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Global Real Estate Markets Annual Review and Outlook 2012

2012 GLOBAL REAL ESTATE MARKETS Annual review and outlook

Highlights • International commercial property markets have reacted to the increased uncertainty in the global economy in late 2011 and early 2012 with varying degrees of resilience.

Demand for office space has remained robust in many markets in the US, Germany and mainland China, but reduced occupier confidence and falling rents have been witnessed in a number of major Asian financial centres and in the European markets most affected by the debt crisis.

• Strong recent leasing activity in Central and Eastern Europe, Germany and the Nordic region has contrasted with the weaker performance of markets in other European countries that have been more severely impacted by sovereign debt concerns. The pace of prime office rental growth has slowed significantly across most of Europe, and rental increases are expected to be relatively subdued in 2012.

• The momentum of the recovery in the US commercial property sector has been maintained, supported by an improving labour market. Class A office rents have been rising in most US markets, with the strongest growth being recorded in Manhattan and San Francisco, where occupier demand has been driven by the thriving technology sector.

• Asian office markets have experienced contrasting recent fortunes. Strong demand for space and low vacancy rates have pushed prime office rents sharply upwards in the major markets of mainland China, especially Beijing, and rental growth is expected to continue during 2012. In contrast, prime rents have started to come under downward pressure in Hong Kong and Singapore.

• The markets of the Middle East have been affected by both the recent political turbulence in the region and high levels of development activity, which have left many locations with substantial volumes of vacant office space. Occupier market activity in Dubai has, however, benefited from its perceived status as a “safe haven” within the region.

• Africa’s emerging property markets have continued to develop, supported by strong economic growth and increased foreign direct investment, particularly from China.

However, high quality office space remains in short supply in many cities.

• Globally, commercial property investment volumes rose moderately in 2011 compared with 2010. It is anticipated that annual transaction volumes in 2012 will be similar to 2011, albeit the second half of the year is expected to be stronger than the first half. Investor caution, continued constraints on debt financing and a lack of large-scale transactions have led to reduced investment volumes in early 2012 in a number of international markets. However, activity should improve if wider economic conditions stabilise over the course of the year, particularly in the Eurozone.

2

www.knightfrank.com

Contents Europe

4

North America

12

Middle East

20

Africa

24

Asia-Pacific

28

Global office rents

33

3

2012 GLOBAL REAL ESTATE MARKETS Annual review and outlook

Europe

The debt crisis in the Eurozone escalated over the course of 2011, putting increased strains on the European economy. For 2011 as a whole, Eurozone GDP rose by 1.4%, but growth was concentrated towards the start of the year, and a quarterly contraction of -0.3% was observed in Q4. With fiscal austerity measures dragging on growth, it appears likely that the Eurozone re-entered recession in Q1 2012. Negative growth is most likely during 2012 in the countries that are under the greatest pressure to reduce their deficits, notably Greece, Portugal, Ireland, Italy and Spain.

4

Figure 1

European office vacancy rates % 25 20 15 10 5

Q2 2010

Q4 2010

Q2 2011

Warsaw

Prague

Paris

Munich

Moscow

Milan

Madrid

London

Lisbon

Frankfurt

Dublin

Brussels

Amsterdam

0

Q4 2011

Source: Knight Frank Research

Despite the gathering economic gloom, a

subdued in the more peripheral markets

rents were recorded in a number of European

number of European occupier and investment

affected by sovereign debt concerns.

office markets in 2011, but the pace of rental

markets performed remarkably well in 2011.

Several Central and Eastern European (CEE) cities, for example, had record-breaking years for office take-up. However, property market

Knight Frank’s European office take-up index, which provides a cumulative measure of office market activity across 15 major cities,

growth generally slowed in the second half of the year, as economic concerns led to increased occupier caution.

recorded a moderate increase in overall

Overall European commercial property

European leasing volumes in 2011 compared

investment volumes amounted to â‚Ź113.7

mirrored the economic strength of individual

with 2010. Decreased activity in central

billion in 2011, according to Real Capital

countries. Increased leasing and investment

London, Madrid and Brussels was

Analytics/Knight Frank data. This was an

activity was recorded in most German, Nordic

counterbalanced by improved take-up in the

increase of 11% on 2010, with the

and CEE cities in 2011, but activity was

CEE region and Munich. Increases in prime

improvement in activity largely driven by

performance varied greatly, and broadly

Record office take-up was witnessed in several Central and Eastern European markets in 2011

London

5

2012 GLOBAL REAL ESTATE MARKETS Annual review and outlook

Following the hardening of prime office yields in most European markets in 2010, there was more limited evidence of yield compression in 2011. Over the course of the year, modest inward yield movements were recorded in cities including Paris, Munich, Warsaw and Prague. Prime office yields were unchanged in London and Amsterdam throughout 2011, while, towards the end of the year, yields came under outward pressure in a number of markets in Europe’s weaker economies, particularly Lisbon and Dublin.

Office take-up in central London in 2011 was recorded at 10.7 million sq ft, which was 27% down on the previous year. The second half of 2011 was notably stronger than the first half, but the whole year was marked by a lack of large leasing transactions, with only 16 deals in excess of 50,000 sq ft recorded, half the

Paris

number of 2010. There was a significant slowing in the rate of prime rental growth; after rising by 31% in 2010, West End prime

increased volumes in Germany and the

interest in London and Paris reflected the

CEE region.

continued flight to prime property, as demand focused on low-risk core assets in large,

London and Paris remained, by some

then remained unchanged in H2. In the City market, prime office rents were stable

liquid markets. Central London offices, in

distance, the cities with the largest

office rents increased by 9% in H1 2011 but

throughout 2011.

investment markets in Europe, with

particular, saw an influx of cross-border

commercial transaction volumes of €19.2

capital, particularly from Asia, with major

billion and €11.9 billion, respectively; the

transactions involving buyers from countries

Paris total was more than three times that of

including Malaysia, Singapore, Hong Kong,

the next most active city, Moscow. Investor

South Africa and the US.

There was a continued polarisation in the performance of UK retail markets during 2011.

The central London market remained resilient, with demand for prime space exceeding supply. Extremely high rents have continued to be recorded on London’s most expensive

Figure 2

thoroughfare, New Bond Street, as luxury

European office take-up

retailers compete for limited space. In

sq m

contrast, many town centres in the UK now

1,500,000

have exceptionally high vacancy rates.

Occupier demand in the UK industrial

1,200,000

property sector softened in 2011, although new requirements have continued to emerge, particularly from retailers seeking to realign

900,000

supply chains or expand their e-fulfilment businesses. Speculative development

600,000

remains limited and restricted to a small number of locations with good rental growth

300,000

Source: Knight Frank Research

6

Warsaw

Prague

Munich

Paris (Central & La Défense)

2010 2011

Moscow

Milan

Madrid

London (Central)

Lisbon

Frankfurt

Dublin

Brussels

have been acquiring sites in anticipation of Amsterdam

0

prospects. However, a number of developers increasing pre-letting activity.

Take-up in the Paris (Île de France) office market amounted to just over 2.4 million sq m in 2011, 13% up on 2010, with the improvement primarily driven by a number of

very large leasing transactions of over

Figure 3

20,000 sq m. There was, however, a slowdown

European prime office rents – annual change, Q4 2010 to Q4 2011

in the number of deals recorded between

%

5,000-20,000 sq m, partly due to the

Stockholm Paris Oslo Moscow London (West End) Warsaw Helsinki Frankfurt Manchester Milan Berlin Copenhagen Munich Vienna Prague London (City) Budapest Bucharest Brussels Birmingham Amsterdam Madrid Lisbon Barcelona Dublin

diminishing availability of prime space in this size range. While the overall Île de France vacancy rate remained at 7.0% at the end of 2011, unchanged from the start of the year, availability in the Paris CBD fell from 5.7% to 4.6%. This supported a gradual increase in prime rents over the course of 2011, which rose by 11% to reach €830 per sq m per annum.

Demand for retail space in France has been increasingly concentrated on prime locations, with brands competing for space in the best shopping centres and high streets. With consumer spending slowing, retailers have begun to rationalise their portfolios and close stores in weaker locations. Prime retail rents

-15

-10

-5

0

5

10

15

Changes calculated in local currency terms Source: Knight Frank Research

have come under modest downward pressure, while more marked decreases have been seen in secondary areas.

Demand for space in the major German office markets proved to be resilient during 2011, with increased take-up recorded in cities including Munich and Berlin. Take-up was

ending the year at €27 per sq m per month,

The Lisbon office market endured a tough

a modest fall of 4% compared with 2010, but

Stockholm 2011, with take-up of approximately Paris

Oslo 80,000 sq m, 25% down on 2010 and the Moscow

36% down on the level reached in 2007-08.

London (West End) lowest annual total recorded in more than Warsaw

In the Spanish investment market, the sale of

Helsinki 15 years.

