Professor François Ortalo-Magné, chair of the Department of Real Estate and Urban Land Economics at the Wisconsin School of Business, delivered a wrap-up keynote presentation at MIPIM last week with Philippe Tannenbaum, senior analyst at IEIF (France).
For more coverage from MIPIM 2011, keep reading the Viewpoint and visit MIPIM World.
Showing posts with label 2011. Show all posts
Showing posts with label 2011. Show all posts
Thursday, March 17, 2011
Friday, March 11, 2011
MIPIM 2011 – Wrap-up keynote address
MIPIM World, the official website featuring content from this year's MIPIM conference, posted video of today's keynote presentation by Prof. François Ortalo-Magné, Robert E. Wangard Chair in Real Estate at the Wisconsin School of Business, and Philippe Tannenbaum, Senior Advisor with IEIF France. Click to visit the MIPIM website and watch the video and view the slides from the presentation.
And please check out the rest of our coverage of MIPIM 2011 here on the Viewpoint and at MIPIM World.
And please check out the rest of our coverage of MIPIM 2011 here on the Viewpoint and at MIPIM World.
Thursday, March 10, 2011
Meaningful response to the global housing shortage
Reporting from MIPIM 2011 Day 3: "Participating in a Meaningful Response to the Global Housing Shortage."
We hear quite a bit these days about the moribund recovery in the U.S. housing market. There is often talk of oversupply and lack of demand for houses on the market. Yet globally, there is immense demand for even the most basic of housing. Global Housing Foundation (GHF) is a U.N. partner working to fill this need for basic housing around the world. Today at MIPIM, GHF sponsored a panel of industry players who are currently developing in markets that are perhaps a bit beyond the eye of the average institutional investor.
The biggest challenges to addressing the need better housing around the world, however, are lack of capital and the unwillingness of large capital sources to get involved in the markets where need is greatest. Some of that is due to issues around getting clean title to land (which is a dealbreaker), but oftentimes it is a simple belief that projects won't be successful. But it can be done, by building communities not just houses. And even though residents are poor, creating product that improves their lives that gets residents investing for the future.
Our coverage of MIPIM wraps up tomorrow with the "wrap-up keynote" presentation by Prof. François Ortalo-Magné and Philippe Tannebaum with IEIF on Friday.
We hear quite a bit these days about the moribund recovery in the U.S. housing market. There is often talk of oversupply and lack of demand for houses on the market. Yet globally, there is immense demand for even the most basic of housing. Global Housing Foundation (GHF) is a U.N. partner working to fill this need for basic housing around the world. Today at MIPIM, GHF sponsored a panel of industry players who are currently developing in markets that are perhaps a bit beyond the eye of the average institutional investor.
The biggest challenges to addressing the need better housing around the world, however, are lack of capital and the unwillingness of large capital sources to get involved in the markets where need is greatest. Some of that is due to issues around getting clean title to land (which is a dealbreaker), but oftentimes it is a simple belief that projects won't be successful. But it can be done, by building communities not just houses. And even though residents are poor, creating product that improves their lives that gets residents investing for the future.
Our coverage of MIPIM wraps up tomorrow with the "wrap-up keynote" presentation by Prof. François Ortalo-Magné and Philippe Tannebaum with IEIF on Friday.
Target: Turkey
Reporting from MIPIM 2011, Day 3:
Turkey, with the world's 15th largest economy and 17th largest population, occupies a position centrally-located not only at the door of the EU, but also between North Africa, Asia, and Eastern Europe. Turkey boasts strong banking sector and pre-crisis fiscal performance and is forecasted to be Europe’s largest population and the the world's 9th largest economy by 2050.
Turkey’s economic conditions are favorable. CPI is currently down to 4% and is continuing to fall. Its GDP is rising and should continue to rise. Average annual real GDP growth projections are the highest of all OECD countries despite an inflation rate six-plus percent. All of which make Turkey currently the 15th most attractive FDI location.
Turkey, with the world's 15th largest economy and 17th largest population, occupies a position centrally-located not only at the door of the EU, but also between North Africa, Asia, and Eastern Europe. Turkey boasts strong banking sector and pre-crisis fiscal performance and is forecasted to be Europe’s largest population and the the world's 9th largest economy by 2050.
