(12-24) 10:10 PST NEW YORK, (AP) —

Panden Rota, a Nepalese producer of fine rugs, is about to become a Manhattanite, the owner of a sumptuous apartment in the luxurious downtown neighborhood of Battery Park City.

His primary residence will remain Katmandu, but his new home will allow him to spend more time at U.S. showrooms that display his rugs and with a brother and sister in New York. “I looked at many places and I decided that a Manhattan apartment will always hold its value,” he said.

Rota is part of a growing wave of foreigners who buy second homes in the U.S. for work and play and as an investment.

Cosmopolitan cities like New York and Miami have long served as second homes for affluent and accomplished foreigners. But the trend is growing. One in five American realtors has sold a home to a foreign investor in the past year, according to the National Association of Realtors.

The events of 2007 have made the U.S. much more affordable for international home buyers. Severe dollar declines against the euro and pound have made U.S. homes much cheaper for Europeans. But even foreign buyers without that sort of currency advantage are benefiting from sharp drops in housing prices at a time when problems in mortgage lending are keeping many Americans out of the market.

At the same time, many foreign real estate markets, especially in Europe, have experienced sharp increases in home prices.

“There are markets like Paris and London and the South of France where some home values have gone up 100 percent,” said Christian Voelkers of the Hamburg realtor Engel & Volkers Group. “At the same time, U.S. prices have either stayed put or come down.”

Volkers’ firm is eager to take advantage of this opportunity. Engel & Volkers, which caters to wealthy clients, plans to open 300 residential sales offices across the U.S. in the next few years. So far, it has offices in Florida, Connecticut and two in New York. The company said it is on track to open 30 more locations on the East Coast by the end of 2008.

The currency advantage is greatest for British citizens, given that each pound is worth well over $2. By contrast, the euro currently is worth about $1.45 while the Canadian dollar in recent weeks is hovering near parity with its U.S. counterpart.

“At this point the English are more actively looking in Manhattan than American buyers,” said Ivan Hakimian of New York’s Itzhaki Properties.

Mia Wilkinson, a transplanted Englishwoman who works for Rubloff Residential Properties in Chicago, deals often with British and other foreign executives transferred to the U.S. for a few years. “Before, people would stay in corporate rentals,” she said. “But now these same people are turning around and buying properties.”

Wilkinson, who has been in the U.S. six years, has bought property in Chicago herself.

The expansion of foreign real estate investment in the U.S. also means that areas that once were not popular with international buyers are now receiving interest. Doug Aitkin, who works for North Carolina’s World Trade Center, said the Research Triangle area Д comprising the cities of Durham, Raleigh and Chapel Hill Д is now getting inquiries from French and Scandinavian home buyers, a new phenomenon.

Constantine Valhouli, a principal with Boston’s Hammersmith Group, which advises real estate developers, said foreign home buying appears to have varied drivers in different cities. In Boston, property purchases by foreigners are strongly linked to the city’s booming biotechnology and life sciences industries. In addition, Boston venture funds are drawing large numbers of German, Swiss and Irish workers, some of whom take advantage of favorable dollar rates against the euro to help buy some real estate.

Even some foreign students at Boston’s large collection of colleges and universities are able to join the ranks of home buyers. “There are some Boston neighborhood where it makes sense for students to buy and some where it does not,” Valhouli said. For instance, many one-bedroom apartments in attractive neighborhoods near the colleges rent for $1,300 to $1,800 a month, which equals the mortgage payment on a condo worth $200,000 to $300,000.

Similarly, Charlie Jefferson, a Philadelphia developer, was surprised when two units in a new development in the University City area, home to the University of Pennsylvania, were purchased by foreign students. “We had never seen that before,” he said. “In the past we didn’t see foreign students with that kind of money.”

In Los Angeles, demand from wealthy South Koreans for attractive condo towers and mid-level rise buildings has helped revitalize the once forlorn downtown neighborhood, according to Johanna Gunther, a senior vice president with the Ryness Co. there. “Downtown has not been an attractive urban residential market until recently, but Korean demand has been a big factor in the change,” she said. In recent years, the South Korean government has loosened restrictions on foreign exchange transactions, facilitating a large rise in Korean purchases of U.S. properties.

And Scottsdale’s phlegmatic residential real estate market reportedly is getting a boost from Canadian buyers eager to enjoy Arizona’s dry warm climate.

The National Association of Realtors found that 7.3 percent of the houses sold last year in Florida were sold to foreign buyers. Miami in particular is a magnet for buyers from throughout Latin America and Europe, helping to mitigate the fallout from the area’s housing slump.

Despite the news waves of foreign buyers in many U.S. markets, few suggest international investors by themselves can entirely offset the nation’s housing crisis, brought on by the failure of many subprime mortgage loans made to home buyers with weak credit histories. Hammersmith Group’s Valhouli stressed that the fact that international investors are helping to prop up some troubled housing markets only emphasizes the level of stress in residential real estate.

