Florida Commercial Real Estate - Many Areas See An Influx Of Overseas Investors

n a recently released report by private real estate analyst Real Capital Analytics', in terms of global property market transactions, the South Florida region ranks 15th worldwide in the level of commercial real estate deals.

The report is among the first to comprehensively track commercial real estate transactions in major metropolitan areas around the world, and has tracked a total of $1.04 trillion in office, industrial, hotel, retail, land and apartment sales globally in 2007. A total of 114 metropolitan areas had more than $1 billion woth of commercial property market transactions.

How Foreign Investment Is Shaping In Some Areas Of Florida

Foreign investment in most of the state, according to analysts, has been cyclical over the years, pointing to the nationwide savings and loan collapse of the early 1990s, in which outside investors, in which some of the were foreign, came in and got great deals in the overbuilt commercial sector. According to state industry observers, the metropolitan Ocala area for example, would probably be look attractive for institutional or foreign investors, not because of any negative consideration, but simply because of the lack of a critical mass, notes some analysts.

It's also less likely that a pension fund is going to invest in a building in Ocala than in Orlando or Tampa, and some note that for smaller communities you're more likely to see smaller groups investing in smaller properties. Market watchers say that there does appear to be an increase in foreign investment in commercial properties in southwestern, central , southern and eastern Florida these days. Most say that weak dollar is a major factor, along with the strong euro, and ongoing political and economic instability in Latin America, where most nations have sizable immigrant populations in the state.

South Florida Region Ranks High Among Overseas Commercial Real Estate Investment

The South Florida region is ranked as the 15th-largest metropolitan area in the world for commercial real estate investment, and is also seen as one of the most desirable markets, wherein a large number of conglomerates have expressed the desire to invest there. South Florida's rising popularity as an international travel, trade and investment haven creates familiarity among foreign investors, the report adds.

The positive notion also helps to considerably lower the notion of the region as an investment risk, since the area' s commercial leasing, sales and consumer markets are not just totally dependent on local economic conditions and demand. The region's emergence in the investment world scene parallels its rise as an international hub of commerce. The Real Capital Analytics' report further adds that the bottom line is that South Florida, with its strategic location, has become more of an attractive destination for international trade and commerce investments.

Of five sectors in the commercial real estate market - apartment, hotel, industrial, office and retail - the recent global commercial property sector report shows the most staggering increase in the retail sector of the Florida commercial market, with foreign investment shooting up from just around $194 million in 2004, to almost $900 million in mid-2007 and early 2008.

 

Bahrain Real Estate - Freehold Properites

When Middle Eastern property markets are mentioned, Dubai is always spoken about and the success of its real estate market is well documented. However, one market that is catching up fast is Bahrain. Of all the Middle Eastern real estate markets, the Bahrain real estate market has possible the greatest potential.

Bahrain is an archipelago of 33 islands. The country was once named by ancients Sumerians, considered an island paradise in which there was no disease, death or suffering, and where gods resided. Although modern Bahrain has not retained such mythical status, many still frolic in its heavenly shoreline, and many still perceive the country as blissful respite from lenient Islamic countries. Bahrain holds a strategic position between East and West, The Kingdom has always been considered a place of unity where east meets west, renowned for its warmth and hospitality. A good balance of traditional values combined with refined modernity, make Bahrain an attractive country to live and work.

Despite its size, Bahrain has a well established real estate market. In recent times changes in Bahraini law, foreign nationals are now allowed freehold ownership of property, have created a huge increase in investor interest in the country. Unlike countries such as Saudi Arabia, Bahrain has worked hard to diversity its economy away from oil by focusing on business areas such as tourism, information technology, telecommunications, education and healthcare. This strategy has attracted a number of multinational firms to establish their headquarters in Bahrain.

About one-third of Bahrain's population is foreign expatriates who seek that ideal blend of stability and prosperity. Perhaps this influence has shaped modern Bahrain, now rapidly modernizing, full of shopping malls and restaurants. Expatriates living in Bahrain generally enjoy an extraordinary standard of living primarily because of substantial tax free income. The types of accommodation expatriates seek has established the style of real estate that is typically available for sale or rent in the Kingdom and financing properties in the Kingdom is fairly easy.

