LS001_P0001ED 25/2/08 10:43 am Page 1

Gold Rush:
Fact or fiction? The Olympic
real estate bonanza

Russian Revolution:
The country weighs in as a
new global property giant

Open Door Policy:

When new regulations
Spring/Summer 2008 signal fresh investment
opportunities

Donald
Trump
Exclusive: The real estate
legend on a career based
on risk-taking
LS001_P0002ADV 21/2/08 9:44 am Page 2

Andrew Williams
Managing Director
Cushman & Wakefield Residential
LS001_P0003ED.indd Sec1:3
Strength in knowledge
Residential is a real estate asset class like no other.
As individuals it is usually the biggest investment
we will ever make. For the international investor
it is an increasingly viable and profitable asset
class to complement investments in commercial
property. Like anything, to get the best deal one has
to know where to look. In this, our second issue of
Landscape, we not only give you a round-up of the
latest news (page 6), but provide you with access to
emerging development trends (page 38), new
investment structures (page 25) and growing global
markets (page 28) to equip you with the latest
industry intelligence.
We open with a look at the worlds biggest event:
the Olympic Games (page 10). We explore what
lasting legacies this event leaves on a host city, and,
importantly, whether or not the promised economic
prosperity translates to investment opportunities for
you. Then, of course, there is our cover story. We spoke
exclusively with the worlds most recognised property
personality, Donald Trump (page 14), for insights into
his career highs and lows, his property portfolio and the
current financial climate. And in the first in a new series
of articles where we will investigate and analyse how
the emerging BRIC countries are changing the world
landscape, we delve into deepest, darkest Russia (page 18).
At Cushman & Wakefield Residential, we understand
the residential market in all its guises and this is
why we decided to create Landscape: a way of inspiring
and imparting knowledge that will help shape and
make your decisions in real estate. This is our
ever-changing Landscape.
Spring/Summer 08 landscape 3
26/2/08 09:20:00
 ADVERTISING, SUBSCRIPTIONS &
PRESS ENQUIRIES
Samantha White
samantha.white@eur.cushwake.com
Cushman & Wakefield Residential
Headquarters,
Nash House, St George Street,
Mayfair, London W1S 2FQ
residential@eur.cushwake.com
+44 (0)20 7935 5000
www.cushmanwakefield.com/landscape
EUROPEAN OFFICE CONTACTS
London
Andrew Williams +44 (0)20 7935 5000
Bucharest
Ciprian Trandafirescu +40 21 230 35 28
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Agnes Kacsmarik +36 (1) 268 1288
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Istanbul
Rahan Cebe +90 212 251 23 54
Lisbon
Ricardo Roquette (+351) 21 322 4757
Madrid
Julia Serrano (+34) 91 781 00 10
Milan
Massimo Tarabusi +39 02 6379 9248
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Christer Lystad +7 (495) 797 9600
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Mark Batt +420 234 603 603
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Anna Kwiatkowska +48 22 820 20 20
Published on behalf of
Cushman & Wakefield Residential
by Touchline Publishing, 3rd Floor,
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Copyright 2008 Cushman & Wakefield.
All rights reserved. The views of
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of the publishers. The publishers cannot
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Landscape magazine is printed on a
PEFC certified paper which promotes
sustainable forest management.
4 landscape Spring/Summer 08
LS001_P0004ED.indd 4
cover story
14 Towering success
In an exclusive interview, real estate titan Donald Trump, no
stranger to the vagaries of global markets, dismisses todays
doom-mongers and declares that for him at least business
has never been better.
networking
06 All systems go for Romanian real estate; scorching Panama bids
to be new property hotspot; battered Thai market back on its feet;
wheels in motion for Saudi Smart City scheme; new airport signals
fresh opportunities in Brazil.
features
10 Gold rush?
Beijing, London, Vancouver, Sochi all are preparing to host the
greatest show on Earth, the Olympic Games. So, asks David Owen,
with construction at fever pitch and global exposure guaranteed to
be massive, can one legacy of hosting the Games be a record-breaking
property market?
18 Russian revolution
Newly prosperous Russia is shaping up as the worlds most expensive
real estate market thanks to a scarcity of quality housing stock
coupled with a burgeoning middle-class seeking prestige properties.
Graham Stack reports.
28 Open door policy
For overseas investors the world just got bigger thanks to new
policies in territories as diverse as Vietnam and Egypt. Faith
Glasgow checks her radar for the most exciting emerging markets.
34 Untangling the web
Buying in Italy is not for the faint-hearted. But a little know-how goes
a long way, with cosmopolitan Milan being the perfect starting point.
expert advice
25 A joint venture
Partnering with local developers can be an ideal solution for
investors wishing to make inroads into emerging markets.
design trend
38 Keeping it real
With developers increasingly catering to investors in branded
residences, the international language of luxury is starting to make
way for a more authentic design style, discovers John Stones.
hot/not
46 Eco homes make headway in new carbon-conscious climate; blue sky
thinking nudging the clouds with the next-gen skyscrapers; China
challenges Germany as worlds third-largest economy; motorists
cling to vehicles in defiance of surging fuel prices; flu jabs on offer
at airports; US property woes continue.
26/2/08 14:17:23
 18

14 10 34

28 38

Spring/Summer 08 landscape 5

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 Romania ready to rocket
Dubais Fortune Group has announced the
results of its two-year research programme
into the viability of investment into the
property market in Romania. The group, which
has over 7 billion dirhams (US$1.9 billion)
invested in property-based projects in the UAE,
conducted extensive investigations into the
property market, the economy of Romania
and international interest in the nation
commercially, and from both a tourism and
second home standpoint. As a result of their
research, they have decided to commit to two
multi-billion euro property-based projects in
Romania, an investment that will no doubt
boost Romanias property market significantly.
Bulgarian boom
Despite negative reporting on the waiting
game that was the Bulgarian investment
scene, both its construction industry and
the property market continue to boom as
2008 progresses, with 2007 having been
bumper years for both economic sectors
according to a series of independent
reports. This is excellent news for the
nation and for all those who had
committed to the market prior to the
countrys 2007 EU entry. The turnover in
the construction industry was a hefty
11 billion leva (US$8.2 billion) up 15%
from 2007 and the property market
turned over in excess of US$16 billion.

UK business rates fill empty

properties tax void
Owners or occupiers of larger buildings
will be hard hit by the imposition of
business rates on empty property
previously exempt from such levies.
The significant power given to the
Secretary of State is to define a range
of actions taken by a landlord as
being irrelevant in terms of valuing a
property. This measure is designed to
inhibit the constructive vandalism
of property in order to keep it out
of the Rating List. The Secretary of
State proposes to do this at a later
date should there be evidence of anti-
avoidance activity.

Spanish property steals

It was reported last year that Spains
property market had experienced a
sharp downturn. However this is not
all bad news for investors. Many
vendors are selling at rock-bottom
prices and you can now snap up a four-
bedroom villa with a pool, on a plot
of 800 sqm, for 404,000 (US$591,000)
which would have cost you 512,000
(US$748,000) in 2007.

Scorching Panama sizzles for

investors
Panama is fast gaining ground in terms
of investor interest due to its exceptional
climate, stunning coastlines, growing
tourism industry, and abundance of real
estate not to mention low living costs.
International property investors are
attracted to the favourable Panamanian
taxation regime, the wealth of
opportunity in the real estate sector
offered countrywide and the long-term
property sector growth potential which
is based on some very solid foundations.
Brazil bolsters top-flight
credentials
As part of the Brazilian Governments
National Tourism Plan to attract over
9 million foreign tourists annually, create
1,200,000 new jobs, and generate
US$8 billion in foreign currency, it is due
to construct a new international airport
in Natal in 2008. Natal, the state capital
of Rio Grande Do Norte, has a population
of almost 800,000 people. San Gonzalvo
International Airport is scheduled to open
outside Natal in 2010. It will be the worlds
fourth largest airport, will handle many
flights from Europe, and is expected to be the
gateway to this popular area, with five million
visitors expected from Europe per year.
Montenegro frees up freeholds
The government is set to give foreign buyers
the rights to own property in Montenegro
freehold and without the requirement
of having a company structure in place
to own the real estate in question. The
government also wants to make it easier
for mortgages to be issued on off-plan and
under construction properties. Such a
move will boost international interest in
the wealth of prime property for sale in
Montenegro, which could result in prices
continuing to rise. On a separate note, a UK-
based international mortgage broker has
announced that it can raise mortgages for
British buyers for property in Montenegro
giving choice for UK buyers interested in
the market.

6 landscape Spring/Summer 08

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 Saudi gets smart
Knowledge Economic City and Cisco
have confirmed that a strategic
agreement has been finalised for the
infrastructure development of the
5 million sqm smart city project in
Saudi Arabia. The project is designed
to attract global information and
communications technology firms.
Residents should benefit as well,
with the initiative providing an
attractive and interconnected living
environment. More than 20,000
jobs and accommodation for about
150,000 people will be generated
by the project which will have an
aggregated investment of more than
SR30 billion (US$8 billion) and take
up to 8-10 years to complete.
Indian investment bonanza
With a current value of US$50 billion,
Indias buy-to-let and commercial
property investment market is set to
become the single largest business
sector in India, forecast to grow by
an annual rate of 25%. Rental yields
vary to a fair extent throughout India,
according to Global Property Guides.
Bangalore records high yields of
approximately 9.9%, while in New Delhi,
yields range between 4% and 8.4%.
Mumbai is positioned at the lower end
of the spectrum with average yields of
around 3.83%.
LS001_P0006ED.indd 7
Tourism triggers Thai
transformation
The key drivers behind the Thai
housing market are the rapid economic our
growth the country is experiencing
and the expected increase in tourism
offices
that Thailand will undergo as a direct around
result of further property development.
Despite the tsunami disaster of 2004,
the world
the Thai property sector seems to be less
damaged than anticipated with only C&W Residential Headquarters
a 31% drop in property transactions Nash House, St George Street,
since the catastrophe. Whats more, real Mayfair, London W1S 2FQ
estate prices have continued to rise in Tel: +44 (0)20 7935 5000
sought-after locations, and high-quality residential@eur.cushwake.com
projects have reported increases in sales
over the past three months. The country
C&W EMEA Headquarters
has been keen to encourage tourism and
43-45 Portman Square,
overseas investment, particularly since
London W1A 3BG
the terrible events of 2004.
Tel: +44 (0)20 7935 5000
C&W Asia Pacific Headquarters
Level 25, 168 Xizang Zhong Lu
Shanghai 200001 China
Tel: +86 21 2320 0808
C&W North America
Headquarters
51 West 52nd Street, New York,
NY 10019
Tel: +1 (212) 841 7500
C&W Mexico Headquarters
Corporativo Arcos Norte B
Paseo de los Tamarindos No.60,
2o.Piso Col.Bosques de las Lomas
Mexico, D.F. CP 05120
Tel: +52 55 8525 8000
C&W South America
Headquarters
Praa Professor Jos Lannes
40 - 3 andar CEP 04571 100
So Paulo SP Brasil
Tel: +55 (11) 5681-2100
Malaysia in for the long haul
While locally the citizens in Malaysia
are demanding more residential real
estate and a robust economy is
contributing to the fact that there is
increasing demand for commercial
property, it is foreign investment that
is fuelling much of the larger
development and buying in to the
majority of REITs. This may appear
surprising when you consider that as
yet, it is less tax attractive to buy into
a Malaysian REIT than a Singaporean
one, or one in Hong Kong for that
matter, but the yields, market stability
and long-term prospects for Malaysian
property are far more impressive than
in other markets in the region.
Spring/Summer 08 landscape 7
26/2/08 09:18:51
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key
issue
LS001_P0010ED 25/2/08 10:37 am Page 11
wenty-eight sports, 11,000
t athletes and billions of
television viewers from
every nation on earth.
Sport doesnt come any bigger
than the Olympic Games. Indeed,
as a logistical exercise for the cities
chosen as hosts, there is probably
nothing bigger in peace-time.
With the unique opportunity that
the building the Games provide for host cities
frenzy that to showcase their best side in a
global spotlight of unparalleled
accompanies intensity, as well as the pressures
exerted by the fear of failure and
the olympic the unmoveable deadline, there
circus is no more powerful tool in the
world today for reshaping urban
invariably environments. The show itself lasts
impacts the just a few weeks, but its legacy in
the great cities that periodically
property vie to provide its backdrop lasts
for decades.
markets
where the The sheer scale of the Olympic
circus and the construction frenzy
games take that generally accompanies its
passage mean the Games invariably
place impact significantly on the property
markets where they take place.
The smaller the city, the bigger
this impact tends to be. In Athens,
host of the 2004 Olympics, the
whole shape of the market has been
Gold rush?
One positive legacy of an Olympic Games is the
infrastructure upgrade the host city receives. So, asks
David Owen, can investing in the right properties in
the right areas reap rewards in Beijing and beyond?
Spring/Summer 08 landscape 11
changed, largely as a result of
extensive transport improvements
that are frequently cited as the
most positive long-term legacy of
the Games for the Greek capital.
They got probably 25 years of
infrastructure in one fell swoop,
says Kerin Hope, a commentator
for the Financial Times and
The Economist, who has lived
in Athens for 20 years. If you are
an ordinary Athenian, its just
much easier to get around.
The whole city is being pushed
eastwards as a result of the changes
of transport infrastructure. There
[has been] a big housing boom as
a result of Greece having joined
the euro and the interest-rate
convergence that occurred as
a consequence, which has made
it much easier to get a mortgage.
Much of the accommodation in
Athens is old, so the dream of many
people has become a maisonette in
east Attica that is not far from the
airport and 15 minutes from the sea.
Moreover, the expansion of the
suburban train from Athens to
Corinth (about 80km to the south-
west) means you can feasibly live
in Corinth and work in Athens.
LS001_P0012ED 26/2/08 3:46 pm Page 12

