US and Australian Investors Take Advantage of Sinking Pound for London Property Splurge
U.S. and Australian investors have taken advantage of the slumping value of the pound against their respective dollars to spend more than $2 billion on London commercial property in recent months, even as other international investors have pressed the pause button.
According to figures from real estate company Savills, U.S. investors spent £809 million ($929 million) on offices, shops and warehouses in London between July and September, double the £418 million ($479 million) invested by U.S. businesses in the second quarter, when Australians were the top foreign investors, with figures skewed by one acquisition, TCorp and Lendlease's £809 million purchase of 21 Moorfields in the City. U.S. and Australian investors had joined other nations in retreating in the second quarter of 2022, but changed strategy as the pound slumped against the U.S. and Australian dollar, particularly after late September and short-lived Prime Minister Liz Truss's ill-fated mini Budget.
Germany: Tristan Capital Buys German Office, Retail Portfolio
Despite the increasing reluctance of investors, large-volume purchases of non-core properties are still taking place in Germany, as reflected in the acquisition by London-based private equity investor Tristan Capital of 15 office and retail assets from a fund of insurer Hansemerkur Grund Vermögen, known as HMG.
Market sources suggest that €220 million was the purchase price, lower than the initial expectations of about €250 million for the buildings with a total rental area of 92,500 square meters mainly in midsize and smaller municipalities in southern Germany. HMG acquired the property from the Austrian company Conwert in 2016 and, though the portfolio was launched in mid-2021, the deal only closed in the second half of this year for the spanning from well rented to opportunistic.
Lithuania: Hotel Manager Sees Demand Rebound in Capital
Hotel operations in Lithuania have normalized to the point that visitors are coming to the Courtyard by Marriott Vilnius City Center in healthy numbers, according to General Manager Sigita Rudzeviciene.
While consequences from both the pandemic and war in Ukraine have been felt globally, Rudzeviciene said Lithuania has been stable. There have been some labor challenges because of a fast rebound in demand that’s reaching and exceeding 2019 levels, with a strong influx of business travelers as well as interest in meetings and events. As a result, there’s stepped up recruiting at universities and schools in Vilnius and the region for workers.
Canada: Retail Landlords Plan to Sell Assets
Despite the uncertain economy, Jonathan Gitlin, president and CEO of RioCan, believes retail landlords like the one he leads are sitting on properties growing more expensive to build as inflation climbs.
RioCan, one of Canada's oldest real estate investment trusts, has a defensive portfolio with stable tenants holding 80% of the Toronto-based REIT's 35 million square feet of leasable space. Even so, rising interest rates are affecting RioCan's plans, and the REIT said it is prepared to adjust the timing of new construction based on market conditions. And Toronto-based First Capital REIT, one of Canada's largest retail REITs with 22.2 million square feet of leasable space, plans to keep looking at selling assets as rates and prices climb.
France: Prologis Deal Signals European Growth Plan
At €1.585bn, 1.14 million square meters, 128 buildings and six projects, the figures for the European logistics portfolio acquired last September by Prologis are enough to make you dizzy. But above all, they reveal the contours of Prologis' strategy to increase its real estate holdings by 50% in the next three years in Europe, particularly in France.
The occupancy rate of these French assets at 95% is in line the overall European portfolio signed by Prologis. The 22 assets, mainly in the Paris region allowing delivery to nearly 1 million people within 30 minutes, represent a total surface area of just under 200,000 square meters that Business Immo sources say are valued at nearly €350m. Prologis is looking for industrial, commercial and retail sites, particularly those with large flat surfaces, said Vincent Sadé, head of leasing & capital deployment at Prologis.
US: Largest Homebuilder Hit by Rising Rates
The nation's largest homebuilder is walking away from some of its land deals as the rapid rise in interest rates and upended lending markets leads to homeowners canceling or delaying sales even with the builder adding incentives.
D.R. Horton, which operates in 105 markets in 33 states, said its cancellation rate for new homes surged to 32% in the quarter ended Sept. 30, up from 19% in the same quarter last year as net sales orders for the quarter slid 15% to 13,582 homes and were down 10% in value compared to last year. The decline in demand for new homes is expected to boost apartment demand as renters opt to keep renting rather than buy a home with a hefty mortgage payment.
This report was compiled from CoStar's international news publications in the United States, United Kingdom, Canada, France and Germany.