The movement of increasing numbers of expatriate to Bahrain has resulted in a huge boom in the real estate sector. Most of these expatriates are taking advantage of the changes in legislation that allow them to own freehold properties and this is increasing the need for quality accommodation. The surge in demand for accommodation is probably why rental rates have surged over the last few years. However, rental rates are still significantly lower than in Dubai. These factors have made the Bahraini real estate market ripe for investment with realization of capital appreciation fairly easy to achieve due to a market enthusiastic for completed resale property.

 

The Cove - Dubai Real Estate Investment on the Cove

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Extend across 50 beautiful acres; The Cove is basically a beach resort project of AED estimated to cost $221 million featuring 179 exclusive residences. If you are one of those individuals who want to experience sunshine of Dubai while lying on the white sandy beach, then there is good news for you as you can get unlimited and private access to beach in 'The Cove'.

Apart from a five star beach hotel, The Cove also includes one, two and three bedroom chalets. There are separate terraces and private plunge pool in each chalet. You can enjoy breathtaking views overlooking the water from The Cove, as chalets are positioned on the islands. What's more, visitor parking is also available on the plateau level of The Cove.

Location

The Cove is located in north of Dubai in the city of Al Khaimah. It is just 40 minutes drive away from Dubai's International Airport. You can't ask for a much better location, as there are plenty of shopping malls, golf courses, top class colleges and hospitals in the close range.

Completion and Service Charges

The construction of The Cove is expected to complete by 2008. In terms of service charges, a maintenance fee is 12 dhs per square foot will be charged. Point to be noted here is that this charge is incurred for the one months of occupation during the initial three years of the leasing period. Once this period is over, you have to pay the conventional yearly maintenance charges.

Selling of the Property

If you are interested in selling your property to a third party you can easily do that. It is worth mentioning in this regard that property in The Cove is fully transferable to a third party, although there is a 0.5 per cent administration fee involved for ownership transfer in The Cove.

No doubt, The Cove offers a unique investment opportunity for real estate investors who would like to have a holiday home, which they can visit any month of the year and get a guaranteed return of 7 per cent in the remaining 11 months.

Not only The Cove is strategically located but also for the initial three years the seller can lease it. After that, you can sell the property or can renew the leasing contract. If you want to sell the property, you can sell it directly to the developer at the market value. So, there is no need of you searching for a buyer.

 

Commercial Property in South Africa: Investment Opportunities and Benefits

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Buying commercial property in South Africa for investment purpose is one of the most commendable ways of generating income. Both domestic and foreign buyers appreciate the versatility that the South African property market has shown in the past few years. According to the Economist, the demand for commercial real estate in South Africa has gone up by 400 percent in the past 10 years, which is the highest in the world. The rising demand for offices by new business enterprises and growing number of foreign investors are two key factors driving this appreciation of price of commercial real estate in South Africa.

Investment Opportunities in South Africa

The commercial property investment in South Africa has almost outperformed the European and American markets. According to estimates made by Research Worldwide, commercial real estate investment in the country had given an annual return of 15 percent when the rest of the world was tottering due to recession. The country continues to be a leading manufacturing and export hub for African, Asian, and European markets. The liberalized economic policy and growth in major urban areas, such as Pretoria, Johannesburg, and East London, has created perfect ambience for investment in South African commercial real estate.

Investors have plenty of option to buy or invest in commercial properties of various shapes, sizes, and prices. It includes office blocks, intricate industrial complexes, retail outlets, apartments, and shopping malls. New concepts, such as serviced and instant offices, make the opportunity for investment more attractive. The low-rate of interest offered by the banks also adds to the already huge potential for real estate investment in South Africa for both foreigners and natives.