Turkey’s economic conditions are favorable. CPI is currently down to 4% and is continuing to fall. Its GDP is rising and should continue to rise. Average annual real GDP growth projections are the highest of all OECD countries despite an inflation rate six-plus percent. All of which make Turkey currently the 15th most attractive FDI location.
How to make resort hotels profitable?
Reporting from MIPIM 2011: How to make resort hotels profitable?
Typically resort hotels require a higher investment per room than city hotels because of the expectations that come with resorts. For instance, resort hotels are expected to have larger rooms to accommodate for longer stays. Additionally, resorts are expected to provide a more vacation friendly setting. Resorts also require an increased investment in restaurants, spas and other amenities because of their remote locations.
One way in which hotel developers are working to increase profits is by developing resorts that are both vacation and business friendly. By accommodating business travelers and vacationers, resorts are able to increase their profits during the off-peak days of the year. In order to attract the business traveler, resort developers look to provide spaces that can function as both event and conference facilities. The transition to combine business amenities with resort amenities has seen success in some markets. However, it is important to note that this strategy can not be utilized in markets that have little business interaction in the surrounding areas. Golf, spa services, and the attraction of sporting events can also be key drivers of profits during the off-peak season.
Video via MIPIM World. For more, visit the official conference blog at blog.MIPIMWorld.com.
Typically resort hotels require a higher investment per room than city hotels because of the expectations that come with resorts. For instance, resort hotels are expected to have larger rooms to accommodate for longer stays. Additionally, resorts are expected to provide a more vacation friendly setting. Resorts also require an increased investment in restaurants, spas and other amenities because of their remote locations.
One way in which hotel developers are working to increase profits is by developing resorts that are both vacation and business friendly. By accommodating business travelers and vacationers, resorts are able to increase their profits during the off-peak days of the year. In order to attract the business traveler, resort developers look to provide spaces that can function as both event and conference facilities. The transition to combine business amenities with resort amenities has seen success in some markets. However, it is important to note that this strategy can not be utilized in markets that have little business interaction in the surrounding areas. Golf, spa services, and the attraction of sporting events can also be key drivers of profits during the off-peak season.
Video via MIPIM World. For more, visit the official conference blog at blog.MIPIMWorld.com.
Emerging trends: signs of cautious optimism
Reporting from MIPIM 2011, "Real Estate Roulette: Winners & Losers: Emerging Trends 2011"
Adapting to the European market, which is facing challenges in the sovereign debt crisis, regulations and a weak lending market, is a challenge in itself. More equity is expected to flow in 2011. However, the substantial undersupply of debt is expected to continue through 2011 and be worse than previous years, making refinancing more difficult. But still, after a very gloomy prognosis for 2009, 2010 showed signs of cautious optimism. Core investment will remain king. More concerns are about the transparency, regulations and the real economy growth from investors.
More coverage of the sessions at MIPIM on the Viewpoint.
Adapting to the European market, which is facing challenges in the sovereign debt crisis, regulations and a weak lending market, is a challenge in itself. More equity is expected to flow in 2011. However, the substantial undersupply of debt is expected to continue through 2011 and be worse than previous years, making refinancing more difficult. But still, after a very gloomy prognosis for 2009, 2010 showed signs of cautious optimism. Core investment will remain king. More concerns are about the transparency, regulations and the real economy growth from investors.
More coverage of the sessions at MIPIM on the Viewpoint.
So where will investment take place in the U.S. in 2011?
Reporting from MIPIM Day 3:
After watching the U.S. property markets collapse following the financial crisis and negative returns continue into 2010, optimism was surprisingly high in the panel "US Property Markets: Where are the Opportunities?" NAREIM President Stephen Renna led the panel of investment managers to try to answer to the question Where will investment take place in 2011?
The short answer was multifamily properties in core markets. These markets, including Washington DC, New York City, Boston, Los Angeles, San Diego and the Bay Area of California, all command premium rents, have strong employment growth, and high populations of the younger demographic with a higher propensity to rent.
Read the rest of our coverage of the sessions at MIPIM on the Viewpoint. Visit our partner the official MIPIM World blog for video and other exclusive content from Wisconsin.
After watching the U.S. property markets collapse following the financial crisis and negative returns continue into 2010, optimism was surprisingly high in the panel "US Property Markets: Where are the Opportunities?" NAREIM President Stephen Renna led the panel of investment managers to try to answer to the question Where will investment take place in 2011?