“Relying on foreign real estate investors is fundamentally as risky as relying on subprime mortgages,” he said, noting that both phenomena distort demand and can conceal the depths of the problem U.S. home buyers and sellers face. “Foreign buyers aren’t going to save the U.S. housing market. They’re just a temporary fix like a finger in the dike. Fundamentals matter.”

Not many traders or other creatures were stirring on Wall Street the day before Christmas amid light activity in an abbreviated session.

Major U.S. stock indexes opened higher on Monday, with financials getting a boost from reports that Merrill Lynch & Co. («www.businessweek.com») has signed some deals designed to pump nearly $6 billion in much-needed cash into its coffers.

On Monday, the Dow Jones industrial average was trading 92.26 points, or 0.58%, higher at 13,542.91. The broader S&P 500 index rose 9.74 points, or 0.66%, to 1,494.18. The tech-heavy Nasdaq composite index gained 15.66 points, or 0.58%, to trade at 2,707.36.

Merrill seized the spotlight Monday on news of deals intended to shore up the financial giant’s balance sheet. Reuters and other wires services reported Monday that Merrill, hit by huge subprime mortgage losses, said it would boost its capital by raising up to $6.2 billion in a private placement with Singapore’s Temasek Holdings and Davis Selected Advisors, a U.S.-based asset manager. Temasek will buy $4.4 billion of Merrill stock and has the option to buy $600 million more by March 28. Davis Selected Advisers, a U.S.-based asset manager that also runs mutual funds, will buy $1.2 billion in Merrill shares.

The deal would give Temasek a nearly 10% interest in the embattled brokerage and follows similar transactions with sovereign wealth funds undertaken by peers such as Citigroup («www.businessweek.com»), Morgan Stanley («www.businessweek.com») and UBS («www.businessweek.com») in recent weeks.

The announcement of the deal is likely a prelude to a huge write-down for the fourth quarter on Merrill Lynch’s subprime mortgage-related securities. Merrill’s third-quarter write-down of $8.4 billion triggered a $2.3 billion net loss, Reuters reported.

Earlier in the day, Merrill announced that it plans to sell most of its middle-market lending business to GE Capital, a unit of General Electric («www.businessweek.com»).

The financial terms weren’t disclosed, but the acquisition is slated to close in the first quarter of 2008 and will add more than $10 billion in assets and $5 billion in commitments to GE Capital Commercial Finance’s base of $260 billion. The most important aspect of the deal, however, is that it will allow Merrill to raise about $1.3 billion in capital for other parts of its business, including its porfolio of asset-backed securities.

Merrill shares were up 4.0% Monday.

The Christmas holiday makes this a quiet week for new economic data, but those who return to work before the new year will be watching the November durable goods and December consumer confidence reports due out on Thursday, as well as December’s new home sales figures to be released on Friday.

January NYMEX crude oil dropped 55 cents to $92.76 per barrel as traders focused on a warmer-than-usual outlook for the next two weeks, suggesting less demand for heating oil as the new year begins, CNBC Business News said. Oil prices climbed $2 per barrel on Friday, so there could be some profit-taking going on.

Among the stocks in the news Monday, Alcoa Inc. («www.businessweek.com») agreed to sell its packaging and consumer businesses to New Zealand’s Rank Group Limited for $2.7 billion in cash. The deal is expected to be completed by the end of the first quarter 2008. Shares rose 1.6%.

Consolidated Water Co. Ltd. («www.businessweek.com») fell 22.2% and could take as much as a 50% hit if the company can’t reach a viable agreement the British Virgin Islands, its only customer for a desalination plant that could account for up to a quarter of the company’s current earnings, according to Barron’s.

Vonage Holdings («www.businessweek.com») and AT&T («www.businessweek.com») have entered into a definitive agreement to settle their patent dispute. The companies had agreed in principle to a settlement on Nov. 7.

European stocks were trading higher Monday. In London, the FTSE 100 index gained 0.70% to trade at 6,479.30. In Paris, the CAC 40 index climbed 0.21% to 5,614.28. Germany’s DAX index rose 1.70% to trade at 8,002.67.

Major Asian markets finished higher. Japan’s Nikkei 225 index advanced 1.50% to 15,257.00. In Hong Kong, the Hang Seng index rose 1.82% to 28,128.80. The Shanghai composite index bounced 2.60% to trade at 5,234.26. Treasury market

Treasury yields bounced in concert with equities. The 10-year note was lower in price at 100-14/32 for a yield of 4.205%, while the 30-year bond was lower at 106-11/32 for a yield of 4.607%.

By ROSALIE WESTENSKOW
UPI Correspondent
WASHINGTON, June 8 (UPI) — A national renewable energy portfolio standard could decrease greenhouse gas emissions and simultaneously shrink electric bills, some experts say.