That changes a great deal: if you live in Corinth,

you can go skiing in winter and have an olive
grove if you feel like it. In the residential sector,
one report focusing on the effects of staging the
Games in four cities Seoul (1988), Barcelona (1992),
Atlanta (1996) and Sydney (2000) observes that
the true Olympic-effect is not in prices, but
in the development of new districts within the
Olympic precinct. It is true enough that recent
editions of the summer Olympics have nearly
always seen such districts developed or redeveloped.
Barcelonas sea-front area is one example of this;
Sydneys Homebush area is another.

The pattern looks set to be continued in future

Games. In Beijing, this years Olympic host, the
Olympic village is expected to become an attractive
new residential neighbourhood, while new transport
links should accelerate the pace of relocation from
downtown areas to the suburbs and, perhaps, enhance
the value of residential and commercial property
adjacent to those links. In London, the venue for the
2012 Summer Games, the hope is that the event can
be used to revitalise a whole moribund swathe of the
east of the city, providing the catalyst that will see up
to 40,000 new houses built.

Yet the effect on prices can be dramatic as well. One

agent reports that Seoul and Barcelona experienced
rapid increases in housing prices and rentals in their
respective Olympic years. In the Spanish city, he goes
on, the Olympics is cited as a major contributor to
increases in residential values of between 250 and
300% over the period 1986-1993.

In Vancouver, host of the 2010 winter Games,

housing markets have seen prices practically double
in the past five years, according to Derrick Penner,
a reporter with the Vancouver Sun newspaper.
Downtown, office vacancies are also at a record
low, as the citys winning bid has coincided with
a general upswing in the local economy. Though
Penner says economists predict a period of slower
growth in residential property prices, no downturn
is forecast and the area is expected, for the most part,
to avoid fallout from the USs present housing crisis.

The Russian Black Sea resort of Sochi, meanwhile,

only won the right to stage the 2014 winter
Olympics last summer. Yet already research by
Cushman & Wakefield Stiles & Riabokobylko has
noted rapid growth in residential prices. In some
cases, the research says, local experts announced
100% growth of average residential and land prices.
It is tempting to conclude that this partly reflects
the rather unexpected nature of Sochis victory,
coupled with knowledge of the huge amount of
development that this city of 300,000 people
decidedly small for an Olympic host will be
required to undertake. Whatever the reason, it is
believed that average residential prices in Sochi
now exceed those of Moscow at about US$5,000
per sqm, a pretty striking state of affairs.
Even the ber-sophisticated residential property
market of London is not immune to an Olympic
effect on pricing, if recent forecasts prove accurate.
In an overall market predicted to be flat after the
rapid growth of recent years, Hackney in east London
was singled out as one of ten likely UK property
hotspots in 2008. This was attributed to regeneration
ahead of the 2012 Olympics attracting buyers.
Equally, there have been editions of
the Games in which little impact on
property
residential property prices has been investors
experienced. Though average house
prices in Sydney are said to have with local
increased by about 50% between 1996
and 2000, a study found that prices
knowledge
in the Olympic corridor rose by little of the
more than the average for the city.
winning city,
The Olympic effect on the hotel market
in successive host cities has proved
and the
much more regular. It is little surprise resources
that host cities generally experience
a growth in room supply in the run-up to act
to the Games. This helps to explain
the decline in average occupancy rates
quickly, will
that often materialises in the actual see their
Olympic year. The Games, though,
provide hoteliers with a powerful lever efforts
for ratcheting up prices. Consequently,
Olympic year also tends to produce a
rewarded
significant increase in average daily

12 landscape Spring/Summer 08
LS001_P0013ED 26/2/08 3:47 pm Page 13
Left This years host,
Beijing, is benefitting
from significant
construction work
room rates as well as a rise in revenue
per available room. It is only after the
circus has departed that additional
capacity can become a concern, with
underlying demand often taking time
to catch up with the rooms added
to cash in on the Games. Beijing has
added hotel capacity at a breakneck
pace in the run-up to its Olympic
Games. Typically this might give rise
to fears of a classic post-Games slump.
However, as highlighted by a recent
Cushman & Wakefield report, fast
developing China could be the worlds
largest tourism market by 2020.
As for London, it is such a mature
hotel market it does seem reasonable
to expect any Olympic effect to be
comparatively small, even if the main
centre of the 2012 Games will be
located well away from the West End
tourist hub. A C&W report concurs:
The Olympic organisers decision to
negotiate fixed prices for the Olympic
family before winning the bid is likely
to curb the potential hike in average
daily rate to perhaps 5-10% for the year.
There is little evidence that hosting the
It was Dame Tanni Grey-Thompson,
upwardly Britains foremost wheelchair athlete,
who brought home to me how
mobile important a factor the Olympic
and Paralympic Games can be in
How hosting improving facilities for disabled
people around the world. The Beijing
the Games can Games could be the most important
be a catalyst opportunity to make social changes
for significant for disabled people there has ever
been in China, she told me when
social change I interviewed her two years ago at
her home in north-east England.
I dont think theyve got any idea of
what 4,500 disabled athletes hitting
Beijing is going to do to them.
Media coverage of the
Paralympic Games, though far
more extensive than a decade or
Olympics can by itself spark a significant
upturn in local commercial property
markets. However, the process can add a
helpful nudge if indicators are already
positive. Olympic-related infrastructure
upgrades can clearly be beneficial,
particularly for properties directly
serviced by new telecommunications
networks, airports or subway lines.
A number of host cities have found
that the global media exposure
afforded by the Games has helped to
lift subsequent convention business,
as well as tourism revenues.
Of course, this assumes that cities
are endowed with suitable convention
facilities in the first place. If this is
not the case, the Olympics can, with
careful planning, play a role in ensuring
missing amenities are installed. Athens,
for instance, is currently converting the
taekwondo venue from the 2004 Games
into a convention centre.
Looking ahead, attention is now focused
on the 2016 Summer Games. An eclectic
field consisting of seven diverse cities
Chicago, Madrid, Prague, Doha, Tokyo,
Rio de Janeiro and Baku could provide
opportunities for alert international
property investors. With Europe hosting
the preceding event in 2012, Chicago is
generally viewed as favourite. However,
the US is not universally popular among
the International Olympic Committee
members who will eventually take the
decision. If the Windy City does not
make it when the decisive votes are
cast in Copenhagen on October 2, 2009,
individuals with good local knowledge
of the city that beats it, and the
resources to act quickly on that
knowledge by investing in the right
properties, may end up seeing their
efforts hugely rewarded. I
two ago, remains a fraction of that
concentrated on the Olympics
themselves. But rendering Olympic
host cities more liveable for disabled
inhabitants and visitors has, arguably,
become one of the most positive
aspects of the Games urban legacy.
Anyone who doubts this should
consider the case of Athens, which
staged the 2004 Summer Games.
Prior to the Games-related upgrading
of the citys hotel stock, I was told
by a former senior Greek ministry
official that there were only about
40 rooms with wheelchair access
in the entire city. These days, the
situation has changed so much that
even the Acropolis has become
accessible to people with disabilities.
Spring/Summer 08 landscape 13
LS001_P0014ED 25/2/08 10:46 am Page 14

