Cluttons First Dubai Office Market Bulletin

Cluttons LLP, the Central London, UK-based real estate firm, has introduced its inaugural Dubai Office Market Bulletin for Spring 2016, which "seeks to unpick the complexities of Dubai's fragmented office market, while providing a detailed overview of the city's office landscape." The bulletin draws from the performance of 22 submarkets across the city in the first quarter of the year, which revealed that 13 markets showed no change in starting rents in 2015, while seven markets had notable increases, and two markets with lower limit rents decrease over the 12 months of 2015.

"Despite sustained demand, occupiers remain cost conscious and budget driven in the face of a softening global economic backdrop, with the key word for many being 'prudence'," said Faisal Durrani, Cluttons' head of research. "Landlords, by contrast appear to be slow to react to the cooling market, with many reluctant to move on asking prices and others demonstrating a lack of flexibility for lease terms at renewal. The emerging gulf between market reality and landlords' expectations is a concern, particularly for a market that is now starting to show signs of maturity."

According to the bulletin, with the establishment of two new free-zones in the form of Dubai Design District (D3) and Dubai World Trade District in 2015, Central Dubai has become the focus of many occupiers and developers, particularly as it has long suffered from a demand-supply imbalance in the face of rising requirement levels. D3's lower and upper limit free-zone rents have registered a 67% and 28% rise respectively since its launch, pushing them to between AED 150 psf and AED 165 psf.

To read the full report, click here. For more news and information visit Blumberg Partners.

CoStar: REITs Will Be Big Sellers in 2016

CoStar Group has reviewed over 80 year-end and fourth quarter earnings reports, along with 2016 outlines, for publicly traded REITs and is projecting a majority of the nation’s publicly traded REITs and real estate companies expect to be big sellers of properties this year, according to a new article. With three times as many REITs projected to be net sellers compared to net buyers, the reviewed companies have disclosed an expectation to sell more than $20.7 billion in properties this year, while only anticipating $9.8 billion in acquisitions.

"Even though the year started with choppy financial markets, we continue to benefit from a very strong real estate market and we expect 2016 to be another very good year," said Bill Hankowsky, chairman, president and CEO of Liberty Property Trust, citing "strong demand from the investment buyer universe."

"Our overall disposition efforts have resulted in a significant reduction of our non-core holdings in Pennsylvania, New Jersey, Delaware, Richmond and Northern Virginia," stated Gerard Sweeney, Brandywine Realty Trust's president and CEO. "In addition, these transactions significantly increase our financial capacity, reduce debt and provide ample liquidity for our development pipeline."

"We expect to complete, including the pending investments announced today, between $750 million to $1 billion of total real estate investments in 2016, subject to favorable capital market conditions," said John Thomas, president and CEO of Physicians Realty.

For more news and information visit Blumberg Partners.

2016 AFIRE Foreign Investment Survey

The Association of Foreign Investors in Real Estate (AFIRE) has released its 24th annual survey of members which shows that 64% of respondents say they expect to have modest or major increases in their investment in US real estate in 2016, with another 31% indicating they expect to maintain or reinvest their investments. According to the survey, none of the members, who are among the largest international institutional real estate investors in the world and have an estimated $2 trillion or more in real estate assets under management globally, have plans for a major decrease in the US commitment. The survey was conducted in the fourth quarter of 2015 by the James A. Graaskamp Center for Real Estate, Wisconsin School of Business.

"The investment opportunity is the United States, itself," said James Fetgatter, chief executive of AFIRE, in a press release. "The real estate fundamentals are sound; the economy continues to remain strong; there are opportunities across all sectors of the real estate spectrum and in both gateway and secondary cities. The recent legislation bringing welcome relief from certain FIRPTA taxes should provide additional incentives for foreign investment into the US. In an environment that is regarded both as the safest and most secure in the world, with a strong currency and the best opportunity for capital appreciation, the US is the safest harbor."

Highlights of the AFIRE survey include:

• 60%t of respondents said the US was the country providing the most stable and secure real estate investments. By comparison, Germany, which came in second, had only 19% of the vote.

• With 46% of the vote, the US was also cited as the country providing the best opportunity for capital appreciation. Brazil, second in this category, received 17% of the vote.

• 85% of respondents said their perspective on the viability of the US real estate market was unchanged over last year, although 80% of respondents said it was "very" (35%) or "somewhat" (45%) difficult to find attractive US real estate investment opportunities.

