&F Properties Co Ltd. and its unit R&F Properties (HK) to “restricted default” (RD), one notch above “default”, after the property developer extended maturities for its offshore bonds.

    Last week, R&F received consent from its creditors to extend maturities for $4.9 billion worth of offshore bonds, the latest such move by a Chinese developer to avoid default.

    In assigning the restricted default rating, Fitch said approval from creditors was necessary for the company to avoid default given its limited liquidity.

    Restricted default ratings indicate an uncured payment default or distressed debt exchange on a bond, without the entity entering into bankruptcy or other formal winding-up procedure.

    A growing nationwide homebuyers’ boycott has rekindled investor concerns about China’s slumping property sector, which accounts for a quarter of the economy, and raised fears banks could face hefty writedowns.










    Fitch cuts China’s property developer Guangzhou R&F to ‘restricted default’ - The Globe and Mail

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    • Re : International Realty News & Trends

      Home sales in USA fall again in June as prices hit new record

      Read more at:
      https://realty.economictimes.indiati...ecord/93031903



      Sales sank 5.4 percent compared to May, toppling to a 5.12 million annual rate, far below what economists were projecting, the National Association of Realtors (NAR) reported.


      WASHINGTON: US home prices hit another new peak in June amid short supply, while existing home sales fell for the fifth straight month amid the ongoing rise in mortgage rates, according to industry data released Wednesday.

      Sales sank 5.4 percent compared to May, toppling to a 5.12 million annual rate, far below what economists were projecting, the National Association of Realtors (NAR) reported.

      That was the weakest sales pace since January 2019, excluding the start of the pandemic in 2020, NAR Chief Economist Lawrence Yun told reporters.

      After topping $400,000 for the first time ever, the median national home price continued to rise, hitting $416,000 last month, the data showed.

      "A combination of higher prices and higher mortgage rates clearly has shifted the dynamics in the housing market," Yun said. "Even people who want to buy are simply priced out, given these affordability challenges."

      With inflation soaring and American families struggling to make ends meet, the Federal Reserve has been aggressively raising interest rates to try to cool demand and ease the pressure. But that has put homes out of reach for many.

      Separate data from the Mortgage Bankers Association released Wednesday showed demand for home loans fell 6.3 percent last week, in the third consecutive decline.

      The Fed is watching the housing market closely for signs that scorching inflation might be easing.

      While sales increased for homes above $500,000, NAR said there were large double-digit declines in the lower price categories, reflecting the affordability challenge and the fact rising prices are pushing some homes into higher price buckets.

      Yun noted that price increases are slowing, while weakening demand is allowing inventories to build up, reaching 2.7 months' supply in June from just 1.8 in January.

      But, he said, even if the housing market returns to something more like normal by year end, with "more manageable" price increases, "I don't foresee a nationwide price decline."

      Sales fell 14.2 percent compared to June 2021, while the median price is up 13.4 percent, according to the data.

      Existing home sales make up 90 percent of the real estate market.
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      • Re : International Realty News & Trends

        Evergrande's debt revamp to provide roadmap on tackling China property crisis

        Read more at:
        https://realty.economictimes.indiati...risis/93110557



        With more than $300 billion in debt, Evergrande has been at the centre of China's property quagmire since last year as the company struggled to repay suppliers, creditors, and investors in wealth management products after Beijing launched measures to control developers' high debt levels.


        HONG KONG: China Evergrande Group, the world's most indebted developer, is expected to announce this week a debt restructuring plan that will not only determine its future but also indicate how Beijing plans to overcome a deepening property sector crisis.

        With more than $300 billion in debt, Evergrande has been at the centre of China's property quagmire since last year as the company struggled to repay suppliers, creditors, and investors in wealth management products after Beijing launched measures to control developers' high debt levels.

        The liquidity squeeze at Evergrande, whose entire $22.7 billion worth of offshore debt including loans and private bonds is deemed to be in default, subsequently engulfed other Chinese developers as their credit conditions deteriorated, and drove several smaller firms to defaults.

        Evergrande's eagerly anticipated offshore-debt restructuring plan, which China's formerly top-selling developer has said it will announce by end-July, is expected to serve as a template for its cash-starved peers.

