Apollo is in advanced talks to take over Citigroup’s real estate unit with global assets worth $12.5 billion. Global private equity house Apollo Management LP may assume control of about seven to eight investments of Citi Property Investors (CPI) in India, on which it is currently holding due diligence. Apollo is in advanced negotiations to take over Citigroup’s real estate unit, CPI, with assets worth over $12.5 billion under management globally.

In India, this could see some of CPI’s key investments passing over to Apollo giving the latter a fairly well-spread real estate portfolio to start with. Among the marquee investments of CPI are $55 million investment in Nitesh Estates, its multiple investments worth over $200 million in New Delhi-based BPTP, $20 million in True Value Homes in Chennai and another $50 million commitment into Gera Developments in Pune. A Citigroup India spokesperson offered no comment, when contacted. Meanwhile, Citigroup has been trying to offload some of its structured finance deals with a few domestic real estate firms like Golden Gate Properties Ltd in Bangalore, independently. Also Citigroup Venture Capital International’s real estate investments like Emaar MGF will not be a part of this deal.

Apollo is expected to take over 74% CPI stake in a JV with Nitesh Estates, which is developing India’s first Ritz Carlton hotel in Bangalore. Incidentally, Nitesh, which has the option of buying back a part of the stake from Citi at a later date, is in the midst of Rs 550-crore IPO roadshow currently. Though CPI had originally committed $360 million investment to various projects of Nitesh Estates, it deferred the rest last year and only went ahead with Ritz Carlton deal. Most of CPI’s investments are at project level barring its 5.89% stake at the parent entity of BPTP.

The acquisition of CPI will could also give New York-based Apollo access to investments across Asia. CPI closed CPI Capital Partners Asia Pacific, LP in February 2007 with commitments totaling $1.29 billion. This fund has a primary focus in Greater China and India. Apollo recently made its debut private equity deal in India by investing $100 million in direct to home satellite TV company Dish TV. Apollo Management’s affiliate, Apollo Real Estate Advisors, already runs a $650-million real estate private equity fund in India in partnership with Delhi-based Khemka family’s SUN group. But Citi Property Investor’s assets are expected to come directly to Apollo, which would give it a direct presence in the Indian real estate market. The deal, being done at a global level for which the interim agreement has been signed, is expected to unveiled in a month’s time. An email sent to Apollo’s India chief Mintoo Bhandari for comments did not elicit any response.

The deal is part of Citi’s efforts to raise funds from selling assets. Citigroup’s arms have also recently exited investments in India’s largest commodity exchange Multi Commodity Exchange of India and telecom tower arm of Bharti Airtel. Last year CPI promoted its India head, Ravi Hansoty, as the interim head of its pan-Asian real estate platform the Asia head David Schaefer moved out. By far, CPI’s largest exposure is to BPTP, where it picked up a 5.89% stake in the entity for Rs 322 crore ($80 million) in August 2007. Subsequently it also picked up stakes in three associate companies and subsidiary of BPTP for another Rs 399 crore ($99 million) in April 2008. The fate of the entity level investment remains to be seen as BPTP recently said is planning to go for a Rs 1500 crore public offering early next fiscal.

It also has an investment in TVH Estates Chennai Pvt Ltd, a Rs 700-crore residential project near Chennai developed by construction firm True Value Homes. The developer is believed to have the right to buyback CPI’s investment in the project. CPI also has a 50:50 joint venture with the Gera Developments for a residential project in Pune. Clarification: Apollo Real Estate Advisors is now known as AREA Property Partners and has no affiliation with Apollo Global Management. AREA’s name change and formal separation from Apollo Management were implemented in 2009.

Real Estate Major Emaar MGF will invest Rs 500 crore to build a mid-income housing project at Gurgaon in Haryana. The company, which plans to launch its initial public offer to raise up to Rs 3,850 crore, would develop 1,250 units in the 29 acre-project located at Sector-77 in Gurgaon. Sources said that investment in the project ‘Palm Hills’ could be around Rs 500 crore, excluding the cost of the land. With a starting price of Rs 48 lakh the company has sold 650 units in the first phase.

