Commercial Real Estate Finance

Posts Tagged ‘construction’

Viva Las Vegas Building? - Discussing whether there are signs of a bottom in Vegas construction, with Dick Rizzo, Tutor Perini Corp.

After suffering heavy losses, is pricing on commercial property in the UK back? Sabina Kalyan of CBRE Investors thinks so.

In times like these, savvy real estate owners all sing a similar tune.  Why build when you can buy for half the cost (or at least significantly below replacement cost)?  And this is a good question.  Yet despite the cyclical nature of real estate, land is bought and sold at all times during the cycle. And this got us to thinking.  If an asset like land, which by nature does not produce income, can continue to change hands, then what are the real drivers of modeling a land deal? How speculative is it really?

That got us thinking even more (we try not to think too much… it makes us tired) about other similar markets for assets of a speculatively priced nature.  Fine art is one particular commodity/asset class that comes to mind. So let’s examine the similarities and differences between pricing for raw land in the realm of real estate, and the pricing of fine art in the world of the aristocrat. Read the rest of this entry »

The Burj Khalifa, known for much of its (seemingly decade long) construction period as the Burj Dubai, opened January 4th 2010 to much fanfare and fireworks, which were televised around the globe. It is the tallest tower the world has ever seen. It was supposed to serve as a metaphor for the grandiose and burgeoning man-made (and oil-financed) structures of the city of Dubai itself….a “Mecca” not just for the Arab world, but rather to for the industrialized world as well. It was supposed to attract tourists, all by itself, to a region that was lacking them desperately. But the name change it recently underwent at its grand opening turned out to be a metaphor for something else… Read the rest of this entry »

Developers of ground-up construction in today’s economic climate are piling up horror stories of projects they are working on that have stopped dead in their tracks due to short falls in financing. In some instances, developers have had to ask their contractors to immediately halt progress on a site just after laying the foundation for a new building.

However, these developers need not worry as they can still secure financing for completion of their projects. All they need to do is go to their local or regional bank and prove to the lender that they are in such great shape that they don’t require any capital whatsoever. The bank will then be happy to let them borrow. Yes, I realize that this makes no sense at all–it’s a classic Catch-22. But such is the current availability of financing for ground-up construction.
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With an increasing number of building projects stalling out due to limited availability of debt financing, we are bound to see some development projects take much longer than expected. If you’re a developer working on a project that seems like it will never finish because you simply can’t get sufficient access to credit, have a look at this list of the 10 Longest Construction Projects. Maybe it will make you feel better. Of course, there’s also a chance it may make you feel worse…

#10 – The Parthenon (Greece)
Duration: 17 years

#9 – The Great Pyramid at Giza (Egypt)
Duration: 20 years

#8 – Sacsayhuman (Peru)
Duration: 63 years

#7 – York Minster Cathedral (U.K.)
Duration: 252 years

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