jones lang lasalle 2013 global real estate outlook
DESCRIPTION
Jones Lang LaSalle's global research experts track rental performance of prime office space across 81 major markets in the Americas, Asia Pacific and Europe.2013 Global Real Estate OutlookAuthors:Jeremy KellyGlobal Research, Jones Lang LaSalleDavid Green-MorganGlobal Capital Markets Research, Jones Lang LaSalleBen BreslauDirector of Research, Americas, Jones Lang LaSalleTRANSCRIPT
Global Real Estate Outlook Jeremy Kelly Global Research David Green-Morgan Global Capital Markets Research Ben Breslau Director of Research, Americas 7th February 2013
Global
Global Real Estate Outlook – Road Map
Global Markets: Current Position
2
Global Markets: 2013 Outlook
Leasing Markets: Review and Outlook • Offices – prices, demand, vacancy, construction • Retail, Logistics
Investment Market: Review and Outlook • Transactional activity • Where did the money come from and go to? • Weight of capital and pricing • Real estate within global capital markets
Global Markets – Current Position
• Optimism returns, momentum gathers pace • Exceptional end to 2012 • Investment and leasing markets continue to diverge …
3
Leasing – Less Resilient • Leasing volumes down 20% on 2011 • Rental growth at 1.5% y-o-y • Vacancies edge downwards – 13.2%
Investment – Confidence Returns • Better than expected 2012 - US$443 billion in transactions • Major risks receding, debt improving selectively • Yields in secondary attracting attention
Leasing markets: review and outlook
4
Jeremy Kelly Director - Global Research
Shanghai, Beijing, Paris Amsterdam, Warsaw
Washington DC Madrid Seoul
Brussels, Dubai, Frankfurt, Chicago
Los Angeles, Mexico City, Tokyo
New York, Mumbai, Delhi, Johannesburg, Istanbul
London
Abu Dhabi
Moscow
Munich, Houston
Berlin
Stockholm, Sao Paulo
Rental Growth Slowing
Rents Falling
Rental Growth Accelerating
Rents Bottoming Out
Milan, Zurich
Hong Kong, Singapore
Toronto
Global Office Property Clock Q4 2012
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
Source: Jones Lang LaSalle IP, January 2013
Boston
Dallas
San Francisco, Sydney
Office leasing
5
Americas Asia Pacific EMEA
Global Office Index – Rental growth stalls
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
Q32009
Q42009
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
Q12012
Q22012
Q32012
Q42012
Americas Europe
Asia Pacific Global
Renta
l Cha
nge (
% Q
oQ)
Asia Pacific – stock weighted average of 27 markets; Americas – stock weighted average of 39 markets: Europe – stock weighted average of 24 markets Global Index based on GDP weighted average of the three regional indices Source: Jones Lang LaSalle, January 2013
Office leasing
6
Office leasing volumes subdued
7
Office leasing
Flat
Europe Asia Pacific US Global
2012
2013
-10%
-30%
+0-5% -5-10%
…but momentum building in H2 2013
-20%
+0-5%
-20%
0
5
10
15
20
25To
ronto
Mexic
o City
New
York
San F
ranc
isco
Bosto
n
Sao P
aulo
Was
hingto
n DC
Los A
ngele
s
Chica
go
Lond
on
Paris
Stoc
kholm
Brus
sels
Fran
kfurt
Madr
id
Mosc
ow
Hong
Kon
g
Toky
o CBD
Beijin
g
Sing
apor
e
Sydn
ey
Shan
ghai
Mumb
ai
Office vacancy rates edge downwards
Source: Jones Lang LaSalle, January 2013
Europe 9.6% Asia Pacific 11.0%
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 only.
