Dubai Trophy-Property Sale Is Well-Timed
The Wall Street Journal reports: In the U.S., the total value of all commercial real-estate deals of $5 million or more will reach just $49 billion in 2009, research firm Real Capital Analytics projects. That is less than one-tenth of the $497 billion in deals done in 2007, and even less than the $79 billion in deals done in 2001. Meanwhile, real-estate private-equity firms around the world are sitting on $172 billion in commitments from investors, according to research firm Preqin.
"There is no product out there, there is nothing to buy, and there's a lot of money out there that would love to buy," said Sam Zell, the real-estate "grave dancer" who made a fortune from earlier downturns.
That could be one of the few bits of good news for landlords who need to raise cash by selling buildings. Bidding has been especially heavy when prime properties—such as fully leased, trophy office buildings in major cities—have gone on the block.
Buyers have been most aggressive outside the U.S. In Hong Kong, a wealthy investor in September purchased a 23-story office building for $465 million at a 4.3% yield—recalling values at the height of the bubble. In London, the average yield that buyers have been willing to accept fell one percentage point over the past six months, signaling an uptick in valuations, according to Real Capital Analytics research director Dan Fasulo.
International investors have also been looking for deals in the U.S., in some cases driving up values. German property-fund manager Deka stunned American real-estate investors when it agreed to buy a 12-story office building in Washington for $208 million.
View the full article on The Wall Street Journal: Dubai Trophy-Property Sale Is Well-Timed
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Posted by: Mark Alferman