The overall vacancy rate has risen Frankfurt

the Torre Picasso building to Pontegadea

steadilyManchester over the last three years to reach over Milan

Inmobiliaria, the property firm owned by

Berlinavailability is above 20% in the 12%, while

Spain’s richest man Amancio Ortega, at the

Parque Munich das Nações and Western Corridor

prime rents up by 6% to €432 per sq m per

end of 2011, proved that there remains

Prague A very limited development submarkets.

annum. With development completions at a

interest in prime Madrid property, particularly

pipelineBudapest should help to constrain further

limited level, vacancy rates have fallen across

from local cash-rich buyers. However, the

growth Brussels in vacancy rates, but prime rents,

the largest German markets.

extent to which property values have fallen in

Amsterdam which fell by 6% in 2011, may continue to

Spain in recent years was illustrated by

come under Madriddownward pressure.

reports suggesting that the sale price of €400

There were positive signs in the Dublin office

moderately down in Frankfurt, but demand for the best space was strong enough to push

Confidence in Germany’s relative economic strength was reflected in robust investment

-15 -12

-9

-6

-3

0

3

market activity. Commercial investment

million was less than half the building’s value

volumes amounted to €22.7 billion, a rise of

at the market peak in 2007.

Copenhagen Vienna

London (City) Bucharest

Birmingham Lisbon

Barcelona Dublin

6

9

12

15

market in 2011, with take-up improving on the previous year. The overall vacancy rate

45% on 2010. Retail property attracted an increased share of activity, boosted by several major shopping centre deals such as the acquisition of the PEP mall in Munich by US institutional investor TIAA-CREF for c.€408 million.

In contrast to Germany, market conditions deteriorated in 2011 in many countries entangled in the Eurozone debt crisis.

Sentiment in Spanish property markets was weak, which was reflected in reduced office leasing activity in Madrid. At 292,000 sq m, take-up was nearly 20% down on 2010 and 45% below the ten-year average. Prime office rents have continued to drift downwards,

Madrid

7

2012 GLOBAL REAL ESTATE MARKETS Annual review and outlook

Figure 4

Despite the negative news surrounding the

European office take-up and vacancy rate indices

Italian economy, there were robust levels of

H1 2005=100

leasing activity in Milan in 2011. Nonetheless,

160

availability has increased, particularly in

140

peripheral areas, as occupier interest has been focused on prime central space at the

120

expense of lower quality offices in secondary

100

locations.

80

Recent office market activity in Vienna has

60

largely been driven by tenants relocating to more cost-effective premises. The city’s

40

vacancy rate has risen to 6.3%, but this remains

20 0

low compared with most other European H1 H2 2005

H1 H2 2006

H1 H2 2007

H1 H2 2008

Office take-up index

H1 H2 2009

H1

H2 2010

H1

2011

H2

Office vacancy rate index

Indices are based on 15 key European markets, weighted by size and market maturity Source: Knight Frank Research

remains high at over 20%, but there are very

The uncertain climate also led to a 25 basis

few large spaces available in the city centre

points softening of prime office yields, to

and no significant office developments are

6.25% in the final quarter of 2011.

currently under construction.

The Amsterdam market remained relatively

In Belgium, occupier and investor sentiment

robust in 2011, with office take-up rising by

weakened in 2011, influenced by concerns

7%, to 258,000 sq m. The strength of

over both the wider Eurozone debt crisis and

demand, together with decisions to change

the country’s own troubled public finances

the use of some unmarketable office

and political instability. Office take-up in the

buildings, contributed to a slight decrease in

capitals. Prime rents were stable at €24.50 per sq m per month throughout the year.

Occupier and investor confidence in the Nordic region was relatively high in 2011. The Nordic countries have been comparatively unaffected by the debt crisis, having low levels of public debt and, with the exception of Finland, being outside the Eurozone.

Stockholm and Oslo recorded some of the strongest prime office rental growth anywhere in Europe in 2011. Commercial property investment in Sweden amounted to €7.1 billion, up by 20% on 2010, making it the fourth most active country in Europe, behind the “big three” markets of the UK, Germany and France.

Brussels market was 324,000 sq m, which

Amsterdam’s structurally high vacancy rate,

The CEE region also performed strongly in

was the lowest for nearly 20 years. There were

taking it from 17.5% to 17.0% over the course

2011, being home to some of Europe’s fastest

a number of large leasing transactions

of the year. In contrast, other Dutch markets

growing economies and largely immune from

involving public sector occupiers, but

including Rotterdam and The Hague saw

the worst effects of the Eurozone debt crisis.

corporate tenants remained cautious, putting

reduced take-up and continued rises in

Poland, in particular, continued to see

expansion and relocation decisions on hold.

availability in 2011.

buoyant economic growth, with GDP rising by 4.3%. This translated into strong demand in the Warsaw office market, which saw take-up reach a record 573,000 sq m. Prime office rents moved upwards by 8% during 2011, to end the year at €25.60 per sq m per month.

The Prague office market also witnessed record take-up, of 276,000 sq m, in 2011.

While tenant renegotiations have continued to be an important driver of the market, corporate expansion accounted for an increased proportion of activity. The city’s vacancy rate fell to 12.0% at the end of 2011, from 13.2% a year earlier, but this was not enough to put serious upward pressure on

Frankfurt

8

prime rents, which remained unchanged at €20-21 per sq m per month.

Bucharest was another CEE office market to have its strongest year on record, with annual take-up of 240,000 sq m in 2011. Only 115,000 sq m of new office space was brought to the market, 70% down on the previous year, and there are very few large-scale projects currently in the development pipeline. Vacancy rates have fallen, currently standing at 10% in the CBD, and below 1% in the Calea Floreasca/Barbu Vacarescu area, which has become an increasing focus of occupier demand in recent years.

The CEE area saw some of the sharpest rises in investment activity seen anywhere in the world in 2011, as commercial property sales came to approximately €8.2 billion, well over double the 2010 figure. Over 80% of investment volumes came from cross-border sources, with institutional investors from Germany, Austria and the US among the most active buyers.

% 10 8 6 4 2

Q4 2010

Warsaw

Stockholm

Prague

Paris

Munich

Moscow

Milan

Madrid

London (West End)

London (City)

Lisbon

0 Frankfurt

The weakening of economic conditions around the turn of the year has added to the already uncertain outlook for European occupier markets in 2012, and it is possible that activity may yet be impacted by further developments in the Eurozone. Generally,

European prime office yields

Dublin

activity, and the availability of large, modern offices has attracted international and Russian occupiers to the area.

Figure 5

Brussels

St Petersburg also recorded rising office rents and falling vacancy rates. The most significant recent development in the market has been the growth of the Pulkovo business district, south of the city and near the airport. This location has become a significant focus of construction

Moscow

Amsterdam

Further east, Russian commercial property markets have recovered well over the last two years, after occupier demand collapsed in 2009. Take-up of Class A and B office space in Moscow was 989,000 sq m in 2011, almost exactly the same level as 2010, but still some way short of the totals recorded in the boom years of 2006-08. Since peaking at 19.5% in 2009, the Class A vacancy rate has steadily fallen, ending 2011 at 12.5%. Average Class A rents rose by 9% in 2011, and further increases are expected in 2012. Rental growth is anticipated to be strongest in the city centre, as a result of falling supply levels and new government restrictions on construction activity.

Q4 2011

Source: Knight Frank Research

9

2012 GLOBAL REAL ESTATE MARKETS Annual review and outlook

Figure 7

Top ten European commercial investment markets, 2011 € billion London Paris Moscow Frankfurt Stockholm Hamburg Manchester Munich Berlin Warsaw

0

Prague

The prospects for office rental growth have weakened, although the continued scarcity of prime space in many city centres may lead to some modest rental increases in 2012, especially if sentiment improves in the second half of the year. However, rents may continue to come under downward pressure in peripheral markets, particularly on the Iberian peninsula.

Figure 6

European commercial investment volumes € billion 40 35 30 25 20 15 10 5 0 Q2 Q3 2008

Q4

Q1

Q2 Q3 2009

Q4

Q1

Q2 Q3 2010

Q4

Q1

Q2 Q3 2011

UK Germany France Nordics Benelux Central/

Eastern Europe Source: Knight Frank Research/Real Capital Analytics

10

Office

4

6

8

Retail

10 12 14 16 18 20

Industrial

Hotel

Source: Knight Frank Research/Real Capital Analytics

however, the trends that characterised European markets in 2011 look set to continue over the next twelve months. Corporate occupiers will remain cautious and focused on saving costs and improving the efficiency of their leased space. Development completions will continue to be well below historical levels, albeit there are signs of construction activity increasing moderately in certain markets, including London and Warsaw.

Q1

2

Rest of Europe

Q4

Investment volumes in 2012 are expected to be at fairly similar levels to 2011, albeit there is potential for activity to improve in the second half of the year if economic conditions stabilise. There remains an appetite for prime property, particularly with prime yields currently offering a significant premium over historically low “risk free” rates. However, the availability of debt seems unlikely to improve significantly in the short-to-medium term, which will continue to restrict transactional activity. Cash-rich investors will remain in an advantageous position within the market, and the recent movement of capital into Europe from overseas sovereign wealth funds and pension funds, which has so far been largely concentrated in London, may spread further to other markets, particularly in France and Germany.

With the majority of investors remaining cautious, demand will continue to be concentrated on perceived “safe havens” such as London, Paris and Germany. This should help to support prime yields in these markets at their current levels, although yields for secondary assets and properties in peripheral markets are likely to come under outward pressure in 2012. The divergence in the performance of prime and secondary property, which has characterised European markets over the last three years, is therefore expected to continue for the foreseeable future.

Rotterdam

11

2012 GLOBAL REAL ESTATE MARKETS Annual review and outlook

North America

United States US commercial real estate performance continued to improve in 2011, adding to the momentum spurred by the recovery in 2010.