cover
story

14 landscape Spring/Summer 08
LS001_P0015ED 26/2/08 10:38 am Page 15
Towering
success
If anyone can weather a global financial storm it
is Donald Trump who, having seen both sides of
the boom and bust coin, remains one of the most
successful names in international real estate. He
talks exclusively to Landscape about staying on top
Left Trump claims lobal financier George Soros predicts that
business was never
better, in spite of
current market
g the world economy could be facing the worst
recession since World War II. Across the globe
banks seem to be competing as to who can
queasiness. But he post the biggest losses. In some towns in the US you can
knows all about the virtually see house prices falling. But Donald Trump is
downsides too unconcerned. Georges prognosis is gloomy, but that
does not mean it is necessarily accurate, he tells us.
I may not be the best barometer, but my properties have
been doing extremely well. And I enjoy investing in bull
and bear markets. There are opportunities in both.
Trumps view is of note because he has experienced
the downside. In the early 1990s his corporate debts
exceeded US$5 billion and he had personal guarantees
totalling US$975 million. But he bounced back. 1992
was a great year for me, he says, with understatement.
And when Trump plays things down, great really does
mean great. More great years followed, interspersed
with less great ones as his career continued to zig and zag
so alarmingly that no one can say to the nearest billion
how much he was worth least of all Trump himself.
We quizzed him about the perceived market crisis,
and how it is impacting the Trump Organization. At
the moment, as he tells it, he is on the crest of a wave,
all this
gloom is not
necessarily
accurate.
i may not be
the best
barometer,
but my
properties
are doing
better
than ever
his lavish new 350 million five-star condominium hotel
in Hawaii being a case in point. Trump Tower Waikiki
ripped through the record books and left property
commentators slack-jawed when all 464 units sold out
in just hours, netting US$700 million. The sale, which
took place simultaneously in Japan and Hawaii, was
originally scheduled as a two-day event, but purchasers
clearly had other ideas. It sold out in eight hours,
which is a record. I predicted it would be Hawaiis most
luxurious development and buyers responded, says Trump.
It was an achievement almost matched by his luxury Cap
Cana resort in the Dominican Republic. Cap Cana had
90% of the estate lots being sold out in less than a day.
Success abroad. And continued success at home. We
sold a US$34 million apartment at Trump World Tower
recently. I am optimistic that things will even out for the
market in general, and be strong and steady in 18 months.
My Manhattan properties are doing better than ever.
More troublesome to Trump lately than capricious
financial markets are residents in Aberdeenshire
campaigning against the potential environmental
impact of his planned Scottish golf course, the Trump
International Golf Links at Balmedie. As one campaigner
told us, it is the hotel and penthouses, not the golf,
Spring/Summer 08 landscape 15
LS001_P0014ED 25/2/08 10:46 am Page 16
i saw a blind
beggar worth
$950 million more
than me. i didnt
love being in
financial
trouble, but
look, kings lose
countries
that are the problem. He says it begins and ends with
golf, but it begins with golf and ends with a housing
estate. Trumps comeback: Its costing over a billion-
and-a-half dollars. You cant pay for that with just a golf
club. The golf course is the amenity that makes it all
work. Frankly, its the thing Im most interested in but
if we dont have houses or the hotel it doesnt work.
Trump was born to be in real estate, his father, Fred,
being a wealthy developer in Brooklyn. The reasons for
my fathers incredible career are actually pretty simple,
he says. He always worked faster and better and for less
money than his competition. I learned much from him.
The shrewd business sense inherited from Trump Senior
is demonstrated in Trumps new Las Vegas project, the
Trump International Hotel and Tower, which soars 64
storeys high, is encased in 24-carat gold glass, and will
be joined in 2011 by Trump Las Vegas II. While the Las
Vegas property industry has struggled in recent years
with escalating construction prices, Trump cleverly
locked in 90% of his building costs when he first
announced plans for the development back in 2004.
Las Vegas has become a very expensive place to build.
As soon as I finished my plans I bought my construction.
And his developers nose for location is as finely tuned
as they come. He is especially proud of having secured
a spot on Dubais super-exclusive Palm Jumeirah resort.
When I look at potential sites for real estate investment,
I concentrate on location, location, location; this is not
only the best location in Dubai, but in the Middle East.
The Trump International Hotel & Tower a hotel and
residential complex planned for the trunk of Palm
Jumeirah has had a whopping US$600 million sunk
into it. And it shows. The original design for this lavish
project featured a circular tower, framed by four golden
petals although such naked opulence was later rejected
by planners in favour of a less ostentatious, blueprint.
Projects such as Dubai and Las Vegas are just the latest
chapters in what has been an incredible story spanning
almost three decades. In the mid-seventies, Trump moved
from the outer boroughs into Manhattan, becoming
President of the renamed Trump Organization. It
flourished. He renovated the Plaza Hotel and built
the Trump Tower. I entered New York real estate
when it was supposedly a terrible market, but I
became successful. If Id listened to all the negativity,
I wouldnt be where I am today.
16 landscape Spring/Summer 08
He moved into casino resorts, airlines, and beauty
pageants. And then the recession came. Trump went
from property titan to figure of fun. He was on the
front of Time Magazine in 1989 holding an Ace of
Diamonds above the cover-line This man may turn you
green with envy or just turn you off. Flaunting it is the
game, and Trump is the name. In 1990, he was on the
cover of Newsweek. This time his head was in his hands
and the heading was Trump the Fall. He was forced to
sell his yacht, his plane and his Florida bolthole. He had
to forfeit management control of Trump Plaza, his living
expenses were dictated by banks and he had to report to
them every 90 days explaining which projects were
losing money and why. One time I was walking down
Fifth Avenue with Marla [Maples Trumps second
wife], he says, when I saw a blind beggar and told her
that man is worth US$950 million more than me.
I certainly didnt love it but, look, kings lose countries.
Back he came. One of his most significant purchases
was 40 Wall Street, (aka The Trump Building) for, he
claims, one million dollars. The 72-floor skyscraper,
which briefly held the title of the worlds tallest
building, is now worth US$600 million. Since then its
hard to think of a magazine for which he has not been
the cover star. He has reinvented himself not just as a
tycoon, but as a global brand. His extraordinary haircut is
a walking logo, described once by The New York Times as
an elaborate structure best left to an architecture critic.
There are the casinos, hotels and residential properties.
And, of course, there are the golf courses the Scottish
venture by no means being Trumps first foray into an
area that has provided crucial impetus in his business
trajectory. In fact, Trump owns nearly as many golf
courses as most of us carry clubs in our bags. I have
five, he says. Access to golf and being a good golfer
is a huge asset in business and in life. I lead a fast
paced life and the beauty of golf is that on the course
I can slow down for a few hours.
He also, inevitably, uses golf to inform his business
decisions. Ive done many deals on the golf course,
he says. You learn a lot about people on the golf course.
If I see someone moving the ball then the probability
is that they will move the ball in business. If they drop
the ball out of their pants thats even worse. Then
there are guys that would never ever think of moving
a ball and they are that way in life too.
LS001_P0014ED 25/2/08 10:46 am Page 17
Trump owns more than 18 million square feet of
Manhattan, but that is almost an irrelevance. It is fame
which drives him. There are people who are successful,
but nobody knows who they are, and I say whats the
purpose? Everybody knows who I am, he asserts.
As the US presidential race continues to hit the
headlines, he tells us he has even been approached to
run for President. But propertys most well connected
figure is loath to compete against close acquaintances.
Would you run against Hillary Clinton? we ask. Shes
a very good friend of mine, is his measured response.
It seems nothing will distract him from his property
empire which he plans to expand nationally and
Left The one that
started it all, Trumps
most iconic tower on
Fifth Avenue, New York
Below Trumps
beloved Mar-a-Lago
bolthole on Palm
Beach, Florida
internationally. We have projects going up around the
globe. (At the last count, 12 of his legendary Towers
graced the skyline of seven international cities, with
more in the pipeline ranging from Toronto to Panama
City the latter being his first push into the Central
American market.) The business may be going global
but Trump is staying put. Asked where in the world
he would build the perfect residence he replies,
Mar-a-Lago in Palm Beach [his Florida home] is
unmatched anywhere. Its a treasure; Im very happy there.
And despite propertys peaks and troughs, for Donald
J Trump it will always be beguiling. Its tangible. Its
solid. Its beautiful. Its artistic. I love real estate. I
LS001_P0018ED 26/2/08 9:28 am Page 18

coun
try
focus

Russian
revolution
An emerging middle class eager to snap up
prime residential real estate, combined with
a lack of quality housing, is fanning the flames
of a Russian property boom, with Moscow tipped
to outstrip London as the most expensive city in
the world within a decade. Graham Stack reports
LS001_P0018ED 26/2/08 9:28 am Page 19
he Red October Chocolate
t factory is an icon of the
Soviet-era. For more than
30 years Russian children
have grown up craving Alyonka
chocolate bars, the factorys flagship
product, and the chubby faced girl
on the wrapper is one of the best-
known faces in the country. But at the
end of 2007 the owners of the factory
caved into temptation: situated on
one of the most desirable locations
in Moscow, they decided to close its
doors and redevelop it as top end
residential apartments that are sure
to sell for millions of dollars a piece.
The landmark red brick building is
perched on the Bolotny Island in
the middle of the river Moskva. It is
a short walk from the Kremlin and
overlooks the rebuilt Church of Christ
the Saviour cathedral on the opposite
bank. Locations in the poorly supplied
heart of Russias capital dont get
better than this.
With property prices soaring to
astronomical levels over the last five
years, the factory owners, Russian
conglomerate Guta, decided to move
the chocolate operations to the
citys outskirts and convert buildings
and grounds into a luxury residential
complex where prices are expected
to reach US$32,000 per sqm. The three
main red brick buildings and famous
chimney will remain, while 30 other
buildings that have accumulated on
the territory over decades will be razed
to make way for new developments.
Internationally renowned architects
contributed to the factory conversion,
where the most prestigious properties
will be loft apartments created from
the spacious top-floor production
halls, boasting huge windows that
afford magnificent views across
the river and of the Kremlin.
But there are few such sites left in
the heart of the capital, says Christer
Lystad, head of Cushman & Wakefield
Residential in Moscow. Theres a real
hunt on now for the next Red October,
he adds dryly.
Demand for housing a
bottomless pit
Property prices have soared across all
of Central and Eastern Europe in the
last two years and were up by just
under a quarter in Russia, one of the
fastest growing markets in the region.
While the Red October development
Pictured Lord Norman Fosters planned
Crystal City development, Moscow
LS001_P0020ED 26/2/08 3:30 pm Page 20

Below Moscows
famous onion domes
the face of old Russia

made the headlines it is the emerging middle class
that are the driving force behind a residential property
market that is on fire. Growth in 2006 was simply
astonishing, says Renaissance Capital real estate analyst
Alexei Yazykov. Were talking about more than 100%
over the year in Moscow. The capital has led the market,
but in the last year the regions have joined the fray
and prices in all the millionki the 11 regional cities in
Russia with populations of more than a million
people are now hot on the capitals heels. Prices in
northwest Russia rose 76% in 2006 St Petersburg,
Russias other capital, also saw prices double and
homes in the Volga Region saw their value jump 84%,
according to Renaissance Capital.
The leap in prices is being driven by powerful GDP
growth and rapidly rising incomes. Between 2004
and 2007 Russias GDP growth averaged 7% per year
and the growth is still accelerating: the Russian economy
expanded by 7.6% in 2007, although the brouhaha on
international markets last summer is expected to take
the edge off growth in 2008, which is forecast at 6.7%.
At the same time real incomes have been increasing by
an average of 12% over the same period and were up by
20% over 2007 according to official preliminary estimates.
Put another way: when President Boris Yeltsin stepped
down in 1999, most Russians were earning US$50 per
month; eight years on under President Vladimir Putin
they are earning US$500 and since 2001 they have access
to credit too. Whole swathes of the population crossed
over the critical threshold where they could think about
buying new apartments. Counter-intuitively, the fact
that 65-80% of the population already owned their own
apartments, thanks to the free-of-charge privatisation
of the 1990s, simply fuelled the explosion in demand.
High level of home ownership has created seed capital
allowing people to continuously trade up, explains
Alpha Banks real estate analyst Brady Martin.
2006 when they rose to a level out of reach of all but the
most wealthy citizens.
The meltdown of the US subprime market has also been
a drag on price growth, which slowed sharply in 2007,
especially in Moscow. Many banks had been financing
their mortgage programmes with international
borrowing and securitisations of mortgages were just
appearing. As liquidity on international credit markets
evaporated, Russian banks have been cut off from their
favourite form of refinancing loans, which has put the
squeeze on property prices, which plateaued in the
second half of last year.
Supply splutters, as sites grow scarce
Russias residential property market has paused
for breath, but most analysts believe the stop will be
temporary; continued upside in residential real estate
is supported by a severely underserved market and supply
side bottlenecks. Theres definitely been a construction
boom here, but even with this boom supply is far short
of demand. At present construction rates, it would take
20 years to fulfil, says Denis Sokolov, Cushman
& Wakefields deputy head of research in Moscow.
Paradoxically for a country as vast as Russia, the chief
bottleneck is lack of land plots, or rather of plots with
sufficient infrastructure to permit development. Where
there are no access roads, water or power supply,

The Soviet legacy of pitifully undersized apartments

means that Russias housing stock is around 21 sqm
per capita lower than Eastern European peers such
as Poland (23 sqm) and considerably lower than Western
Europe (with an average of 36 sqm in the European Union
capitals). It is hard to get your head around just how short
the supply of accommodation in Russia is, says Roland
Nash, head of research at Renaissance Capital. But to
increase the average living space per person in Russia to
just the average enjoyed in Moldova an economic basket
case would require the construction of the equivalent
of two cities the size of Moscow. And to get it to Western
European levels would require five new Moscows.