To reviews graphs of the survey data, click here. For more news and information visit Blumberg Partners.

CBRE Says US a Top Target for Asian Investment

A new report from CBRE Capital Markets indicates that activity from Asian outbound commercial real estate investment has picked up in the United States, with research from the company showing that numbers surged to $8.6 billion in the first quarter of 2015. Russell Ingrum, Vice Chairman, CBRE Capital Markets, commented: "The U.S. firmed as a favorite investment destination for Asian investors, weighted with the closing of some high profile trophy deals. Asian investors are also seeking assets across the size, quality and risk spectrum. We saw strong demand from Chinese-based developers in the lower price brackets particularly along the West Coast. This economically vibrant area is particularly attractive due to its proximity to Asia and its familiarity to investors – there is a large Asian population and many investors went to school in this part of the world, have friends or relatives, or vacation here."

"Asian outbound investment enjoyed a strong start as a number of key deals stretched into the quarter, but we also saw under bidders moving on to alternative deals that kept the numbers buoyant," added Marc Giuffrida, Executive Director, CBRE Global Capital Markets. "Based on our work levels, we expect to see growing interest in opportunities within Germany, while in UK regional areas this could be in office, retail and logistics. They are being drawn by the higher real-time yields, and we are now seeing rental growth. As growth is coming back to Europe, we foresee opportunities in commercial development as an alternative to buying core office buildings. Perhaps the most interesting area for growth is underway in the alternative space such as student housing, as well as health and aged care. The latter are two strategic areas where given the rapid shift in elderly demographics in Asia and around the world; we can expect the acceleration of patient capital providers from insurance groups and conglomerates."

For more news and information visit Blumberg Partners.

DTZ Shows US CRE Rise in Q3

DTZ's research and consulting services arm released its quarterly Investment Market Update for Q3 which shows that U.S. investment volumes reached $66 billion in Q3 2014, up 8% from the previous quarter. With the headline "Invest now while pricing remains attractive", DTZ notes that a big share of the activity in eight top markets such as Chicago, Manhattan and San Francisco came from cross-border investments, with signs that investors' interest in secondary markets has perked up.

"The size, attractiveness and liquidity offered by the key eight markets is very appealing to overseas investors," said Nigel Almond, Head of Capital Markets Research at DTZ. "International capital continues to dominate, but we have continued to see interest from Asian investors in particular from China, as well as growth from European sources, with German funds increasingly active alongside the Norwegian Government State Pension Fund."

Although domestic investors continue to dominate investment, over the last quarter the level of activity has dipped. In contrast cross-border investment grew both from the rest of North America, but also from outside of the region. Of note, Non-North American investors stepped-up acquisitions, taking rolling annual volumes to a new post-crisis record of $23.5 billion and net sales posting a record $3 billion over the last year.

To read the full report, click here. For more news and information visit Blumberg Capital Partners.

Blumberg in the News

Philip Blumberg, Founding Chairman and CEO of Blumberg Capital Partners, was featured as a Cityscape speaker in a 60 second interview with Cityscape Global this month. An excerpt follows:

Q. Whereare the best investment opportunities in global real estate today? USA, Europe, Asia or Middle East?

Opportunities lie in developments and acquisitions which respond to fundamentals and real end user demand, rather than speculation.

I would look to:
Affordable housing, triple net corporate facility investments, opportunistic acquisitions of heavily discounted but well conceived, located and executed commercial and office developments in developing and emerging markets.

Down the road investment in European economies.

Q. How significant is speaking at the Global Real Estate Summit to you? What are your reasons for taking part?

Having the opportunity to speak and participate in this conference over the past 10 years has been a privilege and very enjoyable experience.

Watching this event grow into one of the preeminent real estate conferences in the world is a remarkable achievement, and a good use of the most precious resource: time.

To read the full article, click here. For more news and information visit Blumberg Capital Partners.

Blumberg In The News

Philip Blumberg was recently interviewed by Amwal Al Ghad, a monthly issued magazine that covers all news about economy, Banks, investments, stock market, and all other related financial sectors in Egypt. An excerpt from the article follows:

Amwal Al Ghad En: What is the company's vision over the real estate sector in Egypt even the challenges it facing amid the political turmoil? In addition, what are the market's current demands?

