Diagonal Mar is a 431-unit high-rise residential project in Barcelona, Spain. Pokrovsky Hills is a 39-acre residential development in Moscow, Russia, which features 207 townhomes. And Garibaldi Repubblica is a 56.8-acre mixed-use project in Milan, Italy, which includes residential, office, fashion exhibition, retail and hotel space. Welcome to the world of Hines.
The booming housing market in the United States is not confined by oceans. Europe, too, is enjoying a similarly robust market. And Hines, an international real estate firm based in Houston, Texas, is riding high on this multinational trend.
“Without any question, house prices in Europe have dramatically increased. A lot of it is fueled by a reduction of interest rates,” said Michael Topham, EVP of European operations for Hines.
Topham, who works in London and oversees Western European operations for Hines, said that London has experienced especially rapid growth in home prices.
“The greatest (price) increase by a long-shot has been the United Kingdom and particularly London. The next greatest increase is in Spain,” he said. Spain is experiencing a “Florida effect,” he said, in which residents from other regions are buying second homes there.
House prices in Britain rose 10.6 percent from the first quarter of 2003 to the first quarter of 2004, according to The Economist magazine, and have jumped 25.2 percent since the fourth quarter of 2002 and 116 percent from 1997 to 2004. Ireland, meanwhile, saw home prices jump 174 percent from 1997 to 2004, and home prices in Spain gained 121 percent from 1997 to 2004, The Economist also reported this month.
Research Worldwide, an independent research company based in South Africa, reported that South Africa, Hong Kong, United Kingdom, Australia, New Zealand and Spain experienced the highest level of growth in house prices from a year earlier, as of the latest tally. Germany, Singapore, Israel and Japan saw a drop in home prices from 1.6 percent to 5.7 percent, respectively, according to Research Worldwide data.
Hines, a real estate development, management and investment firm that is one of the largest privately held companies of its kind in the world, went global in 1974 and has since completed projects in 26 cities abroad. A residential tower in Beijing, China, and an office and residential project on the River Seine in Paris, France, are among the company’s recent projects. Founded in 1957 by Gerald D. Hines, the real estate firm has about 50 projects currently under development around the world, has completed about 617 projects, and manages about 70 projects for third parties. Topham said Hines is also “studying seriously” a number of new residential projects.
Hines pursues all types of developments, including office, industrial, retail, restaurant, hotel, sports and medical/biotechnological projects, among others. The company has completed 5 million square feet of residential projects in the United States and abroad, along with about 94.6 million square feet in office space, about 19 million square feet in industrial space, and about 7.8 million square feet in retail and restaurant projects.
Topham said mixed-use developments, including large-scale residential components, have been in high demand in Europe.
“A combination of residential and retail and office as a large-scale development–that is the sort of thing that we are seeing more and more of,” he said. Such developments typically are composed of about 35 percent housing, 35 percent office and 30 percent other space. Hines participates in the construction of 100 percent residential communities, too, Topham said.
There is far less available land for development in Europe than there is in the United States, Topham said, and that has been one of the drivers for rising real estate prices.
“The most compelling thing is that land is extremely scarce. It’s difficult to find land which you can build housing on. Land is getting more and more scarce. It is extremely difficult to find land which is zoned or suitable for housing.” Also, there are strict laws governing architecture, demolition and renovation in Europe, Topham said.
The creation and expansion of the European Union has led to more mobility among Europeans, and has likely placed more pressure on housing markets in areas that have an abundance of available jobs, Topham said.
“Cities that are job-creating cities tend to see an even higher increase in real estate prices,” he said.
This phenomenon can also create weaker real estate markets in some areas, he said, as workers fleeing from one area to another can dampen one real estate market while strengthening the other. He likened this effect to the United States: “If California is hot, the Midwest may be a loser.” On the flip side, mobility by residents within the United States can be far more fluid than mobility among residents in Europe, where more barriers of language and culture exist.
The structure of family units is changing in Europe as well as in the United States, though, Topham said, and single-parent family structures are far more common today. As a result, the housing demands are changing, he said.
“It’s tended to cause a change in the size of the unit, and the demand for a certain type of unit that wasn’t in demand 30 years ago,” he said.
In addition to the United States and United Kingdom, Hines has offices in France, Spain, Mexico, Poland, Russia, Germany, Brazil, Italy, Argentina, China and Canada.
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