And most people do not want to buy many of the

apartments that are already there. According to
Cushman & Wakefield research, over two-thirds of
Russias housing stock is over 30 years old, and an
astonishing 60% requires renovation 15% is in critical
condition and 12% is officially considered uninhabitable.
The upshot is that although the majority of Russians
own their apartments, virtually no one is happy with
them, creating a powerful upward draught that is
fanning the flames. This huge pent up demand and
lack of supply has sent the real estate market spiralling
upwards since about 2003 when the mortgage industry
really started to take hold. Prices have increased ten-fold
in the last decade, but the difficulty in obtaining
mortgages eventually put a ceiling on the market in
development becomes prohibitively expensive. Supply
has also been restricted by recent regulatory measures.
In 2005, a new housing code came into force that
toughened requirements for developers to raise funds
from the population. This means that where previous
developments were funded by presales, even before
development had started (and occasionally before
planning permission was obtained) now construction
must be started before any presales take place.
However, the tightening of regulations benefits overall
transparency and public confidence in the sector. The

20 landscape Spring/Summer 08
LS001_P0021ADV 21/2/08 12:34 pm Page 21
LS001_P0022ED 26/2/08 9:29 am Page 22

consolidation it stimulated in the

sector also benefits foreign investors
looking for respectable and stable
partners to develop with or to invest in.

A second regulatory issue is currently

deterring foreign investors from the
massive Moscow real estate market:
the total absence of freehold in
Moscow. The city owns the land and
makes it available only on long-term
lease. This gives city hall enormous
bargaining power, which it uses to
claim the the city share of any
development: developers must either
transfer apartments to the city for social
needs, or build infrastructure for free.

While it remains difficult for

international developers to make
headway in Russia, Russian
developers latterly have inter-
nationalised in a big way, to raise
capital with a slew of real estate IPOs
in 2007. Companies may own
development rights, explains Lystad,
but lack core portfolio yielding
properties, meaning they are unable
to raise debt. Thats why they are so
enthusiastic about equity.

Russian real estate companies

raised US$8 billion over 2006-2007,
exploding from two to three traded
companies to 15, including the CIS
countries. Most of these companies
trade on the London Stock Exchanges
Alternative Investment Market with
mixed results. And another round
of real estate IPOs is on the cards
for 2008, predict experts. Following Right Russias
Americas subprime debacle other new elite at the
channels of raising finance have Millionaire Fair
closed. Debt for development in Moscow

Mortgage lending is in its infancy benefit from mortgage development.

will the in Russia, but grew in 2007 by an
astonishing 210% year-on-year. The
This social group accounts for two-
thirds of deposits in banks and most
russian case for residential real estate is
closely linked to mortgage growth
people want to move if they can raise
the money.
mortgage giving Moscows middle class the
means to upgrade housing. But the However, mortgage lending is still an

revolution ongoing sub-prime crisis could put a

spanner in the works. Prices gave up
their relentless upward climb in 2007
survive that had been driving the demand
for mortgages. In 2006, some 30% of
sub-prime? demand for mortgages is calculated
to have gone unmet because prices
increased too quickly. Mortgage
growth consequently quadrupled
year-on-year, while retail grew
90%, according to Alpha bank.
It is primarily the middle class, about
20% of the population, who will
embryonic business. Only 9% of total
residential transactions in Russia are
done through mortgages, with total
household mortgages equalling only
1.2% of GDP. Even this meagre 9%
marks a substantial increase over 4%
in 2004, with mortgage loans now
accounting for 16% of total retail
lending versus 4% in 2004.
Growth has been boosted by
diversification of mortgage programs,
a decrease in average interest rates to
14% in roubles and to 11% in dollars,

22 landscape Spring/Summer 08
LS001_P0023ED 26/2/08 3:52 pm Page 23

russians
are simply
happy to
live in a
city less
appeared in 2006 and financing in
euros was becoming available at
expensive
single digit rates, with amortisation than
terms between 10 and 20 years. Now moscow
rates are back at 14-15% and the
maximum loan-to-value available
has dropped to 60%.

The Moscow top-end segment

is the new London
While many non-domiciles in
London are currently on the lookout
for alternative locations because
property prices are so prohibitive,
Russians are simply happy to live
in a city less expensive than Moscow,
explains Cushman & Wakefields
Lystad. While it may be an
exaggeration to say Moscow is more
expensive than London, according
to research, the super-prime property
price growth in Moscow in 2007
reached 40.9% and is set within
ten years to reach London levels.
This will continue, says Sokolov.
The real centre is very restricted
in Moscow, and most available sites
are already under development. The
top end is soon going to be close to
London prices.
The recently released Wealth Report
published by Citibank Private states
baldly: We forecast that within 10
years, Moscow will vie with London
for the most expensive city in
the world.
In fact, the London and Moscow
markets are already increasingly
intertwined: much of the surging
super-prime demand in London
comes from the same wealthy
Russians who are pushing prices in
Moscow. It has become fashionable
for wealthy Russians to own a house
or apartment in London. explains
Christer Lystad. We are regularly
approached by Russians looking for
property over there. They have an
apartment in Moscow, a country
house near Moscow, and are looking
for a third location in London.
Global real estate players have come
in droves to Moscow over the last few
years to cater to this burgeoning
business. In 2006, Morgan Stanley
real estate investment fund made
their first investments in Russia,
snapping up a 15% stake in RGI
International Ltd, a developer of
elite residential in Moscow, and
a 10% stake in Moscows R.E.D,
developing mostly commercial
and some elite residential. In March
2007, Morgan Stanley took a 25%
stake in St Petersburg-based RBI
Holdings. Deutsche Banks real
estate investment arm RREEF is
also involved in prime residential
development, and a slew of other

and an increase in the credit period to
25 years. But 9% is still tiny compared
with an estimated 30-40% of deals in
other CEE countries financed through
mortgages. Total mortgage debt, an
estimated 59 per capita, ranks
among the lowest in Europe, ahead
of only Ukraine, according to the
European Mortgage Association.
The state vs. subprime
The subprime crisis is certain to
impact negatively on mortgage growth
in 2008: 40% of mortgages are made
available from money raised abroad,
so the mortgage market will grow
slower than the 140% per year in
recent years, says Alfas Brady Martin.
Banking analysts note, however, that
the major Russian players are large
state banks, Sberbank and VEB, that
are more insulated from global
uncertainty: state banks account
for about three quarters of all the
international borrowing and Russia
has emerged from the credit crisis
as something of a safe haven. Despite
the collapse of confidence last
summer, Russia still attracted
a record net capital inf low of an
estimated US$82.3 billion in 2007
and US$23.5 billion of that arrived
in the fourth quarter, nearly double
the US$14.3 billion invested in the
same period of 2006.
Mortgage expansion is official policy
too; improving peoples housing
is a Kremlin target and President
(at time of press) Vladimir Putin
has taken a personal interest in the
development of mortgage lending.

Spring/Summer 08 landscape 23
LS001_P0024ED 26/2/08 3:33 pm Page 24
funds are following in their wake.
In December 2007 alone, according to
Cushman & Wakefield research, Canadas
SITQ announced upcoming investments of
around US$200 million, while IMG Partners
declared it is to launch a Russian Development
Fund with total equity of up to US$450 million.
Cushman & Wakefield Stiles & Riabokybylko
themselves have been present in Moscow for
the past decade and are now starting to reap
the rewards of the decision to make early
inroads into the market. Christer Lystad
explains: As a well established presence in
the market we have robust relationships
with Russian developers and landowners,
which helps us match up potential
investment partners.
What we do is arrange investment deals
sometimes we are representing landowners,
sometimes investors who want us to find
something for them. Its mostly foreign
investors interested in new developments
and redevelopments. Most investors we
work with are international real estate
funds. Most of these are joint ventures with
Russian companies doing the development
and international investors contributing the
finance, with plans and designs done jointly.
24 landscape Spring/Summer 08
while much
of the
russian
property
Lystad adds that projects currently bring a buzz
return on investment of over 50%, and earn
cap rates of 8-10%. centres on
moscow,
But while much of the Russian property buzz
centres on Moscow (just consider the hoopla that is not
that accompanied news of Lord Norman to overlook
Fosters ambitious some might say audacious
Crystal City scheme) that is not to overlook
the
Russias less developed southern regions. countrys
less
According to Cushman & Wakefield
research, the great potential and low level developed
of competition make the south of Russia an regions
extremely attractive regional market for
international investments, prompting
international developers and hotel developers
to pay attention.
In fact, says the research, leading UAE
developer DAMAC Properties is looking into
developing a hotel chain and residential
premises in Krasnodar, Anapa, Gelendzhik,
Yeysk and, of course, Sochi, which hosts the
2014 Winter Olympics, thus prompting
speculation over a possible Olympic effect
in Russia. But that is a whole other story I
(For our report on the impact of the Olympic Bottom The Moscow skyline
Games on property markets, see page 10.) shows it to be a city of contrasts
LS001_P0025ED 26/2/08 10:32 am Page 25

exp
ert
opin
ion

A joint
venture

As residential demand rises in newly

emerging markets, so does the requirement
for development funding. For investors keen
to get a foothold in such territories, teaming
up with local developers and landowners on
joint ventures could be the ideal route in

