European real estate industry “awash with capital” and set for busy 2015

BY Fraser Tennant

A busy and profitable 2105 is the outlook for the European real estate industry, according to the new 'Emerging Trends in Real Estate' Europe 2015 report published by PwC and the Urban land Institute (ULI).

The report, which features the views of 500 industry experts (investors, fund managers, developers, property companies, lenders, brokers, advisers and consultants), lists a number of cities which are considered to offer significant real estate investment opportunities this year. The cities, many of which were badly affected by the economic downturn, include Madrid, Athens, Birmingham, Amsterdam, and Lisbon.

According to the report, 70 percent of investors expect to see more equity and debt flowing into their markets in 2015, while 82 percent are of the opinion that “the availability of suitable assets will have a moderate or significant impact on their business this year".

However, despite such optimism, the report makes clear that major concerns remain with fragile economic conditions, weak fundamentals, and volatile geopolitical scenarios cited as the reasons for such uncertainty.

“Real estate investors will face a tricky balancing act in 2015," said Simon Hardwick, real estate partner at PwC Legal and one of the authors of the report. “The market is awash with capital surging into Europe from around the world. On the face of it, this is a nice problem to have, but we expect to see prices continuing to rise due to a shortage of assets. And despite an uncertain economic climate across Europe, investors will have to look beyond the major markets to secondary cities and assets they may not have considered before. This presents both an opportunity and a challenge.”

Lisette Van Doorn, chief executive of the ULI Europe, added “As confidence has returned to global real estate markets over recent years, there has been a progressive movement up the risk curve. Investors have found prime assets expensive and hard to source, and have in turn looked to find new opportunities in recovering secondary cities, secondary assets and development opportunities, as well as new or alternative real estate classes."

Now in its 12th edition, the 'Emerging Trends in Real Estate' Europe report forecasts real estate investment and development trends, cities, property sectors, and real estate finance and capital markets trends.

Report: Emerging Trends in Real Estate Europe 2015

KPMG showcases 100 of world’s best infrastructure projects

BY Fraser Tennant

One hundred of the world’s most innovative, inspirational and impactful infrastructure projects are showcased in KPMG’s new ‘Infrastructure 100: World Markets Report’.

A result of in-depth discussions with a panel of independent industry experts from across the globe, the report focuses on infrastructure in four key markets: mature International markets, economic powerhouses, smaller established markets, and emerging markets.

Hundreds of global projects were considered by the panel before the final 100 were selected.

Assessments were based on the following criteria: (i) scale – how does the scale of the project relate to similar developments in its class?; (ii) feasibility – is the project plan feasible and sustainable?; (iii) complexity – how challenging or complex is it to get stakeholder support?; (iv) innovation – is there a particular challenge the project overcomes?; and (v) impact on society – does it improve quality of life or promote economic growth?

Some of the global projects featured in the report include: Hinkley Point C Nuclear Power Station (UK); George Massey Tunnel replacement (Canada); Southern SeaWater Desalination Plant (Australia); the Scandinavian 8 Million City (Norway); Buenos Aires Bus Rapid Transit Corridors (Argentina); New York City Resiliency Plan (US); and Moscow-Kazan High Speed Rail (Russia).

Transformational, with the capacity to change the face of nations and drive economic growth, the value of global infrastructure projects is estimated by KPMG to be in the region of US$1.73 trillion.

Referencing the key trends driving global investment in the infrastructure sector, Richard Threlfall, KPMG’s UK head of infrastructure, building and construction, said “Our latest showcase of projects from around the world highlight the vision, determination and innovation required to drive economic prosperity and social impact through infrastructure development.

“Each country has its own approach to developing and funding infrastructure, yet all share the challenge of creating the right conditions to attract investment. We see infrastructure investment improving lives, creating opportunity, and bringing the world closer together – ultimately creating a better world”.

Report: Infrastructure 100 World Markets Report

Sub-Saharan Africa to receive $180bn a year investment in infrastructure over 10 years

BY Fraser Tennant

Investment in infrastructure projects in Sub-Saharan Africa is expected to be $180bn a year over the next 10 years, according to a new PwC report.

The 'Capital Projects & infrastructure in East Africa, Southern Africa and West Africa' report suggests that, despite slow growth overall, multiple investment opportunities await global investors, developers and operators.

The 95 influential figures in the infrastructure sector surveyed by PwC indicated that they planned to spend 25 percent more on infrastructure projects this year than last. Fifty-one percent said that they planned to spend more than half of their budgets on new assets.

At present, South Africa and Nigeria have the most ambitious infrastructure programs and together make up almost 60 percent of the spend across Sub-Saharan Africa.