Investor interest, liquidity and leasing activity all combined to create a substantial tailwind that buoyed prospects for both the industrial and office sectors. Other positives, like reduced unemployment, higher market indices and headline-driven IPOs, combined to establish a firm foundation for the fundamentals to continue to improve into 2012.

12

The average asking rent for Class A office space in select US CBD markets at the end of 2011 improved to $40.42 per sq ft per annum from the 2010 year-end average of $37.83 per sq ft, a 6.8% increase that provided pricing strength to the market. The overall vacancy rate for office space in the select US markets finished at 13.4% at the end of 2011, compared with 13.8% at the end of 2010 and 13.7% at the end of 2009.

Net absorption of office space in the select US markets was positive on the year at 8.5 million sq ft, an improvement over the 3.4 million sq ft of positive net absorption that took place in 2010, and the best yearly performance since 2006 when 18.0 million sq ft were removed from the market.

Leasing activity totalled 36.0 million sq ft in 2011, representing a slight decline over the 37.3 million sq ft of leasing that took place in 2010. Between 2006 and 2009, leasing

US Class A CBD office average asking rents US$ per sq ft per annum 70 60 50 40 30 20

San Francisco

Philadelphia

New Jersey

Nashville

Miami

Manhattan

2010

Washington, DC

2009

Los Angeles

Houston

Denver

Dallas

Chicago

0

Detroit

10

Boston

Investment activity for industrial properties in the US also increased in 2011. A total of $24.4 billion in industrial sales took place during the year, compared with $13.7 billion in 2010.

Volume has yet to reach the amount of activity seen from 2006 to 2009 when the market averaged an annual $40.4 billion of sales.

The average sale price for industrial properties in the US was $55 per sq ft in 2011, the same as 2010, while the average cap rate was 7.5% compared with 8.1%.

Figure 8

Atlanta

In the office sector, $58.0 billion in sales volume took place in 2011 – more than doubling the $26.4 billion total for 2010, although still less than half of the $118.7 billion annual average volume seen from 2006 to 2008. Office sales averaged $207 per sq ft in 2011, a 21.8% improvement over the 2010 average price of $170 per sq ft, while the average cap rate for the office market in 2011 was 7.1% compared with 7.8% in 2010.

2011

Source: Newmark Knight Frank Research

convertible to cash, was $2.1 trillion, up 19.1% over the $1.8 trillion reported in the third quarter of the prior year. As companies begin to invest in growth, market activity will start to push upward.

The US unemployment rate, which was 9.4% at the start of the year, finished the year at 8.5%, while job openings hit a nearly three-year high. There were 3.4 million jobs available at the end of December 2011, up from 3.1 million in the prior month, according

to the US Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey.

Development of new office properties slowed as a total of 7.1 million sq ft of Class A office space were under construction in select US markets in 2011, the lowest yearly figure in well over a decade. This figure was less than half of the 14.7 million sq ft that were under construction in 2010, down significantly from the annual average of 35.0 million sq ft under construction between 2006 and 2009.

activity in these select markets averaged 30.8 million sq ft per year.

Factors that influenced the market performance included improvement in the financial position of companies as shown by their total liquid assets. By the end of the third quarter of 2011, corporate assets were at their highest level in more than 50 years. The accumulation of cash, or assets easily

New York

13

2012 GLOBAL REAL ESTATE MARKETS Annual review and outlook

The US industrial market experienced a

2010, and was the best performance since

higher than the asking rent of the prior

bounce in the fourth quarter of 2011 as 25.7

2007 when 98.2 million sq ft were removed

quarter and the end of 2010, both of which

million sq ft of net absorption took place,

from the market.

nearly matching the results from the prior two

reported $4.87 per sq ft. Leasing activity in US industrial properties was 294.5 million

quarters of 26.7 million sq ft. The 2011 total

The US industrial vacancy rate fell to 12.1% at

sq ft in 2011, compared with 428.1 million

net absorption was positive as 62.7 million

the end of the year, down from 12.5% at the

sq ft in 2010 and the annual average of 320.9

sq ft were removed, reversing conditions that

end of 2010. The 2011 year-end average

million sq ft leased between 2006 and 2009.

saw 9.3 million sq ft returned to the market in

asking rental rate was $4.90 per sq ft, slightly

The industrial market continued with the rehabilitation of existing infrastructure and the continued attrition rate of performing

Figure 9

assets. New construction in 2011 in the

US Class A CBD office vacancy rates

industrial sector remained well off the

%

previous decade’s pace. At the end of the

35

year, a total of 17.1 million sq ft of new

30

industrial space was delivered in the US, a slight increase over the 15.9 million sq ft that

25

were delivered in 2010 and still significantly

20

lower than the annual average of 105.1 million sq ft of industrial space that were delivered

15

between 2006 and 2009.

10

Sustainability and energy efficiency carried the upbeat tone in the market throughout

5 San Francisco

Philadelphia

New Jersey

Nashville

Miami

Manhattan

2010

Washington, DC

2009

Los Angeles

Houston

Detroit

Denver

Dallas

Chicago

Atlanta

Boston

2011 with an emphasis on properties

0

2011

associated with LEED, also known as the green office market. The national green office market strengthened in 2011 as the vacancy rate improved to 13.4% at the end of the year from the 14.9% rate at the end of 2010. Net absorption totalled 2.1 million sq ft in 2011,

Source: Newmark Knight Frank Research

adding to the 1.7 million sq ft removed from the market in 2010. The average asking rent for green office space at the end of 2011 was

Figure 10

US industrial average asking rents

$39.54 per sq ft, down from the $39.79 per

U$ per sq ft per annum

sq ft average at the end of 2010.

14

By the end of 2011, conditions for office space

12

in the Atlanta market showed signs of improvement with total net absorption of

10

55,878 sq ft. Although positive for the year, the net absorption total was below the level

8

seen in 2010 when 169,093 sq ft of positive

6

net absorption took place. The average asking rental rate declined throughout the year,

4

finishing 2011 at $19.54 per sq ft, compared

2

with $19.70 per sq ft at the end of 2010. The

Source: Newmark Knight Frank Research

14

2011

San Francisco

Philadelphia

New York City

New Jersey

Nashville

Miami

2010

Washington, DC

2009

Los Angeles

Houston

Denver

Dallas

Chicago

Boston

Atlanta

Detroit

vacancy rate was 19.9% at the end of 2011, an

0

improvement from the 20.8% vacancy rate reported at the end of 2010.

Based on dollar volume, the Atlanta office market experienced tremendous year-overyear growth in investment activity in 2011.

Following a weak year in 2010 with $385

million in sales transactions closed, 2011 ended with $1.4 billion in closed deals, a 270% increase in dollar volume. The average price per sq ft paid grew to $120 per sq ft in 2011 from $98 per sq ft in 2010. The average cap rate for office properties sold in 2011 was 7.7%, compared with 8.4% in 2010.

CMBS debt totalling $4.6 billion was secured by office properties in the Atlanta market by the end of 2011. Of the $4.6 billion outstanding, nearly $1.6 billion, or 34%, was considered delinquent by the end of the year.

The vacancy rate for office properties in Boston settled at the end of 2011 at 11.8%, following rates as high as 13.0% earlier in the year, and remained above the 11.2% rate reported at the end of 2010. The average asking rent grew to $43.51 per sq ft by the end of 2011, improving 2.6% from the $42.39 per sq ft rate reported at the end of 2010. The year-end net absorption total for office space in Boston was positive at 472,342 sq ft in 2011, a considerable

Boston

improvement from the combined 1.8 million sq ft of negative absorption which took place

level seen since mid-2009. Average asking

finishing the year at $20.83 per sq ft, a 1.4%

rents in the Chicago market fell to $31.34 per

decline from the average reported at the end

sq ft at the end of 2011 from $31.79 per sq ft

of 2010. The Dallas vacancy rate ended 2011 at

were delivered to the market, while another

reported at the end of 2010.

25.6%, its highest level since 1997 and one of

580,000 sq ft remained under construction.

In 2011, office investment activity in Chicago

in 2009 and 2010.

In 2011, 700,000 sq ft of new office space

Little development has taken place over the past few years, with 920,000 sq ft of space delivered to the market in the past five years.

grew by more than 20.0% from the previous year as $3.3 billion worth of transactions were closed, the highest level seen in this market

By comparison, from 2001 to 2006, a total of

since 2007. The average sale price for office

3.4 million sq ft of new space was delivered to

properties in Chicago in 2011 was $164 per

the market.

sq ft, a drop from the $182 per sq ft rate seen

The average asking rent for green office space

in 2010. The average cap rate for the year was

the highest office vacancy rates within the US CBD marketplace. The third quarter of 2011 was the only quarter in the year to post positive absorption, bringing the year-end total for net absorption to negative 258,815 sq ft, retreating further from the 133,012 sq ft of negative net absorption in 2010.

in Boston finished 2011 at $47.48 per sq ft,

7.4%, down from 7.9% in 2010.