Benefits of Investing in Real Estate in South Africa

The economic growth in the last decade is the foremost reason for considering the rainbow nation a chosen investment destination. The government patronization to new business ventures has led to influx of many foreign companies and emergence of domestic business ventures in various fields. As a result the demand for commercial places, particularly the offices, have increased giving a new fillip to commercial property prices. The tourism industry and the fast growing internal market also contribute to make real estate investment in South Africa a lucrative option.

Substantial state support is a big advantage for commercial property investment in South Africa. Developers pass a major part of 20-percent tax break given by the government to buyers. In case of renovation projects, investors can also avail of similar tax breaks. Low exchange rate of the local currency Rand against Euro, Pound, and Dollar help investors get more value of their money. Zero stamp duty and minimum levies on property also a big plus to buy and sell commercial property in the country.

Above 95 percent occupancy level illustrates the high demand for commercial property in South Africa. With the economy going strong and European multinational preferring the country as an investment hub, the demand for commercial real estate is set to increase further. The country's proximity to developed countries and trade pacts with developing powers is going to fuel growth in this segment of national economy. Political stability and its role as African financial backbone is sure to benefit the commercial real estate development in the country in the coming days.

Article Source: http://EzineArticles.com/6378434

Starbucks Coffee - What Commercial Real Estate Investors Should Know

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Company Summary

Starbucks Coffee, sometimes referred to as Fourbucks Coffee is the largest coffeehouse chain in the world. It opened its first store in 1971 in Seattle's waterfront Pike Place Market by three partners: Jerry Baldwin, Zev Siegel, and Gordon Bowker to sell high-quality coffee beans and equipment. In 1982, Howard Schultz, the current Chairman and CEO joined the company as the Director of Marketing. He was impressed by the popularity of the espresso bars in Italy after he traveled to Milan in 1983. Back to the US, he convinced the founders of Starbucks to sell both coffee beans and espresso beverages. However, the idea was rejected so he left the company and founded Il Giornale coffee bar chain in 1985. In 1987 Howard Schultz and Il Giornale bought Starbucks with $3.8M and renamed Il Giornale coffee bars to Starbucks and turned it into the Starbucks you know today. The company went public with the symbol SBUX in June 26, 1992 at $17/share with 140 stores. Since then the stock has split 5 times. As of May 2008, SBUX is traded at about $16, down from the high of $39.43 in November 2006.

Starbucks opened the first overseas store in Tokyo, Japan in 1996. The company currently has about 16,000 stores, employs 172,000 partners, AKA employees as of September 2007 in 44 countries. It has annual sales of over $10B with most recent quarterly revenue being $2.526B. About 85% of Starbucks revenue comes from company-operated stores.

Starbucks does not franchise its operations and has no plans to franchises in foreseeable future. In North America, most stores are company-operated. You may see some Starbucks stores inside Target, major supermarkets, University campuses, Hospitals, and Airports. These stores are operated under licensing agreements to provide access to real estate which would otherwise unavailable. Starbucks receives licensee fees and royalties from these licensed locations. At these licensed retail locations, the workers are considered employees of that specific retailer, not Starbucks. As of 2008 it has 7087 company-operated stores and 4081 licensed stores in the US. Internationally it has 1796 company operated stores and 2792 joint-venture or licensed stores in 43 foreign countries. The pace of expansion is slowing down as the company plans to open 1020 US stores in 2008, less than 400 stores in 2009 down from 1800 stores in2007. In addition, it also plans to close 100 stores in 2008.

Risks to Real Estate Investors

Starbucks coffee buildings remain a popular investment for many investors. When you consider investing in a property occupied by Starbucks, you need to understand the following risks of your investment:

1. Recession-sensitivity: a hungry man can survive with a Big Mac & fries but can live without a four-buck Frappuccino. This means Starbucks is very sensitive to economy downturn as seen in 2007 and 2008 compared to Burger Kings and McDonald's. This may be the main reason sales at stores in the US open at least a year are expected a mid single-digit percentage decline, the first drop ever. It triggers Howard Schultz to return to the CEO post. The company plans to double its marketing spending to $100M in 2008 to drum up sales. It began an aggressive coupons campaign offering free drinks every Wednesday through May 28, 2008. This may be a sign of desperation. On April 22, 2008 Starbucks cut its outlook for the year citing weak economy.
2. Calorie & Sugar: Starbucks drinks have more sugar and calorie in which consumers are more and more concerned due to explosion of obesity and diabetes epidemic in the US. For example, its Strawberries & Crème Frappuccino® Blended Crème - whip has 120 grams (over 1/4 lb) of sugar, and 750 calorie on its Venti 24 oz size. If it becomes a trend that consumers decide to cut down on the sugar drinks, or stick to low-carb diets then it will have impact on Starbucks revenue.
3. Competition: McDonald's, Wendy's and Dunkin Donuts now also offer espresso at lower prices to compete with Starbucks. They will capture some revenue from Starbucks, especially from cost-conscious customers. The current Starbucks prices are already pretty high; it's very hard for Starbucks to increase the prices in the near future without affecting the traffic to its stores.
4. High-expenses business model: while Starbucks profit margin is high as it pays an average $1.42 per pound for the unroasted coffee, its business is very labor intensive just like any other foods businesses. It takes between 10-20 employees to run one store. All eligible part-time and full-time partners in the US and Canada receive benefit package consisting of stock option plan, 401k with company matching, medical, dental & vision coverage. Starbucks is voted as the 7-th best company to work for in the US in 2008 by the Fortune magazine employee's survey. What is good for employees may not be good for the employers. These benefits are normally only available to key employees or managers in the restaurant industry. Historically, the costs of these health benefits rise faster than the rate of inflation. In the long run, they may have negative impact on Starbucks bottom line. Should Starbucks not perform well, it may be under pressure as a public company to close more stores.
5. Special-purpose building: Starbucks freestanding building is a special-purpose building designed specifically for Starbucks. Should Starbucks decide not to close or not to renew the lease, it's hard to re-lease the property. There are few tenants out there willing to pay the high rent like Starbucks. It's hard to use it as a fast food restaurant due to a relative small square footage. Besides, it does not have a commercial kitchen. Once vacated by Starbucks, the property value will most likely go down.

Starbucks Real Estate Operation

Starbucks divides the US & Canada into 17 real estate territories, each has its own store development office to develop the market in its territory. The developers constructed freestanding buildings about 1800 SF with drive thru in a location with high visibility, heavy traffic. Once the location is approved by the territory office, Starbucks typically signs a 10 year NNN lease with 2 five year options in which landlords are responsible for roof and structure. All the leases normally have corporate guarantee which means Starbucks will continue paying rent in the event it has to close the store. The lease often has 10% rent increase every 5 years. The rent is between $1.65/SF in a store in Utah to $5.84/SF in New York. This rent survey is based on the rents at just 30 Starbucks properties, 18 of them are free standing, on the market for sale through out the US as of April 2008.

Starbucks Location with Minimal Store Closure Possibilities

During tough times, e.g. in 2008 when sales are declining Starbucks will attempt to cut costs and close underperforming stores. As a real estate investor considers investing in a Starbucks building, you don't want to invest in a property that will be closed in the future.

Location------ 1mile------3miles-------AHI/yr-----Size (SF)----Base rent /yr---Rent/SF/mo --Price-----Cap(%)
Ohio...............296........2609.........$88375....1613.........$58,590........... $3.03..........$868K.......6.75
Florida...........9186......55270......$68595.....1816.........$75,000...........$3.44..........$1.2M.........6.10
Georgia.........5717......57201.....$143936....1750.........$74,000...........$3.52..........$1.091........6.75
Mississippi....188........4923........$77372.....1816.........$112,184.........$5.15..........$1.558M.....7.2
Texas.............5944.....40970.......$75043.....1752.........$92,914...........$4.42..........$1,327M....7.00

