Campinas Has Many Jobs, Not Much Office Space

Campinas skyline; photo courtesy of Fasouzafreitas

Brazil's booming economy has had no problem attracting multinational companies over the past decade, but not nearly as many commercial real estate developers. Long deterred by high interest rates, foreign investors are beginning to recognize Brazil's shortage of leasable office space--especially in Campinas.

Its proximity to the financial capital, Sao Paulo, high quality of life, highly educated workforce, diversified economy, and of course, low cost of doing business, have made Campinas a top investment destination. Aptly named the "Silicon Valley of Brazil" due to its high concentration of universities, research centers and high-tech companies, such as Bosch, Compaq, Dell, General Electric, IBM, Lucent, Samsung, and Texas Instruments, Campinas is also home to automobile giants, General Motors, Honda, Mercedes-Benz and Toyota, and pharmaceutical giants, Merck and Novartis. In all, well over 50 Fortune 500 companies have major regional operations here, contributing to a relatively low unemployment rate of roughly 6% and one of the highest average income rates in the nation.

Campinas' job growth has generated a lot of buzz in recent years. In 2009, Bloomberg/Businessweek named it one of its "Cities that Could Steal Your Job" and KPMG listed it as one of its top destinations for IT business processing outsourcing. Last year, Forbes called Campinas one of "The Next Decade's Fastest Growing Cities" and Wired magazine named it one of the fastest growing high tech centers of Latin America.

Several major infrastructure projects promise to bring thousands more jobs to the region. For example, the $ 18.8 billion public-private Rio-Sao Paulo-Campinas high-speed railway will soon connect Campinas with both Sao Paolo and Rio by 2016, perhaps in time for the Olympic Games in Rio. In addition, a $ 1.5 billion airport expansion project due for completion in 2015 will add a runway and start the first phase of a new passenger terminal.

Notwithstanding the recent job growth, Campinas' commercial property market remains largely underdeveloped. Office vacancy rates are less than 6% on average compared to roughly 14% on average in U.S. cities, signaling a potential dearth in Campinas--particularly when it comes to Class A office space.

Brazil's central bank cut the interest rate last month by 0.5% to 11.5%, and investors expect another 1.25% in cuts by April 2012. This could be enough to spur a new wave of much needed investment in one of Brazil's most favored markets.

Chinese Tourists, Investors Try Their Luck in Vegas

Residential and mixed-use project on the North Strip

Las Vegas was perhaps hardest hit by the global economic recession and US housing market collapse. As the nation's fastest growing metropolis and a top tourist destination, Vegas' housing and tourism industries suffered major blows.


Although tourism declined 4.4% and 3% in 2008 and 2009 respectively, Vegas' luck now seems to be changing--thanks to a rebounding American economy and a surge in tourists from mainland China who have long targeted Vegas as a "must see" destination. The Chinese are not just the fastest growing segment of tourists, they're also the biggest spenders. In fact, the U.S. Department of Commerce estimates that Chinese visitors spend, on average, $6,000 per trip--far more than tourists from any other country. In hopes of reviving Vegas' tourism industry, the Las Vegas Convention & Visitors Authority (LVCVA) has allocated significant resources for marketing campaigns in China's largest cities.




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Abu Dhabi Lures Tourists, Investors

Dubai may be the most popular emirate but Abu Dhabi is where the real money is. Despite its small size, Abu Dhabi makes up over half of United Arab Emirates' (UAE) GDP and has more in cash and energy reserves than most large countries.


The emirate's sovereign wealth fund, the Abu Dhabi Investment Authority, is conservatively estimated to hold between $350 B and $700 B in assets including huge stakes in Barclays, Citigroup, and real estate in top global investment destinations.


Abu Dhabi holds nearly 10% of all the world's known oil reserves (5th largest), and produces 90% of all oil within the UAE. With the world's sixth largest natural gas reserves, the emirate is also wealthy in non-oil assets.


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US Home Sales Plunge in December 2009

Home sales fell 16.7% last month, its largest decline in about 4 decades as the effects of the first-time home buyer tax credit faded. National Association of Realtors data suggest that first-time home buyers made up the majority of home sales in the early part of 2009, compared with just 43% in December.


Regional sales declines were greatest in the Midwest at 26% and least in the South at 16%. Both unemployment and foreclosure rates help to explain the differences in regional home sales figures.


The good news is that December 2009 sales and prices were up 15% and 1.5% respectively over December 2008. However, inventory was also down during the same period, lessening the legitimacy of year over year sales and price increase.

Top 10 U.S. Real Estate Investment Destinations in 2010

Based on Association of Foreign Investors in Real Estate/University of Wisconsin survey results



Washington, DC was yet again named America's top real estate destination for international investment, beating out New York, San Francisco, and Boston respectively. A survey conducted amongst members of the Association of Foreign Investors in Real Estate (AFIRE) found that for a second year in a row, multi-family units were the preferred form of real estate investment.


Although Washington was the world's top real estate investment destination last year, London emerged to capture the top spot by a huge margin. This may be attributable to London's investments in preparation for the 2012 Summer Olympic Games, the weakened Pound Sterling, and a rebounding property market. New York remained the world's third most favored destination, followed by Paris, Tokyo, Sydney, San Francisco, and Hong Kong.





