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The Global Deal

The Real Estate Behind the Games


A look at the 2016 Summer Olympic Games Rio de Janeiro, Brazil, South America
ADAM DOUDIET M.S. Candidate in Real Estate Finance
Since winning the bid in 2009

Olympics, arguing that money

stadiums,

to host the 2016 Summer

should rather be spent on

athletes, and a large media

Olympic

education, infrastructure, and

center. While the city has

health care.

offered

Games,

Rio

de

Janeiro and the country of


Brazil

have

faced

many

challenges. There is a recession

The

development

of

the

residences

these

for

residents

hundreds of thousands of
dollars in compensation, there

that continues to worsen, high


inflation, unemployment, and

The removal of its residents,

are still some homeowners


who refuse to leave. The

a government that is caught

however, does not alleviate the

governments

up in a corruption scandal
involving state-run oil firm
Petrobras.

This

political

climate has led to several mass


protests in Rio as well as other
cities

throughout

Brazil,

prompting the demand to


impeach

President

Dilma

Rousseff.
Protesters have also fought
against

hosting

the

2014

World Cup and this years


compensation for leaving is well


below market level

for leaving are justified by


additional plans to convert the
athletes housing into luxury

Olympic venues has created


within

to

compensate these individuals

citys poverty. Their

conflict

efforts

Rios

communities.

In

the

neighborhood

of

Vila

Autodromo, hundreds of
families have had to relocate
to allow for the construction of
February 19, 2016 [Edition 1, Volume 1]

homes at the conclusion of the


Olympics. As city officials are
also determined to build roads
leading into the Olympic Park,
the remaining families may
finally be forced to leave with
this compensation.

THE GLOBAL DEAL


Vila Autodromo, one of Rios

Games

compensation for leaving is

many

complimentary addition to the

well below market and the

located in the upscale region

surrounding

new luxury housing will likely

of Barra da Tijuca. The

removal

commercial development in

however, does not alleviate

Income inequality will only

preparation for the Olympic

the

get

favelas

(slums),

is

will

of

citys

be
area.

its

The

residents,

poverty.

Their

attract

foreign

investors.
worse.

Thailands Hospitality Sector: Hot or Hostile?


Insight into Thailands problematic hospitality sector Bangkok, Thailand, Southeast Asia
AKSHAY GANDHI M.S. Candidate in Real Estate Finance
As the second most visited city

tourism

by tourists in 2015, Bangkok

represents a 20 percent year-

lower pricing. However, until

presents a massive hospitality

on-year

fueled

the inefficiencies created by

development opportunity for

primarily by the influx of

the supply glut of unlicensed

domestic and international

nearly

hotels

developers

is,

tourists. Within that time

elasticity of Thailands tourist

therefore, unsurprising that

frame, the supply of licensed

market remains immeasurable.

the burgeoning hotel market

hotel inventory has increased,

consisting of thousands of

although not nearly to the

registered hotel rooms has


also fueled the development of

The size of this unregistered

ineffective. Since 2014, the


government has only imposed

market presents a hindrance

reparations on 20 hotels,

these issues to the national

in the potential of Thailands

utilizing paltry fines ranging

level has prompted national

hospitality sector.

alike.

unregistered

It

and

illegal

hospitality properties. Scaling

estimates of 10,000 illegal


hotels that do not meet
structural

or

operational

standards in comparison with


8,000 registered properties.
The

sheer

size

of

this

unregistered market presents


a hindrance in the potential of
Thailands hospitality sector.
Despite the recent roulette in
governance,

Thailand

and

Bangkok were visited by an


estimated 29 and 18 million
tourists in 2015, respectively.
According to the countrys

authority,
increase
8

million

this

Chinese

economic scarcity principles


and demand drivers should
dictate increased nightly rates.
However, Thailands nightly
rates remain among the lowest
of the 20 most visited
destinations by US tourists in
2015 at $95 a night in
comparison with an average of
$158. It is certainly plausible
low

construction

labor
costs

and

coupled

with a propensity for budget


February 19, 2016 [Edition 1, Volume 1]

have

are

encouraged

remedied,

the

Policing of the unlicensed


market

between

has

remained

three

thousand

same effect. Consequently,

that

tourism

and

Thai

ten
Baht

(approximately 80 to 270 US
dollars). This has done little to
disincentivize

further

unlicensed operations, with


most hotels resuming business
under alternate names. With
the tourist tally expected to
cross 30 million in 2016, the
Thai governments measures
to encourage legal hospitality
development,

curb

illegal

development and enable price


mobility
followed.

will

be

keenly

THE GLOBAL DEAL

Across the Atlantic Rises an African Hudson Yards


A background and update on one of Africas largest development projects Lagos, Nigeria, Africa
AMENI KABBOUDI M.S. Candidate in Real Estate Development
The Eko Atlantic project is a