The mandate would require electric utility companies to generate a specific percentage of their power from renewable energy sources or buy renewable energy credits from others. Almost half of the states already have renewable portfolio standards in place — 23 plus the District of Columbia, and including Oregon and New Hampshire, the two most recent to pass RPS legislation.

However, this medley of standards has created confusion among electricity providers, many of whom operate in multiple states, said Marilyn Brown, a commissioner for the National Commission on Energy Policy.

“Many large companies now … face this hodgepodge of different rules,” she told United Press International. “Different renewable resources qualify in one state and not the other, so it really is a competitiveness issue. How can the U.S. compete and be effective if the regulations aren’t uniform?”

A federal RPS would attempt to reconcile the current patchwork of standards and distribute the burden of renewable-energy development among the states, eliminating so-called “free-rider” states that benefit from the efforts of their neighbors but impose no mandates within their own borders.

Adopting a federal RPS isn’t a new idea. Various U.S. policymakers have proposed a national standard 17 times since 1996, but none has passed into law. This year, the legislation comes from Sen. Jeff Bingaman, D-N.M., requiring that 15 percent of electricity come from renewables by 2020 and allowing states to create higher standards if they chose to do so.

Although not incorporated in any bill at the moment, Bingaman plans to propose an amendment creating a federal RPS to the Senate’s main energy bill — the Renewable Fuels, Consumer Protection and Energy Efficiency Act of 2007 — when it comes to the floor sometime next week.

Despite failure of similar legislation in the past, the prospects for approval look good this year, said Barry Rabe, professor in the Gerald Ford School of Public Policy at the University of Michigan.

“These policies have proven popular in a number of states,” he said. “The majority of American citizens already live in Congressional districts with an RPS.”

And it looks like more states will join their ranks this year, namely Michigan, North Carolina and Illinois, where legislators are considering making the current voluntary standard mandatory.

Passing a federal RPS soon may be necessary to avoid costly lawsuits brought by frustrated utility companies against the states they operate in, said Chris Cooper, co-author of “Renewing America,” a report scheduled for release next week that advocates a national standard.

Utility companies that initiate litigation have a good chance of winning because many RPSs erect barriers to the trade of goods with other states — a power denied the states in the Constitution.

“Some states won’t recognize renewable energy from other states,” said Cooper, executive director of Network for New Energy Choices.

For instance, Pennsylvania’s legislature recognizes energy generated from clean coal as renewable, but New Jersey’s does not, creating confusion for utilities in both states over whether imported electricity from the other can be used to meet their state requirements.

“Because that question is open, it could be taken to court by the regulated utilities who could say, ‘Look this is a violation of interstate commerce,’” Cooper told UPI. “Now, should one of those court cases be successful, the practical effect is that it would nullify the state’s RPS mandate … (then) you’d have all of this copycat legislation that would collapse what is our national energy strategy at the moment.”

Most importantly, some proponents of a federal standard say it will cut costs for consumers. One of the key ways an RPS could save money is by decreasing the use of natural gas to generate electricity.

“The reason why that’s important is because the natural gas market has been extremely volatile, and there are lots of indications it’s only going to go up,” said Benjamin Sovacool, co-author of the “Renewable America” report.

Investments in renewable resources will reduce the use of natural gas, driving down demand and, therefore, price for natural gas, Sovacool said. This yields net savings.

“So the utilities save money and they can pass on those savings to rate payers,” he said.

Large-scale production of renewable energy induced by a federal RPS could also decrease costs, according to the “Renewable America” report, which points to wind power as an example.

When the Department of Energy installed its first commercial wind turbines in 1980, wind energy cost about 81 cents per kilowatt-hour. By 2004, when the wind turbine capacity had increased from a few megawatts to 6,000, the cost fell to 5 cents per kilowatt-hour.

Some utility companies are pushing for a federal RPS precisely because of this rationale, including Alliant Energy, a power company with its headquarters in Wisconsin.

“We believe that a national RPS would help to create a floor for renewables and give us and the wind turbine industry a greater level of certainty,” said Scott Smith, spokesman for Alliant, which just received approval to build its first wind farm. “Instead of a boom-and-bust cycle, it will help to solidify the demand which will create a robust market.”

But RPS opponents say the very fact renewables need government regulations to be competitive proves their economic inferiority.

“Renewable energy is more expensive,” said Ben Lieberman, senior policy analyst with The Heritage Foundation, a conservative think tank. “If they’re as good as their proponents say, they should be able to compete without a federal mandate.”

Renewables, such as wind and solar, can also be less reliable than other energy sources, making them less valuable.

“I think these RPSs are a bad idea, and if 10 or 20 states want to do a bad idea, that doesn’t mean we should force it on all 50,” Lieberman said.

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