10. Denver


By the end of 2009, the mile-high city's property market seemed to be nearing a bottom as both vacancies reached 4-year lows. The Central Business District and Lower Downtown office vacancies faired a lot better than most major markets in the third quarter at just 13% and 15% respectively; however, by the fourth quarter, vacancies fell across the entire region.





9. Miami


Although Miami was one of America's hardest hit real estate markets, this year we've seen signs of recovery. In 2009, over one-third of new condo units were vacant, but real estate professionals are reporting that things are improving. Miami still remains a popular spot for international real estate investors for the city's warm climate and significant portion of celebrities.





8. Chicago


With the second largest office market and third largest real estate market in the U.S., Chicago remains a favorite destination among international investors. As such, Chicago's office vacancy rate was one of the lowest in the U.S. at only 12% by the end of 2009.





7. Seattle


Seattle's office vacancies are at 20-year lows, which translates to over 20% in the downtown/financial district. Local brokers and developers have a negative outlook moving forward, however, international investors think highly of the Emerald City, with its highly educated workforce, presence of Fortune 500 companies, and large international port.





6. Houston


Houston's real estate market was close to the national average with overall vacancy rates of about 16%. The city has held up well but in some suburban areas, vacancy rates were much higher. When it comes to local residential real estate, a recent survey showed that most investors have a positive outlook moving forward.





5. Los Angeles


Down from the #4 spot last year, the L.A. area was amongst the country's hardest hit property markets. Some of the city's
most notable landmarks, like the U.S. Bank Tower, is nearly 35% vacant. However, in downtown, rates remained at 14% going into 2010, while the Burbank-Glendale-Pasadena submarket saw a surge to 17%.








4. Boston


Boston was this year's biggest gainer, having moved up from seventh place last year as it was seen as one of the most stable markets in terms of both prices and vacancy rates. Boston remains a favorite US destination due in part to its proximity to Europe and zoning regulations and tight property market.








3. San Francisco

San Francisco was one of the country's hardest hit markets, which once saw over 30% vacancies in the financial district office market last year. But international investors still favor San Francisco as it's a major financial hub and one of the world's top international tourist destinations.







2. New York


The country's largest office and housing market saw one of the lowest office vacancy rates amongst major cities, but also one of the steepest declines in prices. Recent trends suggesting a decline in sublease space indicates that office vacancy rates will stabilize in 2010.





1. Washington, DC

Office vacancies and prices were amongst the most stable in the nation as demand for proximity to the federal government, lobbyists, and law firms makes central Washington an attractive market. As suburban markets in Northern Virginia show signs of recovery, DC's office market is expected to follow suit in 2010. International investors love DC's European feel and future growth prospects.



Photos courtesy of: Ken Schroeppel (Denver); Wikipedia user, Aude (Chicago)

US Economy Returns to Growth

After a year of the largest economic decline in nearly 7 decades, the US economy has finally returns to growth. The US economy showed signs of recovery as the US Department of Commerce recorded an economic growth rate of 3.5% during the third quarter. Consumer spending was up nearly 3.5% as well, the largest quarterly rise in about 2 years.


US New Home Sales Decline


After 5 months of rising new home sales in the US, figures for September were down 3.6%. Many economists attribute the drop to the end of the first-time homebuyer tax credit. The decline was most evident in the South and West, while new home sales were up 35% in the Midwest.

FDI to Vietnam Plunges


Foreign direct investment into Vietnam is down 12% so far this year and new commitments for foreign investment projects is down over 70%. FDI had previously been key to helping Vietnam balance its trade deficit.


Australia, Cook Islands Sign Tax Info Exchange Agreement


The Cook Islands and Australian governments have signed a tax information exchange agreement, further closing the door to any possibility of Cook Islands returning to its former tax haven status. Since nearly 50,000 Cook Islands citizens live in Australia and New Zealand, this treaty is seen as favorable to Cook Islands tax authorities as well.

World's Largest Economies See Signs of Recovery

FDI to BRIC countries Rising


The world's largest developing economies posted significantly higher FDI figures, signaling that the worst of the global foreign investment slump is behind us. Brazil's inward FDI rose to $ 2.5 B in September, up about 25% over August totals. Russia recorded a significantly lower net FDI outflow, indicating the return of foreign investors into the Russian economy. FDI to China rose nearly 20% in September, while FDI to India inAugust was up 40%.



Chinese Economic Growth Accelerates


China released news that its growth rate for the first 9 months of 2009 averaged slightly above 7%, but that things picked up to 8.9% in the third quarter. A significant rise from the low rate of 6.1% in the first quarter, China's economic stimulus is being credited for creating a quick rebound.


US Real Estate Market Rebounding


We finally have news to suggest that the US housing market has begun to rebound. Although pending US home sales rose for the 7th consecutive month in August, existing home sales were still slumping. However, a report released today by the National Association of Realtors showed that existing home sales in the US rose as much as 9.2% in September, the first such rise this year.



Tax & Law


Singapore recently reported a surge in offshore banking activity from Russians, but in the face of mounting pressure to improve transparency, it has changed its attractive tax structure. This week, Singapore passed a tax disclosure law aimed at forcing banks and trusts to provide information if a treaty nation requests specific information for tax purposes.