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Weekly Roundup | 05.14.2024

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

 

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Headlines:
















 

Global


📰 Hines Global CIO Foresees Real Estate Investment Shift from 'Search for Beta to Search for Alpha'


David Steinbach, Global Chief Investment Officer and Co-Head of Investment Management at Hines shares his perspectives on the global real estate market, with a focus on office investments, valuations, and geographic opportunities.





📰 Veteran Analysts Say The World's Biggest Private Equity Firm Could Be In Big Trouble


In this Business Insider article, investigative journalist Bethany McLean delves into the meteoric rise and potential pitfalls of Blackstone's BREIT real estate fund. Initially hailed as a way for ordinary investors to access high-growth private equity real estate, BREIT ballooned to $114 billion in assets, generating substantial fees for Blackstone. However, McLean raises serious concerns about the fund's stability. Critics, like Nate Koppikar, allege that BREIT's valuations are inflated and its methods opaque, lacking independent verification.


Read More: Business Insider


📰 Canadian Investor Takes Shocking $176 Million Loss on San Francisco Office Building


Canadian pension funds are increasingly reassessing their foreign real estate investments following a series of unfavorable outcomes. A notable example is the Canada Pension Plan Investment Board (CPPIB), which recorded an 80% loss on its investment in a San Francisco office building, selling its 45% stake for significantly less than the purchase price. Canada has been a large source of funding for emerging market real estate investments. The investment losses and mistakes place in jeopardy future foreign allocations, particularly to riskier emerging economies.




📰 How Brokers Pitch Office Listings as Potential Multifamily Conversions


This CoStar News article, authored by Katie Burke, highlights the ongoing challenges and creative solutions U.S. developers face in dealing with empty office spaces in major cities. Emerging market real estate investors can draw valuable insights from these developments, learning how shifts in property usage and market demands can influence investment strategies and property valuations.


Read More: CoStar News


 

Latin America


📰 Prominent Industrial REIT in Mexico Eyed By Multiple Investors


Fibra Mty is the latest major investor to enter the fray, studying the acquisition of 100% of Fibra Terrafina's shares as of last week, aiming to become Mexico's largest industrial property owner. Fibra Terrafina, currently the second-largest industrial REIT in Mexico with a market cap nearing $2 billion, has seen a 17% increase in its stock value in 2024 due to multiple acquisition bids. Fibra Macquarie and Fibra Prologis have also expressed interest, with Prologis proposing a significant share swap that would expand their industrial holdings to over 8.4 million square meters.



📰 Juan Valdez Poised to Control 25% of U.S. Colombian Coffee Market


Juan Valdez's footprint is about to grow in North America through a strategic partnership with GCC, aiming for $100 million in sales by 2030, with a goal to capture a 25% market share of Colombian coffee in the U.S. GCC, founded in 2017, is the largest coffee producer in Colombia, supported by significant U.S. investments. Juan Valdez plans to expand its global reach, targeting 1,200 stores by 2027, having already opened 61 new outlets in 2023, with 51 of them located outside Colombia.




📰 Panama's Non-Action to Secure Darien Gap Frustrates Mexico's Nearshoring Ambitions


The Darien Gap, a remote jungle between Panama and Colombia, is a dangerous route for migrants seeking to cross into the US. In 2023, 520,000 migrants crossed this area, double the number in 2022, with many fleeing Venezuela. The crossing is also used by migrants from other continents, including a significant number of Chinese men. The journey is fraught with risks, including criminal organizations, and has led to a humanitarian crisis, with migrants resorting to desperate measures to survive including exchanging sexual favors to survive. Mexico faces increased pressure to address this issue due to its special relationship with the U.S. and Canada and codified roles in the USMCA framework.



 

Africa


📰 African Copper Powerhouses Set to Meet Growing Global Copper Demand


The leading copper producers globally in 2023 were Chile, Peru, the DRC, China, and the United States, together accounting for 59% of worldwide output, or around 21.5 million tonnes. Amid economic recovery and market speculation, copper prices surged, hitting about $10,000 per ton. Investment banks, like Goldman Sachs, anticipate further price increases due to persistent supply deficits expected from 2024. Africa, particularly the DRC and Zambia, is also emerging as a significant player in copper production, with the potential to fill the growing supply gap projected to reach 10 million metric tons by 2030.




📰 Rwanda Ready to Drop "Conflict Mineral" Accusations Against Apple


Rwanda has strongly denied accusations from the Democratic Republic of Congo (DRC) that Apple sources conflict minerals from a disputed area within the DRC. Rwandan government spokeswoman Yolande Makolo labeled these allegations as "baseless" and suggested they are part of ongoing attempts by the DRC to shift media focus onto Rwanda by leveraging Apple's global profile. Apple has responded by reaffirming its commitment to responsible sourcing, stating it has verified the origins of minerals in its supply chain and found no evidence of financing armed groups in the DRC as of December 31, 2023.



📰 Update: Shell's Partial Divestiture from South Africa and Sour BEE Partnership


In an update to earlier reports by Emerging Markets Business, Shell is not exiting its entire South African operation but only divesting its "non-core" downstream retail business, including over 600 fuel stations. This strategic shift follows a prolonged dispute with its BEE partner. Shell will retain its upstream sector, focusing on crude oil and natural gas extraction in the region. Dr. Neil T. Stacey suggests that the move is part of a long-considered strategy due to the challenging operational environment in South Africa, marked by security issues and regulatory complexities.




 

Southeast Asia


📰 Hyosung's $2 Billion Vietnam Investment Plan to Include a Data Center


Hyosung Corporation plans to invest $2 billion in Vietnam, including a data center in Ho Chi Minh City, expanding its presence in advanced materials, biofuels, and financial technology. Hyosung has already invested $3.5 billion in Vietnam since 2007, making it one of the most profitable South Korean investments. South Korea is the largest investor in Vietnam with nearly 10,000 projects and $87 billion in investments.



📰 Microsoft CEO Pledges Nearly $5 Billion for Southeast Asia Data Center Investments


Microsoft CEO Satya Nadella recently concluded a visit to Southeast Asia, committing billions to enhance the region's cloud and artificial intelligence (AI) infrastructure. His tour, which included stops in Indonesia, Thailand, and Malaysia, aligns with Microsoft's strategy to capitalize on Southeast Asia's booming digital economy, projected to reach $300 billion by 2025. This region's youthful demographic is seen as key to supporting Microsoft's expansion.




📰 Japan's NTT Set To Buy 49% of Philippines' PLDT Data Center Business


PLDT, the leading telecommunications provider in the Philippines with a market capitalization exceeding $5 billion, is negotiating the sale of a 49% stake in its data center subsidiary, ePLDT, to Japan's telecom giant NTT, valued at $100 billion and a dominant player in its home market. The potential $750 million deal, confirmed by Reuters with insights from PLDT Chairman Manuel Pangilinan, aims to reduce PLDT's debt and finance the expansion of its data center operations, which currently includes 11 facilities across the Philippines. This strategic move underscores the growing importance of data center investments in Asia, driven by increasing demands for cloud services and digital transformation initiatives.



📰 Overview of the AI Boom Fueling Data Centers in Asia


Asia Pacific, including Japan, has led dealmaking activities in the global data center market this year, with M&A value totaling $840.47 million, more than half of the global amount, London Stock Exchange Group ("LSEG") data showed. In 2023, the region's data center deals hit a record high of $3.45 billion, according to LSEG. That tally is set to be surpassed this year with at least a couple of large transactions in the pipeline.


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