February 8th, 2010
Olgga Architects took an inventive approach to creating student housing in Le Havre, France, by building a 100-unit complex using recycled shipping containers. The result is stylish student housing that is portable, affordable, durable and eco-friendly.
Called the “Crou”, the 2,841-meter (30,700 SF) pyramidal structure stacks the shipping containers on top of each other. The complex has individual rooms for students with areas for living, studying and sleeping. Another plus is that the Crou puts surplus containers to use instead of letting them rust in a landfill.
February 4th, 2010
Capital is flowing out of the Middle East and being invested in real estate across the globe, according to Nicholas Maclean, Managing Director, CB Richard Ellis, Middle East. “The outflow of capital from the Middle East to be invested into real estate properties worldwide has been higher than the influx of global capital into real estate properties in the Middle East. The UAE, in particular, has been looking to diversify its investments and part of the reason has been the lack of transparency within this region.”
Europe and the Far East have received the lion’s share of Middle East investment, with India and China perceived as strong growth markets. Additionally, United Arab Emirates capital is being infused into Abu Dhabi’s office and hospitality sectors. “Capital spent as FDI into real estate within the Gulf Cooperation Council represents only 11 percent of the total. Cross-border activity in the world has exceeded 50 percent and so we have a great opportunity to be the recipient of more investment,” Maclean said.
In terms of where the Middle East is placing its investment dollars globally, “London, Paris and Germany have been the largest recipients in Europe while Hong Kong, Singapore and Australia saw the largest inflows in the regions in the Far East. Knowledge and liquidity have been the key driving forces for the Middle East investors transferring capital to these areas. Institutional investors from the Middle East are investing in commercial developments in these markets while individual investors are looking at residential properties in the UK,” Maclean said.
To learn more about the Middle East and its real estate market, listen to Rochdi Younsi, director in the Middle East and Africa practice of Eurasia Group, analyze the major players in real estate and the new investment opportunities in the Middle East.
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Posted by: Tom Silva
Categories: Development, Economics, Office, Residential
Tags: Abu Dhabi, CB Richard Ellis Middle East, Dubai, Gulf Cooperation Council, Jumeirah, Middle East, Offshore real estate funds, Saudi Arabia, Sheikh Zayed Road, United Arab Emirates, Zawya
February 3rd, 2010
Washington, D.C. office leasing is on the upswing for the first time in a year. Not surprisingly for the District, the rise in leasing activity is driven primarily by expanding federal agencies. A study by CB Richard Ellis of fourth quarter leasing activity showed that the private sector is again leasing space they had subleased in late 2008 and early 2009, a sign that they might be on the verge of rehiring laid-off employees. According to the report, the amount of vacant space shrank 715,384 SF during the fourth quarter. That is a major change from the third quarter, when vacant space grew by 375,558 SF.
Vacancy rates reached a high of 11.8 percent last year, thanks to the region’s net loss of 24,000 jobs and new office buildings coming on line. Now, commercial real estate brokers are seeing new interest from law firms, associations and financial service firms wanting to lease space. Some are planning for future growth, while others are taking advantage of large discounts being offered to attract new tenants. “We have clients call and say maybe this is the time to go into the market and see what’s available,” said Ernie Jarvis, managing director of CB Richard Ellis’ Washington office.
Approximately 32 percent of commercial leases are with the federal government, an increase over the 21 percent reported in recent years. In normal years, the government has three of the top 10 transactions in the region; that rose to eight in 2009. These include 802,000 SF leased by the Department of Health and Human Services in Rockville, MD; 503,000 SF leased by the Drug Enforcement Administration in Pentagon City, VA; and 360,000 SF leased by the Nuclear Regulatory Commission in North Bethesda, MD.
Posted by: Matt Ward
Categories: Development, Office
Tags: Capital Riverfront, Cassidy & Pinkard Colliers, CB Richard Ellis, commercial real estate, Department of Health and Human Resources, Drug Enforcement Administration, NoMa, Nuclear Regulatory Commission, vacancy rates, Washington DC
February 2nd, 2010
India is expected to grow at 7.5 percent this year, up from 6 percent in 2008 — a rate that is the envy of most of the world. To buoy its economic prospects, the Indian Government has raised more than $100 billion over the last four quarters to finance a stimulus package, pushing the country’s debt to 50 percent of the total GDP. One place that’s feeling the optimism is India’s IT industry. As 2010 gets underway, recruiting will reach a peak with spikes in salary hitting pre-recession levels, according to advisory firm Gartner’s India regional VP, Partha Iyengar.
