Asian investment wave set to hit Europe
Asian investors ploughed more than EUR1 bn into the London market in January, according to research by PropertyEU Research. Indeed, Asian investors accounted for three of the top five transactions over the month.
Hong Kong-listed Chinese Estates acquired River Court, the larger of the two buildings which make up Goldman Sachs’ European headquarters on Fleet Street, for EUR 378 mln, while Malaysia’s Employees Provident Fund (EPF) bought the Whitefriars office building for about EUR 176 mln. Indian conglomerate Sahara India Pariwar paid EUR 563 mln for the five-star Grosvenor House Hotel in Mayfair.
James Beckham, partner in charge of the City at King Sturge, characterised the River Court and Whitefriars transactions as ‘largely passive and wealth defensive rather than wealth creation’. Gresham Down advised the vendor on what it called the largest direct purchase by the Chinese in the London commercial market.
Beckham expects the Asian investment wave to hit Continental Europe in due course. ‘The Continent is a bit trickier as the markets are not nearly as transparent as London. But you know if you go to the top cities - Frankfurt, Paris and Madrid - these are well known to international investors, who in some instances have been active for 20-30 years in those areas.’
Hong Kong’s Chinese Estates Aims to Purchase Two Goldman Offices in London
Chinese Estates Holdings Ltd., a property company controlled by Hong Kong billionaire Joseph Lau, wants to buy two buildings in the City of London occupied by Goldman Sachs Group Inc.
Chinese Estates aims to add Peterborough Court and Daniel House after purchasing River Court, a Goldman building on the same street, in January. The two properties were put up for sale last month for at least 300 million pounds ($488 million), according to Jones Lang LaSalle Inc., which is marketing them. They are part of Goldman’s European headquarters.
“Chinese Estates is very interested in buying the Goldman Sachs buildings in London,” Alison Yeung, a spokeswoman for Chinese Estates in Hong Kong, said yesterday by telephone.
London was one of the first real estate markets to see a pickup in deals and prices after the financial crisis. Sales of existing commercial property in the U.K. capital generated more money than any other city last year, according to Real Capital Analytics Inc.
The Goldman buildings are the kind of assets that attract “strong interest from overseas investors who view London as their preferred investment location and a safe haven during this period of global economic uncertainty,” said Stephen Down, managing partner of Gresham Down Capital Partners.
Gresham Down, a London-based property broker, handled the 280 million-pound sale of River Court. Knight Frank LLP advised Chinese Estates.
Peterborough Court and Daniel House have total space of 370,526 square feet (34,500 square meters). The buildings on Fleet Street in central London were put on the market after the former owner, Canadian developer Jesta Group, defaulted on debt repayments, Jones Lang said.
Goldman has two other office buildings in London, both of which are in the city’s main financial district.
Foreign investment in Sweden soars by 135%
Sweden is firmly back on the agenda for cross-border investors with a 135% rise in foreign investment. International real estate advisor Savills reports an increase of foreign investment from SEK 5.8 bn (EUR 654 mln) in 2009 to SEK 13.6 bn in 2010 and ranks Sweden fourth on the list of European countries by commercial investment volume, after the UK, Germany and France.
Savills research further reveals that total investment volumes in the Swedish market reached SEK 113 bn in 2010, amounting to a 95% increase compared with 2009.
Alongside China, Sweden currently has the strongest GDP statistics globally and preliminary GDP figures for 2010, released by Statistics Sweden, indicate a growth of 5.5% in 2010 compared with 2009, which represents the highest annual increase in Sweden since 1970. Consequently, the international real estate advisor predicts that in 2011-2012 international players, who have in recent months been sellers in Sweden, will develop an increased appetite for investment in the Scandinavian market.
In Stockholm prime rental growth was at 20% in Q4 2010, one of the highest levels recorded in Europe and far above the European average growth of approximately 4.5%.
Overall, according to Savills data more than half of the total turnover on Sweden's investment market in 2010 was invested in Stockholm, with an emphasis on residential transactions, at 42%, and the office sector representing more than one third of all investments.
European Commercial Property Buyers Shift to Germany From U.K.
