Apartment investment and loan quality ratings of new loans on US apartment properties saw a drop in the second quarter of this. This increases the risk of price declines on multifamily properties in the event that rent growth stalls. According to a new study, the rate of rental income relative to loan balances fell year on year to 8.7% for high rise apartments in the US.

This rate is particularly disturbing given the fact that it rarely fell below 12% during the four decades leading up to 2006. The rate began to plunge just as the housing market peaked in this year. Commercial property, including apartments, in the large US coastal cities have led a nascent recovery in US commercial real estate as investors reach for yield. This buying has pushed up property values while rents have failed to keep pace.

Morgan Stanley's real estate investing division and NVR Inc. are betting on a bright future for Washington DC real estate, as they have just acquired a portfolio of over 5,600 residential lots in the city. The lots are located in nine new community developments throughout the metro area. The companies didn't disclose the specific locations of the lots, or the total cost of the purchases.

According to a Morgan Stanley executive, they chose to invest in the DC market because it is one of the most supply-constrained in the US in terms of residential real estate. NVR is a residential builder that operates in 25 different cities nationwide. The company has recently seen sales and earnings decline as the national housing market continues to slump. Revenues fell 13% year on year and orders for new homes were down 18%, with cancellations rising 12%.

Real estate investing in China continues to grow rapidly in both the commercial and residential sectors, this despite a concerted effort by the Chinese government to slow the market due to concerns over inflation.

It may be that the figures are nearing a peak as the government's tightening measures were only launched within the last several months and may begin to have a lagged effect soon. These measures include higher down-payment requirements and home purchase limits. The National Bureau of Statistics reported that for the January to February period alone, real estate development in the country rose by over 35%, and investment in the construction of residential property was up 35% as well. Commercial and residential sales together totaled CNY524 billion, which is a 27% gain from the previous year.