Global Real Estate Outlook
August 2014
The Hierarchy of Economic Performance, 2014-2015
China
Indonesia
India
Poland
South Korea
Turkey
Australia
Mexico
United Kingdom
Sweden
United States
Canada
South Africa
Germany
Spain
Brazil
Japan
Russia
France
Italy
Americas
EMEA
Asia Pacific
% pa GDP Change
0
1
2
3
4
5
6
7
8
Source: Oxford Economics, July 2014
Property Clocks
3
Prime Offices – City Capital Value Clock
The Jones Lang LaSalle Property Clocks SM
Q2 2014
Q2 2013
Hong Kong
Toronto
Sydney
Boston, Chicago
New York, Los Angeles, Stockholm
San Francisco, Houston, Berlin
Mexico City, Frankfurt
Moscow
Dallas, Singapore
`
Capital Value
growth slowing
Capital Value
growth
accelerating
London
Capital Values
falling
Capital Values
bottoming out
Mumbai
Americas EMEA Asia Pacific
Shanghai
London
Seoul
Beijing
Tokyo
Madrid
Hong Kong
Washington DC
Sao Paulo
Capital Value
growth slowing
Capital Values
falling
Capital Value
growth
accelerating
Capital Values
bottoming out
Milan
Stockholm
Seoul, Tokyo
Brussels
Toronto, Mexico City
Moscow
Sydney, Singapore
Berlin
Shanghai
New York, Los Angeles
Boston, Chicago
San Francisco
Houston, Frankfurt
Dallas
Washington DC, Amsterdam
Sao Paulo, Paris
Mumbai, Beijing
Brussels
Madrid
Amsterdam
Paris
Based on notional capital values for Grade A space in CBD or equivalent.
Milan
Prime Offices – City Rental Clock
The Jones Lang LaSalle Property Clocks SM
Q2 2013
Amsterdam
Sao Paulo
Paris
Stockholm
Berlin, Moscow
Houston
San Francisco
Toronto
Mexico City
Dallas, Frankfurt
London
Q2 2014
Johannesburg
Milan
Rental Value
growth slowing
Rental Values
falling
Rental Value
growth
accelerating
Rental Values
bottoming out
Mumbai, Boston
Tokyo
New York
Istanbul, Dubai
Los Angeles, Seoul, Shanghai
Chicago
Hong Kong
Singapore
Brussels
Americas EMEA Asia Pacific
Mexico City
Moscow
Shanghai
Berlin
Frankfurt
Houston
San Francisco
Dallas
Beijing
London
Toronto
Johannesburg
Rental Value
growth slowing
Rental Values
falling
Rental Value
growth
accelerating
Rental Values
bottoming out
New York, Stockholm
Tokyo
Boston
Sydney
Los Angeles, Mumbai
Washington DC
Singapore
Istanbul, Beijing
Madrid
Chicago, Dubai
Seoul
Based on rents for Grade A space in CBD or equivalent.
US positions relate to the overall market
Amsterdam
Sao
Paulo
Washington DC
Madrid, Milan
Paris, Brussels
Hong Kong
Sydney
5
Global Office Property Clock Q2 2014
The JLL Property ClocksSM
Amsterdam
Mexico City
Moscow
Shanghai
Berlin
Frankfurt
San Francisco, Houston
Dallas
Toronto
Johannesburg
Rental Growth
Slowing
Americas
Asia Pacific
EMEA
Rents
Falling
Sao Paulo
London
Stockholm, Tokyo, New York
Boston
Los Angeles, Delhi, Mumbai
Rental Growth
Accelerating
Rents
Bottoming Out
Warsaw
Singapore
Istanbul, Beijing
Dubai, Chicago, Seoul
Hong Kong
Prague
Brussels, Madrid, Paris CBD, Milan,
Sydney, Washington DC
Source: JLL, July 2014
Based on rents for Grade A space in CBD or equivalent.