Table 1: Rent Comparables for Free-standing Starbucks Buildings

Location------SBUX rent/yr---SBUX Size---SBUX rent/SF/mo---Other tenant Size---Rent/SF/mo---Difference
California.......$30096........1248 SF.....$2.01........................1245 SF.................$2.50.............-19%
Kansas..........$43200........1600 SF....$2.25.........................1600 SF..................$1.33.............68%
Utah...............$38568........1950 SF.....$1.65.........................1200 SF.................$1.86............-11%
New Mexico..$92004.........2000 SF....$3.83.........................2500 SF.................$1.92............100%
New York.......$125004......1785 SF....$5.84.........................2819 SF..................$2.75............112%

Table 2: Rent Difference in Multi-tenant Starbucks Retail Centers

Since Starbucks does not release sales revenue for a particular location, you just need to make an educated guess. Based on annual revenue and numbers of stored operated by Starbucks, the average annual revenue per store is about $1M. In addition, if the annual rent to revenue ratio is less than 10% there is a good chance the location is profitable. For example if the base rent for the Starbucks in Ohio is $58,590 then the annual revenue should be more than $585,590. Besides picking a store at a good location (refer to the article titled "What 'Location' Means in Commercial Real Estate" by this author), and the cap rate you should consider the following:

1. Densely-populated area: more people mean more customers size and thus more revenue. The Starbucks in FL, GA and TX on Table 1 are more promising. Note: the author tries to be sensitive by not disclosing the exact locations.
2. Low-rent: the Starbucks in MS pays $112,184 for base rent. To be reasonably profitable it needs to have annual revenue of $1.12M. However, since there are only 188 people within 1 mile and 4923 residents within 3 miles radius from the store, it's less likely the store ever achieves that revenue. Besides Starbucks pays $5.15/SF which is very high compared to just $3.52/SF in a fast growing, high income, densely-populated in GA where there are 57,201 residents within 3 miles radius and Average Household Income (AHI) of over $143K/year. It's hard to understand how the Starbucks in MS could be an irreplaceable location in an area with just 188 people within 1 mile radius from the property! While offering the highest 7.2% cap, this property appears to be a good investment but it actually has the highest risk of underperforming and could be closed down in the future. Alternatively, Starbucks could attempt to renegotiate the lease with lower rent during tough times. While Starbucks has not asked for rent reductions yet, it is not surprised if Starbucks will do so to improve its bottom line in the future. In either case, the property value will go down.
3. Rent premium: while most Starbucks properties are freestanding in which it occupies 100%, you may see a Starbucks in a small multi-unit strip center with a few other tenants. It normally occupies the end unit with drive thru and thus is expected to pay a premium compared to the adjacent unit. However, most of the time Starbucks pays substantially higher rent. For example, in Table 2 it pays $5.84/SF compared to just $2.75/SF by a tenant in the unit next door in a center in New York or 112% higher. In this strip center should the rent for the unit occupied by Starbucks be reduced (due to closure or lease renegotiation) the value of the center will be reduced substantially. You certainly don't want to invest in this property.

 

The Most Amazing Skyscrapers of the United States

As I was passing through the seventh largest city of United States, I was quite taken away by the city's unique blend of modern and antique architecture. And after paying a visit to the old landmarks such as Alamo, one definitely is amazed by the workers who are busy with coatings and sandblasting of the newly constructed and under construction skyscrapers of the city. Mesmerized by this one city, one wonders about how many skyscrapers this country has in total.

United States has the honor of being the country with world's first skyscraper, the Home Insurance building in Chicago. This building was built in 1884, and was only 10 floors high, tallest of its time. Since than, US has always held multiple positions in the list of world's tallest buildings. There is literally no defined rule as to how high a skyscraper must be but almost all the top skyscrapers of the world are above 700 feet with the tallest one, Burj Khalifa, reaching 2,176 feet high. Let us take a look at some of the United States most iconic skyscrapers so far.

• Willis Tower Chicago: If the name does not ring a bell, then let me remind you that it was formerly known as the Sears Tower. Built in 1973, it was the tallest building of the world and currently is fifth tallest of the world. But in United States, this enormous 108 story high building stands at 1451 feet and is the country's tallest so far.

