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HSBC plans new $250m Mideast headquarters

HSBC Holdings Plc will start building a $250 million new Middle East headquarters near the world’s tallest tower in Dubai as it prepares to move its Middle East business from Channel Island of Jersey to the emirate later this year.The 20-storey building will be located on Emaar Square, next to the headquarters of Standard Chartered.The new headquarters will include 29,729 square meters of office space while the headquarters’ total area, including parking and facilities, will be approximately 80,000 square meters.Abu Dhabi developer Gulf Resources Development & Investment will construct the tower and sell it to HSBC Bank Middle East Limited upon completion. HSBC, which first opened in Dubai in 1946, will start moving some of its 4,000 workers to the 20-storey building in 2018. Abu Dhabi’s interest in global real estate undented by falling oil pricesDespite the drop in the price of oil, the Abu Dhabi Investment Authoritywill not dramatically alter its fund profile, according to the nation’s head of property investment in the Americas.The Abu Dhabi sovereign wealth fund has investments in 542 assets with an estimated property value of $23.5 billion across 14 countries on four continents, and had acquisitions of about $8.3 billion last year, according to property-research firm Real Capital Analytics Inc. The Abu Dhabi Investment Authority has allocated 5 to 10 percent of its capital to real estate, according to the fund’s website. real estate industryin MENA untappedDemand for  real estate in the Middle East is gaining momentum due to rising medical tourism into the region, according toreal estate consultancy firm Knight Frank.Knight Frank attributed the growth in the health care industry in the Middle East to rising life expectancies, rapidly growing populations and per capita incomes, a high incidence of lifestyle-related diseases, and ambitious medical infrastructure projects.According to the consultancy firm, real estate typically represents  of a hospital’s balance sheet and is the third largest expense on the income statement.clusters, such as Dubai  City in Dubai and Dilmunia in Bahrain are expected to gain increased importance, Knight Frank said. Doha ranks as most expensive city for construction in GCCDoha has been ranked as the most expensive city for construction in the Gulf Cooperation Council region and the 12th priciest city globally on the 2016 International Construction Costs Index compiled by Arcadis.Qatar is investing heavily in building infrastructure ahead of the 2022 FIFA World Cup in Doha with around $150 billion expected to be spent on roads, railways, stadiums and ports, as well as hospitality and social infrastructure over the next 10 years.Among GCC cities, Jeddah occupied the 16th position while Dubai was ranked as the 18th most expensive city for construction.The index compares the relative cost of building in 44 of the world’s major cities.UAE real estate projects toface delays in 2016An estimated 70 percent of the UAE’s pipeline real estate schemes scheduled for completion in 2016 will fail to be delivered on time, according to consultancy firm JLL.JLL attributed the anticipated delays to a combination of factors including contractual disputes, financing delays, licensing and approval delays and developers holding back plans as market conditions slow.The company said around 23,000 residential units are planned for Dubai alone in 2016 and of those, only 6,900 are likely to be delivered on time.The average materialization rate for residential schemes in 2015 was 30 percent, and for commercial schemes it was between 40 and 45 percent.The low materialization will, however, represent a blessing in disguise, because itwould helpstabilize the market and avoid excessive oversupply.

Declining oil revenues dent confidence in Gulf construction industry

The decline in oil revenues, combined with the geopolitical turmoil in much of the Middle East and the expected lifting of Iranian sanctions, have led to a dramatic decline in optimism for 2016 in the GCC construction sector, according to the results of Law firm Pinsent Masons’ annual GCC Construction Survey.The survey, which was presented to companies involved in projects with a value of over $27.2 million, shows that just 32 percent of respondents are optimistic about 2016. This compares to 77 percent stating that they were optimistic about 2015 when asked the same question a mere 12 months earlier.95 percent of respondents also said contract conditions had become less favorable during 2015, a 14 percent increase from a year earlier while 60 percent said they were involved in more disputes during 2015 than had been expected.The survey’s results are indicative of the increasingly tough economic conditions as the construction industry, Pinsent Masons said.Country-wise, the UAE was considered the strongest market opportunity in 2016. 

Canada to attract record real estate investments in 2016

Foreign investors will acquire a record number of commercial properties in Canada in 2016, according to a forecast from the world’s largest real-estate services firm CBRE Group Inc.The acquisitions will be spurred by a weak currency, CBRE said. Canada’s currency dropped 13 percent against the U.S. dollar last year as tumbling oil prices weigh on the economy.Foreign buyers made up 5.4 percent of large transactions in 2015. The total amount of deals reached C$23.8 billion in 2015, the highest since 2007. Total deals are forecast at C$23.6 billion in 2016.Acquisitions by international investors this year will surpass the previous record in 2007, when C$32.2 billion in commercial real estate traded hands in Canada.Europe’s property sales to stagnate after years of growthFalling demand from Asian buyers as China’s economic growth falters, and from Middle Eastern investors who are held back by slumping oil prices, will dent sales of Europe’s commercial properties, according to broker Knight Frank LLP.The possibility of higher interest rates and concerns that prices have climbed too far will also hurt the market, Knight Frank said.The value of commercial property sales will probably be little changed in 2016, following three years in which it rose by more than 20 percent. The deal volume for 2015 amounted to about 235 billion euros, according to the firm’s provisional estimate, approaching the 260 billion-euro record set in 2007.Global real estate assets worth $217tnThe value of all developed real estate in the world amounts to $217 trillion, according to global property research firm Savills. Developed real estate includes retail property, offices, industrial, hotels, residential, other commercial use and agricultural land.Savills said the value of global real estate exceeds by almost one-third the total value of all globally traded equities and securitized debt instruments and represents 2.7 times the world's .Residential properties accounted for three quarters of the total value of developed real estate, according to Savills which found that China and Hong Kong contributed the largest proportion of residential value, at 24 percent. North America held more than 20 percent of the world's total residential asset value even though it houses only 5 percent of the world's population.According to the study, global real estate worth $145 trillion is not traded in a meaningful way because it is owned by small entities and owner-occupiers. The remaining is readily investable at scale. Of the $72.5 trillion of commercial and residential real estate that Savills count as ‘investable’, around $1.05 trillion or 1.45 percent was traded in big ticket deals of over $10 million in the 12 months to Q3 2015. Foreign investors retreat from UK real estateOverseas investors have pulled back from the UK commercial real-estate market, a signal weak oil prices and volatile stock markets continue to bite, according to a survey of property agents. Demand for UK commercial real estate from foreign investors slowed in the last three months of 2015 for a second straight quarter, according to the Royal Institute of Chartered Surveyors.The retreat comes as overall buyer interest in UK property markets grew at its slowest pace in more than two years.Last year, $US40.5 billion of commercial real-estate transactions were sealed in London, over half of the UK total of $US72.7 billion, according to data-provider Real Capital Analytics. Even with fewer foreign buyers, strong demand among other investors, limited supply, and a growing economy will continue to underpin commercial property values.The value of UK commercial property -- such as offices, shops and warehouses -- are broadly expected to keep rising due to robust demand for a limited number of assets, RICS said.