        "We're all waiting for Evergrande's proposal to get an idea of the terms and it'll set a benchmark," said a senior executive of a property developer who has done dollar-bond swaps and is currently in talks with advisers on a restructuring.

        "No firms would want to be the first because that'd be tremendous pressure."

        The restructuring proposal, though, will come at a time when China's macroeconomic conditions have deteriorated and the property sector is witnessing unprecedented challenges.

        The world's second-biggest economy, of which the property sector accounts for a quarter, only narrowly missed a contraction in the second quarter.

        Moreover, Beijing is scrambling to reassure homebuyers who are threatening to stop paying mortgages on unfinished housing projects, in rare protests that's set to spur a shakeout among developers.

        Some offshore creditors of Evergrande told Reuters that there was still disagreement on how it should repay and reorganise the debt, which could result in a delay in implementing the restructuring.

        But the developer's newly appointed CEO Siu Shawn told the 21st Century Business Herald late on Friday that the firm had reached basic consensus with several major offshore creditors on the principles and framework of the restructuring proposal.

        Evergrande declined to comment.

        Debt obligations

        Investors will also be closely watching the role the state will play in the restructuring proposal.

        Evergrande began talks with its offshore creditors about a restructuring proposal earlier this year, after advisers for a group of dollar bondholders demanded more transparency from the developer.

        Reuters reported in May, citing sources, that Evergrande was considering repaying offshore public bondholders owed around $19 billion with cash instalments and equity in two of its Hong Kong-listed units.

        After unveiling the restructuring proposal, the firm aimed to reach consensus with its creditors on specific terms by the end of this year, a separate source told Reuters earlier this month.

        In mainland China, Evergrande has been extending its debt repayment obligations, though creditors are growing impatient.

        The developer's latest repayment extension proposal on a 4.5 billion yuan ($666.7 million) bond was voted down this month, while small suppliers, who are owed money, are also threatening to stop paying bank loans.

        Evergrande also aimed to release a simple restructuring plan for its onshore debt as early as this week, financial information provider REDD reported on Friday.

        Raymond Cheng, head of China and Hong Kong research at CGS-CIMB Securities, said Evergrande's proposal should also outline what it will do with its unsold projects and existing land bank, which would have a direct impact on the broader property market.

        "Investors will not look at Evergrande's proposal solely from a company perspective, but also a macro perspective," said Cheng.
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        • Re : International Realty News & Trends

          China's Country Garden plans $360 million share sale to refinance debt

          Read more at:
          https://realty.economictimes.indiati...-debt/93164488



          The transaction comes after a rally in property stocks earlier this week following reports Beijing plans a real estate fund worth up to $44 billion to help developers resolve a crippling debt crisis.


          HONG KONG: Country Garden Holdings Co Ltd said on Wednesday it plans to raise HK$2.83 billion ($360.23 million) from a share sale to refinance offshore debt, sending Hong Kong-listed shares of the Chinese developer and the wider property sector tumbling.

          The transaction comes after a rally in property stocks earlier this week following reports Beijing plans a real estate fund worth up to $44 billion to help developers resolve a crippling debt crisis.

          However, a steep discount in Country Garden's equity sale has stoked investor concerns about the refinancing needs of other Chinese developers who are scrambling to raise funds offshore after last year's debt crunch dried up market liquidity.

          Country Garden, China's top developer by sales, will issue 870 million new shares, or 3.62% of the enlarged share capital, at HK$3.25 each, to professional and institutional investors in the sale, the company said in a filing.

          The issue price represents a 12.63% discount to Tuesday's close of HK$3.72 each, it added. UBS is the placing agent. The proceeds will be used to refinance existing offshore debt, general working capital and future development purposes.

          Country Garden's shares plummeted 14.5% to HK$3.18 on the Hong Kong bourse by Wednesday afternoon, having gained 18.5% in the previous two sessions. The developer's property services unit shed nearly 22%.

          In the wider market, Hang Seng Mainland Properties Index plunged 6%. Smaller peer CIFI Holdings lost 11%.

