Asian CRE Lows Spur Buying Shift

With commercial real estate yields at their lowest in Asia, with yields for centrally located office buildings just 2.2% in Taipei, 2.8% in Hong Kong and 3.5% in Tokyo and Singapore, investors are taking on more risks, and even considering purchases outside of their regions. A new Wall Street Journal report titled Sinking Yields in Asia Spur a Property-Buying Shift examines the current international markets, and their hot spots. An excerpt follows:

Pension funds, sovereign-wealth funds and other institutional investors have been willing to accept such low returns because they look attractive in a low interest-rate environment. But it also means that buyers are exposed to a loss in value if interest rates rise and demand for such low yields cools.

Yields have fallen so far in Taiwan that financial regulators last year instituted a new rule that limits domestic insurance companies' investments to properties that offer a rental yield of 2.875% or above. Authorities also have allowed insurance companies to buy real estate outside the country's borders for the first time.

Investors are modifying their strategies. Terence Loh, executive director at China-focused investment fund CDH Investments, said he has been investing in development projects in cities such as Beijing, Hangzhou and Xi'an rather than buying existing buildings. "The risk-reward is more compelling," he said.

Also, if interest rates rise faster than inflation, owners could get squeezed, especially if they have floating-rate debt, experts say. "These tight [yield] rates will have a very small margin of error," said Nicholas Wilson, research manager for capital markets in Asia Pacific, at JLL.

For more news and information visit Blumberg Capital Partners.

Blumberg Grain, a division of Blumberg Capital Partners, to Open 5 Manufacturing Plants & Export Hubs as Part of its Asia, Middle East-North Africa (MENA), Middle East-South Asia (MESA), and Sub-Saharan Africa Expansion Plans.

Blumberg Capital Partners, a market leader in investment management and infrastructure development, is expanding Blumberg Grain, its food and grain safety and security systems division.
Blumberg companies are active in real estate and commodity investments, resource development, food and grain storage and security, and manufacturing.

Blumberg Grain provides public and private sector customers with food and grain storage and security systems and assists them manage their food supply through comprehensive network management services.

Blumberg Grain warehouses are prefabricated and pre-engineered to be the most effective and cost-efficient solution for food storage available on the market.

Blumberg Grain, has been engaged by countries located in East Asia, North Asia, the Middle East-South Asia (MESA), the Middle East-North Africa (MENA), and Sub-Saharan Africa to supply food and grain storage and safety systems as part of its plan to select 5 locations for its manufacturing and export hub expansion by the end of summer 2012 with an anticipated construction start date as early as the end of 2012. The 5 hubs will have an estimated employment of 6,000 people.

The initial focus of the manufacturing plants will be to produce prefabricated Blumberg Grain Storage Warehouses, each with 6,000 square feet (557 square meters) of storage.

Through increased trade activity and development, these manufacturing plants and export hubs have the capacity to manufacture 3,000 warehouse buildings annually or US $375M in output.

Currently, up to 50% of worldwide crop yields are lost annually due to lack of proper storage facilities. Accordingly, the demand for modern grain storage systems is a priority across the globe.

The Asian market, excluding China, has a demand of approximately US $80 billion for food storage warehousing systems and the MENA region a market demand of approximately US $22 billion.

Blumberg Grain offers a complete solution that begins with helping nations assess their food safety and security issues and progresses into the development of turnkey storage facilities with management support designed to bring post harvest crop losses to under 5%.

From basic dry storage unit for grains and dry goods to refrigerated and gas displacement systems for perishables including produce and meat, Blumberg Grain warehouses extend the useful life of perishables by up to 6 months. These warehouse units, designed specifically for developing world markets, are powered using an independent energy supply that insures primary or backup operation power.

By extending produce storage-life, users of Blumberg Grain systems can select and time the sale of its agricultural products into premium priced markets away from harvest peak supply periods.

Blumberg Grain's state of the art Network Management Services enables full turnkey systems and the most responsive solutions for food and grain safety and security including controlled access systems; interactive sensor monitors and controls for temperature, humidity, gas monitoring and other variables tied to mechanical and forced venting; controlled atmosphere through refrigeration and nitrogen displacement systems; an inventory management system which can track national food and grain supplies. Furthermore, the inventory management system can directly tie into national commodity markets allowing trading of food and grain supplies directly from the warehouse network. Blumberg Grain also provides strategic re-stockpiling of key food stuffs through hedged forward contracts assuring food supply and food inventory levels. Additionally, Blumberg Grain can also provide assistance in securing financing for the food storage systems.

For a video about Blumberg Grain's turnkey system please click here.

To download the storage unit and option brochure please click here.

For more information, please visit http://www.blumberggrain.com or contact Vicki Rosa atvrosa@blumbergcapitalpartners.com or 305-569-9500.

Philip Blumberg on CNBC Asia Squawk Box 10/28/10

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