The short answer was multifamily properties in core markets. These markets, including Washington DC, New York City, Boston, Los Angeles, San Diego and the Bay Area of California, all command premium rents, have strong employment growth, and high populations of the younger demographic with a higher propensity to rent.
Read the rest of our coverage of the sessions at MIPIM on the Viewpoint. Visit our partner the official MIPIM World blog for video and other exclusive content from Wisconsin.
Distressed or distressing investments? MIPIM 2011
Reporting from MIPIM 2011:
Distressed or distressing is the question in investing these days. However, the market's worst fears of massive default did not come true. And the bulk of distressed assets have appreciated enough during the recovery of the last twelve months to remove themselves from the distressed category before any workouts were required. The optimistic view is that the worst is over.
But while things appear better to those in the know, the public at large still does not know where many banks' balance sheets stand. Further, it is very possible that there are more faltering property owners who are trying to keep their status under wraps. The lack of transparency is an impediment in determining whether we are truly in the clear yet.
Distressed or distressing is the question in investing these days. However, the market's worst fears of massive default did not come true. And the bulk of distressed assets have appreciated enough during the recovery of the last twelve months to remove themselves from the distressed category before any workouts were required. The optimistic view is that the worst is over.
But while things appear better to those in the know, the public at large still does not know where many banks' balance sheets stand. Further, it is very possible that there are more faltering property owners who are trying to keep their status under wraps. The lack of transparency is an impediment in determining whether we are truly in the clear yet.
Roubini on the recovery: the glass is half full AND half empty
The outlook on the global economic recovery is mixed, best described as a glass half full and half empty, at the same time, says Dr. Nouriel Roubini is his keynote address on Thursday at MIPIM.
Here are the pluses, the strong and important factors driving optimism today: Not only have we seen positive growth but accelerated positive growth in the last few months. Risks of default in euro zone and double-dip recession are decreasing. The balance sheets of high-grade companies in the US and Western Europe are strong.
But there are minuses, too, macro uncertainties driving pessimism: mid-east turmoil and its effects on oil prices; problems from public debt and foreign liabilities in the private sector; and significant problems in the U.S. including high unemployment and modest job growth, risk of a double dip in the housing sector, and significant deficits at the state and local levels.
After this and three days of meeting and greeting and listening and learning, how are you feeling about the global recovery? Is your glass half-full or half-empty?
Our coverage of the rest of Thursday's sessions at MIPIM will continue. Plus we'll have the wrap-up keynote presentation by Prof. François Ortalo-Magné on Friday.
Here are the pluses, the strong and important factors driving optimism today: Not only have we seen positive growth but accelerated positive growth in the last few months. Risks of default in euro zone and double-dip recession are decreasing. The balance sheets of high-grade companies in the US and Western Europe are strong.
But there are minuses, too, macro uncertainties driving pessimism: mid-east turmoil and its effects on oil prices; problems from public debt and foreign liabilities in the private sector; and significant problems in the U.S. including high unemployment and modest job growth, risk of a double dip in the housing sector, and significant deficits at the state and local levels.
After this and three days of meeting and greeting and listening and learning, how are you feeling about the global recovery? Is your glass half-full or half-empty?
Our coverage of the rest of Thursday's sessions at MIPIM will continue. Plus we'll have the wrap-up keynote presentation by Prof. François Ortalo-Magné on Friday.
Healthcare sector is healthy
Reporting from MIPIM 2011:
Even during the economic recovery, healthcare is one sector that continues to grow. Currently 10% of worldwide GDP, second only to housing, it attracts investors with aging demographics, long lease terms with owner-operators, and high cash returns. Investments in the sector have been equated to government bonds because governments in Europe pay the bulk of health care bills. However, this could represent a major concern as debt levels and budget deficits rise around the world, health care spending may be put, at least in part, to the wayside.
Even during the economic recovery, healthcare is one sector that continues to grow. Currently 10% of worldwide GDP, second only to housing, it attracts investors with aging demographics, long lease terms with owner-operators, and high cash returns. Investments in the sector have been equated to government bonds because governments in Europe pay the bulk of health care bills. However, this could represent a major concern as debt levels and budget deficits rise around the world, health care spending may be put, at least in part, to the wayside.