Americas 16.0% %
8
Q4 2012 movement Increased Decreased
Stable
Office leasing
0
5
10
15
2020
00
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013 (F)
2014 (F)
US Europe Asia Pacific
millio
ns sq
m
24 markets in Europe; 25 markets in Asia Pacific; 44 markets in the US. Asia relates to Grade A only. Source: Jones Lang LaSalle, January 2013
Global Office Development – deliveries below trend
Average
Office leasing
9
0 5 10 15 20 25 30 35 40
ChicagoLos Angeles
MadridSydneyToronto
New YorkSan Francisco
BostonWashington DC
StockholmBrussels
Hong KongFrankfurt
ParisSingapore
LondonBeijing
Tokyo CBDMoscowMumbai
Mexico CityDubai
Sao PauloShanghai
Completions as % of existing stock
Source: Jones Lang LaSalle, January 2013. Covers all office sub-markets in each city. Tokyo - CBD-3 kus
2013
2014
Office Supply Pipeline – Markets diverge Office leasing
10
Prime Offices – Projected Changes in Values, 2013
Provisional. *New York – Midtown, London – West End, Paris - CBD. Nominal rates in local currency. Source: Jones Lang LaSalle, January 2013
+ 10-20%
+ 5-10%
+ 0-5%
- 0-5%
- 5-10%
Hong Kong, Tokyo, London*
Beijing, Shanghai, Singapore, Sydney, Mumbai Boston, Chicago, Los Angeles, New York* Toronto, Washington DC, Paris* Frankfurt, Stockholm, Brussels, Moscow, Dubai
Hong Kong, Tokyo, Sydney Moscow, London*
Beijing, Shanghai, Singapore, Mumbai Boston, Chicago, Los Angeles, New York* Toronto, Washington DC Frankfurt, Brussels, Dubai
Madrid
Paris*, Stockholm Sao Paulo, Mexico City
Madrid
San Francisco
Sao Paulo, Mexico City
San Francisco
Capital Values Rental Values
Office leasing
11
Global Retail Market Dynamics
Source: Jones Lang LaSalle, January 2013
Americas EMEA Asia Pacific
Q4 2012 Rent Clock
United States • Overall market still to find cyclical trough • Malls show tightest conditions • Key gateway markets starting to turn corner
e.g. New York, San Francisco, Houston, Miami
Asia Pacific • Demand is healthy despite more subdued
retail sales • Upswing in rents in 2013, albeit moderately • Retailers becoming more selective in China
Europe • Turkey and Russia are the stand out markets • Cross-border retailers targeting prime pitches • Retailers under pressure to restructure • Robust rental growth in 2013 in key markets
(e.g. London, Moscow, German cities)
12
Rental Value growth slowing
Rental Values falling
Rental Value growth
accelerating
Rental Values bottoming out
Boston, Sydney
Washington DC Chicago
Houston, Singapore
Delhi Mumbai
Shanghai Beijing
Madrid
Dubai
Paris
Berlin
Moscow, Hong Kong London
Milan, New York City, San Francisco, Tokyo
Retail
Global Industrial Market Dynamics
Source: Jones Lang LaSalle, January 2013
United States • Markets gaining strength • Memphis, Atlanta and Dallas were the star
performers in Q4, • Return of new construction • Focus on “big-box”
Asia Pacific • Retail sales underpin warehousing demand • Export sector shows renewed buoyancy • Most major markets expect rental growth in
2013
Europe • Demand holding up, above 10y average • Take-up underpinned by supply chain
realignment • Low supply sustaining prime rents in 2013
Q4 2012 Rent Clock
Americas EMEA Asia Pacific
Rental Value growth slowing
Rental Values falling
Rental Value growth accelerating
Rental Values bottoming out
Paris, Madrid Los Angeles
Northern New Jersey/New York
Atlanta
Boston, Dallas Houston, Tokyo
Inland Empire, Chicago
Philadelphia
Frankfurt
Amsterdam
London, Warsaw
Hong Kong
Beijing
Shanghai
Singapore
Sydney
Industrial
Investment markets: review and outlook
14
David Green-Morgan Global Capital Markets Research Director
Year on year growth continues in 2012 Investment
0
100
200
300
400
500
600
700
800
Americas EMEA Asia Pacific Global
US$ bn 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Direct Commercial Real Estate Volumes by Region, 2003-2012
Source: Jones Lang LaSalle
15
Strong final quarter typifies post GFC world Investment
Direct Commercial Real Estate Volumes by Region, Q4 2008-Q4 2012
-60%
8%
-19%
92%
-1%
0% 5% 7%
54%
-12%
10% -2%
11%
-27%
22%
-6%
47%
-80%
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
0
20
40
60
80
100
120
140
160
Q408 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412
US$ bn
AM EMEA AP Total investment (% change q-o-q, RHS)Source: Jones Lang LaSalle
Americas EMEA Asia Pacific
16
Flows increased in 2012 to $136 billion Investment
Inter-Regional Flows, 2012
Source: Jones Lang LaSalle
17
Opportunities in Europe move transactions higher Investment
Net Inter-Regional Flows, 2011,2012