Global real estate investors shifted their focus toward commercial property in Germany and away from the U.K., where prices have risen the fastest, according to CB Richard Ellis Group Inc. (CBG)
About 32 percent of investors intend to buy in Germany this year, up from 18 percent in 2010, according to a report released today by the Los Angeles-based property adviser. CBRE announced the results of its survey of 350 investors at a conference in Cannes, France.
“The U.K. led the European market recovery in both transaction volumes and property values from the low point in 2009,” CBRE said in the report. “But the survey revealed that investor attention is starting to turn elsewhere, possibly as a result of the degree of capital value growth that has already been realized in the U.K.’s prime markets.”
Investors planning to spend in the U.K. have fallen by almost half, from about 31 percent in 2010. Retail property surpassed office buildings as the most attractive property type, with 43 percent of investors targeting it compared with 34 percent a year earlier. Well-located shopping malls in Germany are offering yields close to the 2006 peak, CBRE said. Jones Lang LaSalle Inc. (JLL), the second-largest publicly traded broker, said yesterday that it expects investment in commercial real estate in Europe to rise by 30 percent this year from the 102 billion euros ($141.8 billion) spent in 2010.
A shortage of well-located commercial property will cause rents to rise and encourage investors, Chicago-based JLL said in a report.
MIPIM: Allianz plans EUR 1b spree in France, Belgium and Netherlands
Allianz Real Estate plans to spend EUR 1 bn this year in France, Belgium and the Netherlands, CEO Olivier Wigniolle of Allianz France told PropertyEU at MIPIM in Cannes.
Of the total investment sum, 60% will be targeted at France, with 20% each targeted at Belgium and the Netherlands. In 2010 Allianz France spent about EUR 900 mln, mainly on offices and retail in France.
Wigniolle said Allianz France also plans to set up a real estate unit in the Netherlands, located in Rotterdam where the insurer is based.
MIPIM sees visitor numbers rise 7%
The 22nd edition of MIPIM held in Cannes this week welcomed over 18,400 delegates, an increase of 7% year-on-year. The organisers claim that nearly 4,000 of the delegates were investors, marking a rise of 6% on last year's attendance.
'The underlying market stabilisation was evident at MIPIM 2011,' said MIPIM Director Filippo Rean 'What has been striking is that we have seen extremely ambitious projects being presented from a very diverse range of countries.'
Among the plans on show were development plans from London and Sao Paolo linked to holding the Olympic Games and the FIFA World Cup. Rwanda's Prime Minister, Bernard Makuza, led his country's first delegation to attend MIPIM to present international investors with the EUR 6.7 bn development programme for the capital Kigali and China's fourth largest city, Chongqing, made its debut appearance in Cannes to outline real estate possibilities linked to its programme to double in size by 2020.
Another project unveiled at MIPIM was the Baku White City development from Aberdjan which aims to regenerate the industrial Black City district of the country's capital. From Russia, the Northern Caucasus Resorts Company's General Director, Alexey Nevskiy, lifted the curtain on the world's largest skiing development involving five separate resorts and an investment in excess of EUR 10 bn.
Turkish developer Zorlu Property, host of the MIPIM Opening Night Party, actively promoted two major projects, the mixed-use Zorlu Centre and the Zorlu Levent office project, both based in Istanbul. Already EUR 1.7 bn has been invested in the Zorlu Centre, including EUR 214 mln in the performing arts facilities.
London mayor Boris Johnson chose MIPIM to announce that developers now have the opportunity to create one of several new neighbourhoods in the Queen Elizabeth Olympic Park. Starting next month, developers can bid to build up to 800 homes situated between the VeloPark and the Olympic Village. The neighbourhood will be developed as of 2013. 'My message to investors looking for long-term rewards is that this is just one of a myriad of similar opportunities that will arise in our great city,' he enthused.
MIPIM 2012 will take place in Cannes from 6-9 March.
Insurer Allianz Steps Into Commercial Property Lending as Banks Retreat
Allianz SE (ALV), Europe’s biggest insurer, will start to offer direct commercial real-estate loans in Germany this year and may expand into mortgage lending across the euro region.
Allianz Real Estate will grant senior loans to German property buyers or borrowers refinancing existing debt, said Olivier Piani, chief executive officer of the property unit. Senior loans rank first for repayment in the event of a default.
“Hopefully, it can create enough volume to be a sizeable business,” Piani, 57, said in an interview last week. “Then we will ask if we should do deals in other markets, like going to France and Italy. Then, we would look at the euro zone.”