          The deal was upsized and at least three-times oversubscribed, according to a source with direct knowledge of the matter, who could not be named as he was not permitted to speak to media.

          Despite the oversubscription, the person warned other Chinese property companies would need to see a significant improvement in market sentiment to tap the funding markets.

          Country Garden's upcoming offshore debt obligations include a $440 million syndicated loan due in December and a $625 million bond due in January, according to analysts and data by Refinitiv.

          That suggests the developer might need to do more refinancing ahead of the maturities.

          It also has onshore bonds worth 4 billion yuan ($591.27 million) maturing this year.

          While Country Garden's share sale is credit positive for the company, analysts said it shows how cash-starved the developer is given it is a small-sized deal with steep discount.

          Investors now worry that could lead to more equity financing in the market.

          Jefferies analyst Shujin Chen said in a note he expects downside risk in August for most private developers, considering limited policy support, a peak in bond maturities and disappointing expected first half financial results.

          "Even some of the best non-SOE (state-owned) developers cannot guarantee their payments for next year's debt to mature," Chen said.
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          • Re : International Realty News & Trends

            Hong Kong June home prices fall to the lowest in 18 months

            Reuters
            2 minute read Register now for FREE unlimited access to Reuters.com

            HONG KONG, July 27 (Reuters) - Hong Kong private home prices fell at a faster pace in June and dropped to the lowest since December 2020, official data showed on Wednesday, as homebuyers stayed on the sidelines due to an uncertain outlook and rising interest rates.

            Home prices in one of the world's most unaffordable housing markets slipped 1.1% last month from a month earlier, compared with a revised 0.2% decline in May.

            Rates in Hong Kong tend to move in lockstep with U.S. rates, as its currency is pegged to the greenback, although they have lagged their U.S. equivalents in recent months.

            But the market expected major banks in the city would likely raise their best lending rates this week, if the U.S. Federal Reserve raises rates sharply as expected later on Wednesday.

            One month Hibor - the Hong Kong Interbank Offered Rate, a benchmark used for pricing mortgages - last week rose to its highest since May 2020.

            "A rise in interest rates will affect housing transactions in the short term," said Martin Wong, Greater China head of research & consultancy at Knight Frank, adding that it would have more of a psychological impact rather than an actual impact of lowering buyers' repayment ability.

            Home prices in the financial hub have dropped 3.4% so far this year.

            Hong Kong's economy buckled this year under some of the world's most stringent restrictions to contain COVID-19 outbreaks but sentiment improved after the city eased most of the measures and there were waves of new development launches.





            Hong Kong June home prices fall to the lowest in 18 months | Reuters
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            • Re : International Realty News & Trends

              Abu Dhabi's Aldar Properties posts 54% jump in profit in Apr-June 2022

              Read more at:
              https://realty.economictimes.indiati...-2022/93189645



              Profit attributable to shareholders came in at 803.99 million dirhams ($218.91 million) for the three months to June 30, compared with 520.83 million dirhams a year earlier.


              DUBAI: Aldar Properties, the builder of Abu Dhabi's Formula One motor racing circuit, reported a 54% rise in second-quarter profit on Thursday, helped by record sales on strong local and international demand.

              Profit attributable to shareholders came in at 803.99 million dirhams ($218.91 million) for the three months to June 30, compared with 520.83 million dirhams a year earlier.

              Group sales in the quarter rose 33% to 3.12 billion dirhams.

              The Abu Dhabi developer also said it signed an agreement with Abu Dhabi state fund Mubadala Investment Company to acquire four commercial towers that are part of Abu Dhabi Global Market, the emirate's international financial centre.

              The Al Sila, Al Sarab, Al Maqam and Al Khatem towers, which have a total net leasable area of 180,0000 square metres, are valued at 4.3 billion dirhams, it said.

              Aldar's chief financial and sustainability officer Greg Fewer said in a call with reporters the company had 5 billion dirhams of further equity capital that would be deployed over the next 12 months.

              The Central Bank of the United Arab Emirates said on Wednesday it was raising its base rate by three quarters of a percentage point to 2.4% effective from Thursday, moving in parallel with the U.S. Federal Reserve's increase as its currency is pegged to the dollar.