Building a standard for measuring sustainability
Reporting from MIPIM, "Common causes, common measures:"Countries around the world have varying standards for measuring sustainability, from LEED in the United States to BREEAM in Europe. Further, governments are instituting laws designed to force investors and developers into incorporating energy saving measures. Forces which are combining to demonstrate the clear need for a common standard of "sustainability" for commercial properties. The lack of coordination in the industry across the world is greatly reducing transparency; it is nearly impossible to compile statistics for energy savings achieved across the world due the implementation of these programs because the standards vary so widely.
Photo courtesy of Reed Midem.
Rocky and rolling recovery at MIPIM 2011
Reporting from MIPIM 2011 Day 2:
Recovery from the global financial crisis took hold in early March 2009, when US central bank told the world that they will make sure the financial market would not crash, said economists on Wednesday's keynote panel on economics and the road map to the future.
Interest rates are as low as the can go, and inflation also quite low, meaning that real rates are very low. The natural course of events is a very strong economic upswing that will grow in strength over time (though not stronger than 2010). But increases in interest rates and oil prices are needed in order to slow down the now rapid economic expansion in the westerns world.
Real estate will benefit from the recovery because real estate is generally highly correlated to the broader economy. But real estate investors are still nervous. Real estate was an attractive asset class in the years leading up to the crash, and it still is really, notwithstanding the full impact of Solvency II which remains to be seen.
The sleeping tiger is massive government debt that will have to be addressed with higher taxes and lower spending which have a particularly negative affect on the recovery, already on a "rocky road."
We'll have more from Day 3 at MIPIM a little later today here on the Viewpoint and on Twitter @UW_GraaskampCtr.
Stay connected with the Wisconsin Real Estate Program, long after MIPIM, by connecting with us on Facebook.
Recovery from the global financial crisis took hold in early March 2009, when US central bank told the world that they will make sure the financial market would not crash, said economists on Wednesday's keynote panel on economics and the road map to the future.
Interest rates are as low as the can go, and inflation also quite low, meaning that real rates are very low. The natural course of events is a very strong economic upswing that will grow in strength over time (though not stronger than 2010). But increases in interest rates and oil prices are needed in order to slow down the now rapid economic expansion in the westerns world.
Real estate will benefit from the recovery because real estate is generally highly correlated to the broader economy. But real estate investors are still nervous. Real estate was an attractive asset class in the years leading up to the crash, and it still is really, notwithstanding the full impact of Solvency II which remains to be seen.
The sleeping tiger is massive government debt that will have to be addressed with higher taxes and lower spending which have a particularly negative affect on the recovery, already on a "rocky road."
We'll have more from Day 3 at MIPIM a little later today here on the Viewpoint and on Twitter @UW_GraaskampCtr.
Stay connected with the Wisconsin Real Estate Program, long after MIPIM, by connecting with us on Facebook.
Wednesday, March 9, 2011
Icons are made not built, at MIPIM 2011
More from MIPIM 2011 Day 2:
Real estate developers and architects may not always be the happiest of bedfellows, but the architects' keynote panel at MIPIM is always a highlight, providing a jolt of starpower.
This year's focus was on "Iconic Architecture for the 21st Century." Icons exist, but they are not built--and shouldn’t be designed with the idea of being an icon in mind. Icons are created over time. And icons are needed to create connections between people on a fundamental, emotional level. If a building can connect with people, than people can create stories about that city, place, and time. So it is people who create icons, not architects. But an architect who is open to the needs of a space for interactivity can create possibilities, the places where people can connect with one another. Ultimately it is the people who come to "own" these spaces.
Ancient architecture are easy iconic examples, but what about modern icons? What contemporary spaces do you think have reached iconic status? Share your examples in the comments below.
And check out the rest of our coverage from MIPIM on the Wisconsin Real Estate Viewpoint and the official MIPIM World blog for video and other exclusive content.
Real estate developers and architects may not always be the happiest of bedfellows, but the architects' keynote panel at MIPIM is always a highlight, providing a jolt of starpower.
