lobal digest
Global Capital Targeting Emerging Markets
Disruption in the credit markets is wreaking havoc on global property investment
in developed regions, while emerging markets are seeing a surge of capital, says
Real Capital Analytics. The New York City-based firm reports a shift in cross-border transactions in favor of markets in Asia and South America, which are less tied
to CMBS issuances.
Germany, the US, Canada and Australia have witnessed a
plunge in property sales of more than 70% in the first two
months of 2008 compared to the same period a year ago. In
the UK and France, volume fell 40% to 50%. On the other
hand, investment in Asia and South America doubled 104%
and 106%, respectively. Further, acquisitions in Brazil, Russia,
India and China far outpaced the levels of investment record-
ed for the same period in 2007.
WILLIAMS: Some of the transactional drop-off in many developed loca-
The collapse of tions can be attributed to their reliance on the CMBS market,
CMBS “pulled says Steven Williams, an international consultant with RCA.
the rug from “CMBS was a huge part of the financial engineering of these
under the markets,” he says. “Once it collapsed, in essence, it pulled the
markets of rug from under the markets of Europe and the US.”
Europe and Despite pockets of growth, overall global sales volume
the US.” through February was off by 50% from that of a year ago,
with $86 billion of significant property sales reported. This
decline has been noted for every property type except for
developed land. Sales of office properties have been especially affected and are
down approximately 70%.
Nevertheless, the analyst says he expects the market to begin picking up as the
year progresses because of the vast amount of global equity still looking for a place
in real estate. “I’m quite bullish on a recovery, perhaps not on the scale of what we
saw in 2006 and 2007, but certainly strong investment activity rebuilding its
momentum over the next nine months,” says Williams.—Danielle Douglas
ProLogis Launches JVs in Middle East, India
Denver-based ProLogis has expanded its operations in the emerging markets of the
Middle East and India with two separate joint ventures. Partnering with Arcapita, a
global investment company headquartered in Bahrain, the industrial developer has
formed ProLogis Middle East. The new unit will acquire and develop a $1-billion
portfolio of logistics warehouse facilities in the Gulf Cooperation Council region—
Saudi Arabia, Kuwait, Bahrain, Oman and Qatar.
“This is an area with great potential, and it can be very difficult to get access
to land without working with a partner,” says Melissa Marsden, SVP of
investor relations for ProLogis. The JV will initially focus on Saudi Arabia,
where it plans to commence construction on its first sites during the second
half of the year. In fact, the country will house up to 70% of the partnership’s
total portfolio.
And in its first deal in India, ProLogis has teamed up with local developer K
Raheja Corp. Over the next three years, the entity will invest around $575 million
to build some 7. 5 million sf, with an initial focus on the cities of Mumbai,
Chennai, Dehli, Bengaluru, Kolkata and Pune. The partners recently purchased
27 acres of land near Pune and are negotiating other land transactions in a number of key markets.
“We’ve thought India was an attractive market for some time,” says Marsden.
“But similar to the GCC countries, it’s a market where it’s very difficult to gain a
foothold without a local partner.”—Danielle Douglas
SKANSKA BREAKS GROUND
ON £150M MIXED-USE TOWER
London—Groundwork has commenced
on the St. Botolphs, a 14-story, 560,000-
sf office and retail development here.
Stockholm-based Skanska is building the
£150-million project for British real estate
developer Minerva, which has already
preleased 84,000 sf to Lockton
International. A 2010 completion has
been targeted.
MEGA CO. TO OPEN ROMANIA’S
FIRST FACTORY OUTLET COMPLEX
Bucharest—Slated to open at the end
of this year, Mega Designer Outlets, the
first of its kind in Romania, is now
under way here. The 415,500-sf, €80-
million project will house approximately
80 stores, over 60% of which have
been preleased. Washington, DC-based
Mega Designer Outlets
Mega Co. is the owner and developer
of the project. During the past 17 years,
the company has delivered more than
1.8 million sf of commercial real estate
in the country.
IHG BRANCHES OUT TO TAIWAN
WITH FIRST HOLIDAY INN EXPRESS
Taichung, Taiwan—This city will welcome its first internationally branded
hotel this August, with the opening of
Holiday Inn Express Taichung Park. The
169-room property, owned and managed by InterContinental Hotels Group,
will be part of the Sunshine Plaza shopping complex. Esse Commerce
Development Co. is developing the
asset, one of 20 hotels in the pipeline in
China. ◆
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