              A correlation between home sales and long-term interest rates is not as direct for Aldar, Fewer said, because the company has a lot of cash buyers.

              But borrowing costs would be impacted, he said.

              "We have been very fortunate pre-hedged and purchased swaps in the last 12 months when rates were quite attractive. So we have already locked in well over a billion dirhams of fixed rates in anticipation of the acquisitions that we have been doing," he said.
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              • Re : International Realty News & Trends

                Evergrande offers sweetener for debt revamp as China property crisis worsens

                Read more at:
                https://realty.economictimes.indiati...rsens/93230829



                Evergrande's restructuring proposal, which was thin in details, comes as China's property sector, a key pillar for the world's second-largest economy, lurches from one crisis to another. The sector has seen a string of debt defaults by cash-squeezed developers.


                HONG KONG: China Evergrande Group will offer its offshore creditors asset packages that may include shares in two overseas-listed units as a sweetener, the developer said on Friday, as a stifling liquidity crisis in the property sector continues.

                The two listed units are Evergrande Property Services Group Ltd and electric vehicle maker China Evergrande New Energy Vehicle Group Ltd, the embattled developer said in an update on its preliminary restructuring proposal, a move that was widely expected by creditors.

                Evergrande's restructuring proposal, which was thin in details, comes as China's property sector, a key pillar for the world's second-largest economy, lurches from one crisis to another. The sector has seen a string of debt defaults by cash-squeezed developers.

                With more than $300 billion in liabilities, Evergrande, once China's top-selling developer has been at the centre of the crisis and its debt restructuring plan is seen as a possible template for others.

                A person familiar with the restructuring plan separately told Reuters Evergrande aimed to wrap up group due diligence work next month before starting negotiations with creditors on specific terms.

                The developer's goal is to present by November a restructuring plan with more details and which would have key creditors' approval, said the person, declining to be named as he was not authorised to speak to the media.

                Evergrande declined to comment.

                On Friday, Evergrande said in the restructuring update that the due diligence process was continuing, given the group's size and complexity and the "dynamics the group finds itself in".

                It expected due diligence work on the group to be completed in the near future, and aims to announce a specific plan in 2022.

                The world's most indebted property developer's entire $22.7 billion worth of offshore debt including loans and private bonds is deemed to be in default after missing payment obligations late last year.

                The developer began talks with offshore creditors about the restructuring proposal earlier this year, after advisers for a group of offshore bondholders demanded more transparency from the developer.

                Some bondholders were left unimpressed by the update on Friday.

                "It is disappointing but sort of expected... There is nothing they could offer because we all know the company is pretty much a zombie now," said one onshore Evergrande bondholder.

                The bondholder said he had been following developments related to the offshore restructuring to get clues on what Evergrande might do with its onshore debt. He declined to be named as he was not authorised to speak to the media.

                Resuming work

                Last week, the developer said a preliminary probe found 13.4 billion yuan ($1.99 billion) in deposits in Evergrande Property Services were used as collateral for pledge guarantees to facilitate financing by the group and seized by banks.

                The seized amount could wipe out most of the cash the unit was holding, analysts had said.

                Evergrande is pushing ahead with the disposal of its Hong Kong headquarters via a tendering process that ended this week, another source said. The sale proceeds of the Hong Kong tower would be used to repay offshore creditors.

                In its Friday statement, Evergrande expected it would take a relatively long time for the business to restore orderly operations and asset value for all stakeholders, due to the state of the real estate markets in China and the overall size of the company's assets and liabilities.

                It posted contracted sales of 12.3 billion yuan in the first six months, compared to 356.8 billion yuan a year ago, and resumed construction of 96% of its pre-sold and undelivered projects.

                In a separate statement on the company website, Evergrande said company sales have "gradually restored" since March as homebuyers regained some confidence after it guaranteed home delivery.

                It has also acquired new financing of 2.57 billion yuan ($381.12 million) in the first half of the year.

                Evergrande said it cut management staff at its headquarters by 67% to 712 people and at the local project level by 54% to 776 people to cut costs.

