High Risk for High Reward? Real Estate Investors Turn to Africa

Market Analysis - Africa:


AFRICA - Forecasts for 20-per-cent net annual returns from investing in shopping malls, office blocks or industrial complexes in countries from Zambia to Kenya are drawing in new investors, despite fundamental concerns... http://ow.ly/3pRvM1

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Canada Building Permits Up in May

The first of this week’s important reports on the market was released yesterday. Statistics Canada’s building permits data for May shows an increase in permits issued; up 13.8 per cent from April; with commercial property in Ontario and Manitoba and multi-family units in BC being the big areas of growth. Quebec and Nova Scotia were the only provinces not to see an increase. For residential property, there was a 9.5 per cent increase in construction intentions, the third month of gains in a row, with BC seeing the highest increase and Nova Scotia posting a decline after recent growth. For commercial property, there was a 20.8 per hike in permits, with Ontario and Manitoba gaining most and Quebec, Saskatchewan and Nova Scotia seeing declines following large increases in April.

EDI Group Plans Mixed Use Development

UNITED KINGDOM - Edinburgh Council’s property development and investment business has submitted plans for a 687,000 sq ft mixed-use development in Edinburgh’s Fountainbridge area.

The plans include 350 housing units, a 130-bedroom hotel, offices and 48,175 sq ft earmarked for retail and food and drink, including a 23,000 sq ft supermarket.

There are also two arts venues planned for the area.

The 8.2 acre site, to the south of Fountainbridge, borders the Union Canal and has been out of use since 2004.

Lennox Pre-Leases 190,000 Sq Ft at NW Houston Development

HOUSTON - Lennox International (NYSE: LII) will anchor Phase 1 of Denver-based DCT Industrial Trust's (NYSE: DCT) Northwest Crossroads Logistics Center after pre-leasing 190,000 square feet at the northwest Houston development.

Currently under construction, Phase 1 is a 362,000-square-foot, single-story industrial development situated just off Beltway 8 in Houston's Hwy 290/Tomball Pky. Industrial submarket.

Lennox International, a manufacturer of climate control solutions for the heating, air conditioning and refrigeration industries, will take occupancy once construction wraps up in late 2014 or early 2015.

Construction on Phase 2 of DCT's two-building, 682,000-square-foot project is expected to get underway in the second half of 2014.

Aliko Dangote to Invest $12 Billion in Nigeria

NIGERIA - Aliko Dangote, speaking at the World Economic Forum, being held in Nigeria, Dangote told the forum that his company would invest a total of $12bn in Nigeria, and $4bn outside the country, over the next four years. The Dangote Group has interests stretching from cement to food.

The businessman - who is Africa's richest man - also China also promised further investment in Africa. Chinese Premier Li Keqiang gave a speech in which he pledged "no strings" support for an African plan to develop a continent-wide high speed rail network. He said China had set aside $2bn for an African Development Fund.

U.S. Construction Spending Rises but Less Than Projected

WASHINGTON -- U.S. construction spending rose less than expected in May, which could prompt a further downgrading of second-quarter economic growth estimates.

Construction spending edged up 0.1 percent to an annual rate of $956.1 billion, the Commerce Department said Tuesday. However, April's construction spending was revised up to show a 0.8 percent rise, taking some of the sting out of the report.

Economists polled by Reuters had expected construction spending to advance 0.5 percent after a previously reported 0.2 percent gain.

The data was the latest to suggest the economy's rebound from a brutally cold winter could fall short of expectations.

Houston's City Centre Is a Hit

HOUSTON - City Centre mixed used commercial development has quickly become a main attraction in Houston, Texas.

City Centre Continues to Drive Development in West Houston

HOUSTON - Just a few years ago Town and Country sat at the crossroads of Interstate 10 and the Sam Houston Tollway, major North-South and East-West corridors that could potentially funnel two million people to the site within 20 minutes, adjacent to one of the wealthiest ZIP codes in Texas.

What emerged in mid-2009 was CITY CENTRE, a distinctive mixed-use development that has drawn upscale retail shops and world-renowned restaurants, plus corporate tenants and discerning individual residents.

NYC construction spending hits 4-year high

Construction spending in the city topped $30 billion last year for the first time since the bubble burst in 2008, according a report released Thursday by the New York Building Congress.

That spending totaled $30.6 billion in 2012, up 3.6% from $29.5 billion in 2011, and not far off the all-time high of $31.1 billion in 2007. Last year's gain was fueled largely by a rebound in residential building and a surge in government spending tied in part to Superstorm Sandy relief efforts. Last year's performance marked the second straight year of growth for the construction industry after a precipitous decline to $25.9 billion in 2010.

"It really is a stronger than anticipated market," Richard Anderson, president of the Building Congress, said. "If you look at it sector by sector, it's easy to see why."

Residential construction is booming again, and while it remains well below the peak levels of the last decade, it has recovered faster than expected, Mr. Anderson noted. In fact, residential construction jumped 56% last year, to $5.1 billion. In all 10,599 units of housing were built, up 19% from 2011.

Government spending has held strong at $15.5 billion, down only $100 million from 2011, and not far off the 2008 peak of $16.3 billion. The Building Congress attributes this strength to ongoing work on a number of huge government projects, like the Second Avenue subway and the World Trade Center PATH Hub, and post-Sandy rebuilding work.

Non-residential work, as a whole took some of the steam out of last year's activity. The volume of work in that sector, which includes office, institutional and industrial projects slipped 8.5%, to $9.8 billion. Even there, however, Mr. Anderson said there were bright spots. "Universities and hospitals continue to build, which has been very good for the institutional segment," he said.

The big drag last year was office construction, which Mr. Anderson blames on still weak job growth. "We're not getting the jobs we need, and the jobs we are getting, they're taking up less space," Mr. Anderson said. Employers, trying to cut cost during the recession, shrunk not only their workforce but the amount of space they allocate to each staffer, by cramming more people into the same or even less space.

"The offices are ready to go, they're designed, whether it's Hudson Yards or the World Trade Center or on the avenues, but the leases just aren't there yet," Mr. Anderson said. "But they'll come."

Overall, the Building Congress remains optimistic and expects the construction market to continue to grow. "We've got a lot of different things going on," he said.