International News

Insignia acquires Mexican real estate service provider

Insignia Financial Group Inc., New York, has announced its completed acquisition of commercial real estate service company Grupo Inmobiliario Inova S.A. de C.V. (Inova), Mexico City. The purchase price was not disclosed.

Inova provides corporate real estate services, capital markets services and investment/development services all over Mexico. It is also active in major business centers in South America, including Buenos Aries, Rio de Janeiro, Santiago and Sao Paulo, Brazil.

“We are pleased to welcome Inova to the Insignia family, as we establish our first operation in Latin America,” said Andrew L. Farkas, chairman and CEO of Insignia Financial Group. “Mexico is an ideal entry point for us in Latin America by virtue of its having the most advanced commercial real estate services industry in the region, and an economy that is increasingly integrated with the U.S. economy, with growing receptivity toward U.S.-style financing vehicles. We expect to use our acquisition of Inova as a platform to extend our reach throughout Latin America.”

Stephen B. Siegel, chairman and CEO of Insignia's U.S. commercial real estate services subsidiary, Insignia/ESG, agreed. “The debut of our operations in Mexico comes at a propitious time,” he said. “Increasingly, our clients are turning to us for assistance with their real estate requirements in Mexico, particularly with that country's economy showing vigorous growth, its financial health improving, its new president, Vicente Fox, embracing pro-business policies, and commerce between the United States and Mexico reaching an all-time high.”

World's top 10 costliest office locations named in survey

Retrenching tech markets and the prospect of a slowdown in the United States are causing concerns in economies around the world, but have yet to adversely affect most Class-A office markets, according to the semi-annual Global Market Rents survey from CB Richard Ellis Global Research & Consulting, San Francisco.

London's West End office market tops the list as the world's most expensive office market, with an average price tag of $156.89 per sq. ft. The availability of Class-A office space in London is at a 13-year low of 2.2%.

The survey shows occupancy costs rising in most of the cities in CB Richard Ellis' Global 50 Index. In terms of U.S. dollars, costs rose in eight of the top 10 markets. The only reported declining markets were Tokyo's Inner and Outer Central districts, the result of depreciation of the yen against the greenback.

“Asian markets, for the most part, saw strong rental growth in 2000, but the tech sector's troubles, combined with fears of a U.S. economic slowdown, are already having an impact on some markets in the region,” said Tim Kirkus, CB Richard Ellis research director for Asia. “The positive factor for Asian markets is the relative lack of new supply of Class-A office space coming on line. Even if there is a serious slowdown in demand, this is unlikely to push vacancy rates up for Class-A office buildings to high levels,” he said.

Top 10 Most Expensive Cities for Office Space
Market Cost per sq. ft.
1. London (West End), England $156.89
2. Tokyo (Inner Central), Japan $147.05
3. Tokyo (Outer Central), Japan $127.54
4. London (City), England $112.50
5. Hong Kong $92.16
6. Silicon Valley (sub.) U.S. $87.48
7. Paris, France $84.32
8. Mumbai (Bombay), India $80.16
9. San Francisco (CBD), U.S. $73.75
10. New York (Midtown), U.S. $64.63
CB Richard Ellis Global Research & Consulting,
Global Market Rents, January 2001
All costs in U.S. dollars

IKEA begins construction on second Moscow megastore

Âlmhult-based IKEA of Sweden AB has started construction on a second megastore in Moscow, one year after its first outlet took the city by storm.

The planned 333,000 sq. ft. superstore is scheduled to open in December 2001, and will be located on Kaluzhskoye Shosse, in the southern outskirts of Moscow. The company plans to spend approximately $45 million on the new store, bringing its total investment in Russia to about $150 million.

IKEA opened its first store, a 301,000 sq. ft. facility, in the Moscow suburb of Khimki in March 2000. Throngs of shoppers — 35,000 strong — shopped at the store on opening day. It now attracts about 5,000 shoppers on weekdays, and almost five times that amount on weekends and holidays. In the past year, more than 4.5 million customers have visited the Khimki IKEA. The company has reported a pre-tax income of $100 million, which doubled its expectations for the Russian store.

IKEA plans to start up its own local production lines. This month, the company began building a furniture factory in Leningradsky. Over the next few years, IKEA also plans to set up four more stores in Moscow and one or two in St. Petersburg.

IKEA operates more than 158 stores in 29 countries around the world.

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