RR Donnelly has released the October edition of its Venue Market
Spotlight, entitled Real Estate and M&A. The report, a summary
of a survey of experts, speaks to what we can expect in terms of
real estate-related M&A in the next 12 months. Experts predict
an increase in activity, and this legal update will highlight some
of the discussions outlined in the report, including forecasts,
drivers, and potential roadblocks.
An overwhelming majority of the experts surveyed predict an
increase in global real estate M&A levels in the coming year.
While some experts see this increase coming through the residential
real estate market, 80% of experts surveyed agree that the
commercial real estate market will see the largest increases in the
next 12 months. One US-based expert noted that the commercial bias
may be, at least in part, due to relaxed underwriting standards for
commercial real estate borrowers.
While opinions were fairly divided as to where secondary levels
of growth would be seen, the majority of experts forecast the
largest increases coming out of the Asia-Pacific region in the next
12 months, with China and India being two countries to watch in
Experts expect to see most real estate M&A deals being made
by property development companies, home builders, and REITs.
Consolidation in the Asia-Pacific region, especially in the
property development subsector, is a key area to watch.
Markets are doing well, giving buyers a greater appetite for
risk and an eye for deals in the real estate sector. The global
economy is recovering and so are employment rates and incomes. This
is expected to lead into increased demand for homes and commercial
Geographically speaking, an important driver is the urbanization
occurring on a massive scale in the Asia-Pacific region. As the
scale slides from rural to urban, commercial and residential real
estate demand will continue to explode, prompting further
acquisition and investment.
More generally, respondents point to recovery in the real estate
market as well as geographic expansion as the two most important
factors influencing and driving real estate M&A in the coming
year. Again, expect to see many North American and European
companies swivelling their sights towards the Asia-Pacific
Unsurprisingly, licencing and regulatory issues, particularly
for cross-border M&A, are cited as the top roadblocks to look
out for. Investors should be aware of and prepared for foreign
ownership restrictions, antitrust issues and opaque regulatory
regimes. The next largest challenge is proper valuation, with
buyers and sellers disagreeing on the "true" value of an
These challenges notwithstanding, the prepared and
properly-advised company would do well to keep its eyes open
for real estate-related M&A opportunities in the year
The author would like to thank Jad Debs, articling student,
for his assistance in preparing this legal update.
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Russell v. Township of Georgian Bay provides a useful reminder of the fact that while municipal officials sometimes appear to hold all of the cards in disputes with home owners, that is not always the case.
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