Although development of new office towers

which stands at 9.1% over standard Class A

The Chicago industrial market, one of the

slowed in 2011, investment activity grew in the year as more than $120 million in sales

office spaces in the Boston market. The

largest in the US, finished 2011 with a vacancy

vacancy rate for green office space ended the

rate of 14.4%, an improvement over the 15.5%

activity took place, from a nearly inactive

year at 11.1%, almost 200 bps above the 9.3%

rate reported in 2010 and its lowest level

2010. One of the largest leasing transactions

rate reported in 2010. A total of 662,000 sq ft

since 2009. The average asking rent for

in 2011 was for the advertising firm

of transactions were signed for green office

industrial space reached $4.17 per sq ft at the

TracyLocke. The firm signed a renewal lease

space in 2011.

end of the year, up slightly from $4.13 per

for 112,000 sq ft at 1999 Bryan Street in the

sq ft reached in 2010. Ozburn Hessey

Dallas CBD.

The 2011 year-end total for net absorption in the Chicago office market was positive at 787,033 sq ft, adding to the 605,296 sq ft of positive net absorption in 2010. The vacancy rate in the market finished 2011 at 14.6%, a

Logistics signed one of the largest industrial leases in the Chicago market in 2011, inking a deal for 477,000 sq ft at 2780 McDonough Street.

Delinquencies of CMBS debt on Dallas office properties stood at 12.5% or $516 million by the end of 2011. $4.2 billion of securitised debt remained outstanding by the end of

slight improvement over the 14.8% rate

The average asking rent in the Dallas office

2011, 88% of which was originated prior

reported at the end of 2010, and the lowest

market remained nearly flat throughout 2011,

to 2009.

15

2012 GLOBAL REAL ESTATE MARKETS Annual review and outlook

Chicago

In the Houston office market, 2011 marked a year of new construction and active leasing.

The year-end total for net absorption was positive at 842,400 sq ft, compared with the negative 240,345 sq ft of net absorption in 2010. By the end of 2011, leasing activity had

improved to nearly 3.2 million sq ft, a level not seen since 2006 when 3.4 million sq ft of transactions took place.

The vacancy rate in the market finished the year at 10.6%, an increase from the 8.6% rate reported at the end of 2010, as 1.8 million sq ft

Figure 11

The Houston market is home to the fourth largest green office market in the US. In the past year, more than 1.8 million sq ft of green office space was delivered to the market. The vacancy rate ended 2011 at 9.3%, 130 bps below the overall vacancy rate. The average asking rent for green spaces ended the year at $37.19 per sq ft.

US industrial vacancy rates % 25 20

15 10

Source: Newmark Knight Frank Research

16

2011

San Francisco

Philadelphia

New York City

New Jersey

Nashville

Miami

2010

Washington, DC

2009

Los Angeles

Houston

Denver

Dallas

Chicago

Boston

Atlanta

Detroit

5 0

of new construction was completed and brought to the market. The average asking rent rose to $36.02 per sq ft at the end of 2011, from $35.68 per sq ft reported in 2010. One of the largest transactions of the year was signed

by Shell Oil Company. The company signed a renewal lease for nearly 800,000 sq ft of space at 910 Louisiana Street.

The office market in Los Angeles saw declining conditions during 2011, with the exception of asking rents which grew to $34.18 per sq ft from $33.37 per sq ft reported at the end of 2010. The market vacancy rate rose to 16.0%, compared with 14.3% at the end of 2010, reaching the highest rate in the market since the end of 2004. The year-end total for net absorption was negative 381,515 sq ft, making 2011 the fourth consecutive year to post negative net absorption. By the end of 2011, nearly

8 6 4

Nashville

New Jersey

Philadelphia

San Francisco

Washington, DC

New Jersey

Philadelphia

San Francisco

Washington, DC

Miami

Manhattan

2010

Nashville

2009

Los Angeles

Houston

Detroit

Denver

Dallas

Chicago

0

Boston

2

2011

Source: Newmark Knight Frank Research/Real Capital Analytics

Figure 13

US average industrial cap rates % 12 10 8 6 4

2009

2010

Miami

Manhattan

Los Angeles

Houston

0

Detroit

2

Denver

While several Class A projects remain in the planning stages in Midtown, 1.8 million sq ft of Class A space is scheduled to be delivered to the market in the next two years. In 2010, the tower at 11 Times Square was completed and delivered to the market, adding 1.1 million sq ft of Class A office space.

10

Dallas

leasing activity over the past 10 years has been 14.4 million sq ft.

%

Chicago

Leasing activity in Manhattan slowed a little in the second half of 2011, following a strong first half in which 9.5 million sq ft of leasing activity took place. By the end of the year, 16.3 million sq ft of leasing transactions took place compared with 18.9 million sq ft reported in 2010. The annual average for

US average office cap rates

Boston

As one of the stronger performing US office markets, conditions in Manhattan showed signs of improvement in 2011. The average asking rent rose by the end of 2011 to $66.48 per sq ft from $61.44 per sq ft, an 8.2% increase year over year. The year-end total for net absorption was positive 3.7 million sq ft, 3.2 million of which occurred in the first half of the year. By comparison, the 2010 year-end total was positive 3.0 million sq ft. The vacancy rate improved by the end of 2011 to 7.1% from 7.3% reported at the end of 2010, and remained above the 6.9% rate reported in 2009.

a little in 2011 as the year-end total ended at positive 61,681 sq ft. The average asking rent in the market ended the year at $42.08 per sq ft, a slight drop from the $42.53 per sq ft rate reported in 2010, and remained 6.6% below the market peak reached in 2008.

Rents in the Miami office market are among the top five highest in the country.

Figure 12

Atlanta

As the second largest in the nation at nearly 490 million sq ft, the Los Angeles industrial market did not fare much better than the office market throughout 2011. In the fourth quarter of 2011, 624,155 sq ft of positive absorption took place. While positive for the quarter, the year-end total for net absorption was negative 2.8 million sq ft. As with the office market, 2011 marked the fourth consecutive year of negative net absorption.

The vacancy rate for industrial properties in Los Angeles ended the year at 6.5%, compared with 6.1% at the end of 2010.

Average asking rents finished the year at $6.36 per sq ft, down from $6.40 per sq ft at the end of 2010, and were 19.5% below the market high of $7.90 per sq ft reported in 2008.

Conditions in the Miami office market improved by the end of 2011 as the vacancy rate fell to 22.3% from 23.1% reported at the end of 2010. The vacancy rate in Miami has been above the 22.0% mark since the beginning of 2010. Following a strong finish to 2010 with positive net absorption of 120,490 sq ft, the pace of absorption slowed

Atlanta

2.0 million sq ft of office leasing transactions took place, compared with the 2.2 million sq ft which took place in 2010.

2011

Source: Newmark Knight Frank Research/Real Capital Analytics

17

2012 GLOBAL REAL ESTATE MARKETS Annual review and outlook

Canada

Figure 14

US Class A CBD office rents, annual change, Q4 2010 to Q4 2011

The Canadian economy performed

% San Francisco Manhattan Boston Los Angeles Houston Nashville Denver Washington, DC Philadelphia Dallas Detroit Atlanta Chicago Miami New Jersey

-5

0

5

10

15

20

25

Source: Newmark Knight Frank Research

solidly throughout 2011, despite the difficulties experienced elsewhere in the world. Foreign trade accounts for approximately 45% of the country’s GDP, and an improving economic outlook in the United States bodes well for maintained economic stability throughout 2012.

According to Statistics Canada, the country’s economy grew by 2.5% in 2011, down from 3.2% in 2010, but surpassing economists’ earlier forecasts. Over the course of the year, all major sectors posted gains, with mining, oil and gas extraction, construction, public sector spending and manufacturing leading the way.

In 2011, nearly $360 million in investment

improvement over the past year. Nearly 3.3

sales activity took place, an increase over the

million sq ft of green office leasing

$220 million of activity seen in 2010. The

transactions took place in 2011, compared

average price per sq ft also increased to $166

with 3.0 million sq ft in 2010.

per sq ft from $127 per sq ft in 2010. One of

As of March 2012, the Canadian dollar was trading above par with its US counterpart, which causes challenges for the country’s exporters, and the consensus is that

Following a rough first half of 2011 in the

annualised GDP growth will slow in 2012, with

Washington, DC market as nearly

forecasts coming in at around 2.0%. Overall

33,000 sq ft at 100 SE 2nd Street.

330,000 sq ft of negative absorption took

unemployment levels are expected to remain relatively stable, at approximately 7.5%.

Following the effects of the economic

place, the second half of the year appeared to rebound as 280,572 sq ft of positive

the larger leases signed in 2011 was for the General Services Administration for

downturn, the San Francisco office market has been surging over the past year. Leasing activity in the market grew to nearly 5.6 million sq ft in 2011 from 4.7 million sq ft of

absorption took place. The vacancy rate for the market ended 2011 at 13.7%, rising above the 12.8% rate reported at the end of 2010.

The overall Class A and B vacancy rate in Canada’s major cities stood at 4.7% at the end of 2011, down from 6.8% a year earlier.

In most major cities, office space, especially

transactions in 2010. The year-end total for

The average asking rent in Washington, DC

high quality space in new towers, continues

net absorption finished the year at

ended 2011 at $54.74 per sq ft, up 1.4% from

to be leased at an accelerated rate. Indeed,

924,752 sq ft, compared with the negative

the $53.98 per sq ft average at the end of

while vacancy rates declined by over 200

218,235 sq ft of net absorption in 2010.