“The encouraging response on the first day of launch is a testimony to the prevailing huge demand for quality housing in the mid-market segment,” Emaar MGF Executive Vice Chairman and Managing Director Shravan Gupta said. Emaar MGF is a joint venture between Dubai-based Emaar Properties and domestic firm MGF. It commenced its operations in India in 2005 and recently got approval from the SEBI for its maiden public offer.

Of the total proceeds from the issue, Emaar MGF plans to utilise Rs 1,972 crore for part re-payment of debt of over Rs 5,800 crore. The company would use Rs 820 crore for redemption of certain redeemable preference shares and will invest Rs 276.8 crore in paying development and licence renewal charges. Emaar MGF has a land bank of 11,340 acres. It currently has 29 projects, including the Commonwealth Games Village.

Burj Khalifa has been officially declared as the world’s tallest building at a height of 828.00 meters by the Chicago-based The Council on Tall Buildings and Urban Habitat (CTBUH).

The non-profit organization, in its statement, revealed that CTBUH has received and examined detailed drawings of the Burj Khalifa submitted by Emaar Properties, and can now confirm the official building height at 828 meters, and the title of The Worlds Tallest Building.

When the building was officially announced completion on 4th January 2010, Burj Khalifa surpassed the World’s Tallest (Taipei 101) by 320 meters, an unprecedented increase of 61 percent.

The Burj Khalifa represents four major trends, with respect to location, function, structural material and height, in the current tall building construction category.

The trend of the world’s tallest buildings was dominated by the North American continent until the 1990s. But two decades later, the trend moved to Middle East and Asia, due to the dramatic increase in tall building construction in these regions. The Burj Khalifa is the third successive World’s Tallest located outside North America.

As for the function of the building, the Burj Khalifa is the first mixed-use building to hold the World’s Tallest title and is inline with the current tall building trends. At present only 20 percent of the world’s 100 tallest buildings are for mixed-use.

For several years in a row, steel was the material of choice for tall buildings. However, at present composite, concrete and mixed-structure construction is more prevalent in tall buildings. Only 24 percent of the world’s 100 tallest buildings at present have a purely steel structural system.

The height of super-tall structures keeps increasing. The number of completed super-tall now stands at 44, up from 11 in the year 1990. The figure is hoped to increase considerably over the next decade, with 70 projects 300 meters or taller under construction internationally.

Burj Khalifa has also been rated as World’s Tallest in the primary height category of Height of Architectural Top the Council confirms. Burj Khalifa has also surpassed previous record heights in the Height to Tip category and Highest Occupied Floor category at 829.84 meters and 584.50 meters respectively.

Apart from this, the Burj Khalifa also contains record-breaking number of floors, at 163. The observation deck also becomes the second highest in the world at 452.1 meters.

Bargain prices in mature real estate markets in the West are attracting property investors at the expense of emerging markets such as the Middle East and Asia, it is claimed.

Donald Trump Junior, executive vice president of the Trump Organisation and son of property tycoon Donald Trump, told the opening day of Cityscape Dubai property conference that emerging markets need to aim for more transparency and regulation as these are still major areas of concern.

‘It’s a question of risk versus reward.

The potential reward for investing in mature markets has improved significantly over the last couple of years, whereas the risk has if anything reduced,’ he said.

‘On the other hand, emerging markets, whilst they still represent good reward, their risk element - transparency, regulation - is still a concern.

Therefore funds that would normally have been earmarked for emerging markets are now finding their way into the more mature real estate,’ he added.

Trump, who is due to speak in Egypt and India after the conference, said there was still clear potential for emerging markets, but the global fall in prices meant there was more opportunity for real estate investors to do deals in their own back-yard.

‘I’ve just bought a new apartment in New York which was twice the price two years ago,’ he explained.

