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  1. #361
    Disgruntled Optimist lofter1's Avatar
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    Dueling columns from the NY Post ...

    No fire sale for Dubai properties

    NY POST
    By STEVE CUOZZO
    December 1, 2009

    VULTURES hoping to snatch up Dubai-owned Manhattan trophy properties for a song are out of luck, dealmakers and analysts said yesterday. The fact that the overreaching emirate's real estate operations are $59 billion in the hole hardly portends a fire sale -- and might well portend no sales at all.

    The emirate's various investment arms bailed out of both 230 and 280 Park Ave. a few years ago, but the fate of its five remaining real estate holdings has consumed the investment-sale community.

    The properties were all reeled in during Dubai's $7 billion buying spree here since 2005, and none would fetch a price close to what the Dubai moguls paid when the market was at its peak.

    One -- the former Knickerbocker Hotel site on West 42nd Street -- is worth "nothing" in today's depressed environment, one accomplished dealmaker said.

    Besides the W Union Square, which Dubai interests bought for $285 million in 2005, the portfolio includes two other hotels -- the Mandarin Oriental ($345 million for a 73 percent stake in 2007) and the Jumeirah Essex House ($440 million in 2005).

    Dubai also owns a 99-year leasehold on the office tower 450 Lexington Ave. ($600 million in 2006).

    Unless the sheiks of Abu Dhabi are willing to toss their Dubai pals into the Persian Gulf and force a fire sale, hopelessly over-leveraged Dubai's travails are unlikely to inject any juice into the stagnant investment-sale market.

    Guessing the intentions of a beleaguered and secretive Middle Eastern city-state is a fool's game. Plus, insiders said, debt structures on the properties are not all consistently recorded, puzzling the smartest dealmakers.

    The W Union Square Hotel was scheduled for a foreclosure auction on Dec. 8 before Dubai's meltdown came to light last week; Bloomberg reported that any buyer of the $117 million in mezzanine debt might try to wrest full control.

    "Of course, that wouldn't help Dubai unless it owned the debt," Studley investment sale ace Woody Heller noted.

    Of the other properties, a different source said, "as long as a property is making debt service without an imminent maturity, it probably will stay within the current ownership."

    Insiders say the Mandarin Oriental at Columbus Circle would stand the best chance of giving the owners their money back. But even there, a different investment-sale wizard said, "I doubt the Mandarin is still worth the more than $1 million per room" that the sheiks plunked down in 2007.

    Real Capital Analytics managing director Dan Fasulo echoed the broker who saw no sale prospect for the Knickerbocker site, which includes the former hotel that's now an office building and an empty lot next door.

    "They're going to take a huge hit if they sell," Fasulo said. "They're going to get wiped out."

    The government-owned Dubai World, through its Istithmar investment arm, bought the former Knickerbocker for $300 million in 2006 and added the adjacent lot the same year for $76 million. Today, the office building stands half-empty, and the empty lot is a grim eyesore.

    Fasulo and the brokers said the outlook isn't as dire at Dubai's other properties, but still valued them at well below what it paid for them -- although absent much recent sale activity, none was willing to cite a number.

    Of 450 Lexington Ave., one broker said that "between the debt and the price they paid, they're definitely underwater."

    Copyright 2009 NYP Holdings, Inc.

  2. #362
    Disgruntled Optimist lofter1's Avatar
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    Dubai Office Vacancies Soar

    NY TIMES
    By REUTERS
    September 19, 2010

    DUBAI (Reuters) - Dubai's office vacancy levels will rise to more than 50 percent in some areas and the emirate should mothball or demolish buildings to try and limit over-supply, Jones Lang LaSalle said in a report on Sunday.

    "Vacancies will continue to rise across the Dubai market in the short term, as the level of office stock increases ahead of demand," the property consultancy firm said in a report.

    Demand for office space in Dubai is centered on two locations, it says: the financial district, which includes the Dubai International Finance Center and Burj Khalifa, the world's tallest tower, and the TECOM freezone, which includes Media City and Internet City.

    Vacancy rates in the financial district will rise from around 12 percent at present to a peak of between 30 and 40 percent over the next 12 to 18 months, but should fall to 10 to 15 percent by 2014. Figures for TECOM were not available.

    "Elsewhere, the outlook remains less positive, with the likelihood that vacancy levels outside of the CBD will increase to more than 50 percent," the report said.

    The agency claims the best way for Dubai to reduce vacancies is to follow the lead of other cities such as Sydney and Bangkok by trying to limit supply through the conversion of buildings into non-office uses, mothballing projects or demolition.

    "Without radical moves to restrict future supply and remove some existing stock, it is likely that vacancies will remain at high levels in these locations, with many buildings having little or no prospect of attracting tenants in the foreseeable future," the report said.

    Based on current completion schedules, Dubai office space will rise by 43 percent in 2010 to around 63 million square feet, although this figure is likely to be revised downwards as projects are withheld, Jones Lang LaSalle said.

    (Reporting by Matt Smith; Editing by Dinesh Nair)

    Copyright 2010 The New York Times Company

  3. #363

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    Where is Dubai's CBD? The one road with towers?

  4. #364

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    Only 50%?!

  5. #365

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    Does anyone know: what was the Manhattan office vacancy rate in 1932?

  6. #366
    Disgruntled Optimist lofter1's Avatar
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    How about 1934? From "Building the Empire State" ...

    The vacancy rate for office space in Manhattan in 1934 was 24.8 percent according to MacDonald, op. cit, 6. 74.

    More from that same book HERE.

    Found this in a recent Real Deal article:

    Between the market's peak in 1929 and the end of 1932, Manhattan real estate values shrank by a stunning 74 percent, and stayed that way until the start of World War II, according to a Harvard Business School/UC Davis study, which also used data from the Real Estate Record.

  7. #367

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    I'm stunned it was ever as low as 12%.

  8. #368

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    Quote Originally Posted by Derek2k3 View Post
    Where is Dubai's CBD? The one road with towers?
    I think the area you're thinking of is Sheikh Zayed Road where the Burj Kalifa and pretty much all the skyscrapers have or are being built - something like three quarters of Dubai's 16 300m+ towers are located on or just off SZR.

    Thing is you could see this from a mile off - I think I read about two years ago that when you added up all the office floor space either u/c, approved or proposed - Dubai was aiming to build as much office space as Hong Kong had built in the last century.

    Going forward I think Dubai has bust it's chances as becoming the premier ME city, and the likes of Abu Dhabi will start to dominate attention.

  9. #369

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    Mothball or demolish existing buildings? HAH!

    Agreed that big brother Abu Dhabi will start getting the respect it deserves. Dubai always seemed like the ugly stepchild that tried way too hard.

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