2010. The average asking rent in the market

Average asking rents in San Francisco grew

has been more resilient to the declines seen

bps in 2011, the total inventory of built space increased by nearly 2 million sq ft, most of

in other major markets over the past few

this coming online in Calgary and Toronto.

years. Average asking rents have actually

In 2012, it is expected that there will be

grown 2.3% since 2008. Leasing activity was

positive space absorption in virtually

robust in 2011 as 2.0 million sq ft of leases

all of Canada’s major cities, more new

were signed. This level of leasing activity has

office tower developments and upward

not been seen in the Washington, DC office

pressure on asking rents in most cities as

reached at the end of 2010, and the lowest

market since 2003.

space availability continues to decline.

level since 2008.

Construction activity in the Washington, DC

Montreal’s combined Class A and B vacancy

In the San Francisco green office market, the

market remained strong over the past two

rate fell from 7.7% to 5.9% in 2011, and Class

average asking rent rose to $41.31 per sq ft at

years with more than 1.0 million sq ft of new

A rates dropped from 6.8% to 6.2%. With the

the end of 2011, indicating a 23.2% climb

space brought to the market. In the

decline in vacancy rates, asking net rental

from the $30.01 per sq ft rate reported in

investment sales arena, average cap rates in

rates began to creep upward by the year-end.

2010. The vacancy rate improved to 9.8% from

2011 were 6.0%, a slight drop from the 6.5%

Development and pre-development activity

12.6% in 2010, making San Francisco one of

seen in 2010, as investors continue to seek

is energising the downtown real estate

the leading green markets for vacancy

out prime properties in core markets.

market, and the imminent announcement of

25.3% to $40.77 per sq ft from $32.53 per sq ft reported at the end of 2010. Rents in this market still remain below the peak of $72.44 per sq ft reached during the dot-com period in 2000. The vacancy rate finished the year at 10.4%, nearly 200 bps below the 12.1% rate

18

at least two new projects is expected. This

Toronto’s office market is the largest

Class A buildings. As a consequence, tenants

is significant news, as there have been only

in Canada, with a total inventory of

are turning to Class B properties for office

two major office building projects in the

approximately 62 million sq ft of Class A

space, where there is somewhat greater

Greater Montreal area in the last decade, with

and B space in the downtown district. The

availability, but even in this space class

the completion of Phase 2 of E-Commerce

downtown office market is very much in

asking rents are rising rapidly. A number

growth mode; over the past three years,

of new developments are planned or in

Canada campus on Nun’s Island in 2009.

more than 3.5 million sq ft of new space

progress, which should bring 3.5-5.0 million

Ottawa, as the nation’s capital, is generally

has been delivered to the market. Most of

sq ft to the downtown market, but nothing

this new space has been absorbed, and the

will be completed before mid-2014, so the

Class A vacancy rate at the end of 2011 was at

market will remain exceedingly tight.

Place in 2004 and the delivery of the Bell

protected from economic downturns by the tenancies of the federal government, and

4.5%, down from 6.3% a year earlier. In the

downtown Class A vacancy rates dipped

new towers, where demand continues to be

as low as 4.0% at the beginning of 2011.

strong, landlords will be focused on filling

However, the completion of a major new

the remaining smaller pockets of space and

office tower, coupled with the federal

should be able to achieve healthy rents as

government’s decision to address some of

demand is currently outstripping supply.

its space needs outside of the downtown

However, there are still leasing opportunities

core, caused vacancy rates to skyrocket

in the older Class A space that has been

to 8.0% at the end of 2011. It remains to

freed up by tenants relocating to the new

be seen how announced federal spending

towers. The substantial demand for the new

reductions will further impact downtown

breed of office space has led to late-stage

Vancouver continues to experience an office space squeeze in the downtown core. The combined Class A and B vacancy rate was a very low 2.9% at the end of 2011, and there is little relief in sight for tenants.

Larger blocks of available space, greater than 20,000 sq ft, are extremely rare, and asking rents are rising. There are new developments in the pipeline, which will provide over 1 million sq ft of high quality inventory, but none of these projects are

occupancy rates. In the western region of

discussions for further development projects.

the Greater Ottawa area, where there is a

Calgary’s office market has surged over the

As has been the case for the past few years,

strong concentration of hi-tech businesses,

past two years, and occupancy rates now

tenants will find more abundant leasing

vacancy rates at the end of 2011 were 13.7%.

approach 100% in the downtown core’s

opportunities in the suburban markets.

scheduled to be completed until mid-2014.

Montreal

19

2012 GLOBAL REAL ESTATE MARKETS Annual review and outlook

Middle East

The Middle East remains overshadowed by the political upheaval taking place in a number of countries, which has led to considerable caution over the outlook for business and investment. Nonetheless, the IMF estimates that GDP growth for the region was a solid 4.9% in 2011. Looking forward, growth in 2012 is expected be lower at around 4%, although there remains a considerable degree of uncertainty surrounding the wider global economy and the ongoing push towards greater democracy across the region.

20

Figure 15

Figure 16

Middle East prime office rents

Middle East prime office yields

US$ per sq m per annum

%

800

10

700 8

600 500

6

400 4

300 200

2

Kuwait City

Muscat

Doha

Dubai

Abu Dhabi

Riyadh

0

Manama

Muscat

Kuwait City

Manama

Riyadh

Doha

Abu Dhabi

0

Dubai

100

Source: Knight Frank Research

Source: Knight Frank Research

In addition to economic and political headwinds, the oversupply of commercial space has been a major issue in some locations. In Bahrain, for example, office vacancy rates in Manama have reached very high levels after rising consistently since 2008. While the development pipeline has slowed, it is estimated that it will take around five years for current supply to be absorbed.

Tourist numbers have fallen dramatically over the last year, leading to reduced retail sales.

While occupancy levels in the largest prime malls have remained above 90%, many tenants have been encouraged to renew leases through lower rents. However, some retail schemes at the middle-to-lower end of the market are now experiencing much higher vacancy rates of up to 60%.

The impact of civil unrest has been most evident in the retail sector, which is heavily driven by weekend visitors from Saudi Arabia.

In Bahrain’s industrial sector, while there has been a significant drive to allocate land for industrial use and strong interest from local

The political turbulence in the Middle East has impacted markets already affected by high vacancy levels

and regional occupiers, demand for high specification warehousing space is currently limited.

In Dubai, the office occupier market has struggled for a number of years, although an increase in activity was recorded in late 2011 and early 2012, in part due to the Arab Spring.

Dubai’s “safe haven” status in the Gulf has led to a number of companies expanding and consolidating their operations in the Emirate.

As prime headline rents are nearing the bottom of the current cycle, the more astute

Manama

21

2012 GLOBAL REAL ESTATE MARKETS Annual review and outlook

occupiers are aware of this and are trading up in order to secure best deals. In contrast, rents in secondary locations are still experiencing downward pressure, notably with vacancy rates across the city remaining at very high levels.

For many retailers, Dubai remains the major entry point into the wider Middle East, attracted by the presence of western-style mega-malls, high spending power and a young population eager for new brands.

Large regional malls account for 60% of retail space, although an increasing number of smaller community malls are being developed. Rents have not moved significantly over the year, although prime schemes recorded a modest degree of growth, while more secondary schemes saw rents edge down.

Abu Dhabi

22

As in much of the region, Dubai has a limited supply of good quality industrial and logistics stock for which there is strong competition.

As a result, many occupiers are seeking pre-let options in order to secure better quality, purpose-built units.

The Abu Dhabi office occupier market remains subdued as a result of the current economic climate, with requirements averaging around 250 sq m. Supply increased significantly in 2011, with the delivery of over 300,000 sq m of new Grade A space.

The retail market remains active, although there are limited opportunities in the traditional downtown areas to source the quality of space required by international brands. Rents remain stable, with forthcoming developments expected to soon provide retailers with new opportunities.

In Abu Dhabi’s industrial market, rents are expected to fall further as more stock enters the market, although the better quality stock coming through should mitigate the extent of any declines.

In the Middle East as a whole, investment activity remains generally muted, with most investors adopting a “wait-and-see” approach to see how political events play out. However, given the sharp correction in rental levels seen in the last 2-3 years and the softening in property yields which are now in the range of 8-9%, the region offers some potentially very attractive investment opportunities.

Dubai

23

2012 GLOBAL REAL ESTATE MARKETS Annual review and outlook

Africa

Many African economies continued to grow at an impressive speed in 2011, with the global slowdown having a relatively limited effect on the continent. The IMF estimates that GDP growth in Sub-Saharan Africa was approximately 4.9%, however growth in North Africa decelerated sharply to around 2.0% as a result of the economic impact of the Arab Spring.

24

Figure 17

Africa prime office rents US$ per sq m per annum 2,000

1,500

1,000

Blantyre, Malawi

Nairobi, Kenya

Harare, Zimbabwe

Lilongwe, Malawi

Cape Town, South Africa

Gaborone, Botswana

Durban, South Africa

Johannesburg, South Africa

Kampala, Uganda

Dar es Salaam, Tanzania

Lusaka, Zambia

Cairo, Egypt

Lagos, Nigeria

0

Luanda, Angola

500

Economic growth and inward investment have continued to support the development of Africa’s property markets

Source: Knight Frank Research

While high commodity prices have buoyed

shopping centres, targeted at Africa’s

several very large projects aimed at improving

growth in Sub-Saharan Africa, its economies

growing middle class, continue to be built

the city’s built environment are in the

have also been aided by advances in

across the continent.

pipeline, including Eko Atlantic City and the

technology and communications, improved regional trade integration and increased political stability in a number of countries.

