In the past year global property markets have reacted to the impact of the U.S. sub-prime market on debt and capital markets and now there is growing concern about a declining global economy. While there are many grim economic forecasts there are also those that point to new global property investment opportunities.
Commenting on global property markets, Paul Reitz, Vice President Investment Services, NAI Global said, "The biggest challenge facing investors today is the overall instability of the capital markets. Whether a property market is strong or weak, as long as you have stability, investors can assess risk with some degree of confidence and price investments accordingly."
"Even investors and institutions that are flush with cash are hesitant to make commitments as they are waiting for signs that the current situation is stabilizing."
"Additionally, the lack of financing in the markets has created a tremendous challenge to the normal flow of property transactions. Generally speaking, loans are harder to find, take longer to obtain, are more costly and offer lower leverage."
Reitz continued saying, "Foreign investors perceive that the market problems will depress property values and create buying opportunities. Similar to the RTC days of the 1980's, investors have shifted a lot of focus to heavy discount buying of loans and properties. Additionally, there has been a flight to quality, albeit at more attractive pricing."
"Without ample financing alternatives in the marketplace, the number of qualified buyers, particularly for the larger transactions is greatly diminished." Reitz added.
Paul Reitz who directs NAI Global's investment activity in Latin America (see bio below) will be participating in a panel discussion about the emerging markets of Brazil, Russia, India, China and others at the Global Property Market to be held in Toronto on December 2nd. – Global Property Market Brochure (PDF)
Also presenting at the conference are Jacques Gordon, International Director and Global Strategist, LaSalle Investment Management and Laurent Ternisien, Managing Director Investment Property Databank Limited who will provide an overview of how major international markets are performing.
A panel led by Tim Boytinck, Managing Director, Farragut Capital LLC, USA titled, "Is Debt the New Equity?" will examine the replacement of highly leveraged transactions and readily available capital by constrained credit markets and masses of balance sheet debt seeking new lenders.
The challenge and importance of making sense of the rapidly evolving global property market is underlined by the following recent news stories.
First the bad news.
Global Turmoil Threatens Calgary's commercial Real Estate – Calgary's commercial real estate sector stabilized in the third quarter of this year, but storm clouds are on the horizon. There are 5.5 million square feet of prime AA and A class space under construction in the downtown market of which 718,500 square feet is expected in 2009, 3.1 million square feet in 2010 and 1.7 million square feet in 2011.
Calgary Herald , November 05, 2008
Homburg cancels proposed Cedar SC joint venture – Homburg Invest previously reported proposed joint venture with Cedar Shopping Centres to purchase 32 properties has been cancelled. The joint venture had proposed the acquisition of 27 properties in the U.S. totaling slightly more than 1 million square feet for an approximate cost of US$ 128.9 million.
Canada News Wire, November 3, 2008
Shopping Centres Emptying – The bleak global economic outlook has started to hit home – literally, with household income being eked out only for staple items. This is leading to a two-tiered retail property market. Shopping centres anchored by supermarkets are faring much better than those reliant on fashion and discretionary stores.
Australia's Sydney Morning Herald, November 08, 2008
The good news stories are:
German Funds are Back in Action – After a couple of years of inactivity, where they registered a net outflow of capital, the large German open-ended property funds are now firmly back, investing in major commercial property assets. Net inflows of €6.68 billion in 2007, with more in 2008, have allowed the funds to return to the market.
NAI Global Blog , November 6, 2008
Brookfield looks to go bargain hunting – Brookfield Properties says a third quarter profit has helped it amass a small war chest in order to pick up distressed commercial properties. Brookfield, which owns more than 100 properties in a number of major North American cities, made $174 million in the latest July-to-September period.
CBC, November 7, 2008
Falling CRE values create opportunity – Falling commercial real estate values are expected to create an opportunistic environment for buyers of distressed properties in 2009, according to Jones Lang LaSalle’s Fall 2008 Cross-Sector Survey.
Globe St., November 3, 22008
"More than ever, information is key to success in this market cycle. The upcoming Global Property Conference will be an invaluable opportunity to hear and learn from a diverse group of global real estate professionals" said Paul Reitz about the the Global Property Market.
What is an advisable global property investment strategy for 2009? How can you turn the challenges of failing financial markets into a global property opportunity? Find out at this years Global Property Market.
Registration cost for the Global Property Market is only $395.00 plus tax until November 24th including the Chairmen's reception for the Toronto Real Estate Forum.
Registrants to both the Global Property Market and Toronto Real Estate Forum receive a $50 discount for a combined registration fee of $990.00 + tax.
Paul A. Reitz CCIM, Vice President Investment Services, NAI Global
Paul directs the investment activity of the firm in Latin America and provides clients with transactional and advisory services including debt and equity placements, joint venture structuring and investment acquisitions and dispositions throughout the Americas. He has over 25 years of experience in real estate on the investment, development and brokerage sides of the industry. Recent significant accomplishments include the sale of a major office tower in Rio de Janeiro and providing advisory services for the proposed Waldorf Astoria development in Montreal.
Prior to joining NAI Global in 2006, Paul was the chairman of a boutique property investment firm that owned and operated a $150M portfolio of hotels, office and retail properties.