In terms of outsourcing, this year is likely to be characterized by an inflow of low-end projects off-shored to Indian vendors to achieve cost savings. Speaking in an interview with Financial Express, Iyengar said that 2010 will also reveal consolidation in the software sector along with spiked IT spending by Indian firms.
Off-shoring is likely to witness what Iyengar calls a “back to the future syndrome”. The next year will see industry growth pushed forward by cost savings, which is how the outsourcing sector initially began. Most outsourcing projects are expected to be related to maintenance support and application development.
For global firms, outsourcing often provides 80 percent of a company’s cost savings. Consequently, more low-end work will come in to India. More complex projects are likely to follow in 2011.
Additionally, 2010 is likely to be marked by mergers and acquisitions. Giants in the Indian outsourcing business like Infosys, TCS, and Wipro will make more acquisitions in Europe in order to acquire onsite capacity. They will also expand to near-shore destinations to tap markets in Latin America, Eastern Europe and elsewhere. Meanwhile, global firms, particularly Tier II firms that have not developed off-shore capacities, will make acquisitions in India and other top outsourcing countries.
Jacob Cherian is the India correspondent for AlterNow. His work is featured on SourcingLine, a leading source of data and news about offshoring.
February 1st, 2010
David Tepper’s shrewd bet that the nation would avoid a second Great Depression inspired him to buy bank shares at rock-bottom rates, a move that has earned his Appaloosa Management hedge fund an estimated $7 billion worth of profit during 2009. Last winter, Tepper invested heavily in Bank of America stocks selling for $3 a share, as well as Citigroup, Inc. preferred stock, then priced at a bargain-basement $1 per share.
Tepper, a philanthropist who funded the Tepper School of Business at Carnegie Mellon University, made a gamble that is paying off in a big way - surprising skeptics who insisted that he was making a costly error. “I felt like I was alone,” Tepper said. There were days when “no one was even bidding.” An improving market has seen Appaloosa Management earn a 120 percent return. As a result of those gains, Tepper now manages approximately $12 billion, making his company one of the world’s largest hedge funds.
In general, hedge funds had a bad year in 2008, when they experienced a 19 percent decline. Approximately 1,500 funds - 16 percent of the total - went out of business in 2008. The funds had a far better year in 2009. According to Hedge Fund Research, Inc., they are seeing a 19 percent return, the best annual gains in 10 years.
Alan Shealy, a long-time Tepper client, says “Investing with David is like flying, with hours of boredom followed by bouts of sheer terror. He’s the quintessential opportunist, investing in any asset class, but you have to have a cast-iron stomach.”
January 28th, 2010
London has overtaken Washington, D.C., as the preferred city for commercial real estate investment, primarily because investors believe that prices have bottomed out and the time to get into that market is now. The British capital has overtaken the previous favorites of Washington, D.C., and New York, according to a survey conducted by the Association of Foreign Investors in Real Estate (AFIRE).
“London currently offers investors the advantage of a ‘re-priced’ market,” says James Fetgatter, AFIRE’s CEO. “The re-pricing began sooner than it did in other cities.” London’s score is 31 points higher than the perennial favorite Washington, D.C., and 40 points ahead of New York City. A year ago, London occupied second place, ranking four points behind Washington. The survey of the association’s approximately 200 members was taken in the fourth quarter of 2009 and represents ownership of more than $842 billion of commercial real estate. Of that, $304 billion is invested in the United States.
London, along with the rest of the United Kingdom, has rebounded with investment rising 56 percent from the first to the second half of 2009. Property values rose 2.4 percent in November, the largest monthly increase in 15 years. Savills, the real estate advisory firm, is predicting London will eclipse New York as the fastest growing global financial center.
Despite London’s success, the United States is still preferred as the “most stable and secure real estate investment environment,” according to 44 percent of survey respondents. This is the first time the United States ranked below 50 percent in the survey. It ranked 53 percent in 2008 and 57 percent in 2007. Germany occupies second place with 21 percent. In terms of price appreciation, the United States ranks first, followed by the United Kingdom and China.