While he stressed the values that characterised Dubai’s boom - the excess, drive and momentum - were not lost in the recession, he recognised the challenges of reconciling the increased supply that’s now coming onto the market.

‘Its Dubai’s greatest asset that was also its greatest liability. Now is the time to buy real estate in Dubai, according to Trump Jr.

The Malaysian property market is expected to improve further in 2010 in line with the economic recovery, it is claimed.
The Malaysian property market is expected to improve further in 2010 in line with the economic recovery, it is claimed.

According to Datuk Abdullah Thalith Md Thani, the director general of Valuation and Property Services Department at the Finance Ministry, the challenging economic and financial environment had affected the overall performance of the Malaysian property market last year but the outlook is better for 2010.

‘The property market for this year will improve as the number of transactions involving new housing and construction activities, increases,’ he told the Third Malaysian Property Summit.

He explained that Malaysia is expected to steer towards a recovery path this year, driven primarily by domestic demand, with commodity prices for rubber, crude oil and palm oil also improving.

These, he said would increase the confidence level among consumers and provide a positive impact for the property sector. ‘The demand for properties is returning,’ he added.

Abdullah Thalith said the government would continue to implement appropriate measures to restore confidence and market sentiment. In particular the liberalisation of Foreign Investment Committee (FIC) guidelines would increase the competitiveness of Malaysia, as a preferred investment destination.

Acquiring properties in Malaysia would be more attractive, as FIC approval is no longer required and the review of the Real Property Gains Tax (RPGT) would also boost the property industry, he added.

Also officials are determined to crackdown on dodgy operators. Malaysian Housing and Local Councils Minister Kong Cho Ha revealed that 1,345 developers and more than 5,000 directors of companies involved in problematic projects have been blacklisted including projects that have been abandoned and those not completed on schedule.
Mr Kong said it involved not only housing projects that were abandoned but also housing projects that were not completed on schedule.

‘Apart from being blacklisting, many developers were also fined for not conforming with the Housing Act, including not preparing reports on schedule, especially work progress reports every six months,’ he said.

Kong said there were 135 abandoned housing projects in the country but some were being revived by corporate organisations. Though the figure was not high when compared with 18,000 housing projects throughout the country, officials still want to outlaw bad developers.

‘For every developer, starting a new housing project is a new business. So, if they understand their responsibility as a developer and follow the agreement, they must complete the projects according to the dates set,’ he said

Thailand will not renew property tax breaks when they expire at the end of March as the economy is recovering and developers are returning to normal profits levels. The incentives, including a reduction in the property transfer fee, a cut in the mortgage registration fee and a lower special business tax, helped boost property sales which increased by 7% in 2009, officials said.

But now developers are warning that they will have to pass on the additional costs to buyers and prices will rise from April as a result.

The changes mean that the transfer tax, currently 0.01% will go back up to 2%. Certain vendors, including property developers will pay a 3.3% specific business tax, up from 0.11% and mortgage registration will increase from 0.01% to 1%.

These taxes affect completed property so the announcement will create an incentive for developers with unsold completed inventory to sell and transfer before the expiry date.

It is not expected to have a significant impact on off plan launches but it will affect developers’ profit margins as developers pay the specific business tax.

Some developers may increases prices to compensate for the extra tax but the volume of competing projects scheduled to be launched this year may keep prices roughly level for similar products in similar locations.

The increase in mortgage registration means that it will be more expensive for borrowers to switch lenders once special introductory interest deals expire.

Thailand’s biggest home builder, Land & Houses, said it will put up prices in April to take account of the higher tax charges. It also said it expects to report only single digit growth in net profit in 2010 due to the higher costs.

Without the tax breaks, the company will shoulder an additional cost of about 4% of sales. ‘Our bottom line will show single digit growth this year instead of double digit,’ said senior Executive vice president Adisorn Thananun-narapool.

The Gulf region offers good value for money for real estate investors at present with two thirds of would be property buyers intending to purchase in the region in the future despite being more aware of the risks involved, according to a new report.

