Dec 9, 2010

Japanese’s whispers

I have put on a paper some thoughts while I was in roadshow in Asia, following meeting with investors and investment analysts. As a disclaimer, I am writing this in the middle of a jetlagged night, and I clearly do not pretend to know what I am talking about here.

1- In China, it seems that it is more reasonable to invest into less known secondary cities, than in the majors. Rational being that a lot of speculation is driven by some cities names, not by economics. Ring a bell in Germany as well. Except that Frankfurt is by no way a major city by Chinese standards

2- The bigger the city the closest you want to be to the major public transportation nods. Sometime 500 meters away is just too far.

3- Some landlord measure, and spend money to try to increase footfall for pure office building. I will need to figure out what is that so important. So far I am clueless…

4- Singapore and Hong-Kong offices rent are expected to grow by 70% in the next two years .This is not a typo, it is SEVENTY percent (rental growth Q410 in Singapore was 10%). Even if they just achieve half of that it will still be 35% higher than the rental growth in Europe… On the other hand, where is the fun if being there is just enough?

5- In some markets the only segment which is monitored and researched is the large Grade A office (10% or less of total stock) and the assumption is that the rest of the market will do the same… I am not convinced it is that simple.

6- I have seen a 40 floors building, which could fit an alstria asset on each floor. The good news is that it was considered very large by local standard as well …

7- Underweight Europe, but (and this is the good news) in Europe Overweight Germany. The bad news is that there is no decent (in terms of size) stock to invest in… So size does matter after all… Working on this one already for quite some time

8- Should look at Hong Kong market development ($ interest rates, and Asian Growth) as a proxy for what could happen in Germany (PIGS interest rate and German Growth). When interest rates stop to be correlated with the state of the local economy, it can lead to interesting result for real estate.

9- Next time, bring pills for sleep

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