Investors Shift Sights to Latin America
Global investors seem to be shifting some of their focus away from Europe toward
Latin America, if recent data from Jones Lang LaSalle is any indication. The firm
found that total investments in Latin America rose 90%, from $3.6 billion in 2006
to $6.9 billion in 2007, while cross-border volume rose 37% to $3.4 billion.
In Mexico, for instance, volume was up a whopping 129% from $1.4 billion
in 2006 to $3.1 billion. Brazil, too, attracted investors, with the number of deals
climbing 67% last year to $3.8 billion.
Previously, investors saw the region as very risky, notes Steve Collins, a
managing director in Jones Lang LaSalle’s international
capital group. “For a long time, Latin America was just a
horrible place to be because there was no transparency,”
the Chicago-based executive says. “But things have started
to turn around and it’s becoming easier to see how you’re
going to get your money in investments in these areas.”
While deal levels in Latin America are surging,
European investments fell 4% last year, to $244.1 billion.
COLLINS: Continental Europe actually saw volume rise 7% to €173
“Latin America billion, but the United Kingdom was down 22% to €71 bil-
was a horrible lion. As the capital markets, pricing and cap rates began
place to be correcting last summer, Collins notes that many investors
because there started looking away from Europe and toward emerging
was no trans- markets in Asia and Latin America.
parency. Things Nevertheless, Collins notes that Europe is still a good
have started to place to deploy capital. Office remains the number-one
turn around.” choice on the Continent; investment in the sector
increased 6% to €128.7 billion, accounting for 52% of
total volume. Industrial deals accounted for 6% of the
total, or about € 14 billion, JLL reports, while retail plays slowed, to € 50 billion, or 21% of total investments.—Jennifer McCandless
Europe’s Hotel Pipeline Booms, Cash Disappears
While Lodging Econometrics’ data show the construction pipeline for
European hotels growing—949 projects totaling 163,919 rooms in Q4, from
Q3’s 854 projects and 145,636 rooms—the numbers are deceiving. Like the US,
Europe is facing a downturn in residential housing and a credit crunch that is
making financing for lodging projects scarce, notes Patrick Ford, president of
the Portsmouth, NH-based research firm.
The long-term nature of the development process is behind the discrepancy
between the data and current conditions. About half of the 475 hotels now
under way already have financing, says Ford, so they’re not impacted by the
tighter conditions. Another 267 projects are slated to start within the next year.
Deliveries should continue to be strong through 2009, he relates.
However, the executive expects projects that have not already obtained
funding to be delayed or cancelled. The only developments in the pipeline that
may still be able to get financing are smaller hotels, Ford notes, and even then,
“lenders are now very selective and are requiring a much greater down payment, much more developer equity into deals.”
For large projects, he says, “it’s all but impossible to locate financing at the
moment. For large, mixed-use facilities that include freestanding hotels, the marketplace is practically shut down.”
Further reducing the pipeline is a declining economy creating a softening in
demand, room rates, RevPAR and revenues. The result will be a reduction in
new project announcements, he says.—Jennifer McCandless
W HOTEL AND RESIDENCES
TO DEBUT IN MOROCCO
Marrakech, Morocco—Starwood Hotels
& Resorts Worldwide Inc. has moved its W
brand into North Africa. The W Marrakech
and the Residences at W Marrakech will
include a 150-room hotel and 68 villas.
The property is scheduled to open in mid-
2010 and will be owned by Dilam Hotel
Development S.A.S, a joint venture of
Ironstate Development Co., Logan
International and Alliance Group. The hotel
will be a core component of the mixed-use
Al Maaden Resort development.
SHCA WINS DESIGN CONTRACT
FOR FOUR MOSCOW BUILDINGS
Moscow—Swanke Hayden Connell
Architects has won the contract to design
four buildings within the Park City development. The properties are located in the
city’s historic center and are part of a
36-acre mixed-use master plan. Two of the
buildings will involve the reuse of existing
19th century breweries, while the remaining
two assets will be new construction. The
site will feature a hotel, residential, retail and
entertainment space. Construction will
begin sometime this year.
THREADGREEN PAYS € 14.3M
FOR GERMAN INDUSTRIAL SITE
Partners of London has bought a
31,835-sm facility here leased to United
Paper and Pannhorst GmbH. The firms
currently have 10-year commitments at
the two linked buildings. ThreadGreen
Industrial Ltd. bought the property, which
includes office, logistics and industrial
storage space, for € 14. 3 million.
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