The number of commercial property sales in Europe climbed by more than a third in the fourth quarter, the fastest pace in three years, as cash-rich buyers returned to the market, according to CB Richard Ellis Group.

More than 1,100 transactions were completed throughout Europe, 36 per cent more than in the third quarter and 52 per cent more than a year earlier, the Los Angeles-based property broker said yesterday.

That’s about 75 per cent of the number at the market’s 2007 peak.

The sizes of transactions have also grown as investors that raised cash, including German property funds and sovereign wealth funds, compete for properties.

There were 24 purchases for more than 200 million euros (S$390.4 million) in the second half of last year, triple the number in the first half, CB Richard Ellis said.

‘There has been a significant increase in the average lot size,’ CB Richard Ellis said in the statement. ‘The combination of the recovery in values and ability of investors to complete larger transactions has driven this average up.’

Buyers’ access to debt was a crucial factor in the success of deals, the company said.

The average European sale was 23 million euros in the fourth quarter, according to the report. That compares with 49 million euros at the market’s peak in the third quarter of 2007, when there were 62 purchases for more than 200 million euros.

The total value of commercial property transactions was 25.7 billion euros in the final three months of last year, a 42 per cent increase from the previous quarter, the broker said on Jan 18.

That included one billion euros spent by German funds in December, in 13 acquisitions across seven countries.

Source: Business Times, 11 Feb 2010

Habtoor Group, a stakeholder in Barclays plc, has hired Rothschild to identify five-star hotel targets in Europe, its chairman said yesterday.

The conglomerate, one of the United Arab Emirates’ largest family businesses, is also aiming to win up to US$8.2 billion worth of building contracts this year with Australia’s Leighton Holdings.

Habtoor, which owns hotels in the UAE, was one of several Middle East investors that bought into Barclays in 2008 as the lender looked to boost its capital to weather the global financial crisis.

‘We talked with Rothschild bank . . . about investment in Europe and especially in London and Paris for hotels if there is anything they can find so they are looking for us,’ billionaire Khalaf al-Habtoor said in an interview.

He added that the group was also looking at companies which want to sell their assets due to a lack of financial liquidity.

Mr Habtoor said in August that the group had about US$1.3 billion to invest in Europe.

The group, which rivals Dubai’s largest contractor Arabtec, has a joint venture with Leighton and has said it may float its engineering unit or the entire group in the third quarter of 2010 with possible listings in Dubai and London.

Mr Habtoor declined to comment on the potential initial public offering yesterday.

The construction firm is working on about 27 billion dirhams (S$10.3 billion) of projects in the United Arab Emirates at present and expects to bid on about 40 billion dirhams worth of projects in Abu Dhabi alone this year, Mr Habtoor said.

‘We are expecting this year that we have to grab a minimum of 25-30 billion dirhams in projects,’ he said.

The company also expects to boost its presence in Qatar as it looks to diversify revenues away from its home market.

Source: Business Times, 26 Jan 2010

A slower correction in mainland European property values has turned tens of billions of euros of mortgage-backed bonds into potential time-bombs with a greater risk of defaulting than their UK peers, Fitch Ratings said.

The agency has so far this year downgraded 47.2 billion euros (S$97.7 billion), or 69 per cent, of European commercial mortgage- backed securities (CMBS) notes that it tracks, and maintains either Rating Watch Negative or Negative Outlook on a further 52 billion euros of notes.

It said that refinancing risk for CMBS linked to French, Dutch or German real estate may be even greater than in Britain because so many transactions were completed at the peak of a property boom in 2006 and 2007.

UK real estate prices have rallied after falling almost 45 per cent in the two years to September, but Fitch senior director Euan Gatfield said that continental European markets may be lagging, with further declines likely to collide with a wave of impending maturities over the next five years.

‘There is hope that the worst is over for UK commercial real estate, something that cannot be said for most mainland European markets,’ Mr Gatfield said.

‘With a prolonged wave of maturities arriving in two years time, financing pressures are building in the sector,’ he said.

Negative rating action has been concentrated in European CMBS without UK exposure, despite the fact that few borrowers have yet to deal with a loan maturity in European CMBS.

Although less than 5 per cent of European CMBS loans have suffered a missed payment, Fitch said that the growing number of financial covenants in breach of their terms has foreshadowed the difficulties that even performing borrowers will face when repayment is due.

Fitch said that about five billion euros of CMBS are due to mature in 2010, followed by 61 billion euros between 2011 and 2014, with a third of securities falling due in 2013. Some 13.5 billion euros worth of German CMBS loans are set to mature in 2013, including 10 billion euros from just four multi-family housing mortgages, twice the UK’s peak of 6.6 billion euros projected for 2012.

Source: Business Times, 26 Nov 2009

After seeing record growth this year, Frasers Hospitality is setting its sight on even more ambitious expansion for next year and beyond.

The serviced apartment arm of conglomerate Fraser and Neave (F&N) opened 740 units worldwide this year, bringing its total to about 5,000 in 20 cities. The latest is Frasers Suites Edinburgh.

Located in St Giles Street, off the Scottish capital’s famous Royal Mile, it houses 75 luxury suites in a historic 130-year-old building that used to belong to the local city council.

On a rainy evening last Wednesday, bagpipes heralded the official launch of their second property in Scotland – a homecoming of sorts as the founders of F&N were both Scotsmen.

And Frasers Hospitality will continue expanding its network, even in the uncertain economic conditions, its chief executive Choe Peng Sum told The Straits Times.

Frasers, whose average occupancy rate is holding steady at 80 per cent, is planning to double its residences to more than 10,000 by 2012.

The company had started with only two properties in Singapore in 1998.

While it may seem unusual to expand so aggressively during the global slump, the correction of property prices has actually thrown up opportunities, especially in Europe, said Mr Choe.

In London, for instance, property prices have dropped by about 30 per cent, after rising constantly in the last decade.

The company already has eight properties in London, as well as two in Paris. Other European destinations that might soon find themselves in Frasers’ cluster include St Petersburg, Prague and Berlin.

But Mr Choe feels there is still potential for growth for serviced apartments, as many countries do not provide enough of them. ‘There’s a pent-up demand, but the apartments must be well done.’

The only major continents that Frasers has not set up shop in is the Americas.

Mr Choe noted that North America, being a pioneer of serviced apartments, is not easy to break into while South America is simply too far away.

But he is not ruling out any possibilities, and added that Frasers is looking at New York and Sao Paulo or Rio de Janiero as their first ventures in those continents.

Source: Straits Times, 24 Nov 2009