Yet another developer/property owner has dodged a bullet, after no one was killed in the latest roof collapse. This one took place in a multiplex theater in Pilsen at the Plaza shopping center. Five people were injured in the accident, with one woman requiring hospital care after, but thankfully, luckily, no one was killed. It’s hard not to think back to another shopping center in Poland last year that saw a roof cave in, and to the the stunning collapse of a roof in Bratislava, without asking just what’s going wrong?
These days it’s popular to scoff at the endless due diligence process going on, and brush off complaints about CEE developers/ construction companies / investors skimping on quality. This kind of near-disaster, though, is a stark reminder of just how much is at stake. Waiting for the police to complete their usual 8 month investigation that turns up nothing specific is an effective PR strategy, because the shock wears off and people forget. But it’s certainly not good enough.
In something of a kick in the teeth, the European Union has told Romanians and Bulgarians to keep waiting in line, when it comes to joining the Schengen zone of passport-free travel. Several countries had “reservations“, according to AFP. Perhaps concerned that such wordings were too diplomatic, the House of Lords in London said Romania shouldn’t have been admitted to the EU in the first place.
“The last six years indicate that post-accession conditionality achieves only slow progress. In future accessions, every effort must be made to ensure that all reforms are irreversible prior to accession, as post-accession mechanisms are both undesirable and unlikely to prove effective.”
We missed this little piece of news from the beginning of the week. It seems Mr Vitek is making quite the property play this year. Along with a suspected fight for control of Orco, the Czech billionaire increased his holding in the developer Ablon near the beginning of the month to 15.52%, before taking an even bigger slice:
ABLON Group Limited (“ABLON” or the “Company”), a leading real estate owner and developer in Central Europe, was informed today that Mr. Radovan Vítek, a Czeck national private person, owner of CPI Group, has increased his total holding in ABLON from 21,250,954 or 15.52% of the issued share capital, to 30,443,938 shares, equalling 22.23% of the issued shares and voting rights in the Company.
Ablon is holding an extraordinary general meeting on February 1st.
Game on! That, at least, is the word from Bloomberg, which reports that Orco Property Group founder JF Ott is buying shares in the company. (Not a secret, by the way, since it’s also confirmed on Orco’s website here) The reason, it’s speculated, is that he’s fighting with the Czech business mogul Radovan Vitek for control of the company.
Orco has gained 76 percent in the past three months after a bond-for-equity swap cut indebtedness and sent the stock price to a record low on Sept. 12, attracting new investors. Vitek, owner of Czech Property Investments AS, who bought a 30 percent stake, has proposed to become board member and cut the company’s share capital by 51 percent without cancellation of shares at a Feb. 4 shareholder meeting. Ott bought 8.4 percent last week, raising his stake to 8.9 percent, Orco said yesterday.
“We see CEO Ott’s increased stake as part of a fight for control over Orco,” analyst Josef Novotny at Erste Group Bank AG’s Prague-based unit wrote in a report to clients today.
Those who watched the high-stakes drama over the holidays in which the U.S. got as close to the fiscal cliff as it could may have been reminded of an unruly 4-year old boy who insists on peering over the side of a precipice. Possibly just for the fun of annoying his parents, and proving that he can. The fact that lawmakers in Washington actually came to an agreement was greeted with immediate relief and rising markets, but there was never any doubt that more drama was on the way.
And it’s coming quick. In order to pay its bills, the U.S. Congress will have to raise its debt ceiling, once again, and angry Republicans are certain to make life difficult for President Obama to come to grips with spending. Not an unreasonable goal, in fact.
But if you were in any illusion over just how tough that fight could end up being, the trillion dollar coin should be enough to bring you back down to Earth. Apparently, because of a bunch of weird, arcane rules, while the Congress holds the country’s budgetary purse strings the President actually has the power to mint a coin whose value could literally be $1 trillion. So, theoretically, if Congress refuses to agree to a deal on raising the country’s debt limit, Obama could simply create $1 trillion out of thin air, deposit it in the Treasury, and pay the country’s bills.
For normal people, or possibly for about 99.9% of the planet, this seems crazy. It’s like a Black American Express card on steroids for superpowers, and something about it just feels absolutely wrong. How bizarre, then, to read Nobel prize winners taking the idea seriously, and the Financial Times writers discussing how the possibility of such a coin alters the negotiations dynamic between Congress and the President. So get used to hearing about this (hopefully) fictional coin. And/or follow the “debate” on Twitter at #MintTheCoin .
Are the crowds any thinner in the shopping malls this year? Most would take that as a highly negative sign, but a more nuanced approach should take into account whether on-line retailing isn’t finally having an impact on how long you wait at the counter. Whatever the answer, a recent study by CBRE suggests that on-line retailing is definitely making itself felt in the product supply changing.
‘Online retailing is an established activity across much of Europe and expected to grow further over the next few years,” says Patrick Kurowski, Director of Industrial Department in CBRE. ”It is already a significant driver of logistics market activity, and its future growth will introduce significant challenges and opportunities for the logistics networks needed to support it. This is not merely a case of increased demand for generic logistics space.”
There’s no question about it: technology is disruptive. And adapting to new shopping trends turns out to be just as important for trucking companies as it is for retailers, points out Kurowski. “It will also require the development of higher specification logistics buildings tailored specifically to the needs of online retailing, and capable of handling higher levels of mechanization and process complexity.”
Across Europe 40% of 16-65 year olds use the internet to shop and 47% browse for goods online. Both behaviors are significantly more prevalent in northern and western Europe (Sweden, Germany, UK and France) than they are in southern Europe and CEE.
Retailers expect the online proportion of their total sales to double from 5% to 10% over the next two years. While 70% currently regard themselves as primarily traditional “bricks and mortar” retailers most have begun the process of evolving into multichannel retailers, with 63% expecting to be fully-integrated multichannel retailers over the next two years.
Overall internet access in Europe has risen by nearly 400% since the year 2000, and credible estimates put the rate of future growth in online retailing in Europe at 12-15% per annum over the next five years.
BlackRock is to buy more than two dozen U.K. real estate investments that Bloomberg reports are worth over GPB 335m. The wire service quotes a Blackrock statement as saying that the deal “increases and further diversifies the fund’s client base by an additional 64 investors, giving them access to a longstanding U.K. real estate platform.” The purchase of the investments, which brings the value of BlackRock’s UK Property Fund to GBP 2.4bn, include retail, office and industrial funds.