Spring/Summer 08 landscape 25
LS001_P0026ED 26/2/08 2:40 pm Page 26
t is no secret that residential property in
i many Western countries, such as the UK,
Ireland, Spain and the US in particular, is
an unloved asset class currently. But in other
parts of the world, especially emerging markets such
as Turkey, Poland and the BRIC countries (Brazil, Russia,
India and China), it is a far more attractive proposition,
as the economies grow and local mortgage markets
become more open and increasingly sophisticated.
With residential demand rising in these countries, so
is the need for development funding. Andrew Williams,
managing director of Cushman & Wakefield Residential,
which has been responsible for around 5 billion-worth
of residential property transactions, believes there are
plenty of opportunities for investors to partner with
overseas developers and landowners in joint ventures
to their mutual benefit. Large-scale residential
development finance can be drawn from anywhere
in the world, and placed anywhere else in the world.
Emerging markets are particularly suited to this sort of
deal. Developers in mature markets have access to more
mature funding markets, but fundraising is tougher for
those in countries with less mature debt markets. So
C&W Residential is currently looking very much towards
the BRICs, Turkey, Central and Eastern Europe for its
projects. We are reacting to demand, says Williams.
There is a significant level of funds looking for exposure
to the residential sector, and to international markets.
But where the sector and geography meet, it becomes
quite a difficult product to access in an intelligent and
protected manner.
Responding to this need, the group offers full
consultancy and advisory services to guide clients
through the process of finding a partner and negotiating
contracts, through to completion of a development,
and international sales. It currently has deals or transactions
underway with consortia of high-net worths put together by
wealth managers, right through to sovereign wealth
funds investing 200 million to 300 million with GDVs
of over 1 billion. Our structured products are also
attractive to opportunity and pension funds.
26 landscape Spring/Summer 08
Amid the current uncertainty afflicting asset classes
across the world, the attractions of residential property
are clear. As Marc de Chassey, a director at real estate
investment management group JER Partners points out,
the residential sector offers good risk diversification
from other commercial property markets. The markets are
deep with significant international variation and
several product categories (primary homes, secondary
homes and serviced apartments among others).
And if you get the right deal, the residential sector
has provided a high risk-adjusted return to investors
over long-term periods.
So how are such deals put together? Most transactions
are done with a landowner, or a prospective landowner
who is more thinly financed, says Williams. Previously
they would utilise minimum levels of equity, and take on
as much debt as possible. But if you are thinly financed,
you are essentially trying to create a successful
development before you finance it, which is difficult.
Most projects are better delivered if they are funded
appropriately from the outset.
Projects are taken on with a mid-term view, of three-to-
five, perhaps up to ten years in mind. But a recent
development in New Zealand, which was funded by a
consortium of Irish investors, saw the group sell their
stake to a US consortium six months later, earning a
100% return on their equity in that short time. We
didnt go into that deal with the intention of trading
out, but when the opportunity came up, the investors
had a commercial choice to make, and I think they made
the right choice, says Williams.
As that example shows, the potential returns are
certainly tempting. Williams suggests that if youre
putting in what is somewhere in the mid-scale between
opportunity funds and debt, whether its a mezzanine-
financed package, or equity with participation, youre
looking at returns in around the mid-teens to mid-20s
IRR, depending on the level of risk involved.
It is important to get specialist guidance. Choosing the
right market to invest in is not necessarily difficult as
LS001_P0027ED 26/2/08 3:44 pm Page 27
problems Williams points out, most commentators would agree
that values in places like Romania, Russia and India
do not should continue to grow at a reasonable pace
over the next three years, assuming you dont overpay
just today. The challenge is in choosing the right
occur development to invest in. The main risks come from
partnership risk, construction risk and development risk.
when And of course, there are also the usual considerations that
go with any investment the contribution of equity,
things go the responsibilities of the parties within the JV
wrong, agreement, the protection of capital; then thereafter, the
level, priority of profit split, the cost of funds and so on.
they can
As well as hammering out payment terms, it is important
happen to consider what might happen if problems arise. How
when is the money protected? And what are the triggers to
secure that money in the event of non-performance?
things go Problems dont just come up when things go wrong
they sometimes happen when things go too right. Some
too right. markets move very quickly and greed begins to play
if markets a part. Protection measures include ensuring that
money is held in escrow, to negotiating directly with
move the development bank providing the debt finance for the
deal, and getting some level of comfort or guarantee
quickly, from them.
greed can
The crucial factor, says Williams, is that all of this has
play a to wrapped around an understanding of returns in the
residential sector and an understanding of how the
part residential cycle works not just generally, but specifically
in a country, and at a micro and project level.
That makes local knowledge and relationships hugely
important to the success of these deals, given the range
of market-specific hurdles that can arise from planning
laws and the taxation environment in the region, to
knowing which developers have sound track records and
which are best avoided.
That in turn means that the number of companies
with the ability to transact these deals is quite
limited, says Williams. For one thing, you need
a global infrastructure to have relationships on the
ground. You need to have seen your partners in action
across a cycle, and through different circumstances,
so that you know you can trust and rely on them even
when conditions are less favourable.
Experience is also vital when it comes to partnering
developers with investors, who may have a very different
view of how residential property investment works.
You have to be able to translate that. Marrying an
institutional outlook and expectation with someone
on the ground is the difficulty in the deal.
Finding the right partner is vital, agrees de Chassey.
A good joint venture, like any good partnership, can
bring the strengths of both sides to the table. The local
developer will bring strong local relationships, good
local market knowledge and expertise in marketing.
The investor has the funds to back the developer and
can add a more financial view to projects.
This is where Cushman & Wakefield Residential really
comes into its own, he adds: Cushman & Wakefield
through their extensive international network are able
to bring the right partners together. They are also able
to help to provide a commercial third party view during
the negotiations.
As Williams puts it: We have been on the ground in
these markets for 15 years. The value is in the experience
of developing in these countries and the relationships we
have. It is about understanding residential development
and markets in a micro sense. He compares it to the
difference between studying a foreign language at home,
and actually living in a country. Anyone can learn a
language, but if you understand the culture, that is really
where you get the deals done. I
JER Partners (www.jer.com) is the private equity investment
arm of the J. E. Robert Companies, a real estate investment
management company with more than 26 years of experience
in sourcing, underwriting and managing a broad spectrum of
real estate equity investments and debt products in North
America, Europe and recently emerging markets.
Spring/Summer 08 landscape 27
LS001_P0028ED 25/2/08 10:41 am Page 28

key
issue

Open door
policy
Changes in legislation in territories as diverse
as Vietnam and Egypt are paving the way for
overseas buyers to snap up property in markets
previously closed off to overseas investment.
And with bargain prices to be had, the race is on
amongst canny investors to stake a claim in the
latest real estate hotspots, says Faith Glasgow

Right Thanks to s international property
recent relaxations
in property laws,
the wheels are in
a has become a global
interest, shrewd investors
whether individuals
motion for a or institutions are always on the
Vietnamese lookout for the next hotspot. In many
real estate boom cases, previously dormant countries
emerge into the international arena
after changes in their legislation
open the way for developers to obtain
and develop land, and/or for foreign
buyers to own property there.
One country appearing on the radar
of western investors looking for new
frontiers is Vietnam, the new
Thailand, according to some
commentators, who highlight the
territorys range of opportunities
at very affordable prices. So, whats
the appeal? For a start, Vietnam is an
economic growth success story, with
GDP gains averaging 7.8% over the last
five years second only to China. Nor
is that trend expected to collapse in
the coming three or four years, with
GDP expected, if anything, to exceed
present levels. Not only is the
economy booming, but according
to recent research the countrys
demographics are also sound, with
a young, highly literate, hardworking
and consumer-oriented population.
Moreover, tourism to Vietnam is
growing steadily, and the World Travel
and Tourism Council forecasts that
within 10 years it will be among the
top ten tourist destinations globally.
A new report from Cushman &
Wakefield finds that Vietnam is
projected to have the sixth highest
tourism growth rate in the world,
at an annual average rate of 7.5%
between 2007 and 2016. However, the
country is still a single-party socialist
republic; as such, the potential for
political unrest or a governmental
change of heart on the relaxation of
restrictions for foreign property

