Commercial Real Estate Finance

Posts Tagged ‘Asia’

Look on the bright side. Even though the Great Recession led to enormous bankruptcies, high unemployment, depressed asset values, an epidemic of foreclosures, the imminent threat of total financial collapse, and general misery–it  wasn’t all bad.

I could have phrased that better.

What I mean to say is it made things affordable again. If you were looking to buy real estate at a great bargain, 2009 was the time. Of course, no one was spending money in 2009.

After the economy went berserk,  a few people jumped into commercial real estate investment–where there were any opportunities to be found–and profited greatly. Many U.S. CRE markets and asset types have rebounded much faster than other industries, and this success is beginning to make this “alternative” investment sector a top choice for many. Just look at REITs–giant firms becoming even larger thanks to a constant stream of new investment capital.

As certain markets transition from “recovery mode” to “growth mode,” however, the availability of inexpensive opportunities with strong  potential for yield is dwindling. We see this in lowering cap rates (especially for multifamily) and the swelling price of shares in publicly traded REITs. In the U.S, many CRE opportunities are preferable for the risk-averse, those seeking stability over returns.

But where does one go when looking for yield? Michael Hudgins, a strategist for JP Morgan (NYSE: JPM), recommends foreign REIT investment. Mr. Hudgins tells Barron’s, Read the rest of this entry »

Obsessively tracking and compiling lists of the world’s tallest skyscrapers, I’ve been told, is “such a guy thing.”

Either way, the Council on Tall Buildings and Urban Habitat (CTBUH), an organization dedicated to such a guy thing, has lots of great lists and features on their website. Here’s their current ranking of the Top 10 Future Tallest Buildings in the World:

10. Manara Warisan Merdeka, Malaysia (height: 1,969 ft.)

9. Makkah Royal Clock Tower Hotel, Saudi Arabia (1,972)

8. Lanco Hills Signature Tower, India (1,982)

7. Triple One, S. Korea (2,034)

6. Shanghai Tower, China (2,073)

5. Wuhan Greenland Center, China (2,087) Read the rest of this entry »

Mensch: 

Noun, informal. A decent, upright, mature and responsible person.

Schlemiel: 

Noun, slang. An awkward, clumsy, or unlucky person whose endeavors tend to fail; a loser. 

Mensch of the Week:

Nick Crockett, Jones Lang LaSalle

As private real estate news source PERE pointed out last week, Jones Lang LaSalle (NYSE: JLL)’s endeavor to create greater access to Asian real estate funds makes it a bit of a matchmaking service, if not a Match.com for private real estate funds.

According to Nick Crockett, part of the international real estate service’s Asia Pacific division, there may be as much as half a billion dollars in private real estate capital available for investment in coming months, provided the funds can be connected to the right investments.  PERE explained in its Friday Letter:

Crockett’s firm is providing the Secondary Market Bulletin (SMB), part of a secondaries trading platform to which buyers and sellers of private real estate fund units can register their holdings along with their pricing and volume trading requirements. …JLL hopes this will lead to some secondaries transactional matrimony in the region.

Granted, this plan seems rudimentary–it’s pretty much a private brokerage newsletter–but it may be a significant improvement for the huge but fragmented Asia Pacific CRE market. While this SMB initiative may lack the sophistication of CBRE (NYSE: CBG)’s secondaries trading and data service in Europe, any effort to cultivate business and relationships in the Asia Pacific region seems worth the effort. Read the rest of this entry »

Some of the greatest moments in any Olympics, in any sporting event for that matter, tend to be when the underdog wins. Surprise successes make for good drama, good TV ratings, and decent Hollywood biopics down the road. So it’s no surprise that Oscar Pistorius, a/k/a Blade Runner, has dominated headlines in the months leading up to the London Games. I’ll admit, I would’ve loved to see him medal, regardless of whether or not his boomerang prosthetics gave him–a double amputee–”an unfair advantage as a runner,” which some people claimed with a lack of irony that’s almost uncanny.

Mr. Pistorius is representing South Africa, part of that continent which is in so many ways the world’s underdog. With over a billion people but only 2% of the world’s wealth, Africa faces the most uphill of battles when it comes to achieving economic self-sufficiency. But African communities have to start somewhere, and with numerous resources and a huge potential workforce, this region has plenty to offer foreign investors–once it can assure them of stability.

Read the rest of this entry »

When it comes to the world’s largest asset class, the wide array of investment options aren’t the only challenge for a would-be investor. By far, the highest barrier to entry is simply the enormous amount of capital necessary to participate in real estate. While the challenge of investment capital is fairly universal, even prohibiting many aspiring homeowners, nowhere is capital more of a challenge than commercial real estate.

Of course, for big ticket CRE assets like office towers and shopping malls, singly or in portfolios, the industry is increasingly enamored with the unparalleled buying and fundraising muscle of the REIT. Not only do REITs entice investors, they’re able to access debt in ways few others can, all of which has made them popular for numerous asset classes. Thanks to its effectiveness, the REIT concept has been expanding to other markets, those which may require us to redefine our own concepts of “real estate.”

Thus we have the timber REIT, the investment structure less focused on buildings than the land underneath (and materials they can harvest from it). Timber REITs seem far less explored than REITs in other sectors, so I had to do quite a bit of research into how these firms operate and adapt to the REIT structure. Read the rest of this entry »

ULI CEO Patrick Phillips explores some of the real estate and development challenges in increasingly urbanized Asian markets:

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In a post about the nation of Turkey, I can’t resist a title from that catchy song we all learned as kids.  Indeed, Istanbul’s dual-personality is well expressed in the back-and-forth over its name. While the area is associated, geographically and culturally, with both the West (Europe) and the Middle East, its unique identity and incredible potential for global investment come about through its in-between status. In fact, Turkey’s mega-city Istanbul (population: 13 million) holds the distinction of being the only city that lies on two continents.

Without a doubt, Turkey’s investment opportunities should be weighed against its complexities. While the nation is a candidate to become a member of the European Union, its location in Asia Minor keeps it situated in a region not known for political stability (i.e., check out its neighbors). Plus, the fact that Turkey’s largest city, Istanbul, is one of the fastest-growing metropolises in the world means there is still a great deal of change in store for the area, something to weigh when considering such long-term investments as commercial real estate.

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These days, American International Group (AIG) is known for two things: insurance and a government bailout. The insurance and financial giant, teetering on the edge of complete collapse in 2008, was forced to accept a $182.3 billion  federal bailout as part of the government’s scramble to save institutions that were “too big to fail.”

AIG is (or was, at least) far more diversified than many know: its holdings include not only individual and commercial insurance services, but mortgage lending, aviation, and telecommunications businesses. It even owns a ski resort, the Stowe Mountain Resort, for some reason.

One industry in which it used to enjoy significant clout was commercial real estate. To a great extent, CRE has fallen by the wayside in the wake of AIG’s implosion and government bailout. Encumbered by debt, stricter financial regulations, and the watchful eyes of its grudging government investors, the firm has cut back substantially on its real estate business, AIG Global Real Estate.   Read the rest of this entry »

Amid all the bad news of the U.S. labor market and employment growth (or lack thereof), I thought it was appropriate to share some positive information. The Financial Times reports that institutional capital–and more specifically, pension funds–have begun to re-enter the commercial real estate market after two years of tepid reception (actually, outright skepticism is probably more appropriate). Remarkably, especially in light of recent history, the article notes that “prime property in particular” has offered “a safe haven in otherwise uncertain markets.”

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