Record year for development growth

Spanish house prices’ peak-to-trough 32%

Plans to develop a 24-hour urban community in Paris

Trump loses millions of dollars in deposits

Australian retailers demand more incentives

Kuwaiti property sales fell -35.2%

Record year for development growth

Last year was a record year for development growth with the focus on medium-sized schemes in secondary towns and cities, according to Jones Lang LaSalle’s new report ‘Shopping Centre Development - Boom or Bust?’.

Over 300 shopping centres were completed, accounting for 7.9m sqm of space, with Russia once again being the most active market, accounting for 13% of new space delivered. Turkey also experienced another strong year with nearly 1m sqm completed. As in 2007, Central & Eastern Europe (CEE) dominated with 55% of completions, and there are still several large schemes under construction.

Neville Moss, head of EMEA Retail Research, said: “Last year (2008) was a record year for new space delivered, but given the current financial climate it is inevitable that the pace of development will slow over the next two years and a substantial amount of planned space is expected to be delayed.”

However, Moss pointed out that in 2008 the actual amount of space that opened was 5.5m sqm lower than the 2007 prediction of 13.7m sqm. Most new developments are currently taking place in Turkey, Italy and Russia and much of the proposed space for 2009 is already under construction, and it is doubtful that it will be stalled.

Moss believes 2010 will be less active and it is anticipated that a significant proportion of the proposed 11.3m sqm pipeline will be put on hold if economic prospects continue to deteriorate. Corrections to the development pipeline will be absorbed mostly by those markets that have grown considerably over the past three years, notably Russia and Turkey.

Spanish house prices’ peak-to-trough 32%

Spanish house hunters should wait until at least 2010 before dipping a toe in the market due to huge stocks and recession, economists polled by Reuters said.

Five Spanish and five foreign-based economists surveyed this month said prices would drop 20-50% by the end of the downturn, or 32% on average from their 2007 peak when prices stood three times higher than at the start of the boom a decade before.

Spain’s unemployment rate is around 15% as a deep recession worsens, and foreign economists emphasise the country’s economic model needs a radical overhaul to boost its competitiveness and unwind the debts that drove a decade of growth. Spain could suffer a lengthy ‘L-shaped’ recession, analysts warned.

Against this backdrop of weakness, Spain has a supply overhang estimated at one million unsold homes - three times the number of households created in Spain each year. Banks are now adding to that by releasing repossessed homes onto the market.

All 10 experts said the overhang of empty apartments and half-finished estates around Spanish towns had to be absorbed in the next two or three years before prices gained some traction.

According to Government data, prices only fell -3.2% last year, though analysts say this massively under-reports the real size of the fall. Housing Minister Beatriz Corredor said in November they may already have dropped -15%.

Plans to develop a 24-hour urban community in Paris

Developer Hermitage Group, working with EPAD, the public sector body responsible for development at La Défense in Paris, are planning to build a new 24-hour urban community housing Western Europe’s tallest mixed-use towers to the east of La Défense.

The project, Hermitage Plaza, has been designed by Foster + Partners and was unveiled at MIPIM in Cannes. The new Parisian project will incorporate two 323-metre-high buildings to the east of La Défense in Courbevoie, Paris. The mixed-use towers will include an hotel, spa, panoramic apartments, offices and serviced apartments, as well as shops at the base.

Work is due to start on site in 2010 and complete by the end of 2014.

Trump loses millions of dollars in deposits

Donald Trump was sued by buyers who lost millions of dollars in deposits on a failed hotel-condo in the Mexican border city of Tijuana.

The 69 buyers purchased 71 units in Trump Ocean Resort Baja and paid deposits totalling between US$18-20m, said Bart Ring, their lawyer.

Buyers were told last month that the luxury oceanfront project was being scrapped and that there was no money left to refund deposits. In December, they were told the project had only $556,000 left after collecting $32.2 million in buyer deposits.

The 197-page complaint recently filed in Los Angeles Superior Court seeks unspecified damages against Trump, his children and others including the Los Angeles developer Irongate Capital Partners.

The lawsuit accuses the New York real estate developer and reality television star of fraud, negligence, unjust enrichment and violating federal disclosure laws.

Australian retailers demand more incentives

According to the Australian Business with the Wall Street Journal, Australian retailers, following the lead of US and British counterparts, are demanding Australia’s biggest shopping centre landlords giving rent holidays and reduce fees under the threat of closing their stores.

Rent breaks or store closures would severely eat into the profit forecasts of the world's biggest shopping centre owner, Westfield Group, and others such as the troubled Centro Properties Group, the Commonwealth Bank-managed CFS Retail Property Trust, GPT, Lend Lease, AMP and Macquarie CountryWide Trust.

About 30% of the leases of Australian Retailers Association’s (ARA) 5,000 members would come up for renewal this year.

Retailers around the world are suffering as consumers rein in spending in the recession.

In the US, a plethora of tenants have demanded rent relief. Some, such as Blockbuster, have sent open letters to their landlords demanding rental reductions and threatening to not renew leases.

In the UK, a report in the Financial Times said some retailers in Westfield’s flagship London centre were refusing to pay part of the service charges. The report said the backlash was led by Next fashion chain, which refused to pay part of the charge after Westfield increased fees to £14 sq ft from earlier guidance of £8.50 sq ft shortly after the opening of the centre.

Kuwaiti property sales fell -35.2%

Kuwaiti property sales fell -35.2% in February, the eleventh straight month of decline, according to official Government data.

Property sales, especially for residential units, have been falling since the state restricted private firms from residential deals last year.

Meanwhile, Gulf property markets are coming under pressure amid a global financial crisis that has brought to an end an economic boom in the oil-exporting region.

Residential property deals, which represented the biggest proportion of total property transactions, fell -52.59% in the year to February 2008 to 45.81 million dinars (US$155m).

Investment property sales fell -56.4% in February to 20.48m dinars, while deals in property classified as commercial almost tripled to 34.88m dinars from 12.49m dinars a year earlier, the data showed.