This year's focus was on "Iconic Architecture for the 21st Century." Icons exist, but they are not built--and shouldn’t be designed with the idea of being an icon in mind. Icons are created over time. And icons are needed to create connections between people on a fundamental, emotional level. If a building can connect with people, than people can create stories about that city, place, and time. So it is people who create icons, not architects. But an architect who is open to the needs of a space for interactivity can create possibilities, the places where people can connect with one another. Ultimately it is the people who come to "own" these spaces.
Ancient architecture are easy iconic examples, but what about modern icons? What contemporary spaces do you think have reached iconic status? Share your examples in the comments below.
And check out the rest of our coverage from MIPIM on the Wisconsin Real Estate Viewpoint and the official MIPIM World blog for video and other exclusive content.
How to invest in Latin America
Reporting from MIPIM 2011 Day 2:
Latin America's strong historical growth has long attracted investors. But its favorable climate has been the real fuel for growth through tourism in resort areas such as Acapulco, Panama City, and Punta del Este. For investors interested in sustainability, Latin America, while sometimes "idiosyncratic," is making great strides forward. Efficiency is gaining a great deal of momentum and countries are looking at innovative ways to mix buildings and nature.
Latin America's strong historical growth has long attracted investors. But its favorable climate has been the real fuel for growth through tourism in resort areas such as Acapulco, Panama City, and Punta del Este. For investors interested in sustainability, Latin America, while sometimes "idiosyncratic," is making great strides forward. Efficiency is gaining a great deal of momentum and countries are looking at innovative ways to mix buildings and nature.
Innovating to regeneration in the UK
Reporting from MIPIM 2011 Day 2:
Following on yesterday's keynote address by London Mayor Boris Johnson, a panel of UK government leaders gathered at MIPIM today to further discuss regeneration efforts in the UK. With the austerity programs recently implemented by the UK government, regeneration efforts in the UK have shifted to the public-private/LEP model. Cities are refocusing their attention on economic matters and seeking business leaders to show the way. It's no small matter, either: with economies in excess of $50 billion annually, each of the panelists' cities are larger than some European countries. Interestingly, city leaders are not limiting their efforts to help from the UK government alone, looking to foreign investment partners. Their successes may become a model for other UK cities.
Video via MIPIM World. For more, visit the official conference blog at blog.MIPIMWorld.com.
Following on yesterday's keynote address by London Mayor Boris Johnson, a panel of UK government leaders gathered at MIPIM today to further discuss regeneration efforts in the UK. With the austerity programs recently implemented by the UK government, regeneration efforts in the UK have shifted to the public-private/LEP model. Cities are refocusing their attention on economic matters and seeking business leaders to show the way. It's no small matter, either: with economies in excess of $50 billion annually, each of the panelists' cities are larger than some European countries. Interestingly, city leaders are not limiting their efforts to help from the UK government alone, looking to foreign investment partners. Their successes may become a model for other UK cities.
Video via MIPIM World. For more, visit the official conference blog at blog.MIPIMWorld.com.
Density & the city
Reporting from MIPIM 2011:
What does density mean for a city--"for better or for worse"? Density itself, or the lack of it, can have an impact. The global population shift from suburban to urban centers means suburban populations are shrinking. Some German cities, for example, have lost 30 percent of their population in two decades. The effects of this shrinkage on the real estate market include high vacancy rates combined with severe drops in value. To address the problems, German suburbs investing in infrastructure, revitalization techniques and even demolishing vacant units. Going forward it will be important to take into account this relocation, the resiliency of plans and the sustainability of projects when considering how to plan for the density within a city.
Our coverage of the sessions at MIPIM continues tomorrow, so bookmark the Wisconsin Real Estate Viewpoint and follow us on Twitter @UW_GraaskampCtr. And be sure to visit MIPIM World blog for video and other exclusive content.
What does density mean for a city--"for better or for worse"? Density itself, or the lack of it, can have an impact. The global population shift from suburban to urban centers means suburban populations are shrinking. Some German cities, for example, have lost 30 percent of their population in two decades. The effects of this shrinkage on the real estate market include high vacancy rates combined with severe drops in value. To address the problems, German suburbs investing in infrastructure, revitalization techniques and even demolishing vacant units. Going forward it will be important to take into account this relocation, the resiliency of plans and the sustainability of projects when considering how to plan for the density within a city.