                China's economy, of which the property sector accounts for a quarter, only narrowly missed a contraction in the second quarter. A growing revolt by homebuyers this month who are threatening to stop paying mortgages on unfinished projects, has further clouded the outlook for the sector.

                Evergrande said it was making its "best effort" to resume work and construction and the group had "partially or completely resumed" construction of 96% of its pre-sold and undelivered projects.
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                • Re : International Realty News & Trends

                  Vonovia to sell properties, consider new investors


                  Reuters
                  1 minute read

                  A logo of German real estate company Vonovia, is pictured during a news conference in Duesseldorf, Germany, March 6, 2018. REUTERS/Thilo Schmuelgen


                  DUESSELDORF, Germany, Aug 3 (Reuters) - Vonovia (VNAn.DE), Germany's largest residential landlord, is considering a range of measures to secure access to capital as interest rates rise, including property sales and joint ventures, it said on Wednesday.

                  It has earmarked 13 billion euros ($13.2 billion) worth of properties for sale and is looking into the possibility of new investors who could invest in its real estate portfolios, it said.

                  It also said it was under no time pressure to agree joint venture partnerships with investors.

                  "In the current market environment we want to be particularly prudent and identify the right deals and the right timings," it said in presentation slides.

                  For the first half of 2022, Vonovia posted a 36% jump in core profit (FFO) to 1.06 billion euros and affirmed its guidance for 2022 core profit of 2.0 to 2.1 billion euros.








                  Vonovia to sell properties, consider new investors | Reuters
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                  • Re : International Realty News & Trends

                    China Evergrande to get $818 million for giving up land use rights for soccer stadium

                    Read more at:
                    https://realty.economictimes.indiati...adium/93366948



                    In a filing to the Hong Kong stock exchange late Thursday, Evergrande said "the group's liquidity issue has adversely affected the development of and construction on the land" in Guangzhou.


                    BEIJING: Embattled Chinese property giant Evergrande has cancelled a contract to build a football stadium in a southern city in return for 5.52 billion yuan ($818 million), it said in a filing.

                    The real estate behemoth has been involved in restructuring negotiations after racking up $300 billion in liabilities in the wake of Beijing's crackdown on excessive debt and rampant speculation in the property sector.

                    Last week, the company failed to meet a self-imposed deadline to publish a preliminary restructuring proposal, although it said it has made positive progress.

                    In a filing to the Hong Kong stock exchange late Thursday, Evergrande said "the group's liquidity issue has adversely affected the development of and construction on the land" in Guangzhou.

                    Evergrande entered a contract with the city's authorities in 2020 for use of the land, designated for sports and industrial purposes.

                    The contract allowed for commercial and sports uses of the land for 40 years, as well as other business uses for 50 years, the filing said.

                    Evergrande had started construction, including the building of the Guangzhou Evergrande Football Stadium, which was set to have at least 80,000 seats, it said.

                    The latest refund will enter a project escrow account designated by the government and will be used to settle debts relating to the deal, Evergrande said.

                    "It is expected that the group will record a loss of approximately 1.255 billion" yuan over the total book value of the land along with buildings, structures and other items at the site after deducting the refund, Evergrande said.

                    Evergrande, one of China's biggest developers, has scrambled to offload assets in recent months, with chairman Hui Ka Yan paying off some of its debts using his personal wealth.

                    It has also found a potential buyer for its Hong Kong headquarters, according to earlier media reports.

                    Its troubles are emblematic of the problems rippling across China's massive property sector, with smaller companies also defaulting on loans and others struggling to raise cash.

                    Cash-strapped developers have increasingly struggled to deliver projects on time, sparking mortgage boycotts from angry homebuyers in many cities.
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                    • Re : International Realty News & Trends

                      In New York, renters desperate as soaring rents exacerbate housing crisis

                      Read more at:
                      https://realty.economictimes.indiati...risis/93456754



                      Renting in New York has long been a struggle, but recently costs have skyrocketed, jumping an average 20.4 percent in the second quarter of this year alone, according to the housing search website StreetEasy.