28 landscape Spring/Summer 08
LS001_P0028ED 25/2/08 10:41 am Page 29

Spring/Summer 08 landscape 29
LS001_P0028ED 25/2/08 10:41 am Page 30
ownership is higher than in other,
more mature markets. Lack of
transparency can also be an issue.
Such considerations have certainly
not deterred the property investors
who have taken an interest in
Vietnam so far. Most have been
Asian-based, but its appeal is widening.
Newer players include investors
from the Emirates, Israel, Russia
and Scandinavia; US institutions
are also expected to get involved.
The governments issuance of Decree
84 in May 2007 has helped fuel that
interest, adding greater confidence
in the market. Among other things,
this piece of legislation allows foreign
investors to lease land for 70 years
(up from 50 years), to extend the
lease without additional payment,
though they are not allowed freehold
ownership of property or land. This is
tantamount to a perpetual lease and
makes the Vietnamese property
market more open than those in,
30 landscape Spring/Summer 08
say, China (where one 70-year lease is
allowed) or Thailand (where a 30-year
lease can be extended only twice).
Importantly, foreigner investors are
not currently allowed to use their
properties as homes, so the rental
market is their only residential focus.
This is an attractive proposition: not
only is there a rising domestic middle
class increasingly keen to live in
smart city apartments, but expatriate
numbers are also on the increase as
the country opens up. Companies and
business visitors have been attracted
by Vietnams entry to the World Trade
Organisation in January 2007, and
theres growing demand for office
and retail space too.
So where should investors look, and
what sort of returns can they expect?
Ho Chi Minh City (HCMC) and Hanoi
are the two main cities, and both
offer the potential for significant
returns in residential real estate.
The best bets, say insiders, are fully
serviced apartments and high-end
condominiums in premier locations.
Average rents are around US$15 per
sqm in HCMC and US$12 per sqm in
Hanoi, but rising: they could reach
as much as US$30 per sqm for locally
managed projects and US$40 per sqm
for units in internationally branded
schemes, according to research from
a local agent. Investors should look
for developers with a track record in
the country, and choose schemes
with facilities; upper-floor corner
units with views are popular too.
Tourist resorts are also expanding.
Below Michael Flynn, executive director
Sharm el Sheikh Cushman & Wakefield Hospitality,
has witnessed a speaking from the companys new
flurry of real Vietnamese office, reports that the
estate activity number of foreign holidaymakers
fuelled by its was up more than 17% for the first
thriving tourist 11 months of 2007 over the previous
scene corresponding period; and the locals
LS001_P0031ED 26/2/08 10:37 am Page 31
aided by
government
initiatives,
egypts red
sea riviera is
the scene of
amazing
growth as
complexes
spring up on
the back of
golf and
diving
new horizons:
croatia
Spains overdeveloped coastal sprawl has served
one useful purpose: as a warning to other
countries on how not to develop their tourist
industry. Croatia, in particular, has taken note.
In 2003 it sent a delegation to Spain to study
the effects of residential tourism. The conclusion:
while the economic benefits were clear, the
environmental costs were unacceptable. And so,
in 2004, the Croatian government announced a
comprehensive planning review for its spectacular
5,000km coastline and 1,000-plus islands.
It took three years, but the end result is a zoning
policy its hoped will preserve the beauty of the
coast, while enabling tourism to develop in a
sustainable fashion. No construction is allowed
nearer than 70-100m from the sea; buildings must
be no more than three storeys high; and density
is strictly controlled, with no more than 35%
building per plot. All existing plans for the
coastline were sent back to the capital Zagreb
to be reconsidered against the new regulations.
Only recently have developers become active again.
Developers may be limited as to the volume of
units they can put up, but for investors thats
an advantage in terms of site quality and capital
value preservation. The largest investment fund
operating in the country is working on eight sites
over the coming five years but with relatively
modest volumes of around 200 to 300 units
all focused around a marina or golf course.
Myriad coastal plots have planning permission
already, so larger investors are advised to seek
out those ones.
are expected to take more holidays
too. Coastal resorts such as Da Nang,
Vung Tau, Phu Quoc Island or
Nha Trang are seeing high quality
developments, in some cases with
leaseback investment structures.
However, in both Hanoi and HCMC
theres a chronic shortfall of hotel
accommodation, particularly at the
top end of the market. At present
in Hanoi, tour operators and travel
agents are struggling to accommodate
travellers requests, says Flynn. In
HCMC, a shortfall of 14,500 rooms
is projected by 2010. Even with a
number of hotel projects planned
for both cities, the rate of hotel
development may not meet the
current shortage of rooms.
The potential is there, for investors
who can stomach the inherent risk
involved. But its important to buy
shrewdly. Moreover, Cushman &
Wakefield warns that investor
protection is lacking, and that more
reforms are needed to strengthen
investor confidence in the country.
Egypt is another prime example of
a rapidly emerging destination for
buyers. It is already well endowed as
a tourist destination, with year-round
sun and unsurpassed historical and
cultural interest, a growing economy
and a relatively stable political scene.
It also now has a government keen to
boost the tourist industry in a big
way: over nine million tourists came
in 2006, and the aim is to attract 14
million a year by 2011.
The suicide attack of 2005 on a
Sharm el Sheikh hotel appears to
have had little impact on the regions
popularity, with property groups
involved in the region stressing that
security is not a major issue for
buyers, though they concede that
barriers and security scanners are
par for the course in every hotel
and development. Hurghada is one
of the main centres of development
activity along the Red Sea coastline.
Encouraged by government
initiatives, the Red Sea Riviera,
as it is now known, is the scene of
extraordinary growth as holiday
complexes spring up on the back
of golf, diving and beach life.
The process began in 2004, when
reforms were introduced to customs,
income and corporate taxation to
encourage foreign direct investment.
In 2005 the government also began
actively promoting foreign property
purchase in Egypts coastal resorts,
abolishing red tape measures that
limited ownership to two properties
and banned resale within five years
of purchase. Even more attractive for
overseas buyers is the fact that non-
Egyptians pay no Egyptian capital
gains tax on the sale of a property,
nor inheritance tax on death.
There are still legal anomalies,
though. Freehold title deeds are
available across the country except
for Sinai (which includes the resort
of Sharm el Sheikh), where political
sensitivities mean buyers must make
do with renewable 99-year leases.
But its worth noting that the
government plans to introduce an
automatic leasehold renewal facility.
And while the purchase process is
not difficult, buyers should use a
good English-speaking lawyer, and
be careful about the issue of title.
The main established areas of
development include Sharm itself,
where prices range up to US$290,500
for a three-bedroom apartment
overlooking the sea, and El Gouna,
where around 40% of properties are
owned by Europeans. There is intense
development activity in the Hurghada
area, with prices ranging from an
exceptionally low US$38,000 to
US$115,000.
The regions tourism profile has
also been upped several notches
with the launch of Lord Norman
Fosters first top end holiday resort
Serrenia in Sahl Hasheesh Bay,
south of Hurghada. The 200-hectare
resort includes a great deal of high-
profile architecture inspired by the
wind-sculpted sand dunes of the
surrounding desert, including a
super-luxurious seven-star hotel,
a world-class golf complex and spa,
a heliport and a 330-berth Camper
& Nicholson marina and yacht club
that will cater to the words largest
private yachts. According to research
by Cushman & Wakefield Residential,
which was involved in the Serrenia
scheme at the outset, it differentiates
itself from local competition by
offering a high quality blend of
services and low density to the
market that is not yet available on
the Red Sea, where buyers receive
freehold title.
Global mixed use developments
with residential and hospitality
components, such as Serrenia, have
been and are expanding into new
global territories with great speed.
I recently met with a client who has
a personal portfolio built over the last
three years of 12 properties in four
different continents, says Sonny
Gowans, commercial director
Cushman & Wakefield Residential.
Notwithstanding Lord Fosters
involvement in the area, many buyers
are buying because low prices enable
them to make lifestyle purchases
Spring/Summer 08 landscape 31
LS001_P0032ED 26/2/08 3:34 pm Page 32
for their own use. But for those who
do want to generate an income
from their property, tourist demand
for short-term rental accommodation
is increasing. This is a recent market
as until a couple of years ago it was
only legally possible to rent property
long-term.
Gowans sums up, Emerging
economies are driving enormous
tourism initiatives off the back of
real estate schemes, which is leading
to major changes in foreign
ownership all over the world. The
industry is finding ways to simplify
and reduce barriers to entry to attract
foreigners through the lure of
relatively cheap property investments.
This is taking place at a time when
the global economy is changing shape
and size, making way for significant
opportunity for those who know
where and how to invest. The global
choice presents challenges, though.
I would recommend investors seek
professional advice before making
any commitments. I
32 landscape Spring/Summer 08
new horizons:
libya
Libya has been busy trying to reinvent its battered
image as a pariah state. And it is making progress.
In 2006 the US removed Libya from its list of state
sponsors of terrorism, while BP returned to
operations there last year with an oil deal. Colonel
Gaddafi, it seems, has decided to face west rather
than east. The country is now encouraging larger-
scale foreign investment, and in August 2006, the
government issued Decree 21, establishing a new
state-owned real estate company to partner foreign
and private firms looking to invest in property
projects. Some initiatives are already in the pipeline.
One ambitious scheme is Green City resort,
planned for the Mediterranean coast 70km from
Tripoli. Billed as the Monaco of North Africa, it
covers 612 acres and incorporates 3km of sandy
beaches. It will include nine top-end hotels (two
managed by Hilton Hotels one of which is a Conrad)
plus Libyas first international non-sand golf course,
a marina, and a casino/conference centre. Around
5,000 residential apartments and villas are planned
by developer Landbank; phase one comprises 360
units built along the shoreline and on a collection
of manmade islands around the second marina.
Green City should not be confused with Green
Mountain, the worlds largest sustainable region,
a high-profile scheme on the eastern coast. Green
Mountain includes the ruins of ancient Cyrene,
and was launched by Col Gaddafis son Saif al-Islam.
Norman Foster is also involved. Another dramatic
project is at Farwa Island, in the north west. The
government is turning this stretch of coast between
Tripoli and Tunisia into a free zone, meaning
alcohol can be sold. Italian developer Gruppo
Norman plans to build a holiday resort featuring a
marina, golf course, 1,770 hotel rooms and 50 villas.
But Libyan property acquisition laws remain
difficult, particularly for foreigners. It is currently
mixed use
developments
with
residential
and
hospitality
components
are expanding
into new
territories not possible for a foreigner to buy property; here,
purchases of one-off properties are generally made
with great on behalf of a Libyan company. But as Irene Dallas,
speed a British lawyer specialising in Libyan law observes,
that strategy is unlikely to be applied where large-
scale residential developments are sold to encourage
tourism. Until a large-scale development is close to
going to market, it is difficult to say how the law
Top Vietnams status as a
will change, she says. But the Libyan government
Communist state has not
wants to encourage tourism, so there may be
deterred investors
relaxations in existing legislation.
Above right Green Mountain, an
ambitious new scheme in Libya
LS001_P0033ADV 21/2/08 9:31 am Page 33
LS001_P0034ED 26/2/08 9:04 am Page 34
city
focus
Untangling
the web
Often stymied by red tape, Italys property market can be daunting to
foreign buyers. But that is to miss a great opportunity, stresses Emily
Backus, who says purchasing in Italy neednt be all hard, and proposes
Milan as an ideal place for would-be investors to start
Right With its talys spectacular
smart boutiques
and dramatic
architecture, the
i endowment of
architecture, art, history,
fine cuisine and rich
Galleria Vittorio landscapes entices millions of global
Emanuele II visitors every year. From the canals
encapsulates and footbridges of Venice to the
Milans twin rolling hills of Tuscany, the territory
preoccupations: that gave birth to the Roman empire
style and and the Renaissance has a way of
commerce seducing travellers of all walks.
One Italian city that doesnt make
many vacation itineraries is Milan.
Italys business capital does not
provide a feast for the eyes at every
turn like its prettier sisters Florence,
Venice or Rome. It is a place to live
and work, to engage and discover.
Its beauty is in private courtyards and
extraordinary interiors, unexpected
cobblestone streets, and hidden
vestiges of its long, complex history.
Milan is renowned for its energy,
first-class shopping, fine cuisine,
diverse cultural institutions (from
the legendary Teatro della Scala to
pop music extravaganza FestivalBar),
excellent services, strong work ethic
34 landscape Spring/Summer 08
open my heart
and you will
see graved
inside it, italy
robert Browning
and congenial, cosmopolitan culture.
As a world fashion and design capital,
style infuses everything. And, of
course, Milan hosts not one, but two
champion football teams a rivalry
to behold when they go head-to-head
at home.
But for all the pleasures to be found
in Milan and throughout Italy, the
countrys investment climate has
been less inviting to outsiders,
earning a reputation for bureaucratic
and political interference that
continues to stymie the flow of
foreign investment. In the minds
of many, business in Italy is a flurry
of red tape, shifting rules and
permissions, and delayed timing.
As a result, foreigners and foreign
institutions are missing out on solid
investment opportunities in Italys
real estate sector, says Harry Farthing,
managing director of Cushman &
Wakefield Italy. While the market is
not easy if you come to it blind, the
effort pays off handsomely with a bit
of savvy and the assistance of a solid
local advisor. Not everyone is doing
LS001_P0034ED 26/2/08 9:04 am Page 35
LS001_P0034ED 26/2/08 9:04 am Page 36

there are solid

investment
opportunities
in italy, and
milan has the
potential to be
the biggest
construction
site in europe
it, so the offer is limited. [Well-targeted]
investments invariably outperform, and
outperform very well, says Farthing.

Massimo Tarabusi, Cushman & Wakefield

Residentials head of Italy, says it is crucial to
partner with local firms who have close ties in
local government, to give special heed to the
stage of project development, and to understand
local procedural practices. Especially with mixed
use projects, having a strong local advisor is
fundamental, says Tarabusi, But there are lots
of opportunities many just opening up now.
Take Milan, for example. The city is so under-
stocked in certain areas of the market, like high
quality housing, that demand continues to far
outstrip supply. Prices are expected to hold
despite uncertainty elsewhere in the world.
Milan, Tarabusi and Farthing explain, has not
had the flood of foreign investment places like
Barcelona and Dublin have enjoyed in the last

I Dont be caught without a strong I Dont seek a high level of leverage.

investing local advisor on a mixed use project.
in italy: I Do buy into a project with a local
construction or local development
the golden company, especially one with strong
political ties, an understanding of
rules local practices, and without a large
debt burden.
I Dont take on 100% ownership
without the minority participation
of a local partner.
I Dont attempt to develop a project
from scratch, not even with a local
partner. The further the project is
from completion the riskier the
undertaking. This is especially true
in Italy. A good advisor can tell you
whether the timing or stage of
development is secure.
I Do expect less return in exchange
for lower risk. Finding a great
location is not the only fundamental.
Ask your advisor about the others,
such as timing, stage of development,
partners and local context.
Italy is a land of conservative
lending practices, which is one of
the reasons it has been less affected
by the credit crisis. In the current
market climate, high leverage is
also unwise.
I Do consider investing through
a private fund. Funds are still
developing as an investment vehicle
in Italy. They offer fiscal and cash-flow
advantages, and local developers are
adopting them with greater
frequency.
I When evaluating a residential or
tourism investment, use capital gain
as your model, not the yield. Capital
gains will give you a more accurate
picture of your return.
I If you try to develop designated
agricultural land, permissions can
take as long as two years.
(Source: Massimo Tarabusi, Cushman
& Wakefield Residentials head
of Italy)