This data is based on material/sources that we believe to be reliable. While every effort has been made to ensure its accuracy, we cannot offer any warranty that it contains no
factual errors. Neither Jones Lang LaSalle nor any of its affiliates accept any liability or responsibility for the accuracy or completeness of the information contained herein
Prime Retail – Rental Clock, Q2 2014
Moscow
Paris, Hong Kong, Singapore
Americas EMEA Asia Pacific
Berlin, Beijing
London
Tokyo
Miami
Rental Value
growth slowing
Rental Values
falling
Rental Value
growth
accelerating
Rental Values
bottoming
out
Dubai, Mumbai, San Francisco, Houston
Delhi
New York, Boston, Washington DC
Chicago
Shanghai
Madrid, Milan, Los Angeles
Sydney
US positions relate to the overall market
Source: JLL, July 2014
7
Prime Industrial – Rental Clock, Q1 2014
Singapore
Frankfurt
Dallas, Shanghai
Rental Value
growth slowing
Rental Values
falling
Rental Value
growth
accelerating
Rental Values
bottoming
out
Los Angeles
Tokyo, Philadelphia
Chicago, New York, San Francisco
London
Atlanta, Houston
Boston
Beijing, Hong Kong
Amsterdam, Paris, Madrid
Warsaw
Sydney
Americas EMEA Asia Pacific
US positions relate to the overall market
Source: JLL, July 2014
8
Market Performance
9
Prime Offices – Rental Change, Q2 2013 – Q2 2014
Singapore
Mexico City
San Francisco
Dubai
London
Boston
Tokyo
Los Angeles
Toronto
Chicago
Shanghai
New York
Frankfurt
Stockholm
Sydney
Madrid
Hong Kong
Beijing
Mumbai
Brussels
Washington DC
Seoul
Paris
Moscow
Sao Paulo
-15
Americas
EMEA
Asia Pacific
% change
-10
-5
0
5
10
15
20
Based on rents for Grade A space in CBD or equivalent. In local currency.
Source: JLL, July 2014
10
Prime Offices – Capital Value Change, Q2 2013 – Q2 2014
San Francisco
Dubai
Boston
Madrid
New York
Chicago
Stockholm
London
Tokyo
Los Angeles
Sydney
Paris
Mexico City
Washington DC
Shanghai
Frankfurt
Seoul
Singapore
Toronto
Brussels
Hong Kong
Mumbai
Beijing
Sao Paulo
Moscow
-10
Americas
EMEA
Asia Pacific
% change
-5
0
5
10
15
20
25
30
Notional capital values based on rents and yields for Grade A space in CBD or equivalent. In local currency.
Source: JLL, July 2014
11
Rental Growth for Prime Office Assets
10
8.6%
Rental change (y-o-y %)
9
8
7.6%
7
6
4.2%
5
4
3
2.2%
2
1.5%
1
0
2010
2011
2012
2013
2014
Prime Office Rental Growth, Unweighted average of 25 major markets.
Source: JLL, July 2014
12
Prime Offices – Yield Shift, Q1 2013 – Q1 2014
13
Prime Offices – Annual Capital Value Change
25 Major Office Locations
14
Prime Office Yields, 2010 - 2014
15
ECONOMIC OVERVIEW
Prime Office Yields - Global Cities
Source: JLL, July 2014
Prime Offices – Projected Change in Values, 2014
Rental Values
Capital Values
Singapore
Tokyo, Boston, Chicago
Madrid, New York*, Los Angeles
San Francisco, Mexico City
Dubai, London*, Tokyo
Beijing, San Francisco, New York*
Boston, Mexico City
Dubai, London*
Seoul, Sydney, Beijing
Frankfurt, Singapore
+ 0-5%
Stockholm, Hong Kong, Seoul
Paris*, Sydney, Frankfurt
Chicago, Los Angeles, Toronto, Washington DC
Shanghai, Madrid, Brussels, Mumbai
Stockholm, Paris*, Toronto
Washington DC, Shanghai, Mumbai
Brussels, Hong Kong
- 0-5%
Moscow
+ 10-20%
+ 5-10%
- 5-10%
Sao Paulo
*New York – Midtown, London – West End, Paris - CBD. Nominal rates in local currency.
Source: JLL, July 2014
Moscow, Sao Paulo
Supply-Demand Balance
18
Office Leasing Volumes, 2013-2014
U.S.
FY 2013
FY 2014
+6%
0-5%
Europe
-5%
~ 5%
Asia Pacific
Global
-11%
+1%
15-20%
~ 5%
.
Source: JLL, July 2014
19
Corporate occupier demand strengthening
2014 Projections of Gross Leasing Volumes
U.S.
Europe
Asia
Pacific
Leasing volujme.
Source: JLL, July 2014
+0-5%
+5%
+15-20%
Highest net absorption of current recovery cycle
London and Paris lead recovery in Europe
Gross leasing volumes rebounding
… but demand remains patchy and recovery in
leasing volumes weaker than in previous cycles
20
Global Office Demand – Net Absorption Trends, 2004-2014
21
Office Vacancy Rates - Major Markets, Q2 2014
Global 13.1%
%
Americas 15.5%
Europe 9.7%
Asia Pacific 11.5%
25
20
15
10
Quarterly movement
5
Increased
Decreased
Regional vacancy rates based on 49 markets in the Americas, 24 markets in Europe and 24 markets in Asia Pacific.
Covers all office sub-markets in each city. All grades except Asia and Latin America (Grade A only). Tokyo relates to CBD – 5 kus.