Source: Jones Lang LaSalle
-12 -7 -2 3 8 13 18
Asia Pacific
EMEA
Americas
US$ bn 2012 2011
More product on the market in Europe is the major factor driving inter-regional flows
18
More balanced approach in 2012 Investment
Net Investment by Type, 2011,2012
Source: Jones Lang LaSalle
-55
-45
-35
-25
-15
-5
5
15
25
35
REIT Unlisted Institution Private Government Hotel Owner /Operator
Other Corporate Developers
US$ bn
2011 2012
Western governments starting to dispose of property
19
Lack of product holds retail back in 2012 Investment
Net Investment by Sector, 2011,2012
Source: Jones Lang LaSalle
47%
29%
12%
8%
3% 1%
Office Retail Industrial Hotel Mixed Other
50%
24%
13%
7%
3% 3%
2011 2012
20
Secondary cities starting to see more deals Investment
Net Investment by Type, 2011,2012
Source: Jones Lang LaSalle
21
Real estate attracts the cash Investment
Fund Raising by Strategy 2012
Source: Bloomberg
Buyout 43%
Real Estate 13%
Debt 12%
Venture 8%
Secondary 8%
Real Assets 6%
Growth 6%
Fund of Funds 4%
Other 0%
22
-150 -100 -50 0 50 100
TokyoSydney
SingaporeShanghai
MumbaiHong Kong
Beijing
Mexico CitySao Paulo
Washington DCToronto
San FranciscoNew York
Los AngelesChicagoBoston
StockholmParis
MoscowMadrid
LondonFrankfurtBrussels
Q3 2012 - Q4 2012Q4 2011 - Q3 2012
23
Source: Jones Lang LaSalle, January 2013
Basis point change
Amer
icas
Euro
pe
Asia
Pacif
ic
Investment
More movement in secondary, Prime stagnant Prime Offices Yield Shift
UK led markets lower in 2006, what about 2013? Investment
Net Investment by Type, 2011,2012
Source: IPD
-25%
-15%
-5%
5%
15%
25%
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Global Returns All Property UK Returns All Property
24
Capital value growth slowing
25
Prime Offices - Capital Value Clock
Capital value growth
accelerating
Capital values bottoming out
Capital values falling
Tokyo, Brussels
Mumbai
Beijing, Stockholm, Boston
Shanghai, Washington DC, London
Singapore, Amsterdam
Hong Kong
Madrid, Seoul
Los Angeles Houston, Frankfurt
Berlin, Moscow
Paris Milan, New York
Sydney
Dallas
Toronto
Mexico City
Chicago, San Francisco, Sao Paulo
Capital value growth slowing
Capital value growth
accelerating
Capital values bottoming out
Capital values falling
Sao Paulo
Dallas
Mexico City Sydney
Washington DC Toronto
Houston San Francisco
Hong Kong, Singapore, Paris
Mumbai
Tokyo Seoul, Brussels
Milan
Madrid
Frankfurt
Moscow
Berlin Stockholm
New York, Boston, Chicago Los Angeles, Shanghai, Beijing Amsterdam
London
The Jones Lang LaSalle Property Clocks SM
Based on notional capital values for Grade A space in CBD or equivalent. US positions relate to the overall market Americas EMEA Asia Pacific
Q4 2011 Q4 2012
$500 billion in sight for 2013 Investment
Direct Commercial Real Estate Volumes by Region, 2003-2013
Source: Jones Lang LaSalle
0
100
200
300
400
500
600
700
800
Americas EMEA Asia Pacific Global
US$ bn
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 (forecast)
26
Global Markets – 2013 Outlook
Investment – Stable, with Upside Potential • 2013 average of US$125 billion transactions/quarter • Prime yields look close to bottom, secondary starting to attract more investor
interest • US looks set for major upside in 2013 if political challenges don’t become a
drag; AP resumes growth on improved global trade; EMEA flat • Major markets & strong secondary to attract majority of deals in 2013
27
Leasing – Slow Start to Year, Momentum Builds H2 • Gross leasing volumes +0-5% • Rent growth +2-3% • New office deliveries +28%, but still 30% below trend • Vacancy edging down below 13% • Star performers - San Francisco, Jakarta
28
David Green-Morgan Jeremy Kelly
Global Capital Markets Research Director [email protected]
Director - Global Research [email protected]
Benjamin Breslau
Head of Americas Research [email protected]
Global Real Estate Outlook Questions and Answers
Our Global Research Platform
29
Global Market Perspective Spotting Real Estate Trends
Global Retail Redefining Retail Investment
Global Office Index Monitoring Performance
Global Capital Flows Tracking Real Estate Investment
World Winning Cities Identifying New Markets
Sustainability Transforming the Property Industry
Transparency Understanding Operating Conditions
Global Research Hub joneslanglasalle.com/Research
30
David Green-Morgan Jeremy Kelly
Global Real Estate Outlook
Thank you
Global Capital Markets Research Director [email protected]
Director - Global Research [email protected]
Benjamin Breslau
Head of Americas Research [email protected]