GDP growth of over 6% was estimated in 2011 not only in oil-rich West African countries such as Nigeria and Equatorial Guinea, but also in East African nations including Tanzania and Uganda.

The IMF forecasts that annual GDP growth in

Luanda, Angola, and Lagos, Nigeria, are

Lekki Free Trade Zone.

among the most expensive cities in the world

The development of the new Central Business

in which to rent offices, with both markets

District in Gaborone, Botswana, is expected

having a very limited supply of high quality

to have a major impact on the city’s office

space able to meet the requirements of

market in the coming years. While a limited

international occupiers, particularly those

amount of space has been completed so far in

from the oil and gas industries. Lagos

the new district, nearly 90,000 sq m of offices

continues to be severely affected by

are due to be delivered in 2012, most of which

overcrowding and poor infrastructure, but

will be completed on a speculative basis.

Sub-Saharan Africa will continue to run at above 5% over the next five years, although serious challenges, including infrastructure difficulties and skills shortages, remain present in many countries. Any slowdown in China’s economic growth would also cause concern, as it has become a hugely important trade partner and investor in Africa.

The economic development of Africa has supported the growth of its commercial property sector. However, outside of South Africa, property markets generally remain small and underdeveloped, with many major cities having a limited stock of high quality office space. African retail property markets continue to grow; while small-scale informal retail activity remains very common, modern

Cape Town

25

2012 GLOBAL REAL ESTATE MARKETS Annual review and outlook

Cairo

A number of major occupiers, from both the private and public sector, are planning to move to the new CBD, which may cause availability to increase in the city’s existing business parks.

In Lusaka, Zambia, over 14,000 sq m of new office space is currently under construction and expected come to the market in 2012.

While Zambian tenants remain reluctant to pre-let space, there has been increased evidence of pre-let demand from international companies entering the Zambian market.

Lusaka’s retail sector has continued to grow, with Levy Business Park and Makeni Junction adding approximately 40,000 sq m of new retail space in 2011, but no new retail schemes are due for completion in 2012.

of the space being let to tenants moving from dilapidated premises. Several major office schemes are currently under construction the city, with development activity being encouraged by strong occupier demand and a lack of available space in the CBD. Office market activity in Harare, Zimbabwe, has been restricted by the recent liquidity crisis in the country’s economy. The highest office rents are currently recorded in suburban business parks, while the CBD continues to see significant vacancy rates. Demand for retail space has remained relatively strong, in both the CBD and better quality suburban shopping centres. This has put some upward pressure on retail rents, albeit increases are likely to be limited by the low spending power

There is currently a surfeit of Grade B offices available in Kampala, Uganda, with vacancy rates for such space currently standing at approximately 30%. Occupation costs have risen considerably as a result of increased power outages, which have necessitated the use of standby generators for longer periods.

of much of the population.

A number of new office projects were delivered to the market in Dar es Salaam, Tanzania, in the second half of 2011, with most

there are ambitious plans for several

26

In Nairobi, Kenya, significant volumes of new office space have continued to be delivered to the market, most of which have been well-let.

New completions in 2011 included 14 Riverside, with approximately 30,000 sq m of commercial space. Over the longer term, large-scale urban developments in Kenya, notably TATU City and Konza Technology City.

Of Malawi’s two largest cities, Lilongwe has seen a greater level of office development activity in recent years than Blantyre, where availability rates are high. In the retail sector, the 18,000 sq m Gateway Mall, which will be Malawi’s largest shopping centre when completed, is currently under construction in Lilongwe and due for completion in 2013.

Occupier demand for office space in South Africa was fairly subdued in 2011, and vacancy rates drifted upwards during the year in many of the country’s major cities. While prime office rents were generally stable, rents for lower quality space came under downward pressure.

In Johannesburg, demand has been strongest in decentralised nodes including Illovo and Sandton, and these areas have been able to command higher rents than the CBD. While vacancy rates rose in most of Cape Town’s submarkets during 2011, the availability of premium grade space has remained low. In Durban, demand has been healthy in the Umhlanga/La Lucia Ridge area, but the CBD has continued to record high vacancy rates.

Durban

27

2012 GLOBAL REAL ESTATE MARKETS Annual review and outlook

Asia-Pacific

Asia-Pacific led global economic growth in 2011, with GDP for the region as a whole rising by 6.2% according to IMF estimates.

However, growth slowed by the end of year in many parts of Asia, with mounting global economic uncertainties, particularly in the Eurozone, dampening international demand for Asian exports.

Government measures aimed at tackling high inflation and the risk of a residential property market bubble have also affected economic activity in markets including China, India, Singapore and Hong Kong.

28

Office vacancy rates have fallen below 5% in Shanghai and Beijing, putting upward pressure on rents

Figure 18

Asia-Pacific office vacancy rates % 35 30 25 20 15 10

Q4 2010

Hong Kong

Perth

Shanghai

Beijing

Melbourne

Brisbane

Jakarta

Seoul

Tokyo

Sydney

Singapore

Bangkok

Bangalore

Ho Chi Minh City

New Delhi

Guangzhou

Mumbai

Kuala Lumpur

0

Hanoi

5

Q4 2011

Source: Knight Frank Research

Some moderation in economic growth is

two of the first major global office markets to

limited development completions. The Beijing

expected in Asia-Pacific in 2012, albeit it

see rents reach their peak in the current cycle,

market recorded exceptionally strong rental

should remain the fastest expanding region

and recorded falls in prime rents in the final

growth in 2011, with prime rents rising by

of the global economy. The IMF anticipates

quarter of the year.

46%. Beijing and Shanghai are both forecast

that GDP growth in China will ease from 9.2% in 2011 to 8.2% in 2012; likewise, growth in India is forecast to fall from 7.4% to 7.0%.

The major office markets of mainland China performed strongly in 2011, in sharp contrast to the residential property sector, which saw

Demand for office space in the region was

prices decrease as a result of government

affected by global economic concerns towards

moves aimed at cooling the market. Prime

the end of 2011, particularly in cities most

office rents rose rapidly in Shanghai and

closely integrated with international financial

Beijing, and vacancy rates fell below 5% in

markets. Hong Kong and Singapore became

both cities, driven by strong demand and

to see continued rental growth in 2012.

The rapid growth of China’s retail market and the rising spending power of its consumers have continued to attract investors and developers. A notable example is the Singaporean mall owner CapitaMalls Asia, which has quickly expanded its operations in China, and now has interests in more than 50 shopping centres in the country. International retailers continue to grow their presence in China; during 2011, IKEA opened its secondlargest store in the world in Shanghai, US clothing retailers Hollister and American Eagle Outfitters launched their first shops in mainland China, while luxury retailers Dior and Marni opened new flagship stores in Beijing.

Following two years of exceptional growth, prime office rents peaked in the Central district of Hong Kong in the second half of 2011, and rental falls were recorded in the final four months of the year. Hong Kong’s exposure to global economic headwinds has engendered increased occupier caution, and a growing

Shanghai

number of tenants have sought to reduce their operating costs by moving to less expensive

29

2012 GLOBAL REAL ESTATE MARKETS Annual review and outlook

Figure 19

Financial Center project, which will include a

Asia-Pacific prime office rents

total office space of 328,000 sq m in three

US$ per sq m per annum

towers when complete.

1,800

Grade A vacancy levels have remained high in

1,600

Hanoi and Ho Chi Minh City, keeping prime

1,400

rents under downward pressure. The Grade A

1,200

vacancy rate in Hanoi rose sharply to reach 33% at the end of 2011, mainly due to the

1,000

delivery of a large volume of new space in the

800

west of the city. In HCMC, the Grade A vacancy

600

rate is 14%, but this figure is skewed by the

400

Bitexco Financial Tower, a 262 metre tall

200

Q4 2010

Kuala Lumpur

Jakarta

Bangalore

Phnom Penh

Bangkok

Guangzhou

Seoul

Hanoi

Shanghai

Ho Chi Minh City

Melbourne

New Delhi

Beijing

Mumbai

Brisbane

Sydney

Perth

Singapore

Tokyo

building opened in 2010, which remains less Hong Kong

0

Q4 2011

cost-conscious tenants. The opening of the

to fall by 10-15% during 2012, but rents should

138,600 sq m Sumitomo Fudosan Shinjuku

remain firm in non-core districts such as

Grand Tower added to availability in Tokyo

Causeway Bay, Quarry Bay and Wan Chai.

towards the end of 2011, and vacancy rates

continued to perform well, buoyed by strong

may edge further upwards with a significant

The outlook for Singapore’s trade-based economy has worsened, with government

rose by around 20% in 2011, and further

forecasts suggesting that GDP growth will

growth is anticipated in 2012 with

slow from 4.8% in 2011 to no more than 3%

international retailers maintaining an interest

in 2012. This is expected to cause office

in expanding into Hong Kong’s major

occupiers to rein in their expansion plans and

shopping centres. The Hong Kong retail sector

office market activity is likely to weaken in the

also provided the largest global commercial

next year. Prime office rents began to fall in

property investment transaction of 2011, with

the final quarter of 2011, and are forecast to

the sale of Festival Walk shopping centre to

decrease by up to 15% over the course

Mapletree Investments for HK$18.8 billion

of 2012.

helped to push the vacancy rate down to

somewhat in 2012 as a result of concerns in the global economy, most of the new space expected to be delivered to the market over the next 12 months is already pre-let, which will help to support occupancy levels.