Mumbai
Shanghai
Sydney
Seoul
Singapore
Hong Kong
Beijing
Tokyo CBD
Moscow
Madrid
Frankfurt
Brussels
Stockholm
Paris
London
Sao Paolo
Boston
Chicago
Los Angeles
Mexico City
San Francisco
New York
Toronto
Washington DC
Stable
0
Source: JLL, July 2014
22
Office Supply Pipeline - Major Markets, 2014 - 2015
Global Office Development – Completions, 2000-2015
24
Global Office Market Conditions Matrix*, 2014-16
Market
2014
2015
2016
Market
2014
2015
2016
Market
MARKET
Chicago
Brussels
Beijing
Los Angeles
Frankfurt
Hong Kong
New York
London West End
Mumbai
San Francisco
Madrid
Shanghai
(Pudong)
Toronto
Moscow
Singapore
Washington DC
Paris
Sydney
Mexico City
Stockholm
Tokyo
Sao Paulo
Dubai
2014
Tenant Favourable
Neutral Market
Landlord Favourable
* Relates to conditions in the overall office market of a city. Conditions for prime CBD space may differ from the above.
Source: Jones Lang LaSalle, July 2014
2015
2016
Investment Activity
26
Direct Commercial Real Estate Investment – Quarterly
27
Direct Commercial Real Estate Investment - Largest Markets
$US Billions
USA
UK
France
Germany
Japan
Australia
China
Mexico
Sweden
Brazil
South Korea
Canada
Netherlands
Singapore
Norway
Hong Kong
Spain
Belgium
Italy
Ireland
Thailand
Q1 14
55.8
19.1
5.4
11.8
12.2
4.2
3.0
1.5
3.1
0.4
0.4
3.8
2.0
1.2
0.8
1.0
1.5
0.3
1.1
1.4
0.2
Q2 14
56.8
19.9
10.3
8.5
8.4
7.8
5.1
4.2
3.9
3.7
2.9
2.8
2.7
2.4
2.0
1.9
1.8
1.6
1.4
1.2
1.1
% change
Q1 14-Q2 14
2%
4%
91%
-28%
-31%
85%
73%
180%
25%
816%
560%
-27%
37%
100%
150%
89%
14%
449%
22%
-12%
437%
Q2 13
45.4
13.5
5.0
6.9
10.2
7.3
6.0
1.2
2.7
0.5
2.3
4.9
0.9
2.1
2.4
1.5
0.8
1.3
1.2
0.3
0.4
% change
Q2 13-Q2 14
25%
47%
106%
24%
-18%
7%
-14%
255%
44%
655%
26%
-44%
190%
15%
-17%
24%
109%
24%
18%
360%
173%
H1 2013
79.4
29.1
10.1
15.7
20.8
10.5
9.6
1.5
4.6
0.8
4.2
8.0
1.5
4.1
7.4
4.8
1.2
1.7
2.0
0.7
0.6
% change H1
H1 2014 2013-H1 2014
112.7
42%
38.9
34%
15.6
55%
20.3
30%
20.6
-1%
12.0
14%
8.1
-15%
5.7
279%
7.0
53%
4.1
422%
3.3
-20%
6.5
-18%
4.7
214%
3.6
-14%
2.8
-62%
2.9
-39%
3.3
171%
1.9
16%
2.5
28%
2.6
262%
1.3
122%
Source: JLL, Julyl 2014
28
Direct Commercial Real Estate Investment
Top 20 Cities, H1 2014
29
Direct Commercial Real Estate Investment – Regional Trends
$US Billions
Americas
EMEA
Asia Pacific
TOTAL
Q1 14
62
54
23
139
Q2 14
67
59
32
158
% change
Q1 14-Q2 14
9%
9%
38%
14%
Q2 13
52
40
32
124
% change
Q2 13-Q2 14
30%
49%
-2%
28%
H1 2013
90
83
59
232
% change H1
H1 2014 2013-H1 2014
129
44%
113
37%
55
-8%
297
28%
Source: JLL, July 2014
30
Direct Commercial Real Estate Investment, 2006 - 2014
31
Global Office Index
32
Global Office Index - Prime Rents, 2000-2014
Global Office Index – Prime Rents, 2009-2014
Global Office Index – Prime Rents
Top 10 Global Performers during Q2 2014 (quarter-on-quarter)
Global Office Index – Prime Rents
Top 10 Global Performers – year to Q2 2014 (year-on-year)
Hotels
37
Global Hotel Investment, 2007 - 2014
Billions
US$
60
52
40
20
0
32
35
34
2011
2012
55
11
2009
2010
2013
2014F
Source: JLL, July 2014
38
U.S. Hotels CMBS Issuance
Contact
Jeremy Kelly
Global Research
Tel: + 44 20 3147 1199
[email protected]
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accuracy of this information. We would like to be informed of any inaccuracies so that we may correct them. Jones Lang LaSalle does not accept any liability in negligence or otherwise for any loss or damage
suffered by any party resulting from reliance on this publication.
40