36 landscape Spring/Summer 08
LS001_P0034ED 26/2/08 9:04 am Page 37
Left High fashion is
never more than
a street away in
image-conscious
Milan; the same
goes for serious
investment
opportunities
decade and a half, nor has it enjoyed the same
redevelopment rate. International investors only
began to explore the market six years ago, yet
projects and plans are afoot that could change
the face of Milan over the next decade. Milan has
the potential to be the biggest construction site in
Europe, says Farthing. City officials, like housing
assessor Giovanni Verga, claim it already is. About
25 billion (US$37 billion) is currently being
invested in real estate development in Milan,
according to estimates by Italys national business
newspaper, Il Sole 24 Ore. The city government
calculates that 6-8% of the municipal territory is
under various stages of planning or construction.
In recent years, city leaders have pushed to
redevelop a vast patchwork of ex-industrial and
other under-utilised areas to make the city more
polycentric. Milans city centre covers a tiny
fraction of the metropolitan area, yet still
provides the only truly desirable location for
better by
design
With its gothic spires,
works of art, catwalks
and swanky shops, Milan
is a culture vultures treat
living, shopping and doing business.
This concentration of activity bottlenecks
everything from traffic to economic
growth. Plus, thanks to industrial flight
in the 1980s and historic obstacles to
redevelopment, much of the existing
infrastructure and building stock are
inefficient or obsolete. Milans new
regulatory plan aims to free up an extra
10% of municipal territory for new
development, beyond existing works in
progress. It will transform the areas into
ten new epicentres of activity providing
heavily serviced, highly desirable places
to live and work. The (investment)
environment has much improved. Local
government is sensitive to the needs of
investors. They realise that a tight
collaboration between public and private
entities is the key to success, says
Manfredi Catella, CEO of Hines Italy.
The city landscape is also benefiting
from an influx of high quality
architecture. The line-up of architects
designing major projects in Milan reads
like a Whos Who of international
architecture, and includes Zaha Hadid,
Daniel Libeskind and Lord Norman Foster.
Despite the real estate activity brewing,
Farthing believes Milan will see the
market neither bubble nor burst. This
is because the historically slow pace of
permissions and other market obstacles
have contained the rate at which new
building stock hits the market. Also,
Italians have a low rate of personal
I The third largest cathedral in the
world, Milans Duomo, is a white
marble masterpiece that took 500
years to build. Its soaring vaults,
elaborate gothic spires and wealth
of statues are awe-inspiring.
I The Galleria Vittorio Emanuele II
is a 19th-century, glass-roofed arcade.
Inaugurated in 1867, the Galleria
is flanked by smart shops and the
exclusive new five-star hotel, the
Town House Galleria.
I The Teatro della Scala has been
renovated to new splendour.
Internationally celebrated
performances at the 18th-century
opera house regularly raise the roof.
I The streets Via della Spiga, Via
SantAndrea, Via Montenapoleone and
Via Manzoni offer the cream of Italian
luxury fashion and designer shopping.
Window displays are near works of art,
as Italian luxury brands vie for the
most enticing flagship boutiques.
Cobblestone, car-free Via della Spiga
offers serenity as well.
indebtedness compared to other
Europeans, and lending practices by
financial institutions are conservative.
Finally, the global credit squeeze is
expected to weigh on the pace of new
development, especially for developers
relying heavily on bank financing.
Farthing and other experts concur that
for the medium term there are niches
of demand that remain dramatically
underserved, especially in the high-end
residential market. The supply of high
quality housing in Milan is scarce, says
one local agent. If I found an apartment
in the 5 to 7 million range, I would
immediately have ten people to show it
to. But it doesnt exist.
Fabbiana Megliola, analyst for the Italian
brokerage group Tecnocasa, says scarcity
of supply in the upper fascia means high
quality housing will remain unaffected
by a cyclical market slowdown expected
for properties of lower value in 2008. For
Milans residential market as a whole,
Megliola predicts business volume will
contract and sales cycles lengthen this
year. Milan, like cities around the globe,
is at the close of a long growth cycle. But
prices, she says, with a few exceptions on
the low end, will remain stable.
Milan is really under-marketed,
says Tarabusi. Compared to other
European cities there are a lot of
opportunities here. I
I The Castello Sforzesco is the citys
15th-century fortified brick castle and
former ducal residence. Castle resident
Ludovico il Moro, Francesco Sforzas
son, kept Leonardo da Vinci at court as
his official painter and engineer. The
castle now houses a dozen museums,
galleries and archival sources. It also
abuts Milans largest and prettiest
park, Parco Sempione, which was
landscaped on the location of the
former ducal gardens.
I Leonardo da Vincis masterpiece
The Last Supper is housed in the
refectory of Santa Maria delle Grazie.
Visits by reservation only.
I La Triennale provides Italys first
Design Museum as well as thought-
provoking temporary exhibits on
modern art, media and architecture.
Catch lunch or espresso at its chic
museum caf.
I The Brera Pinacoteca museum
offers an exquisite collection of
paintings of major Italian artists
from the 13th to the 20th centuries.
Spring/Summer 08 landscape 37
LS001_P0038ED 25/2/08 10:33 am Page 38

des
ign
trend

Keeping
it real

Once luxury looked the same the world over. But as hotels get
involved in branded residences they are now meeting investors
demands for a more defined sense of place. By John Stones

38 landscape Spring/Summer 08
LS001_P0038ED 25/2/08 10:33 am Page 39
he international language
t of luxury has long been
employed by big hotel
groups; as they settle into
leather armchairs or pad across deep,
cream carpets, jet-lagged, jet-setting
guests could be forgiven for not
always recalling whether they were
in Manchester or Mumbai. But
increasingly some of the most
innovative hotels and residential
complexes are wising up to the
potential of local styles, and creating
schemes that sensitively acknowledge
the regional design vernacular.
Such an approach may be especially
necessary now hotels are getting
more involved in branded residences.
After all, what worked for holiday-
makers (or business travellers,
especially) in the past, is not always
what appeals to someone who has
Left Banyan invested in a property for the very
Trees Lijiang reason that it is in another, more
resort in China exotic part of the world. You cater to
respects the local a different audience with purchasers,
Naxi style says one agent who handles branded
Top Designers of residences. In most cases you must
the Alila Uluwatu keep the tourists in mind as they will
villas in Bali be renting the properties for much of
were careful to the year, but we are finding that the
avoid the theme property purchasers want a greater
park trap say in the design, and demand a
Spring/Summer 08 landscape 39
more varied and personalised look.
That can mean a less generic style,
and, depending on individual taste,
something much more in tune with
the surrounding environment.
Some destinations, such as Morocco,
or tropical Asian resorts like Bali,
have a highly prized visual culture
that is very much part of the reason
for travelling or investing there, so
ignoring it is clearly unwise. But other
places too are reconnecting with their
heritage. In Japan, where there has
been a long divide between traditional
and western luxury offerings, these
are being reunited by projects such as
the Ginzan Onsen Fujiya designed by
iconic Japanese architect Kengo Kuma
which stays true to the exquisite
traditions of Japanese ryokans (inns)
while also being modern.
Localisation is not only noticeable at
the most exclusive resorts, but is also
filtering through the chain, meaning
big brands such as InterContinental are
now ensuring they are not too generic,
but employ local designers to inject a
sense of place into their hotels and
residences. This is being experimented
with most fully, and with the most
engaging results, at the highest end.
For instance, Per Aquums hotel in
LS001_P0038ED 25/2/08 10:33 am Page 40
Sri Lanka, The Fortress, combines
a traditional exterior evoking Dutch
and Portuguese colonial architecture
with modern Asian interiors. Its
Dhoni Mighili resort in the Maldives
goes a step further, pairing traditional
Maldivian bungalows with discreetly
yet luxuriously kitted out Dhonis
(traditional Maldivian wood boats).
Key players such as Mandarin
Oriental and Four Seasons take a
mixed approach, adopting local
flavour where appropriate, while
always maintaining an international-
standard level of service. The
forthcoming Four Seasons Hotel
Istanbul at the Bosphorus is being
presented as a luxurious recreation
of a 19th-century Ottoman palace.
A spokesman points out that design
is only one of many areas where the
locality provides influences and
inspiration it can extend to all
aspects of the offering, from food to
type of spa as well as small nuances
in a hotels approach to service; the
way they welcome you to the hotel
or offer you your nightly aperitif.
Singapore-based Banyan Tree has
probably the most sustained design
engagement with the locations of its
hotels and residences, attempting to
blend with the landscape and use
indigenous materials. Every Banyan
Tree is distinct in the way it adapts
itself to the local environment and
architectural heritage, explains
Dharmali Kusumadi, vice-president
design services for the group.
The fullest expression of this approach
is perhaps the Banyan Tree in Lijiang,
a historic city recognised as a World
Heritage site in south-west China.
With this resort, whose two-and
three-bedroom residences and
townhouses come onto the market
later this year, the challenge was to
remain sensitive to the local Naxi
style, provide the trademark luxury
and deal with a difficult location
that was essentially a jungle and a
cliff. In Lijiang, the exteriors of the
villas are constructed with local
materials, such as exotic pink stone
and grey Naxi bricks, explains
Kusumadi. The stone bricks were
wholly hand-cut and assembled by
local masons. All-natural materials
including teak and traditional clay
roof tiles were sourced from local
kilns and these lend authenticity to
the contemporary Naxi-styled curved
40 landscape Spring/Summer 08
roofs. A local mason was engaged
to build the pagoda situated in the
middle of the resorts central lake.
It was built in the traditional Naxi
style. This painstaking approach is
evident at Banyan Trees other resorts.
For instance, on Indonesian island
Bintan, where Banyan Tree is selling
one-and two-bedroom bayfront pool
villas, the locality was respected by
building the resort around existing
rocks and trees, retaining the
character of the rainforest where
the villas now exist.
Le Sereno, on the Caribbean island
of St Barts, takes a slightly different
approach. Designed by celebrated
interior designer Christian Liaigre
(responsible for the super-stylish
Hakkasan and Yauatcha restaurants
in London), materials were not
necessarily sourced locally, but
from around the world, so as to
most closely relate to the local sea
and landscape. And a stone was
located in Laos that has the same
colour as the lagoon, so this was
imported. In respecting local aesthetic
traditions, the danger, successfully
avoided by Liaigre, is that one creates
a pastiche, or worse, a theme park.
It is an issue appreciated by Richard
Hassell at Singapore-based architects
WOHA, whose designs for the Alila Right A luxury
Villas Uluwatu, a resort of luxury resort ambiance
residential serviced villas in Bali, with a twist of
are nearing completion. Again, an Big Apple the
awareness of purchaser, not just 40 Bond serviced
tourist, expectations was key to the apartments in
thinking. He says that, increasingly, Manhattan
people dont want a stage set but
want to engage authentically with (designed by Richard Rogers recently
where they are. The objective was renamed practice Rogers Stirk
to create a resort that was about the Harbour + Partners) and the more
place, rather than regurgitating classic, traditionally British interiors
stereotypes created by marketing being designed by Candy & Candy.
about Bali. We brought the design
back to basics. The solution was Britishness can take many forms.
an allusive architecture inspired by Defining a New York style is even
traditional Balinese designs but which less simple. The citys architectural
also pulls in other architectural heritage is, after all, an international
traditions as appropriate. affair. Take 40 Bond, a development
of residential serviced town houses
With tropical locations such as Bali, and apartments in Manhattan, the
indigenous traditions are easy to brainchild of legendary hotelier Ian
pinpoint. But this becomes less easy Schrager. His intention was to rethink
with cosmopolitan capitals such as homes as he had done luxury hotels,
London or New York. One Hyde Park, offering a five-star experience in a
Mandarin Orientals development of domestic setting. Swiss architects
serviced apartments in central Herzog & De Meuron were coaxed on
London, is making headlines for the board to create their first residential
astronomical prices being achieved, project. Few of the aspects are
somewhat eclipsing the architecture deliberately New York, save perhaps
LS001_P0038ED 25/2/08 10:33 am Page 41

global
village: the
international
language of
luxury
While maintaining a specific sense of place is
an important trend, it is not the only one. There
is always going to be room for old world luxury
in hotels and resorts taking their cues from the
best that England, France and Italy, the traditional
purveyors of luxury, have to offer. Take well-known
British interior designer David Collins first foray
into hotel design in New York, appropriately
named The London NYC. A refurbishment of the
Rihga Royal, Englishness is gently conferred by
discreet and classic luxury touches rather than
by obvious national cues.