Blumberg: First, my expectations in Egypt it will attract investments as soon as possible because investments in real estate travel very quickly. Secondly, the affordable houses are important and much needed in Egypt, which also the Egyptian government can assist. The housing sector should support the PPP system.

We think there are opportunities in the office-building sector that we can reposition them from the C to A class.

We look to the region of Egypt as it has more jobs; it is a promising market for exports and manufacture, more and above it is the great real estate residential sector for affordable houses.

The companies will not come if they will not see stabilization in Egypt. Therefore, we are looking now for US government support for Egypt

John Kerry, US Secretary of State, has allocated $250 million for Egypt; it will be released as soon as the IMF discussion is over, for the Egyptian government's projects. We believe they go to the infrastructure and job creation to help people.

There is another $ 750 million but the US government is waiting that how the Egyptian government could utilize the $250 million.

To read the full interview, click here. For more news and information visit Blumberg Capital Partners.

Fragile Recovery for Home, Investment Markets

While the February home sale figures dip, home sale statistics are affected by the economy underpinning them, generally several months preceding the home purchase decision, and the closing several months later.
Therefore the associated sale and pricing figures are lagging indicators by 3-4 months or so.

With this in mind we are now seeing stronger investor interest as recent employment rates improve and the outlook for the residential market demand improves.

This coupled with a bit more flexible bank lending policy for home mortgages
suggests an improving outlook for US home sales and a stabilized pricing
environment.

Bodes well for investment in the US residential market.  Though I'd term it a
fragile recovery, that could easily lose traction if global economies, with a particular eye on Europe, retreat throwing US employment figures negative.

Is the CMBS Recovery Faltering?

The Wall Street Journal thinks so. A new article from Al Yoon at the Journal observed that the recovery in the commercial mortage-backed securities market has stalled out even though before the summer all indicators showed a favorable return on the horizon post-recession. An excerpt from the article:

Investment banks have sold four issues of the bonds, valued at about $6 billion, since the market hit the brakes this past summer because of investor skittishness about the souring economy and an 11th-hour decision by rating firm Standard & Poor's to pull its rating from a deal.

But to sell these issues banks had to structure them differently, providing buyers of the safest bonds more protection than usual. Now, weak investor demand is hampering the sale of the riskier parts of the new issues.

For example, J.P. Morgan Chase & Co. has been trying to sell a quarter of its $1 billion issue for two weeks as investors have been balking at yields on lower-rated classes, according to two investors familiar with the deal. Sales have been slow even as J.P. Morgan raised the risk premiums—or the amount of yield above their interest-rate benchmark—at least twice for these riskier bonds, the investors said.

Meantime, the bank easily sold the senior, safest bonds within days of the deal's announcement. A spokesman for the bank declined to comment. Investors say J.P. Morgan has sold most of the high-risk bonds but took much longer than usual.

The difficulty means that banks may have to go even further to make commercial mortgage securities attractive to investors. "Everyone wants to be in a safe haven, but once you go down in the capital structure, it's not looking so good," said Julia Tcherkassova, a strategist at Barclays Capital in New York.

For more news and information visit Blumberg Capital Partners.

Third-Quarter 2010 Real Estate Investment Outlook Report

A new report titled Third-Quarter 2010 Real Estate Investment Outlook: Investors Go On Offense, finding that Improving capital markets spark renewed interest across property types, has been released by National Real Estate Investor, Retail Traffic, and Marcus & Millichap. Earlier this year the groups invited private investors and developers of commercial real estate to participate in a survey to gather market opinions; the majority of respondents were private investors (36%); private partnerships (19%) or developers (16%) with an average of $35.8 million invested in commercial real estate. The full report can be read here. An excerpt:

The exclusive National Real Estate Investor/Marcus & Millichap Investor Sentiment Index shows that investor confidence has taken a major step forward in the past year. After bottoming out in 2009 with an index rating of 91, investor sentiment rose to 113 in the first quarter and 119 in the third quarter of this year. Although the index shows that sentiment is still well off the high of 148 that occurred in 2005, the positive trend over the past year is an encouraging sign that investor confidence is returning.

The index takes into account survey responses related to expected changes in property values for various real estate sectors, as well as plans to increase or decrease total real estate holdings. The baseline of 100 indicates neutral sentiment for the industry. The trajectory shows that investor sentiment reached its high in 2005, followed by a dip to a trough in 2008 and 2009, and is now showing signs of an upswing in 2010.

For more news and information visit Blumberg Capital Partners.