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Weekly Roundup | 05.07.2024

Our pick of headlines this week impacting commercial real estate in the emerging markets.

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📰 Arnold Schwarzenegger Became A Millionaire From Real Estate Not Acting

Arnold Schwarzenegger became a millionaire from real estate investment, rather than from his acting career or bodybuilding achievements. By the time Arnold Schwarzenneger was a household name, he'd already amassed a sizable fortune through his real estate venture. Today, the actor's real estate holdings are estimated to be worth over $300 million.

📰 IMF Chief Flags U.S. Rate Hikes as Major Threat to Emerging Markets

Kristalina Georgieva, the managing director of the International Monetary Fund, recently highlighted in an interview with CNBC the pronounced impact of high U.S. interest rates on emerging markets, contrasting with the relatively stable conditions in advanced economies like Europe and Japan.

Read More: Emerging Markets Business (Video: CNBC)

📰 Office-Loan Defaults Near Historic Levels With Billions on the Line

Defaults in the U.S. office market have surged to levels not seen since the aftermath of the 2008-2009 financial crisis, according to Peter Grant of The Wall Street Journal. Data from MSCI suggests that over $38 billion worth of buildings are at risk of default, foreclosure, or other financial distress. This surpasses the peak seen in the aftermath of the 2008 financial crisis. The U.S. office vacancy rate currently stands at a record 13.8%, a significant increase from 9.4% at the end of 2019. Tenants are signing leases for about 10% less space compared to the 2019 average. The repayment rate of office loans transformed into commercial-mortgage-backed securities has drastically fallen from over 90% in 2021 to just 35% last year, revealing deep challenges within the sector.

Latin America

📰 Mexico Nearshoring: A Great Real Estate Opportunity Could Be Taking Shape

For institutional real estate investors considering the Mexico nearshoring theme, the advice is to standby but don’t stand down. Be aware that most of the nearshoring activity is from Chinese manufacturers moving to Mexico to game the USMCA framework, not from American companies choosing Mexico over the multitude of other options. This is a niche and exotic investment theme until Mexico’s federal government takes serious action to connect population nodes with road and rail infrastructure, cracks down on cartels, and reforms the nation’s regulatory and tax frameworks.

border logjam of trucks entering america from mexico

📰 Colombia's Former Marxist Guerilla President Breaks Diplomatic Relations with Israel

Colombian President Gustavo Petro's decision to break diplomatic relations with Israel underscores a significant shift in Colombia's foreign policy stance towards the Israeli-Palestinian conflict. Petro's announcement, made amidst criticism of Israeli actions in Gaza, reflects his administration's commitment to opposing Western values and respect for civil liberties and free markets. This move aligns Colombia with other Latin American countries that have taken similar diplomatic actions against Israel, such as from the left-wing leaders of Bolivia, Belize, and Chile.

📰 Fortune 500 Anchor Tenant Ross Enters Puerto Rico

Ross Stores, a fortune 500 American retailer, expanded into Puerto Rico by opening its first store in Centro, Guayama. This 33,500 square foot store is part of Ross' strategic expansion, which saw the company open 97 new locations in 2023, approaching its target of 100 stores. With this new store, Ross' total number of locations reached 2,112, including Ross Dress for Less and dd's DISCOUNTS across 43 states, the District of Columbia, and Guam. Further expansion within Puerto Rico includes plans for additional stores in Aguadilla Mall and two locations in Caguas, leveraging the island's post-disaster economic recovery and the incentives provided to businesses operating in this U.S. territory.

Ross storefront


📰 South Africa Was Africa's Top Gold Producer in 2023

In 2023, global gold investment trends show that production reached over 3,000 tonnes, with Africa contributing 370 tonnes, or 11.67%. Despite holding around 40% of the world's gold reserves, Africa's output, led by South Africa, Ghana, and Mali, suggests potential for growth. Smuggling issues, particularly in the DRC, impact accurate accounting, with an estimated $3 billion in gold annually misattributed due to illegal trade. China topped the 2023 production charts, accounting for 12% of global output, and led as the largest buyer with its central bank purchasing 225 tonnes.

gold production by country in 2023

📰 Oyo State Seals $100 Million Gas Infrastructure Deal with Shell Amidst Strategic Exit from South Africa

The Oyo State Government and Shell Nigeria Gas have secured a $100 million investment deal to enhance Oyo State's energy infrastructure, contrasting sharply with Shell's potential full divestment from South Africa. This strategic collaboration includes the construction of a Pressure Reduction and Metering Station and the installation of pipelines across Oyo State, slated to transfer ownership after 20 years. Scheduled to commence operations soon, this project aims to supply approximately 50 million cubic feet of gas per day to local industries within 18 months, significantly boosting the state’s industrial capacity and aligning with Nigeria’s Decade of Gas Initiative.

📰 Africa Takes Aim at Avocado Market Expected to Reach $26 Billion by 2030

The global avocado market is expected to reach $26.04 billion by 2030, growing at a compound annual growth rate of 7.3%. Africa, already a major producer, is poised to be a key player in this growth. Specific growth projections for Africa's avocado industry are difficult to make, but the industry is poised for significant growth over the next five, ten, and twenty years for the reasons outlined within. Namely, that demand is increasing in the Western economies for avocados, and Africa has inherent advantages including relatively low labor costs and the ability to produce year-round.

avocado cut open

Southeast Asia

📰 Vietnam's Ten-Year Quest for Emerging Market Upgrade Lingers On After Latest Setback

Vietnam's stock market upgrade to emerging status has been delayed due to the State Securities Commission's rejection of a new trade clearing system proposed by the Ho Chi Minh City Stock Exchange. This setback has significant implications for the market, which was anticipating an influx of foreign capital estimated between $1.5 billion and $10 billion with the upgrade. The delay could have broader economic consequences, including a potential reduction in foreign direct investment and slower growth in the financial sector.

📰 Vietnam's Tech Investments Fall 17%, Outperforming Global 35% Decline

Vietnam's digital economy is on track to reach a valuation of $43 billion by 2025, growing at an impressive annual rate of 20%. According to the Vietnam Innovation & Tech Innovation Report 2024, this robust growth is supported by an outperforming venture capital environment where Vietnamese tech startups secured $529 million in 2023, significantly outperforming the global market with a 17% decline compared to a 35% drop worldwide. The growth of the resilient venture capital ecosystem is driven by a booming e-commerce sector which has been late to start but is catching up quickly to peers. Vietnam's internet economy grew 28% year-over-year, making it the fastest growing in Southeast Asia.

chart showin vietnam vc capital raised over 10 years

📰 US, Philippines Eye Agreement to Cut China Nickel Dominance

The U.S. and the Philippines are in discussions over ways to prevent China from dominating nickel processing in the Southeast Asian nation, a key supplier of the metal that’s crucial for electric vehicle batteries.

Read More: Bloomberg




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