And, Armani, which having recently successfully

moved into the world of interior design, is
extending its reach into branded hotels and
serviced residences. The first Armani Hotels &
Resort projects will be a mixed offer of hotel and
residences in the Burj Dubai, one of the tallest
buildings in the world. There is nothing localised
at all about the total Armani lifestyle on offer,
with the touch of the Italian fashion design icon
extending to every aspect of the experience on
offer; from the smallest item to the overall look,
everything will bear the imprint of the Armani brand.

Perhaps the most eye catching (and controversial)

hotel project of recent years is the Hotel Puerta
America in Madrid. A stellar cast of 14 designers
and architects was assembled and given different
parts of the project Jean Nouvel transformed
the staid faade of the existing building into an
eye-catching spectacle; John Pawson created a
suitably minimalist reception area; and Zaha Hadid,
Ron Arad and Lord Norman Foster designed
different floors. It is as international as is possible
to imagine, and whether or not it manages to be
more than the sum of its parts, it shows the potential
in some of the worlds biggest design talents is only
just beginning to be harnessed for luxury projects.

the massive iron gates inspired by

local graffiti (offering purchasers
purchasers
Big Apple grittiness, without being demand a more
too gritty) but the quality and breadth
of vision supplies the sense of place. personalised
As boundaries between hotels and
look. that
residences blur, the evolution of can often
interiors will change in turn. Some
hotel brands are already getting mean
owners-to-be involved in villa designs
in the early stages to ensure interiors
something
meet specific needs. Purchasers may more in tune
even be given the choice of using
the brands own architect, or a local with the
architect recommended by the hotel.
That said, the tastes of tourists
environment
staying in such properties for much
of the year cant be overlooked, and
a rein will always need to be kept on
purchasers with a more adventurous
creative bent. I

Spring/Summer 08 landscape 41
LS001_P0042ED 26/2/08 10:34 am Page 42

grand
sche
me
ine has been produced

w in the Douro region

(northern Portugal)
for over 2,000 years
and since the 18th century its
main product, port, has become
world-famous for its quality. Now
the region, a UNESCO World Heritage
site, boasts another world-class string
to its bow, with the development of
the exclusive aquapura douro valley.

Like the exceptional wines produced

in the regions historic vineyards,
the villas, hotel and spa are a study in
balance and harmony, demonstrating
sensitivity to both the landscape and
the building. Situated in a spectacular
setting, just 75 minutes drive from
Oporto International Airport, and
20 minutes from the Vila Real
regional airport (which has facilities
for those arriving by private jet or
helicopter), this peaceful haven is
perfectly placed for visitors wishing
to jet in for a relaxing break. Nestled
between the Douro River and the
verdant, rolling wine terraces,
aquapura douro valleys stunning

A proud
heritage
The historic Portuguese wine region of Douro
can now be enjoyed from the comfort of your
own luxury villa thanks to a stunning new
exclusive hotel and spa development by aquapura

Right Decked roof terraces offer direct

views across the stunning Douro landscape

42 landscape Spring/Summer 08
LS001_P0042ED 26/2/08 10:34 am Page 43
LS001_P0042ED 26/2/08 10:34 am Page 44
natural location has been fully
embraced by its designers. Developing
in such a location requires careful
and sympathetic planning from both
the architects and local planning
authorities. The result is a stunning,
intelligently designed and totally
unique space that blends modern,
stylish dcor and facilities with the
distinctive heritage of the local area.
So distinctive, in fact, that only
fortified wine from the Douro Valley
can be labelled as port, following
the regulations of the Institute of
Port Wine, in the same way that
the provenance of true champagne
can only be the eponymous French
region. Such exclusivity reflects the
aquapura philosophy. Its development
model revolves around the key
concepts of luxury, authenticity and
excellence all of which are evident
at aquapura douro valley, no more
so than in its 21 residential villas and
five-star hotel, which overlooks the
Douro River and is formed partly from
a handsome 19th-century manor.
Designed by Portuguese architect
44 landscape Spring/Summer 08
Luis Rebelo de Andrade, the hotel has
three restaurants, which source 80%
of their produce from local suppliers,
a wine-tasting room, two bars, six
meeting rooms, a library and a pool.
aquapura also boasts its own world-
class spa worth a visit in its own
right. At 2,200 sqm, it is one of the
largest spas in Portugal and features
chocolate facials, oxygen treatments
and skin products by Karin Herzog, as
well as holistic and exotic treatments
such as orchid facials from Ytsara. As
with the resorts restaurants, the spa
utilises local organic produce in some
of its treatments, including grapes,
olives and cherries.
The sense of luxury and indulgence
extends to the residential villas,
which are ready to be occupied and
are sold furnished to a very high
standard. Each property offers
breathtaking views, either of the
vineyards or the river, with floor-
to-ceiling windows offering sweeping,
unobstructed vistas and an abundance
of natural light. Units are available
in two different designs the
contemporary Villas do Douro, some
with decked roof terraces and plunge
pools, and a direct view across the
Douro River, and the more colonial
Villas da Vinha, with rustic fireplaces
and private gardens, overlooking the
vineyards. Some of the properties are
more unusually located in the old
wine cellars of the original buildings.
Owners can avail themselves of
all of the hotels facilities. Each villa
also benefits from a 24-hour concierge
service as well as butler service.
There is also a state-of-the-art centrally
controlled lighting system, which
allows users to create diverse lighting
and shading effects throughout the
villa, and the floor to ceiling glass
allows for an abundance of natural
light throughout the day. aquapura
Below douro valley is part of a series
Villas are of high-end developments by the
furnished to the aquapura group as it bids to become
very highest the worlds premier boutique hotel,
standards villa and spa brand. With further
Below right projects in two locations in Brazil,
The five-star hotel as well as two more European
LS001_P0045ED 26/2/08 4:54 pm Page 45

ventures in Prague and Budapest,

owners of villas in aquapura douro
valley will also be offered the
opportunity to enjoy aquapuras
future developments. All properties
come fully furnished and are sold
on a sale and leaseback basis with
the hotel. The owners have the right
to use their properties for up to a
total of eight weeks during any one
year, remaining in the rental pool
for the remainder. Investors receive
a guaranteed annual return of 6%
net for the first two years. Following
that, the return is variable and in
proportion to the area of the owners
villa and equal to 50% of total gross
annual income generated by the
villas in the rental pool, less the
management fee. Prices at aquapura
douro valley start from 542,000.

Like a fine wine, aquapura douro

valley is a rare thing; a unique
spot in which you can indulge
yourself far from the stresses of
modern life a secluded, luxurious
hideaway thats certainly worth
raising a glass to. I

zero to hero
As the world goes carbon footprint crazy, eco homes could be the
answer. Step up Dan Burr. Burr was design director on Britains
first zero-carbon house, the Lighthouse (pictured left), built in
Watford last year. The building meets Level 6 of the
Code for Sustainable Homes, with which all
new homes in Britain must comply by 2016.
Developers are getting in on the act too, with
some recently announcing that all their
new developments would achieve at
least a Level 3 Sustainable Homes rating.
Meanwhile, over in Abu Dhabi, 2007 saw the
unveiling of plans for the worlds first eco-city.
The futuristic CityScape, designed by Foster
& Partners, will rely on a photovoltaic
(thats solar-power to you and me) plant
for energy and will be entirely car-free.
Time to get those hover boots out.
the skys the limit
Got a head for heights? Plans for the worlds tallest residential
skyscraper, the Spire, were unveiled in Chicago last year. The
magnificent design is by Spanish architect Santiago Calatrava.
Each of its 150 storeys will be offset by two degrees against the
floor beneath, giving the building the appearance of the twisting
thread of a screw. The Spire will be dwarfed, though, by Dubais
Burj Tower, which will include hotels and flats, and will be a third
taller again at 2,650ft. Elsewhere, the Russia Tower, Moscow, due
for completion in 2012, will reach 2,009ft. It will be the
tallest building in Europe and the second tallest in the world.
Just dont look down.
dragon economy
Watch out Germany, Chinas right behind you. It seems theres
no stopping the Chinese economy, which has grown by more
than 10% for five straight years, meaning it is poised to overtake
Germany as the worlds third-largest economy after the US and
Japan. Growth came despite interest rate hikes and government
curbs meant to slow a boom in investment in real estate and
other assets it was feared could ignite a financial crisis. Growth
for the three months ending December
2007 was 11.2%, down slightly from 11.5%
the previous quarter, indicating that
government efforts to prevent financial
overheating are taking effect. The
full-year expansion was the fastest
reported since 1994.
46 landscape Spring/Summer 08
LS001_P0046ED.indd 46
free wheeling
Talk about not taking the hint. British motorists are using
cars more and more despite record fuel prices, higher vehicle
taxes, and entreaties by the Government for greater use of
public transport. Traffic has risen sharply in the past decade in
almost every part of the country except central London, despite
Government pledges for a greener transport system. The figures
come as petrol prices reach a new high. At press time, the average
price of unleaded was 104.28p a litre, with diesel, at 109.24p per
litre just 3.5p short of the long-feared 5 gallon. In the USA,
on January 3, 2008, oil prices hit an all-time peak at US$100.05
per barrel. Motor manufacturers are reporting a shift to smaller,
more efficient cars, but people
do not seem to be adapting
their lifestyles to drive
less. Just wait till they
snap up that condo in
CityScape, Abu Dhabi
cabin fever
Fly from any major international airport these days and you can
pretty much get hold of anything perfume for the wife, toys
for the kids, and, why not, a whizzy new gadget for yourself.
But some US airports have taken the service remit a step further
by doling out flu injections at the gate. The fact is, the odds of
catching an illness are higher in the confines of an aircraft cabin
due to the unpleasant combination of a large group of people
in a confined space and the free movement of airborne germs.
Doctors say few things can reduce your chances of picking up a
germ. But regular hand washing in hot water might help. They
also warn that the best thing to do if you
are feeling under the weather is not
to travel at all. If your ears are
affected, cabin pressure can
trigger severe pain.
there may be trouble
ahead
Sales of new homes in New York have fallen even more than
was expected to their lowest level in more than 12 years, leaving
the market awash with unsold homes and pointing to yet more
trouble ahead for the housing market. In the US, new home
sales tumbled 9% last year to a seasonally adjusted annual rate
of 647,000, according to a Census Bureau report. That was the
worst showing since April 1995, when the pace of sales was
621,000, and is much worse than the 715,000 sales rate forecast
by economists. The sales pace is down more
than a third from levels a year ago.
Furthermore, the decline is
widespread nationwide,
ranging from a 28%
drop in the northeast
of America to a 38%
plunge in the
Midwest regions.
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