                      NEW YORK: In mid-May, Paula Sevilla and her roommates joined the many New Yorkers suffering under the city's crushing housing crisis, which has seen rents soar in the pandemic's wake.

                      The tenants argued their landlord had violated rules requiring sufficient notice but ultimately were told if they would have to pay an additional $800 per month if they wanted to stay at their Brooklyn rental.

                      Sevilla and one roommate began a grueling search for new housing in a market that over the past year has spawned countless apartment search horror stories.

                      After two months of searching, some 30 apartment visits and constant stress, they finally found a two-bedroom spot for $3,000 dollars per month.

                      Renting in New York has long been a struggle, but recently costs have skyrocketed, jumping an average 20.4 percent in the second quarter of this year alone, according to the housing search website StreetEasy.

                      And finding a home increasingly takes longer, with long lines of applicants vying for space.

                      "One time we lost an apartment because we turned in an application four minutes too late," recounted Sevilla, a 26-year-old originally from Spain.

                      - Boiling point - Draconian prerequisites to rent in New York aren't new: earn income 40 times the monthly rent, have perfect credit history, present the last two years of tax returns and current bank balances.

                      And the city's housing crisis has been simmering for years, with construction of units lagging behind a growing population.

                      Now, as hundreds of thousands of people who fled the city during the pandemic's early days return -- along with the normal flow of transplants to America's cultural and economic nexus -- the situation is growing untenable.

                      There are "too many clients and not enough apartments," said Miguel Urbina, a real estate agent.

                      In some cases, it's not even enough to arrive first or offer more than the asking price to owners, which are often large firms or investment funds, especially in Manhattan.

                      Sevilla makes $75,000 annually, slightly more than the average salary in New York -- but it's not enough to rent on her own.

                      In New York, renters must often also pay significant broker fees to rental agents, generally at least between one month and 15 percent of the annual rental cost.

                      Many people who stayed in the city in 2020 and 2021 signed leases at a discount, but now many landlords are bumping those prices back up -- pushing out more than a third of tenants who can't afford the increases, according to StreetEasy.

                      Even New Yorkers lucky enough to live in rent-stabilized apartments -- approximately one million units and two million tenants, according to city data -- are not immune to the increases.

                      Those rents can only be raised based on a vote by the city's rent guidelines board, whose members are appointed by the mayor.

                      For eight years under Bill de Blasio, the highest increases were 1.5 percent for one-year leases -- but under the board appointed by new mayor Eric Adams, rents are set to see their sharpest rise in nearly a decade.

                      In June, the board approved a 3.25 percent increase for one-year contracts and five percent for two years, which will affect many of the city's residents with limited means and triggered outrage among housing rights advocates.

                      - 'Staggering financial burden' - Manhattan families spend some 55 percent of their income on rent, a figure that is 43 percent in Queens and 60 percent in Brooklyn, according to StreetEasy data.

                      "Rent is becoming a staggering financial burden," read a recent report from the online real estate portal.

                      Gia Elika, the owner of a real estate agency, says average rent in Manhattan is some $5,000 a month -- but in a city of stark class division, some agencies are offering monthly rents of $140,000 on Fifth Avenue.

                      The shocking price tags are driving more middle-class families and young people like Sevilla to seek housing in neighborhoods historically occupied by immigrants, Latinos and African Americans, fostering relentless gentrification.

                      Elika told AFP that while "there is always a shortage of housing" in New York, "now it's magnifying" with unprecedented prices.

                      According to the Washington-based policy research group Up For Growth, in 2019, the New York metropolitan area needed some 340,000 more units.

                      Rising interest rates in the face of rampant inflation has aggravated the crisis by pushing would-be buyers to rent, in a market "hampered by historically low inventory," according to Lee's report.

                      Decades-old zoning restrictions limit building size in some areas is one barrier, along with construction costs, limited public housing and legislative foot-dragging that has seen state and local politicians largely put off solving an increasingly pressing problem.

                      And the outlook is grim: much of the skyscraper boom in Manhattan has been for luxury and commercial purposes, and despite high-rise construction in Brooklyn, Queens and New Jersey, agents don't foresee prices to quit rising any time soon.
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