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Weekly Roundup | 05.28.2024

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

 

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Headlines:














 

Global


📰 Washington DC Property Sells at Stunning 83% Discount to Assessed Value of $225.7 Million


Gallery Place, a prominent mixed-use development in Washington, D.C.'s Chinatown neighborhood, is set to be purchased for $39 million, representing an 84% discount from its most recent assessed value of $225.7 million.




📰 Phoenix's Westin Hotel Faces Foreclosure Just Two Years After Opening


The Westin in Tempe, a suburb of Phoenix (AZ), opened its doors in 2021 and was funded with an $86.5 million construction loan, and additional equity, with Around $8 million paid for the prime site located in the center of Tempe's business district.




📰 PIMCO's $3.9 Billion Office Acquisition Leads to $1.7 Billion Loan Default and $700 Million Haircut


PIMCO's $1.7 billion office loan tied to a 5.5 million sf portfolio across four U.S. cities defaulted in February 2023. The lenders, Goldman Sachs, Citigroup, and Deutsche Bank, slashed interest rates on the date and given other concessions in a recently approved loan modification. The collateral's appraisal value nosedived from $2.3 billion to $1.6 billion, a staggering 30% loss in just 2.5 years.




📰 Chicago Building Sells For 90% Discount From $27 Million Purchase Price 11 Years Ago


Chicago office real estate faces severe challenges. A 10-story building at 216 W. Jackson Blvd, bought for $22.3M in 2013, was recently sold for $2.5M. The area saw $2B+ in real estate projects, including a $670M Willis Tower renovation and an $800M Old Post Office transformation. The building was 94% leased in 2020, with Mares Spectron as a key tenant. It generated $2M in income from $4.3M in revenue in 2018, implying a cap rate over 7%. Another building at 300 W. Adams St. sold for $4M, a 90% discount from its 2012 value of $38M.



 

Latin America


📰 Foxconn Plans to Set Up In Querétaro


The Government of the Municipality of Querétaro informed that during the meetings, Foxconn reiterated the possibility of establishing itself in Querétaro. The company currently has operations in Chihuahua, Tijuana, Guadalajara and Ciudad Juarez, where it has 30,000 employees distributed in seven manufacturing facilities.


Read More: Mexico Now


📰 Microsoft Inagurates a Data Center in Querétaro; is the Company’s First Headquarters in Latin America


Microsoft opened a data center located in Querétaro, and although the site started operations more than a month ago with 30 customers, it has now officially opened its cloud services for businesses in general. With this, Mexico joins the company's more than 60 cloud regions and became the company's first headquarters in Spanish-speaking Latin America.


Read More: El CEO


📰 El Dorado Releases Colombia - May 2024 Update


Colombia has the highest GDP growth (2013-2023) in the Americas, its commercial real estate is performing well while its residential real estate, usually strong, is suffering. The main drivers of real estate growth - population growth, working age population growth, household formation – all are strong. However, Colombian real estate is entering a period of stress caused by high interest rates, poor public policy, scarcity of capital and a vulnerable currency.


 

Africa


📰 South Africa's Power Issues Help Drive Microsoft's $1 Billion Data Center Investment in Kenya


Microsoft and G42 are investing $1 billion in Kenya's digital infrastructure, marking the largest private-sector digital investment in the country's history. The investment will fund a "green" data center powered by Kenya's geothermal energy, expected to be completed in 24 months. Kenya's data center market, valued at $184 million in 2023, is projected to grow at a 12% CAGR from 2024 to 2029. This initiative will create over 1,000 direct and 5,000 indirect jobs, leveraging Kenya's 791.5 MW geothermal capacity.




📰 Bankenveld District City Development in Johannesburg Clears Key Hurdle with Land Purchase Approval


A major real estate project in the northern suburbs of Johannesburg, named the Bankenveld District City, has recently received Competition Commission approval. Developers Eris Property Group and Calgro M3 are purchasing 150 hectares (371 acres) of land from the University of Witwatersrand for R200 million ($10.8 million). The project will deliver 20,000 to 30,000 housing units priced between R500,000 and R1.5 million ($27,000 to $82,000), addressing the growing demand for affordable housing in the are. It will also feature commercial, retail, and industrial spaces, educational and healthcare facilities, and create 15,000 jobs.





📰 Navigating the Platinum Market: The Role of South Africa's 2024 Elections


South Africa's upcoming general election could significantly impact the global platinum market, with potential implications for the country's dominance in platinum group metals (PGMs). The election outcome will be crucial for the crisis-torn country, where the mining industry faces challenges due to political and economic uncertainty. The result could influence the future of PGM mining, affecting major players like Sibanye Stillwater, Impala Platinum, and Anglo-American Platinum. The best-case scenario involves an ANC, DA, and MK coalition, potentially boosting the industry through pro-business measures. However, a decisive ANC victory could worsen social and economic strains, posing further challenges to the industry.


Read More: Emerging Markets Business (Guest Contributor: Mihail Stoyanov)

 

Southeast Asia


📰 Power Delivery Issues Eclipse Vietnam's Anti-Corruption Efforts


Vietnam's power delivery concerns have been a significant issue since 2020, when electricity demand began outpacing generation capacity. In 2023, consumption rose to 241.8 billion kWh, an 8.1% increase, while generation capacity only increased by 3.9% to 79.3 GW. This has led to power disruptions, affecting major manufacturers like Foxconn and posing a threat to Vietnam's reputation as a reliable manufacturing hub. The power crisis is impacting the broader economy, with the industrial production index and export growth slowing down in April 2024. Foreign direct investment and the stock market have also been affected. Despite efforts to increase power generation capacity, including a significant increase in coal imports, delays in power plant construction and grid expansion projects have hindered these efforts.




📰 Vietnamese Steel Producers Echo Thailand's Concerns over Steel Dumping from China in the Region


Vietnam and Thailand are taking a regional approach to address the surge in Chinese steel imports, known as steel dumping. Vietnam's April 2024 imports of hot-rolled steel from China rose 1.5 times to 890,000 tons, doubling last year's volume. The Ministry of Industry and Trade has imposed anti-dumping tariffs on Chinese cold-rolled steel imports, ranging from 4.43% to 25.22%. Thailand, importing between 63 and 70 percent of its steel from China in 2023, is also considering broader anti-dumping measures. Further actions are being contemplated in both countries to mitigate the impact on their domestic steel industries.



📰 KKR, TPG Said to be Exploring Buyout of New York-Listed PropertyGuru


KKR and TPG are exploring options including a buyout of Southeast Asian online real estate platform PropertyGuru Group, sources familiar with the matter said. Singapore-based PropertyGuru went public in New York in 2022 after a merger with Bridgetown 2 Holdings, a special purpose acquisition company backed by billionaires Richard Li and Peter Thiel. Australia’s REA Group also owns a significant minority stake in the business as part of a broader deal in 2021.


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