Some 63% said they were likely to invest, 15% said they were unlikely to do so and 16% said they do not think the region offers good value property at present, the FutureBrand Gulf Real Estate Study shows.

The confidence shown in the region’s real estate market exists despite the research showing that the principal impact of the global economic downturn was a lack of trust in developers.

‘Heightened awareness of risk, the potential for monetary loss, loopholes and corruption all should point to a weakening of homebuyer confidence. But this new wariness does not seem to affect buyer attitudes,’ the report says.

Nearly 57% of respondents said they were more aware of risk now, following the real estate downturn in 2009, almost 50% said they were now more aware of loopholes and corruption while about 53% said they believed property prices would decline further. A further 38.6 % said they had less trust in the developers to deliver what they promise.

And Dubai is still a popular location for investors with more than 43% indicating that the emirate is their number one choice in the region despite house prices slumping by up to 50% percent in some parts of the city during 2009.

Abu Dhabi is also increasingly popular with the capital of the United Arab Emirates more than doubling its appeal among buyers looking to buy a second or vacation property in the Gulf region.

Some 23% picked Abu Dhabi as their preferred location in 2009, compared to just 11.5% the previous year. The report said it saw Abu Dhabi as having the potential to take over from Dubai as the top property location in the long run.

‘With its financial strength and its rise as a destination of note, Abu Dhabi is best placed to lead the region’s real estate recovery. It is also poised to be the first place in the region to attract foreign investment and partnership opportunities in the future, should the emirate seek these,’ the report says.

But Jae Hwang, executive director at FutureBrand, said Dubai still had a lot going for it and that it was premature to announce the death of its real estate industry.  ‘The business model for real estate in Dubai needs to be re-evaluated and I believe companies are starting to do that but our study shows that it’s still the most popular place to live,’ he explained.

He said mega projects like the Burj Khalifa and Dubai Metro becoming a reality added to the city’s appeal to would be home buyers.

Doha was the third most popular city, named by just over 11% of respondents followed by Jeddah, 9.2%, and Muscat, 5.9%. All top five locations increased their appeal in 2009 but Sharjah and Ras al Khaimah saw big falls last year compared to 2008. Sharjah dropped from being the most popular location with 9.9% of buyers in 2008 to just 0.4% last year while RAK fell from 6.8% to 0.8%. Riyadh, Manama, Kuwait City and Fujairah also lost appeal among property buyers.

The report also said that developers should consider setting up crisis management teams to help improve their brands as part of their strategies for the future. ‘Even though most players in the region are private entities, adapting the PR practices of publicly listed companies in managing crises will help them better weather the storms that might lie ahead,’ it said.

It predicted that developers will be scrutinised more than ever before. ‘The days when business needs set marketing deadlines with no correlation to the development timeline have passed. This spells doom for those brands that maintain hype-driven empty promises,’ it warned.

Investor activity rose across 70% of the Globe as commercial property recovered as an asset class with Brazil and China leading the way, according to a new report.

The Global Commercial Property Survey from the Royal Institution of Chartered Surveyors shows that due to generally low interest rates and relatively high yields investors have returned to commercial property.

The net balance of surveyors reporting a rise in transactions in Brazil rose from 29% to 61% in the fourth quarter of 2009 while the net balance in China edged up to 58% from 47%.

But some countries are not doing as well. More surveyors again reported a drop in activity in the US

Overall the report shows that occupier demand has been most visible across the emerging economies with lettings activity picking up most in Latin America, emerging Europe and most of Asia.

It also shows that the UK property recovery was led by the London office market, with the amount of available space declining for the first time in two years. However, elsewhere in the UK and across 90% of the globe, the amount of available space continued to rise. There were some notable exceptions. Brazil, Peru, Venezuela, Austria, Hong Kong and Ghana are all witnessing mild declines, the report indicates.

However, surveyors are confident that the emerging economies, particularly in Latin America and Asia, will continue to lead the property recovery into the first quarter of 2010 but concerns persist over the outlook for some of the more developed real estate markets such as the US, Japan, Germany, Italy and the United Arab Emirates.