Our coverage of the sessions at MIPIM continues tomorrow, so bookmark the Wisconsin Real Estate Viewpoint and follow us on Twitter @UW_GraaskampCtr. And be sure to visit MIPIM World blog for video and other exclusive content.
Brazil: open for business at MIPIM 2011
Reporting from MIPIM 2011:
São Paulo Mayor Gilberto Kassab delivered some of the city's impressive numbers in his keynote address :
Sao Paulo is setting the stage for international investment, infrastructure and redevelopment in 2011 with "a one-hundred percent" commitment to best practices in transparency and accountability.
More news on the country came at the Investment Lab panel "Brazil: the present and future of investments." Historically, Brazil has respected all types of international capital flow through very strict laws guaranteeing repatriation of capital. The real estate market, employing more than 4.5 million people, represents 19% of total GDP and grew 11.6% last year. One of the biggest issues Brazil faces is its housing deficit; at 6 million units; one of the highest worldwide. The government is playing a big role in developing new projects over the next decade.
Ultimately Brazil looks to building a lasting legacy from the major events--the 2014 FIFA World Cup, the 2016 Summer Olympics, and perhaps even the 2020 World Fair.
São Paulo Mayor Gilberto Kassab delivered some of the city's impressive numbers in his keynote address :
- 4th largest city in the world,
- 11.5 million inhabitants,
- 12,500 restaurants,
- 7.5 million automobiles, and
- 450 helicopters.
Sao Paulo is setting the stage for international investment, infrastructure and redevelopment in 2011 with "a one-hundred percent" commitment to best practices in transparency and accountability.
More news on the country came at the Investment Lab panel "Brazil: the present and future of investments." Historically, Brazil has respected all types of international capital flow through very strict laws guaranteeing repatriation of capital. The real estate market, employing more than 4.5 million people, represents 19% of total GDP and grew 11.6% last year. One of the biggest issues Brazil faces is its housing deficit; at 6 million units; one of the highest worldwide. The government is playing a big role in developing new projects over the next decade.
Ultimately Brazil looks to building a lasting legacy from the major events--the 2014 FIFA World Cup, the 2016 Summer Olympics, and perhaps even the 2020 World Fair.
MIPIM 2011: Making green buildings pay
Reporting from MIPIM 2011:
Green building continues to be a hot topic. And as interest has continued even thru the economic crisis, it would appear the "trend" may be moving into the mainstream. Wednesday's session "Making Green Buildings Pay" addressed sustainability for occupiers.
Operating costs, over a building's life cycle, are approximately 80% of a building's aggregate cost. Developers cannot control interest rates or the price of energy, etc. but can impact energy consumption (running costs).
Tenants, as the drivers of space design, need to see and understand the real economic value, the cost savings, that justify green building investment and share in those benefits from investing in green buildings--one benefit being a positive public image.
Wisconsin MBA students in real estate are reporting from MIPIM. Continue to check this blog for more updates and visit MIPIMworld.
Green building continues to be a hot topic. And as interest has continued even thru the economic crisis, it would appear the "trend" may be moving into the mainstream. Wednesday's session "Making Green Buildings Pay" addressed sustainability for occupiers.
Operating costs, over a building's life cycle, are approximately 80% of a building's aggregate cost. Developers cannot control interest rates or the price of energy, etc. but can impact energy consumption (running costs).
Tenants, as the drivers of space design, need to see and understand the real economic value, the cost savings, that justify green building investment and share in those benefits from investing in green buildings--one benefit being a positive public image.
Wisconsin MBA students in real estate are reporting from MIPIM. Continue to check this blog for more updates and visit MIPIMworld.
U.S. real estate rebound? MIPIM 2011
Reporting from MIPIM 2011 Day 2:
In a recent survey of foreign property investors, the U.S. ranked some 50 percentage points higher than its closest competition in providing the greatest opportunities for capital appreciation and 20 points higher offering the most stable and secure property investments in the world.
The robust property markets in New York and Washington are considered signs of recovery of the real estate market. However, data from CRE showed that the vacancy rates for office, retail and multi-family are still at historic highs. Multi-family rents have started to improve while rents for most other commercial properties still soft. There was a nice spike in the real estate transaction at the end of year 2010, but the market is still weak in terms of price and volume. Property prices in New York and Washington were driven up by risk-averse capital investment in trophy properties, and the prices for most other properties are unchanged. Distressed assets continued to be drag for the market. The retail sector offers some opportunities with more bankruptcies and consolidations still to go. Unemployment and political factors represent macro risks for the real estate market.