The preferred property for investment is multifamily residential, followed by office, industrial, retail and hotel.
Posted by: Matt Ward
Categories: Industrial, Office, Residential
Tags: Boston, China, financial crisis, Germany, London, Los Angeles, New York, Real Estate Roundtable, San Francisco, United Kingdom, United States, Washington DC
January 27th, 2010
President Barack Obama is angry with the big Wall Street banks that took TARP dollars and plans to do something about it. “We want our money back and we’re going to get it,” Obama said in a White House speech when he proposed the Financial Crisis Responsibility Fee. “If these companies are in good enough shape to afford massive bonuses, they surely are in good enough shape to afford to pay back every penny to taxpayers.”
The President’s proposal - which requires Congressional approval - would apply to approximately 50 of the nation’s largest financial institutions and rake in $9 billion a year for at least a decade. Envisioned is an annual 0.15 percent fee on liabilities - except for insured deposits - and would be assessed on banks, insurance companies and financial firms with a minimum of $50 billion in assets. The objective is to counterbalance $117 billion in losses from TARP. The 10 largest financial firms would pay approximately 60 percent of the fee.
“My commitment is to recover every single dime the American people are owned,” according to the President. “And my determination to achieve this goal is only heightened when I see reports of massive profits and obscene bonuses at some of the very firms who owe their continued existence to the American people, folks who have not been made whole and who continue to face real hardship in this recession.”
Not surprisingly, banks were not pleased with President Obama’s proposal. “Two-thirds of the TARP investment from banks has already been repaid, with a large profit to the taxpayer,” countered Steve Bartlett, president of the industry trade group, the Financial Services Roundtable. “This tax is strictly political.”
Another viewpoint advanced is that banks that haven’t repaid TARP funds haven’t done so because they served the original intent of the program - they made loans to consumers and businesses.
January 26th, 2010
Apartment vacancies in the United States hit a 30-year high during the fourth quarter of 2009 as many would-be renters moved in with family or roommates to save money. According to Reis, Inc., a New York research firm that tracks vacancies and rents in 79 markets across the country, the apartment vacancy rate was eight percent at year’s end.
Rents declined by three percent in 2009, even as landlords upped the ante to attract creditworthy renters. In New York City, effective rents - which include concessions such as one month free rent - fell 5.6 percent last year, the worst performance since Reis first tracked data in 1990. Asking rents fell 2.3 percent from 2008 to an average of $1,026. Effective rents, what tenants actually paid, decreased three percent to $964.
“We’ll shampoo their carpets. We’ll paint accent walls. We’ll add Starbucks cards,” said Richard Campo, chief executive of Camden Property Trust, a Houston-based REIT that owns 63,000 apartments. Complicating the situation is competition from 120,000 new rental units that came on the market last year. These include some failed condominium projects that were converted to rentals. A hefty percentage of these developments had secured loans before the credit markets froze. With new development at a virtual standstill, apartment completions are expected to decline 50 percent in 2011. For apartment owners, the limited new supply means they can increase rents as soon as job growth returns.
“If you are renting a place, now might be a good time to renegotiate that lease,” advises Victor Calanog, Reis’ director of research, who predicts that the apartment sector could recover in the second half of 2010 if jobs start returning or people think the economy is improving.
January 21st, 2010
A Federal Reserve official predicts that 2010 will see a continuing moderate economic recovery with
interest rates kept “exceptionally low” to encourage job creation. Elizabeth Duke, a Fed governor, said “In the current environment, the Federal Open Market Committee (FOMC) continues to anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period. Such policy accommodation is warranted to provide support for a return over time to more desirable levels of real activity and unemployment in the context of price stability.”
The Fed slashed interest rates to nearly zero in December 2008 in reaction to the worst recession in 70 years, and created other emergency lending facilities. Speaking to the Economic Forecast Forum in Raleigh, NC, Duke pointed out that recent data on production and spending indicate that economic activity increased at a “solid rate” during the 4th quarter of 2009.
Duke was quick to point out that credit remains tight for businesses; she believes that continued growth is dependent on additional progress in fixing financial markets and re-establishing the flow of credit to households and small businesses. The Fed will adjust policy if any changes occur in economic conditions. According to Duke, the Fed has “a wide range of tools for removing monetary policy accommodation when that becomes appropriate.”
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