speakers - microsoft · • deregulation helps global capital flows • mixed-use projects allow...
TRANSCRIPT
Speakers
David Ji
Director, Head of Research & Consultancy, Greater China
Thomas Lam Senior Director, Head of Valuation & Consultancy
Global Cities Opportunities
The Skyscraper Index
0
50
100
150
200
250
300
Prime Rent (US$ / sq ft / year)
Source: Knight Frank, Newmark Grubb Knight Frank, Sumitomo Mitsui Trust Research Institute
Note: Q4 2014 to Q2 2015
The Skyscraper Index: Office Rental Growth (In
the past 6 months)
0%
2%
4%
6%
8%
10%
12%
Source: Knight Frank, Newmark Grubb Knight Frank, Sumitomo Mitsui Trust Research Institute
Note: Q4 2014 to Q2 2015
Prime Yields
0%
1%
2%
3%
4%
5%
6%
7%
Prime Yield (%)
Source: Knight Frank, Newmark Grubb Knight Frank, Sumitomo Mitsui Trust Research Institute
Office Rental Growth (2007-2015)
-40%
-20%
0%
20%
40%
60%
80%
Source: Knight Frank, Newmark Grubb Knight Frank, Sumitomo Mitsui Trust Research Institute
Note: Forecast figures until end of 2015
Office Rental Growth Forecast (2015-2018)
-5%
0%
5%
10%
15%
20%
25%
Source: Knight Frank, Newmark Grubb Knight Frank, Sumitomo Mitsui Trust Research Institute
Five future trends in capital markets
• Specialist property growth in demand
• Property income – long or short?
• Deregulation helps global capital flows
• Mixed-use projects allow investors to spread risk
• US and Chinese outbound capital continues to grow
Strong Dollar Drives U.S. Commercial Investment Abroad
Source: Real Capital Analytics
Note: Based on office, industrial, retail and hotels. Excludes development sites.
0
10
20
30
40
50
60
70
80
90
2007 2008 2009 2010 2011 2012 2013 2014 2015H1
US$ billion
US Outward Investment in Past 2 years
Source: Real Capital Analytics
80%
15%
5%
Europe Asia Pacific Other markets
New Trends in Hong Kong, Shanghai and Beijing: CBD Expansion
Shanghai:
Underground city
Beijing:
New airport
Hong Kong:
The new CBDs
HONG KONG GRADE-A OFFICE MARKET
Grade-A Office Rents
0
20
40
60
80
100
120
140
160
180
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Core area Non-core areaHK$ per sq ft
Source: Knight Frank Research
Grade-A Office Vacancy Rate
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Core area Non-core area
Source: Knight Frank Research
Chinese Firms Become Key Demand Driver
0%
5%
10%
15%
20%
25%
2008 2014
Share of Existing Central Office Space Leased by Chinese firms
In 2015, around 40-50% of
new lettings in Central
involve Chinese firms
Source: Knight Frank Research
Central Grade-A Office Stock Distribution by Age
57.5%
8.7%
17.7%
12.4%
3.7%
Above 25 years 21-25 years 16-20 years 10-15 years Less than 10 years
Source: Knight Frank Research
Major Future Grade-A Office Supply
-
5
10
15
20
Central Kowloon East Island East Tsim Sha Tsui Wanchai/CausewayBay
million sq ft
New supply (2017-2020) New supply (2015-2016) Existing stock
Source: Rating and Valuation Department / Knight Frank
Grade-A Office Stock in Core Districts of Selected Financial Centres
0
50
100
150
200
250
Hong Kong Singapore Sydney London Manhattan, NewYork
Internal floor area
(million sq ft)
Source: Knight Frank Research
Overlaying Historic Take-up against Future Supply
0
1
2
3
4
5
6
7
8
Internal floor area
(million sq ft)
Average completion 95-03
= 2.6 million sq ft
Average take-up 95-14
= 2.0 million sq ft
Average completion 04-08
= 2.1 million sq ft
Average completion 09-14
= 1.2 million sq ft
Shortfall ~ 2 million sq ft
*Preliminary figure
Source: Rating and Valuation Department / Knight Frank
Average completion
= 1.7 million sq ft
Shortage of Grade-A Office Space (2016-2020)
Shortage = an additional 2 million sq ft
(equivalent to the total office space of Two IFC)
Source: Knight Frank Research
1. Central Harbourfront
Development
The project could provide a maximum of
about 970,000 sq ft of Grade-A office space.
Around 480,000 sq ft of Grade-A office space
may be completed by 2020.
2. Kowloon East CBD2
Kowloon East CBD2 could provide a maximum office space of 42.6 million sq ft, only less than 10% is likely to be delivered by 2020.
The West Kowloon Cultural District will supply
around 1,160,000 sq ft of office space
Three Grade-A office buildings will be built on the
West Kowloon Terminus station, total GFA of
around 2.8 million sq ft to market by 2020.
West Kowloon Cultural District
West
Kowloon
Terminus
3. West Kowloon District
The Wan Chai waterfront sites could provide around 2.0 million sq ft of prime office space.
4. Wan Chai government
offices relocation
Q & A