Grade A office rents in Seoul have continued on a downward trend in the face of relatively

Following the devastating earthquake in

weak demand and rising levels of new supply.

March, the Japanese economy picked up well

There were a number of large completions in

in the third quarter of 2011, but activity

the CBD during 2011, while the Yeouido

weakened again in the final quarter, with

Business District will also see major deliveries

exports hit by slowing global trade. Prime

over the next two years, most notably the

office rents in Tokyo remain under moderate

Federation of Korean Industries Hall, with a

downward pressure, with landlords needing

floor space of 169,000 sq m, and Two IFC and

to offer competitive rents in order to attract

Three IFC, part of the mixed-use International

30

Strong demand for office space in Jakarta

in 2012.

arrivals from the mainland. Prime retail rents

initial yield of c.4.5%.

a new benchmark for prime offices in HCMC.

number of projects due for completion

private consumption and increased tourist

(c.US$2.4 billion), reportedly reflecting an

reflected a yield of approximately 8.5%, setting

earlier. While demand is expected to weaken

offices. Prime rents in Central are anticipated

market has cooled, the retail sector has

Tower to the Japanese investor Daibiru

6.3% at the end of 2011, from 11.9% a year

Source: Knight Frank Research

While sentiment in the Hong Kong office

than 50% occupied. The recent sale of Saigon

Jakarta

Phnom Penh Tower was completed in 2011, while the 39-storey Vattanac Capital Tower, due for completion in 2012, is expected to set new standards of quality for Cambodian offices. Asking rents for the new Grade A space are significantly higher, at US$20-25 per sq m per month, than those achieved in existing Grade B buildings, where rents are typically US$9-15 per sq m per month.

The major Indian office markets have seen a gradual recovery in demand over the last two years, albeit vacancy rates remain high in many locations. The majority of leasing activity within the National Capital Region during 2011 occurred in peripheral business districts such as Noida and Gurgaon, while a

Tokyo

limited number of transactions were recorded in the New Delhi CBD, due to a lack of Prime office rents in Kuala Lumpur remained flat over the course of 2011. Office leasing activity was healthy, driven by the oil and gas and financial sectors, but the vacancy rate edged up to 20%. With a significant amount of new space due for completion over the next twelve months, rental growth is not expected in 2012.

Occupier demand in the Bangkok office market has remained robust and largely unaffected by the severe floods seen in

Thailand in the second half of 2011. However, the floods have had a greater impact on the industrial sector, causing considerable damage and disruption to many industrial estates and factories. In some cases, industrial occupiers are considering relocating operations to less flood-prone areas, either within Thailand or in other countries.

available space. Prime office rents were either

The Grade A office market in Phnom Penh remains in its infancy, although the 22-storey

office rents were flat over the course of 2011 in

stable or showed modest rises across the NCR’s submarkets in 2011.

The Mumbai office market was relatively subdued in 2011, with occupiers from the business, financial and insurance sector, traditionally the major drivers of the market, accounting for a reduced share of leasing activity compared with recent years. Prime Nariman Point, the central business district, while modest rises were recorded in western suburbs such as Malad and Andheri. High

Figure 20

vacancy rates and a large development

Asia-Pacific commercial investment volumes

pipeline are likely to keep rental levels in

US$ billion

Mumbai under downward pressure in 2012.

The Bangalore office market rebounded in

30

2011, with prime rents rising by 10% in the 25

CBD and by around 15% in Whitefield and Electronic City, submarkets favoured by IT

20

occupiers.

15

The Indian organised retail sector showed signs of recovery in 2011, with increased

10

demand noted in a number of cities, although retailers remain cautious about expansion.

5

Several major markets are expected to see increased new supply over the next year, as

0 Q1

Q2 Q3 2008

Q4

Q1

Q2 Q3 2009

Q4

Q1

Q2 Q3 2010

Q4

Q1

Q2 Q3 2011

Japan China Australia Hong Kong South Korea Singapore Rest of

(Mainland)

South East Asia Office, retail, industrial and hotel transactions only Source: Knight Frank Research/Real Capital Analytics

Q4

developers gradually restart projects that had been delayed during the global economic

India

downturn. Significantly, though, the Indian government suspended plans to open up the retail market to foreign investment in late 2011.

31

2012 GLOBAL REAL ESTATE MARKETS Annual review and outlook

Demand for office space in Sydney remains relatively patchy, although prime accommodation has been surprisingly resilient in the face of reduced business confidence caused by the uncertainty in the global economy. The vacancy rate stood at 9.6% at the year-end, an increase from 8.3% at the start of 2011 caused primarily by the completion of several large new developments in the first half of the year.

In Melbourne, the office vacancy rate fell from 6.6% to 5.3% during 2011, although the rate at which availability fell slowed during H2 as leasing activity softened. In both Sydney and Melbourne, demand is strongest for offices at the prime end of the market, particularly space with large contiguous floor plates.

The Brisbane and Perth markets have both benefitted from increased demand from Australia’s booming resources sector. In Brisbane, the vacancy rate fell steadily in

Marginal rental increases were recorded in the Australian industrial sector in 2011, with demand for the limited available prime space remaining strong. An increased level of speculative and pre-lease development is expected to be seen in 2012, although this is likely to remain at a fairly low level until the global economy picks up a head of steam.

Overall, investment in commercial property in the Asia-Pacific region came to just under US$93.8 billion in 2011, 10% up on the previous year, according to Real Capital Analytics/Knight Frank data. While increased activity was recorded in China and Australia, volumes in Japan inevitably fell in the aftermath of the TÂŻohoku earthquake.

Investment activity in Australia was driven by a notable increase in offshore demand, with cross-border investors accounting for around 50% of office transaction volumes in both Sydney and Melbourne.

2011, to reach 6.2% at the year-end, and rents rose modestly. However, an ample development pipeline may dampen the rate of rental growth in Brisbane during 2012.

The lack of available supply is more acute in Perth, with the vacancy rate now standing at 3.3% and nearly all of the new space due for delivery in 2012 already pre-let. Perth now has the highest prime office rents in the country, albeit Sydney still achieves the highest individual rents in trophy, premium buildings.

Office rents in Perth are expected to rise further in 2012, with demand supported by the strength of Western Australia’s economy, which is currently outperforming the rest of the nation.

Consumer spending was subdued during 2011, contributing to challenging conditions within the Australian retail market. Despite this, a number of international retailers are actively pursuing expansion strategies within the country, with Topshop and Zara being notable new entrants to the market during the last twelve months. Demand from large retailers seeking prime locations for flagship stores has underpinned modest rental growth in Sydney, but rents have remained flat in other locations within the city. Average retail rental growth in Sydney is expected to be flat to negative in 2012.

32

Sydney

Investment volumes slowed in the final quarter of 2011, and the outlook for 2012 appears uncertain. The relative strength of economic growth in the region should continue to encourage activity, but there are signs that aggressive pricing is causing some local investors to look further afield at other international markets in search of better value, with prime office yields at sub-4% in markets such as Tokyo and Hong Kong.

The occupational markets of the region face a mixed outlook in 2012, and prime office rents are expected to come under pressure in a number of major cities. Paradoxically, the economic downturn that started in the Eurozone may actually be having a greater impact on some Asian markets, with occupier caution in the historically volatile markets of Hong Kong and Singapore causing these cities to have some of the weakest rental growth prospects globally in 2012.

Table 1

Global CBD office rents, Q4 2011 Market

Region

Hong Kong, SAR China London (West End), UK Tokyo, Japan Moscow, Russia Paris, France Singapore Perth, Australia London (City), UK Geneva, Switzerland Sydney, Australia Lagos, Nigeria St Petersburg, Russia Dubai, UAE Mumbai, India Brisbane, Australia Manhattan, USA Milan, Italy Stockholm, Sweden Beijing, China Delhi NCR, India Melbourne, Australia Oslo, Norway Washington, DC, USA Frankfurt, Germany Abu Dhabi, UAE Rome, Italy Ho Chi Minh City, Vietnam Shanghai, China Aberdeen, UK Istanbul, Turkey Manchester, UK Hanoi, Vietnam Birmingham, UK Doha, Qatar Munich, Germany Bristol, UK Helsinki, Finland Edinburgh, UK Glasgow, UK Boston, USA Miami, USA Amsterdam, Netherlands Riyadh, Saudi Arabia Dublin, Ireland Madrid, Spain Kiev, Ukraine San Francisco, USA Leeds, UK Warsaw, Poland Brussels, Belgium Vienna, Austria Houston, USA Newcastle, UK Los Angeles, USA Cardiff, UK

Asia-Pacific Europe Asia-Pacific Europe Europe Asia-Pacific Asia-Pacific Europe Europe Asia-Pacific Africa Europe Middle East Asia-Pacific Asia-Pacific North America Europe Europe Asia-Pacific Asia-Pacific Asia-Pacific Europe North America Europe Middle East Europe Asia-Pacific Asia-Pacific Europe Europe Europe Asia-Pacific Europe Middle East Europe Europe Europe Europe Europe North America North America Europe Middle East Europe Europe Europe North America Europe Europe Europe Europe North America Europe North America Europe

Rent (€/sq m/yr)

Rent (US$/sq ft/yr)

Rent (UK£/sq ft/yr)