• Trump International Hotel and Tower: And if you guessed it right, the building is actually named after Donald Trump. The building is a 92 story high condo hotel reaching 1389 feet. This building is currently world's eleventh tallest structure. One interesting fact about this building is that it was supposed to be built as the tallest building of US, but after the terrorist attacks on world Trade Center, the plan was dropped and scaled down.

• Empire State building: and if you are wondering why isn't there anyone who hasn't heard of this building than let us remind you that this building has held the title of world tallest building from 1931 to 1972. An unbelievable 40 years record. The building has a unique and classic architecture and is now the tallest building in New York after the 9/11 crash. 1250 feet tall building is America's third tallest building and world's fifteenth on the list.

• The Bank of America Tower: Besides being the second tallest building in the New York City, it is also the World's most eco friendly building. The eco friendly system includes a complete floor to ceiling insulating glass and the grey water system, which preserves and reuses the rainwater. The tower also incorporates a daylight dimmer system.

• Stratosphere Las Vegas: the tallest structure in Las Vegas is essentially the fifth tallest in United States but there are some arguments as to include it in the list of building or not. This structure is basically an observation tower which is not fully inhabitable up to top floor. The rest of the building serves as a hotel and casino.

 

Why Selling Commercial Real Estate Is Different From Selling A House?

The real estate arena is composed of vast properties. Each considered as an investment but when it comes to its purposes, generates different outcomes. The top two of the most well coveted investment to have these days especially in this unpredictable economy are residential real estate and commercial real estate. Both wise assets to have but are entirely distinct from one another.

A home is a private property wherein you and your family can stay in for as long as you wish. It is a shelter and a necessity for every single individual. It is a real estate investment which can be designed to fit the needs of the home owner. Owning and selling a home is considered as an expense you have to maintain as long as you are the title holder of the property. Meaning, you have to shell out money to keep your home up float and in perfect condition. It is not a source of income unless you decide to sell it. Selling a house also depends on the stability of the real estate market; if demand is low chances are your house will be on the home for sale list for a long time. Also, the market value of your house can either increase or decrease.

Meanwhile, a commercial real estate is a property that is mainly intended for a place for business. It is an investment regarded as an income making asset to which you as its owner will obtain monthly cash inflow. This is where consumers flock for their basic needs as well as for their whims and fancies. But, the downside of this is that there is a big chance for your business to close down when it is not well received by the market. However, having a good commercial property can be more lucrative than the business itself. Great examples of this are shopping malls and condominiums. These establishments generate income and are a sure hit to people. Selling it is also profit worthy since these types of business-related enterprises increases value over time.

The following are some key points that distinguish selling a commercial real estate from a housing property:

The Age of The Building

Selling a building is different from selling a residential asset. Homes that have been around for many years or historical homes tend to generate more home value upping its sale price. But in the case of commercial entities, an office building that is old usually means a lot of renovations needed. This generates a low selling value. Most companies tend to give importance to how old a building is. There are companies who do not mind buying an old one and fixing it up while other firms want a modern building that need not require or needs limited improvements.

In Demand

When you say income generator, it goes to say that whatever the circumstances may be; it still makes money. A commercial real estate investment can be sold to interested buyers in case your family does not want to deal with it any longer or when you wish to move on to another business. Even if a business fails, it can still sell and the new owner can turn it around and make it flourish once again. Also, selling of commercial assets gain a wider scope of audience since selling it to investors or companies who have more money is better than selling to a home buyer.

Continuous Cycle of Income

When a commercial real estate is situated in a very promising location or it is located in the middle of metropolitan life, its real estate assessment as well as its ability to produce money is an unremitting cycle. The flow of income goes on and on because it is very marketable to the people. This alone makes it a desirable target especially when you decide to sell it.

The Bigger The Size, The Higher The Price

When a commercial establishment has square feet that can match the size of five baseball fields, selling it to business clients becomes easier. Most people on the lookout for buying commercial real estate want a place that is big, where they can utilize whatever industry they want to put up.

Selling commercial real estate is in contrast with selling residential assets. Learn to recognize a commercial asset's true value may it be a renowned or undersized property. This way, selling it will help you profitably generate income.