Top headlines and news impacting Latin America, Africa and Southeast Asia commercial real estate.
The far-left Peronist coalition surprised to the upside and received the most votes counted in Argentina's general election this week. Milei and Bullrich are the more moderate and pro-market candidates receiving a collective 54% of the total votes counted. Argentina requires runoffs where the leading candidate receives less than 45% of the vote, or 40% and a 10-point lead. Since that didn't occur, a runoff between Massa and Milei will occur next month in a winner-take-all matchup.
The company plans to grow in Africa and the Middle East. Egypt is intended to be the flagship MENA market for Juan Valdez to establish the brand. Two more stores are planned in 2023, with 60 in Egypt by 2029. Juan Valdez is #1 in Colombia.
This feeds the narrative that Mexico’s industrial is a bubble waiting to burst. The shopping mall REIT is making its first industrial investments with plans to develop 2.1 million ft² (i.e., 200k m²) of rentable industrial GLA.
El Dorado is an advisor to Canadian Pension funds and has advised on major real estate investments in Colombia over the years. Read their sober and rather detailed analysis of the situation in Colombia's real estate sector. Good data inside for the quants. My main question is what are the terms and rents of new leases being signed? Lack of new developments and options for current tenants give the upper hand to property owners, for now. Existing leases have good escalations.
The Brazilian opportunity fund has over $11 billion in AUM of Brazilian properties and companies it has collected over three decades. For the first time it is now making direct investments in real estate in America through a JV with Miami’s Leste Group.
The European Union plans to spend the money over four years under its Global Gateway Initiative. The initiative is similar to China’s Belt and Road Initiative, except that the EU initiative has few concrete achievements and has mostly been bluster and over-the-top headlines to date.
The bill sets a borrowing threshold of 55% of GDP in present value terms. Anything to contain the ability of politicians to print and borrow to buy votes is a welcome move from investors.
International Housing Solutions (“IHS”) is owned by Hunt Companies, based in Texas, and managed out of South Africa. IHS has raised over $740 million for Africa real estate investments up to 2022 across six funds. The vast majority of the capital has been deployed in South Africa, particularly into student housing. Increasingly, IHS targets the rest of Africa.
The mixed used development will launch early in 2024 and contain affordable housing (1,630 units), retail (5,500 m2), and a high school (3,000 m2). Atterbury is leading the development and is one of the largest property companies in South Africa. It has investments in Europe, and unsuccessfully ventured into sub-Saharan Africa (x-SA) retail investments with plans to completely divest.
The fund’s CEO met with Cambodia’s Prime Minister and Vietnam’s Premier to discuss economic cooperation. Since 2011, the fund has invested $164 million in Vietnam alone. In total, the fund has invested $20 billion in over 90 developing countries.
The massive land bridge would be in the country’s south and predicted to increase GDP growth 1% - 2% annually. Two ports would be constructed, along with 90km of road and rail connecting them. The move would be aimed at capturing goods shipped through the congested Strait of Malacca and looks to be replacing plans for a Kra Canal (pictured below). Mexico has similar plans with its ambitious Interoceanic Corridor aimed at capturing cargo shipments through the congested and Chinese controlled Panama Canal.
The intelligence chiefs of the United States, Britain, Canada, Australia and New Zealand made a joint statement accusing China of stealing IP of the respective nations. U.S. FBI Chief called for a confrontation with China over the “unprecedented threat” to innovation across the world. The CCP dismissed the statement calling it a “collective disinformation campaign”.
The World Bank predicts Cambodia’s GDP growth to be 5.5% in 2023, and 6.1% in 2024. In spite of that impressive growth, the real estate sector is challenged. Large investors are holding back investments and banks aren’t lending. Demand for land and construction services have dwindled. Retail rents in malls are down 6.6% from last year according to CBRE Cambodia.
The north’s land lease rates increased 35%, and the south’s by 14.5% this year due to an influx of foreign manufacturing investors. Occupancy rates at most industrial parks exceed 95%. Vietnam has 397 industrial parks with a combined leasable area of 122,900 hectares (i.e., 304k acres). Vietnam is benefiting heavily from companies opting to move operations out of China over geopolitical concerns and rising costs.