Allianz and other insurers are attracted by the higher interest income generated by commercial property loans compared with government bonds, Piani said. Banks, which dominate property lending in Europe, are pulling back after incurring losses in the financial crisis. That has forced real-estate borrowers to look elsewhere for refinancing and new funds.
Until now, Munich-based Allianz’s European commercial real- estate lending has involved buying property-backed covered bonds known as pfandbriefe that are sold by German banks. New rules on capital by the Basel Committee on Banking Supervision, known as Basel III, may limit the number of pfandbriefe they can sell.
Allianz owns about 350 billion euros worth of bonds, equal to 80 percent of its investments, some of which are managed by its Pacific Investment Management Company LLC unit, Piani said. Prospects of slower pfandbriefe sales have made it consider other ways to generate secure investment returns from property, Piani said at the Mipim real-estate trade fair in Cannes, southern France.
Deutsche Bank sells Frankfurt HQ for EUR 600m
Germany's Deutsche Bank said on Monday that it is to sell its 'Doppelturme' (Twin Towers) in Frankfurt am Main to a closed-end real estate fund to be launched by DWS. The transaction price is expected to amount to around EUR 600 mln, in line with the property's current market value.
A company spokesperson said further details on the fund and the acquisition including the yield will be disclosed with the prospectus in May. The DWS-managed fund will be marketed exclusively to private investors of the German bank from mid-May 2011. DWS is the mutual fund company of Deutsche Bank's Asset Management Business Division.
The German lender will continue to use the property as its corporate headquarters under a long-term rental agreement.
Designed by architects Walter Hanig, Heinz Scheid, and Johannes Schmidt, the 155-metre high skyscrapers were already in a closed-end fund from 1984 to 2007 before Deutsche Bank acquired ownership of them in order to carry out a refurbishment of the assets. In the past three years, the lender has completely renovated the property and brought it up to green standards, securing a 50% reduction of energy consumption and a 90%-reduction of CO2 emissions.
The property earned a Gold rating from DGNB as well as a Platinium rating under the American LEED certification.
Kempinski Mothballs Dubai Project as It Expands in Middle East
Luxury hotel operator Kempinski AG is delaying a Dubai project by two years, even as it expands elsewhere in the Middle East because authorities have allowed the market to become oversupplied, according to the company’s president for the region.
A 253-room development on Dubai’s palm tree-shaped artificial island will remain a “shell” for the time being, with the opening pushed back until 2013, said Ulrich Eckhardt, the Geneva-based company’s head of the Middle East and Africa.
“I’m concerned about what I consider poor planning from those in a position to approve new hotels,” Eckhardt, 69, said in an interview in Dubai. Building permission was granted without studying “existing inventory, growth rates and future demand,” he said.
Dubai occupancy rates and room prices probably will decline as 30,000 additional hotel rooms are added over the next five years to the current supply of about 50,000, Deloitte LLP estimated in December. The number of visitors would need to rise to about 12 million annually from 9.5 million now to fill the hotels, the auditing company said.
Kempinski plans to open nine properties in the next three years in Abu Dhabi, Bahrain, Saudi Arabia, Oman, Lebanon, Syria and Egypt. The company will open 82 luxury serviced apartments and 10 villas on Palm Jumeirah in June.
Raven Russia Returns to Profit as Property Values Rebound
Raven Russia Ltd. (RUS) returned to profit last year as the value of its warehouses in Moscow and St. Petersburg increased and demand for space rose.
Net income was $41.5 million, or 7.4 cents a share, last year, compared with a loss of $139.3 million, or 28.5 cents, a year earlier, the Guernsey-registered company said in a statement today.
“Russia is getting better more quickly than people thought,” Chief Executive Officer Glyn Hirsch said in a telephone interview. “Rents are going up and we are slowly starting to build again.”
The recovery of the Russian economy meant the availability of warehouse space has shrunk. Developers, including Raven Russia, stopped constructing logistics buildings in 2009 following the financial crisis. Raven Russia now has only 5 percent of its total space available after leasing 220,000 square meters (2.4 million square feet) this year.
Retailers are leading the demand for space, and Raven Russia is building more space in the Moscow region as the capital is leading the country’s economic recovery, Hirsch said.