Secondary markets in the U.S. are considered the next targets with huge potential and opportunities.
This is a topic of particular relevance to the Graaskamp Center and Prof. François Ortalo-Magné who leads an annual survey of the members of AFIRE, the Association of Foreign Investors in Real Estate. The survey, results of which were released in January, revealed that the U.S. real estate market offers a stronger investment opportunity for foreign real estate investors’ money than it has in the last 10 years. Interestingly, there is typically a fairly even distribution of votes among the top U.S. cities for foreign investment. However, in this year’s survey, New York and Washington scored almost four times higher than third place Boston. Click here to read the full story and the detailed survey results.
In a recent survey of foreign property investors, the U.S. ranked some 50 percentage points higher than its closest competition in providing the greatest opportunities for capital appreciation and 20 points higher offering the most stable and secure property investments in the world.
The robust property markets in New York and Washington are considered signs of recovery of the real estate market. However, data from CRE showed that the vacancy rates for office, retail and multi-family are still at historic highs. Multi-family rents have started to improve while rents for most other commercial properties still soft. There was a nice spike in the real estate transaction at the end of year 2010, but the market is still weak in terms of price and volume. Property prices in New York and Washington were driven up by risk-averse capital investment in trophy properties, and the prices for most other properties are unchanged. Distressed assets continued to be drag for the market. The retail sector offers some opportunities with more bankruptcies and consolidations still to go. Unemployment and political factors represent macro risks for the real estate market.
Secondary markets in the U.S. are considered the next targets with huge potential and opportunities.
This is a topic of particular relevance to the Graaskamp Center and Prof. François Ortalo-Magné who leads an annual survey of the members of AFIRE, the Association of Foreign Investors in Real Estate. The survey, results of which were released in January, revealed that the U.S. real estate market offers a stronger investment opportunity for foreign real estate investors’ money than it has in the last 10 years. Interestingly, there is typically a fairly even distribution of votes among the top U.S. cities for foreign investment. However, in this year’s survey, New York and Washington scored almost four times higher than third place Boston. Click here to read the full story and the detailed survey results.
MIPIM 2011: Understanding what sovereign wealth funds are looking for
Reporting from MIPIM 2011 Day 2:
Sovereign wealth funds, or investment vehicles created from a country's reserves with the purpose of benefiting future generations, invest across many asset classes including real estate. Traditionally, these funds invest in prime office buildings in "prime" cities like London, New York, and Tokyo, with an interest in their home markets as well. As sovereign wealth funds continue to look for properties with strong fundamentals, there has been an increasing trend to focus on other investment vehicles, property types, and geographies.
Wednesday's panel "Capital Requirements: Understanding What Sovereign Wealth Funds Are Looking For When Investing in Property" highlighted recent investments in hotels and residential complexes, emphasizing that they added diversification to the portfolio. Emerging economies are the targets of increasing interest, particularly markets like Rio de Janeiro, Taipei, and Seoul. A trend that should continue as the changing economies of the world create new definitions of developed and emerging markets.
Despite strong portfolio returns and acquisitions of high-profile properties around the world, transparency concerns exist. Transparency is also something that has different meanings around the world.
Sovereign wealth funds, or investment vehicles created from a country's reserves with the purpose of benefiting future generations, invest across many asset classes including real estate. Traditionally, these funds invest in prime office buildings in "prime" cities like London, New York, and Tokyo, with an interest in their home markets as well. As sovereign wealth funds continue to look for properties with strong fundamentals, there has been an increasing trend to focus on other investment vehicles, property types, and geographies.
Wednesday's panel "Capital Requirements: Understanding What Sovereign Wealth Funds Are Looking For When Investing in Property" highlighted recent investments in hotels and residential complexes, emphasizing that they added diversification to the portfolio. Emerging economies are the targets of increasing interest, particularly markets like Rio de Janeiro, Taipei, and Seoul. A trend that should continue as the changing economies of the world create new definitions of developed and emerging markets.
Despite strong portfolio returns and acquisitions of high-profile properties around the world, transparency concerns exist. Transparency is also something that has different meanings around the world.
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