| Real Estate Lawyers
Q&A: State of the Market: Global Overview
What are the main trends you see in regard to your practice area?
I would say it is a maturing market. It has become much more professional compared to 2007. The markets have become more segmented, so investors just focused on logistic properties or on retail properties; withdrawing from other sub-sectors of the real estate market –office space, for example. Starting at the end of last year and through the beginning of this year, there also has been a trend towards more opportunistic investments in value-added properties. Lastly, I think green building continues to be a trend. Investors want their properties to be greener than ever.
Dr Roland Bomhard, Hogan Lovells, Germany
Are there any recent deals or developments that are noteworthy? Why?
There have been a few significant transactions, the latest being a joint venture formed by Saxo Property along with Resolution, a UK-based private equity fund. They have committed themselves to go into the market and invest on a yearly basis for 2 billion DKK. They have begun to search for properties, which could help to spur their transaction market, or at least give some life to it. One pension fund especially of note in Denmark has invested in Aarhus, the country's second-largest city. A retail centre was also sold in central Copenhagen for more than 1 billion DKK to a foreign private equity fund.
Mr Flemming Horn Andersen, Kromann Reumert, Denmark
How optimistic are you about this sector over the next 12 months and why?
On a global basis, it is one of the safest places to invest in real estate. Unfortunately, it's a small market. Within the Canadian economy, real estate is like gold: it will be resilient as other tangible assets. It is a predictable market. The only things we can't predict are obscure fluctuations in the public market that affect debt.
Mr Simon P. Crawford, Bennett Jones, Canada
I would say there is ongoing personal sale activity. Financing is available, conservatively underwritten requiring significant equity; however there is plenty of equity available. For the best properties that you might call "trophy" or "A properties," it's very competitive and the prices are reaching historical highs. For non-premium properties, there is still a reasonable amount of transactions and leasing activity taking place in Washington, particularly downtown and in the central business district.
Mr Philip M. Horowitz, Venable, Washington, DC
Actually I think it will at best stay flat. It could well go down but New Zealand has been quite resilient compared to the rest of the world.
Mr Greg Towers, Simpson Grierson, New Zealand
We're seeing growth in the office market after a few years of little activity: both in terms of change in ownership as well as the launch of new projects. Essentially, the markets absorbed a large amount of office space during the past few years. Now, the occupancy rates are high. Three years ago, we saw no new projects at all. This is now changing. Some money is getting channelled from residential development into office development. This is a more solid market than the residential one because it's backed by consumers like big corporations, law firms, accounting firms and banks, who are willing to finance these projects with fixed-income producing assets. In the residential markets, we're seeing a number of infrastructure projects involving solar energy.
Mr Yaron Grofman, Tadmor & Co, Israel
What are your clients' top-three concerns?
The biggest issue at the moment is the worldwide recession. Like the property market all over the globe, the real estate market in South Africa is in the doldrums. Property values have barely appreciated over the past year or two. Banks are not lending significantly, so the buying and selling market is in a very subdued state at the moment. I think that is the biggest economic challenge at the moment: for the banks to start lending again on a larger scale.
Mr Hugh Jackson, Cliffe Dekker Hofmeyr, South Africa
I think there is a trend toward private equity funds and investing in large real estate projects, as well as to create REITs (real estate investment trusts) for the various types of properties. The Mexican hospitality industry is becoming particularly attractive to private equity players and developers, as well as hotel chains investing in real estate along Mexico's coasts. Many of these transactions have interesting financing components. I believe the trend is to go more sophisticated with financing structures along with private equity funds.
Jorge Cervantes Trejo, González Calvillo SC, Mexico