Posts tagged with Emerging markets

(II) CONSTRUMAT 2011: Construction fair in Barcelona

23 September, 2012 No Comments

Construmat 2011 focused on internationalization and in recapturing the refurbishment business, which is growing at a rate of 11%.

In the process of Internationalization, an agreement was reached with the China Council for the Promotion of International Trade (CCPIT)  – 中国 国际 贸易 促进 委员会 – whose goal is the promotion of international trade, developing economic agreements with foreign countries through the creation of professional networking to export the construction exhibition into China. The show took place in July, 2012 in Beijing, to which 200 local and international organizations attended, and who performed many activities dedicated to sustainable construction. The China Council promoted the participation of exhibitors, visitors and the industry associations in the country.

It is difficult for European companies to compete with the prices of major Chinese builders, however they can compete in the products’ quality. The idea was that Construmat China, besides offering sustainable products, offered finished products such as faucets, fences, painting and ceramics.

Here are some highlights regarding the current Chinese real estate market (some mentioned in previous posts):

1-For the most part, the idea of refurbishing buildings is not shared by Chinese, and as a consequence buildings degrade within few years, which are then subject to demolition, and then rebuilt from ground. In general, the quality of the materials used in construction is not good which brings to the eye the need to restore / paint facades.

2 – However, the Chinese market demands a European based design for their homes. The demand for designers / architects for residential or resort projects of a European – Spanish style can be very attractive. In fact, in one of the Chinese real estate fairs I visited last year, a leading developer requested a European technician capable of completing a Spanish-style design for a residential mega-project.

Brazil could be the next destination to host this fair with its own brand despite the deal not being closed yet. It is a country that everyone talks about. It’s a popular country given its economic growth, its upcoming sporting events (Olympic Games…), and for being an emerging market with great growth potential… The fair would be a great gateway to the Latin American market!! In the show held in Barcelona last year, ​​Brazil was the foreign country with the highest number of exhibitors.

The Manifest: The construction sector joined hands and elaborated a manifest in which they demanded support to overcome the crisis. They requested measures to support new construction, rehabilitation, and to maintain the appropriate level of investment in building as well as the level of attraction of foreign buyers for the residential sector. This was presented by the President of Construmat, J. Miarnau (Comsa-Emte), along with SEOPAN, the Association of Builders and Promoters (APCE), and the Colleges of Spanish Architects.

Sustainability: I would like to stress the European Solar Decathlon, a competition of scale models of solar buildings that involved fifteen European countries. A forum dedicated to sustainable thinking, with national and international presentations.

Rehabilitation in Spain: is the segment within the construction sector that is experiencing considerable growth.

(II) Mipim2011 the World’s property market: analyzing topics

13 September, 2012 No Comments

I would like this post to be a meeting point for reflection in this crucial time for the real estate and the financial sectors.  Dr. Nouriel Roubini in 2006, was one of the few to alert the financial community of the crisis that was underway.

Nouriel Roubini, who attended to the 2011 economic forum in Davos, is an advisor in the subject of international economics to the White House, the IMF, The World Bank, and is a professor at NYU’s Stern’s School of Business, and Yale University. Mr Roubini has a Phd. in economics from Harvard University among many other degrees and awards for his work.  In this video Mr Roubini presents in a schematically way the current and future situation of the advanced economies and emerging markets so that real estate investors can direct their investments to markets that they consider will have greater potential of response.

* In the first part of his presentation in 2011, Mr Roubini highlights the strengths and weaknesses of the global economy today:


1 + Despite the severe economic and financial crisis, we are at a stage in which we perceive a slight recovery. In the last two years (counting from 2011 and back) the economy, both in emerging countries (Brics..) and advanced economies (USA and parts of Europe) has shown symptoms of growth.

2 + Due to the crisis, corporations in both the U.S. and Europe have had to cut on expenses (personnel, and overall costs…). Therefore, they are now more prepared to invest as they are stronger than two years ago. HOWEVER, the question posed by Roubini is: Will these companies decide to invest in advanced economies (which are slow-growth countries) or in emerging market economies (for faster growth)?.

3 + The rapid growth of the economies of emerging markets, presents itself to the public as the new item that can be the locomotive of the world’s economy (until now it was solely the US and the advanced economies). Mr Roubini does not only speak about BRICS, China, or India, but also other countries from Central Asia, Middle East and Latin America, where great progress is taking place, as these markets are growing very rapidly.

For the real estate market, growth in emerging markets will be a positive event in the medium to the long term, as it leads to industrialization, and thus to the urbanization and the improvement of infrastructures. China and India are currently under a process of rapid and massive urbanization and industrialization.

4 + 2010 was a year of “risk on” “risk off”. Last spring season people got worried amid the recession in Greece, and the US’s double dip recession.

However, throughout the fall, things began to improve in the financial markets, and when looking at the overall 2010, we could say that it ended up with better perspectives as a result of the fiscal stimulus in the U.S. and other measures taken in Europe to help the countries whose economies were in trouble.

Since the global economy is slowly recovering, it follows that financial markets will also recover (becoming a vicious cycle). It would be the opposite of what happened in 2008 when prices and investment sunk, causing the economy to contract.

- Negatives:

1 – In many advanced economies, the recovery is almost inexistent, due to the large amount of debt of the public and private sectors. This will slow growth since corporations and governments must spend less and save more to reduce debt.

2-This paragraph is related to the previous one. There is a significant and sudden increase in risk of the advanced economies. Not only in countries of the Euro zone such as Spain, Greece, Portugal or Ireland but in countries such as the US, the UK, or Japan among others, due to budget deficits and a big stock of public debt. This increased risk due to public debt will remain a problem for many years to come.

Besides the amount of public debt in these economies, another factor comes into play; the aging population will mean an additional cost to social security, pensions, medical care for the elderly, … this will rise even more their debt.

3 – The financial and economic problems still exist in the Euro zone:  in countries such as Greece, Spain, Italy, Portugal and other potential countries, whose financial problems are becoming chronic and won’t be resolved anytime soon despite the aid given by the European Union. We also have to take into account that Spain and Ireland had the real estate bubble, which in hand with a large amounts of private debt will be even harder to straighten up.

Some of these countries are losing competitiveness in the Euro zone, and are experimenting a negative growth. Spain, Ireland and Greece are still struggling with a contracted economy, while Italy’s is a bit more positive.

A summary of the existing problems:

a-Large deficit and public debt as well as private debt

b-Lack of competitiveness in the international market

c-Lack of structural reform

d-Lack of economic reform.

4-Important public sector debt: lets take the US as example and set the problems the country faces

-Unemployment is high and job creation is insignificant.

-The housing sector has fallen again since 2010 to 2011, with the consequent negative effect on consumption. Failure to pay home mortgages requires owners to leave their homes.

-The states government’s fiscal deficit is very high. While Europe and the UK, are paying attention to their own fiscal problems, in the U.S., politicians don’t conclude any measures.

Until this point of the presentation, we have discussed Roubini’s  global economic analysis. In the next post, there is a reference to emerging economies, entering to further analyze the current economy and future prospects in certain specific countries.