Rendering of a portion of Eko Atlantic

public/private partnership; the


financing is 100% generated
from the private sector. The
role of government is to
provide

fast

tracked

processing of documentation
and to provide legal and
policy assistance. The project
is operated privately by The
Chagoury
developer),

Source: www.ekoatlantic.com/media/image-gallery/

created a necessity to provide

about Lagos as it continues to

such a project given an over-

fight for a competitive position

demand for and non-existent

in the global property market.

supply of properties. Eko

However, across the Atlantic

Atlantic is a mixed-use project,

rises one of the largest mega

meeting sustainability criteria.

in

Africa,

Eko

Atlantic, which by New York


standards is comparable to
Hudson Yards.
This project, launched in 2007,

[T]he area is planned to be a


free economic zone in the hope
that Lagos will continue to

is still under construction.


Located on Victoria Island,

develop as the financial hub of

south of Lagos, Nigeria, the

compete within international

area is planned to be a free


economic zone in the hope

West Africa, and thus can


markets.

develop as the financial hub of

It spans over four miles long

West Africa, and thus can

and one mile wide, providing

compete within international

housing for more than 250

markets.

thousand people and office


space for 400,000 employees.

faster than New York, which


February 19, 2016 [Edition 1, Volume 1]

while

the

construction

companies are purely Chinese.


In fact, not too far from the
Eko Atlantic project, China
Railway

Construction

Corporation
signed

has
deal

recently
with

the

Nigerian government worth


nearly $12 billion to build a
railway

along

the

West

African nation's coast.


It is important to note that the
insemination of the idea
behind Eko Atlantic arose
from environmental necessity;
the Nigerian coastline erodes
at a rate of 32 feet per year.

that Lagos will continue to

Lagos is growing 10 times

(the
the

wealthiest families in Nigeria,

You may not have heard much

projects

Group
one of

Thus, the necessity to reclaim


land and rebuild a stop wall,
dubbed by locals as the Great
Wall of Lagos, was the reason
sparking this massive project.

THE GLOBAL DEAL


The reclaimed land comprises

According to the developer,

In Nigeria, where the elite

3.86 square miles. Eko Atlantic

there is no competitor for Eko

class increased by 300% from

is incorporating: residential,

Atlantic; no one is building

last year, a project as big as

commercial,

leisure

anything of this scale within

Eko Atlantic is setting a

facilities, hospitals, schools,

Africa. Given its location in

standard for the city. In fact,

places of worship, and over 12

the worlds most populous

this project is often referred to

hotels, all of which are

city where space is at a

as the African version of

scheduled for construction to


date. According to David

premium, and the fact that


Nigerias economy is one of

Dubai. This is an ambitious


step that can unleash an echo

Frame, Managing Director of

the fastest growing globally, it

for an emerging city in the

Eko Atlantic, This mixed-use

is fair to suggest that it will

next few years. New York,

project is not an old model,

not face much competition in

watch out, the real estate

this is a 21st century model

the near future. Further, this is

market is taking off across the

that will reach international

the first land reclamation

Atlantic!

standards.

project in Sub-Saharan Africa.

retail,

Evidence of the land reclamation in


order to accommodate Eko Atlantic

Source: Google Earth

February 19, 2016 [Edition 1, Volume 1]

THE GLOBAL DEAL

NOTE FROM THE EDITORS


Welcome to this seminal issue of the Global Deal, the Schack Institute's very own student-run
news bulletin. The first, condensed issue of this newsletter takes us across the globe, reaching Rio's
hills, Thailand's shores, and Nigeria's capital. It is our intent moving forward that these articles
engage the readers in a conversation with one another, facilitating the communication
between Schack students on the various cutting-edge real estate issues being addressed at
home and abroad. Indeed, it is incumbent on members of a New York City-based university such
as ours to critically engage in real estate issues that face our colleagues around the globe. Of
course, it is also crucial to learn and have fun. We hope you enjoy the first of many issues of The
Global Deal. Please feel free to send any comments to our contact e-mail listed below.
We would like to extend our sincere gratitude to Jessica Estrada-Watson and Chada
Ngamwajasat, the REISA Executive Board, and especially to the students who have supported
this endeavor and made it possible.

If you are interested in contributing to The Global Deal, please respond by filling in the
linked form. Participants chosen will write an article of between 250-300 words, covering
the most relevant real estate news of their chosen country or global issue.
Application Link: http://bit.ly/THEGLOBALDEAL

NYU SPS Schack Institute of Real Estate
The Global Deal
A Publication of REISAs Global Real Estate Group
11 West 42nd Street, New York City, NY 10036
Contact: gre.reisa@gmail.com
Senior Editors:
Denham Apperley (denham.apperley@nyu.edu)
Felipe Kohn (felipekohn@nyu.edu)
Juan Carlos Ramos (jcramos@nyu.edu)

February 19, 2016 [Edition 1, Volume 1]