‘’The latest Global Commercial Property Survey demonstrates in the clearest possible terms that it is emerging real estate markets where sentiment has turned around most significantly. Crucially, the improvement in investor appetite is being accompanied by a firmer tone to the rental market. This is key to ensuring that the recovery proves sustainable,’ said RICS chief economist Simon Rubinsohn.

‘The strength of the results contained in the survey for Latin America and Asia are a reflection of the unfolding economic recovery with many of the more developed markets likely to be hampered by  the challenges resulting from the ballooning of public sector debt and need of the authorities to gradually exit from emergency monetary conditions,’ he added.

The largest listed developer in the Arab world is turning to Turkey for a new project in a move that is regarded as an admission that the troubled real estate market in the Gulf could take some time to recover.

Dubai’s Emaar Properties, the builder of the world’s tallest tower, owns land in Libadiye, Istanbul, and is now finalising the cost of developing a shopping mall, residences and a five star hotel.

Emaar is proceeding with the development of the New Istanbul Project. This is in line with the company’s strategy of seeking growth opportunities in promising global markets,’ it confirmed in a statement.

It will be a second project for the developer, which is 32% owned by the government of Dubai, in Turkey. It has already completed the first phase of a $700 million gated community.

But it is still not clear what is happening with its plans to expand into Indonesia. ‘Indonesia is one of the key markets for Emaar, and our expansion to the country is in line with the company’s growth strategy of geographic expansion and business segmentation. The Lombok Project will create a new dynamics to the property sector of the region and the resort style project will catalyse inward investments to Indonesia,’ Sergio Casari, chief executive of Emaar International, said in June last year.

‘Emaar has completed the master-plan for the project already and we look forward to completing all necessary formalities and obtaining governmental approvals for commencing development,’ he added.

But plans for the $600 million waterfront resort have still not moved forward. Emaar had initial talks with the Indonesians in 2007 on a development for Lombok Island, which is next door to Bali and administered by its authorities. But talks floundered at the height of the global economic crisis.

However, the company confirmed it hopes to revive the plans which include villas, hotels, shopping facilities and a golf course. Problems have surrounded establishing an agreement with Pengembangan Pariwisata Bali, an Indonesian government backed company, over equity sharing and land acquisition.

It is clear the developer is keen to move away from the bust that has seen prices in Dubai’s once booming real estate market plunge 50% from the peak of the market in 2008. It said last month that it would focus on middle income housing in emerging markets and overseas expansion to boost 2010 revenue after returning to profit in the fourth quarter of 2009.

The fallout of the financial crisis has driven a dramatic shift in homeowners buying decisions and has had a significant impact on the global property markets’ recovery.

The latest figures from a recent survey carried out by Simplyzigzag.com – an online estate agency – reveals an assessment of the financial crisis affecting homeowners’ buying decisions.

According to the poll, almost two thirds (60%) of homeowners feel the financial crisis affects their buying decisions, with 33% of those waiting for stabilisation before re-entering the market.

Achim Amann, Director at Simplyzigzag.com, said: “I think that before the financial crisis, there was a general shift in homeowners buying decisions, as properties and assets continued to rise the fastest in over two decades and buyers were either being priced out and properties were not being sold.

The financial crisis had the effect of accelerating this trend – reducing property prices but creating psychological havoc in buyers’ minds.”

In turn, a certain number did not believe the financial crisis affected them.

15% polled gave a straight ‘no’; 13% answered ‘not really’ and a further 12% said ‘not at all’.

Raya Mamarbachi, Director at Simplyzigzag, added:

“There is a segment of the market that has not been affected by the financial crisis – mainly people sitting on a lot of cash, foreigners or those that see the housing market as cyclical – for a small number there is no reason not to buy.”

The Simplyzigzag.com poll was conducted via the company’s website over an 8 week period from 1st of July till 30th of August.