Megadeals Mark Commercial Real Estate Market in H1

Buyers continue to show eagerness to snap up fancy offices, hotels and malls in Russia, and though commercial real estate investment won't reach last year's historic high, it could surpass $6 billion, analysts say.

Snapping up fancy offices, hotels and malls is continuing apace in the domestic market, and though commercial real estate investment won't reach last year's historic high, it could surpass $6 billion, analysts say.

This year's level of investment, which is measured in purchases of buildings by other real estate players, is already more than $2 billion, according to various estimates.

Jones Lang LaSalle puts the amount for the first half of 2012 at $2.4 billion, while fellow real estate consultancy Knight Frank Russia & CIS said the deals closed in the first six months equal $3 billion.

Including the $1.1 billion sale of St. Petersburg's Galeria shopping complex — a deal that was supposed to close in January, Bloomberg reported at the time — Cushman & Wakefield gives the first-half figure as $4.18 billion.

This year's big transactions include Russian real estate investor O1 Properties' purchase of Ducat Place III, the Class A office tower at 6 Ulitsa Gasheka, from U.S. developer Hines for about $370 million, said Tom Devonshire-Griffin, head of capital markets for Jones Lang LaSalle Russia and CIS.

Immofinanz Group bought a 50 percent stake in Zolotoi Vavilon, or Golden Babylon, a 450-store shopping center in Moscow, for more than $500 million, according to information from Cushman and Knight Frank.

Also among the deals is Bin Group's purchase of the Summit office complex on Tverskaya Ulitsa and other properties for about $980 million, according to Jones Lang LaSalle.

Despite the hefty figures, deal volume so far this year has been substantially lower — perhaps by nearly half — compared with the volume in the first six months of 2011.

Investment transactions tapered off in the first quarter because of European debt malaise, a respite after year-end deal-making, and a wait-and-see attitude among Russian buyers because of the March presidential election.

International investors weren't deterred, Devonshire-Griffin said, because "they want to see stability." Barring a change in government or tax policies, they take the approach that politics "is what it is" here, he said.

Views differed on the liquidity needed for major investments.

"We do have the availability of finance, which is key to Russian deals," Devonshire-Griffin said, given that they are typically huge transactions that require the parties to seek out loans.

Russia's VTB, Sberbank and Alfa Bank are the most active lenders, he said. Foreign institutions Raiffeisen, UniCredit and Aareal Bank are also engaged in the market.

Alexei Filimonov, general director of real estate adviser Astera, called project financing "more like mythology than reality." He did point to Sberbank and VTB as relatively active lenders.

Compared with last year's $7.5 billion in overall investment, excluding the Galeria deal, this year's haul is expected to be about $5 billion, said Olga Yasko, regional director for analysis and market research at Knight Frank Russia and CIS.

Somewhat higher is the 2012 estimate from Jones Lang LaSalle, which is $6.5 billion.

"We will get very close to last year's volume," said Alexander Zinkovsky, a senior research analyst at Cushman. The firm expects investment volume to be $7 billion.

"There is demand, and there is supply," Zinkovsky said.

He said investors are seeking Class A and Class B offices, Class A warehouse space with modern technologies and shopping centers with a mall concept and interior design.

Many analysts said Europe's debt crisis has weighed down the market.

"The significant factor in investment is the general economic situation in both Russia and in the world at large," Yasko said. "Further development [of the market] will depend greatly on the resolution of the European Union situation."

Source: http://www.themoscowtimes.com/business/article/megadeals-mark-commercial-real-estate-market-in-h1/461871.html

Property Made Easy

Turkey has made major changes to laws governing the sale of real estate to foreigners this year. The changes make it easier for foreigners to purchase property in Turkey, and are expected to attract a massive amount of investment to the country, despite concerns that a bubble is being created.

In 2011, property sales to foreigners were about $2 billion, a decline from the $2.5 billion the year before.

Sales are now expected to surge following the amendment of a reciprocity law that was limiting foreign investment in the sector.

"We anticipate that these new regulations, which facilitate property acquisition by foreign nationals in Turkey…will come into force in the second quarter of 2012," says Işık Gökkaya, chairman of the Istanbul-based Association of Real Estate Investment Companies (Gyoder).

Now the reciprocity law is amended, Turkey could attract as much as $5 billion in annual capital inflows to the real estate sector, he says.

Currently, most real estate purchases by foreigners are made by investors from Germany and the U.K., according to Erste Bank analyst Mehmet Emin Zumrut.

The changes mean, however, Turkish real estate will be open for direct investment from Russia, Central Asian countries, and the Gulf states.

Another recent change in legislation has made it possible for foreigners to purchase property in Istanbul's central Beyoglu district—considered a military area. Before that law was amended, foreigners who wanted to own property in Beyoglu were forced to skirt the law by having a Turkish citizen buy property on their behalf, or by establishing a local corporation.

"Now as a [foreigner] you can just go and buy an apartment," says Ibrahim Yilmaz, an independent real estate agent who helps foreigners purchase and rent property in Istanbul.

The Turkish government sees sales of real estate to foreigners as a way of gaining foreign direct investment and financing for the public budget, both in the form of taxes and property purchases.

Another recent amendment includes the ability to buy 4.1 million acres of deforested, or 2-B, land owned by the treasury department, which until recently had been off-limits to developers.

Opposition parties had opposed the sale of the land for city expansion, arguing that the infrastructure in many Turkish cities is already overstretched.

Source: http://online.wsj.com/article/SB10001424052702303459004577363683068236486.html?mod=googlenews_wsj

Bulgaria's real estate market stabilising - realtors

Bulgaria's real estate market was still far from the peaks reached at the height of the property boom in 2007, but appears to have bottomed out, data released on April 9 by two local realtors showed.

The number of real estate transactions in 2011 was up by 22 per cent compared to the previous year, according to real estate consultancy firm Yavlena, but the bulk of the deals concerned agricultural land.

The number of transactions involving mortgages rose by only 4.2 per cent, and their share in the total number of real estate deals declined to 15 per cent (compared to 25.7 per cent in 2008).

But a positive development was the decrease in the annualised interest rate charged by banks for mortgages, in particular those leva, which now were on the same level as interest rates on mortgages in euro, Yavlena data showed.

Nevertheless, activity on the housing segment was down despite growing supply, as demand for apartments in the medium and high-price range was down drastically. Most prospective customers sought housing in the low price range, defined by Yavlena as 25 000 to 50 000 euro, but supply of such housing was low, Yavlena said.

Prospective buyers were a lot more cautious and less optimistic about the future, but also better informed about financing terms than at the peak of the real estate boom.

Housing prices continued to decline, but at a slower pace than in previous years, Yavlena said. The company said that it envisioned the same trends continuing this year and in 2013.

In a separate statement on the state of the real estate market in the last quarter of 2011 and the first quarter of 2012, consultants Bulgarian Properties struck a more optimistic note, saying that real estate prices had stabilised, as had the number of property transactions.

The strong drop in prices over the previous several years have made certain properties in Bulgaria's winter and seaside resorts attractive, with Russian buyers in particular active in purchasing property on the Black Sea coast.

Russian and Bulgarian buyers were the mainstay of the holiday properties segment of the market (once dominated by British and Irish investors), the company said. The same two groups were most active in purchasing village properties.

Source: http://www.sofiaecho.com/2012/04/09/1804799_bulgarias-real-estate-market-stabilising-realtors