"The shallow economic recovery in most developed markets has shifted the focus to faster-growing regions. This is also true for the infrastructure development sector,” said Jonathan Cawood, capital projects & infrastructure leader for PwC Africa. "With an abundance of natural resources and recent mineral, oil and gas discoveries, demographic and political shifts and a more investor-friendly environment, the investor spotlight shines brightly on Africa."

Despite Cawood’s optimistic outlook, a number of key challenges face those looking to invest in the continent, including: (i) the limited availability of skills; (ii) a lack of internal capacity among state organisations to plan, procure, manage and implement capital infrastructure projects; (iii) the impact of political risk and government interference during project lifecycles; (iv) access to funding; and (v) an inhibiting regulatory environment.

Mr Cawood continued: "Infrastructure plays a key role in economic growth and reducing poverty having a 5-25 percent per annum return on investment as an economic multiplier. Those countries that have been most successful in developing and maintaining infrastructure have established programmes of prioritised investment opportunities with a number of features, including clear political support, a proper legal and regulatory structure, a procurement framework that can be understood by both procurers and bidders, and credible project timetables.”

As a relatively unexplored region with large natural resources, Sub-Saharan Africa is a hot spot of infrastructure investment potential.

Report: Trends, challenges and future outlook: Capital projects and infrastructure in East Africa, Southern Africa and West Africa

Africa rising

BY Richard Summerfield               

Although a lingering sense of scepticism surrounds the continent’s development, Africa’s economic outlook is on the up according to a new EY report. New-found confidence in Africa has been built on the impressive economic growth rates recorded by many country's across the continent.

EY’s report, ‘Africa 2030: Realising the possibilities’, builds on the firm’s previously Africa-centric series, ‘Africa Attractiveness’, which has been highlighting progress over the last 15 years. The report notes that, as a result of the last 14 years of sustained growth across Africa, the continent’s relative attractiveness as an investment destination has increased dramatically. The sub-Saharan region in particular has seen a jump in foreign direct investment (FDI), with projects growing at a compound rate of 19.5 percent between 2007 and 2013.

Looking to the future, entrepreneurship is likely to be a key driver of economic growth and job creation in Africa as we move toward 2030. EY expects that new products, services and problem solving will also help to drive the job creation needed to generate inclusive and sustainable growth.

Yet, despite the optimism, future success across the continent is in no way guaranteed. “There are still many challenges ahead, not least of which is a robust structural transformation — required across many economies — that will not only lessen dependency on commodities, but also expand the private sector, increase productivity levels and, most of all, create jobs,” says the report.

Report: Africa 2030: Realizing the possibilities

HP splits in two

BY Richard Summerfield

Computing giant Hewlett Packard has unveiled plans to separate its business into two distinct publicly traded entities, one consisting of the company’s personal-computer and printer operations, the other its corporate hardware and services business. The division of the company will see HP shed around 5000 jobs and is expected to be complete by the end of 2015.

According to HP, the company’s software and services businesses will be known as Hewlett-Packard Enterprise. The other side of the business – the PC and printing units – will be known as HP Inc, and will keep the existing HP logo. The firm’s incumbent chief executive, Meg Whitman, will continue to run Hewlett-Packard Enterprise and act as chairman of the PC and printing business. HP’s chief financial officer, Cathie Lesjak, will also remain with the enterprise company. Dion Weisler, current head of the printing and personal systems group, will lead HP Inc. Pat Russo will assume the role of chairman of HP Enterprise. “In short, by transitioning now from one HP to two new companies, created out of our successful turnaround efforts, we will be in an even better position to compete in the market, support our customers and partners, and deliver maximum value to our shareholders,” said Ms Whitman in a statement announcing the division.

HP is believed to have considered a separation of its PC business for some time. Indeed, in 2011 the firm announced that it was contemplating spinning off or selling its PC unit, allowing it to focus on selling servers and other equipment to business customers, much like competitor IBM had done six years earlier. However, the proposed spinoff was halted by spooked investors who felt that the separation would jeopardise both branches of the company. The plan was cancelled and the chief executive responsible for the proposal – Léo Apotheker – was dismissed.

Based on revenues generated during the last financial year, the separation of the HP units will create two roughly equally-sized firms. The company’s PC and printer businesses produced revenues of $55.9bn in its last financial year, almost identical to the combined $55.7bn of its enterprise computing, services and software divisions. In trading following the announcement, HP’s stock jumped nearly 5 percent.

HP’s announcement came just days after US e-commerce giant eBay Inc declared its intention to spin off its PayPal business into a separate publicly traded company in 2015.

Source: HP to Separate Into Two New Industry-Leading Public Companies