Rank 2010

Rank 2011

Outlook 2012

1,247.58 1,188.16 988.25 926.64 830.00 728.54 718.89 706.48 698.39 686.67 648.65 594.59 566.02 563.49 538.18 534.96 525.00 503.91 465.89 457.38 452.54 450.53 439.54 432.00 420.41 420.00 416.99 408.65 404.62 398.46 378.93 370.66 366.08 362.93 360.00 353.24 348.00 346.82 346.82 344.03 342.87 340.00 339.77 325.00 324.00 320.46 313.78 308.28 307.20 295.00 294.00 288.76 282.59 278.45 269.75

150.09 142.94 118.89 111.48 99.84 87.65 86.49 84.99 84.01 82.61 78.04 71.53 68.10 67.79 64.75 64.36 63.15 60.62 56.05 55.03 54.44 54.20 52.88 51.97 50.58 50.52 50.17 49.16 48.68 47.94 45.59 44.59 44.04 43.66 43.31 42.50 41.86 41.72 41.72 41.39 41.25 40.90 40.88 39.10 38.98 38.55 37.75 37.09 36.95 35.49 35.37 34.74 34.00 33.50 32.45

97.11 92.50 76.93 72.13 64.60 56.71 55.96 55.00 54.36 53.45 50.49 46.28 44.06 43.86 41.89 41.64 40.86 39.22 36.27 35.60 35.23 35.07 34.21 33.63 32.73 32.69 32.46 31.81 31.50 31.02 29.50 28.85 28.50 28.25 28.02 27.50 27.09 27.00 27.00 26.78 26.69 26.46 26.45 25.30 25.22 24.94 24.42 24.00 23.91 22.96 22.88 22.48 22.00 21.67 21.00

3 1 2 4 5 6 N/A 7 11 8 10 17 12 9 14 22 16 20 48 15 23 25 40 26 13 24 19 35 27 29 33 21 31 18 32 34 41 36 37 68 51 39 43 28 38 30 54 44 49 42 47 67 46 58 53

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55

ê ì î ì è ê é è è ì è è è è ì é î ì é è ì ì è è è î ê é ì ì è î è î è è è è è ì è è ê î î è é ì ì è è ì è è è

33

2012 GLOBAL REAL ESTATE MARKETS Annual review and outlook

Table 1

Global CBD office rents, Q4 2011 Market

Region

Westchester/Fairfield, USA Vancouver, Canada Long Island, USA New Jersey, USA Berlin, Germany Sheffield, UK Chicago, USA Ottawa, Canada Prague, Czech Republic Manama, Bahrain Copenhagen, Denmark Toronto, Canada Seattle, USA Budapest, Hungary Liverpool, UK Seoul, South Korea San Diego, USA Kuwait City, Kuwait Denver, USA Lisbon, Portugal Montreal, Canada Philadelphia, USA Bucharest, Romania Guangzhou, China Orange County, USA Barcelona, Spain Portland, USA Detroit, USA Lusaka, Zambia Bangkok, Thailand Muscat, Oman Phoenix, USA Baltimore, USA Dar es Salaam, Tanzania Phnom Penh, Cambodia Nashville, USA Kampala, Uganda Dallas, USA Johannesburg, South Africa Bangalore, India Indianapolis, USA St. Louis, USA Atlanta, USA Durban, South Africa Jakarta, Indonesia Kansas City, USA Kuala Lumpur, Malaysia Gaborone, Botswana Cape Town, South Africa Harare, Zimbabwe Nairobi, Kenya Blantyre, Malawi

North America North America North America North America Europe Europe North America North America Europe Middle East Europe North America North America Europe Europe Asia-Pacific North America Middle East North America Europe North America North America Europe Asia-Pacific North America Europe North America North America Africa Asia-Pacific Middle East North America North America Africa Asia-Pacific North America Africa North America Africa Asia-Pacific North America North America North America Africa Asia-Pacific North America Asia-Pacific Africa Africa Africa Africa Africa

Rent (€/sq m/yr)

Rent (US$/sq ft/yr)

Rent (UK£/sq ft/yr)

Rank 2010

Rank 2011

Outlook 2012

262.91 262.57 261.91 258.59 258.00 256.90 255.59 252.52 246.00 245.01 242.14 241.55 241.46 240.00 237.63 236.81 233.40 232.61 224.59 222.00 220.60 218.69 216.00 214.98 214.61 210.00 207.63 195.58 194.59 194.50 191.96 189.01 186.94 185.33 185.33 177.96 171.43 169.98 165.02 164.66 160.17 159.92 158.26 153.64 147.34 145.71 135.61 133.78 129.74 111.20 101.93 96.83

31.63 31.59 31.51 31.11 31.04 30.91 30.75 30.38 29.59 29.48 29.13 29.06 29.05 28.87 28.59 28.49 28.08 27.98 27.02 26.71 26.54 26.31 25.98 25.86 25.82 25.26 24.98 23.53 23.41 23.40 23.09 22.74 22.49 22.30 22.30 21.41 20.62 20.45 19.85 19.81 19.27 19.24 19.04 18.48 17.73 17.53 16.32 16.10 15.61 13.38 12.26 11.65

20.46 20.44 20.39 20.13 20.08 20.00 19.90 19.66 19.15 19.07 18.85 18.80 18.80 18.68 18.50 18.43 18.17 18.11 17.48 17.28 17.17 17.02 16.81 16.73 16.71 16.35 16.16 15.22 15.15 15.14 14.94 14.71 14.55 14.43 14.43 13.85 13.34 13.23 12.85 12.82 12.47 12.45 12.32 11.96 11.47 11.34 10.56 10.41 10.10 8.66 7.93 7.54

71 50 62 73 61 56 74 60 64 78 66 63 57 65 55 77 59 52 82 69 72 75 85 88 76 70 83 92 90 84 87 81 79 89 80 94 99 91 86 97 N/A 93 95 N/A 102 96 101 100 98 105 104 103

56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107

ì î è è ì è î î è è è î è è è î è î ì è î è ì é î î è è ì ì î î è î ì è î è è ì è è è è ì è è î è è ì ì

The figures in this table provide indicative rents for prime, well-located office space. While local practices vary, in order to provide figures that are as comparable as possible, the values quoted represent the rents that could be expected for high specification, standard size office units in the best location within a market.

34

Global Corporate Services

Global Corporate Services

The Newmark Knight Frank Global Corporate Services model combines strategy and execution within a unified team. This integrated platform is crucial to the effective optimisation of clients’ internal corporate real estate functions. Our approach has proven that by developing strategies with a clear understanding of the execution phase, and managing the implementation of those plans from beginning to end, we can achieve optimal results for our clients.

Demand of Space.........

Location Strategy and Optimization

OperationsServices Workplace Global Corporate and Portfolio and Strategy

STRATEGY TO IMPLEMENTATION

Facilities and Property Management

Program and Project Management

Workflow Strategy

Real Estate Transactions and Advisory Services

.........Supply of Space

We assign a senior leadership team to every account, providing a truly robust but nimble response to service clients’ needs, and depth and stability in every phase of execution. Our team of worldwide professionals brings crucial local expertise and an in-depth understanding of their respective markets, creating an environment which is conducive to making quick and efficient business decisions.

This highly integrated, senior-led organisational structure is based on effective communications and proactive measurement of goals and objectives, ensuring the highest level of quality and consistency for our clients.

Looking beyond real estate, the Newmark Knight Frank Global Corporate Services approach takes a holistic view of our clients’ overall objectives, implementing strategies that provide exponential value by reducing costs and thereby increasing profitability. Our approach is founded in the belief that real estate decisions should be made with consideration of long-term goals, and not just as reactive measures driven by lease expirations and other immediate needs.

Tony Nicholas Head of Global Corporate Services – EMEA tony.nicholas@knightfrank.com +44 (0) 20 7861 1179

• Supply Chain/Distribution • Manufacturing • Office and Labs

• 1st Dimension: Targets a specific market (Americas, EMEA, APAC) • 2nd Dimension: Addresses a service requirement (transaction, project, facility) • 3rd Dimension: Leverages subject matter expertise with each asset type Se

rvi

ce s

Subject Matter Expertise

Newmark Knight Frank Global Corporate Services is an integrated global platform which provides seamless, beginning to end corporate services solutions to clients on an international level. Operating from three centres of excellence; New York, London and Hong Kong, Newmark Knight Frank Global Corporate Services oversees operations for all global accounts, ensuring consistent high levels of service for clients worldwide.

G

s hie

rap

g eo

Whatever your business sector, location, corporate structure or company culture, our Newmark Knight Frank Global Corporate Services team is ready to work alongside you, adopting your objectives as our own and designing innovative solutions to bring you closer to your goals.

Tony Nicholas, Global Corporate Services, EMEA, said “Business strategies continue to be focused on efficiencies and cost savings, whilst the workplace follows its trend towards activity-based working in response to the arrival of the new generation in the workforce.

Occupiers continue to seek consolidation opportunities and flexibility on commitment given the changes in structure and reduced availability of high quality space in a number of prime CBDs. The decision process is still elongated, but the perceived importance of London versus the Eurozone should lead to certainty on strategy in European markets.”

Colin Fitzgerald, Global Corporate Services, APAC, said “Demand in key Asian cities such as Hong Kong and Seoul is expected to be dampened by the uncertain global economic outlook especially given that many decisions are made at a European or American HQ. The growth of APAC continues, supported by strong domestic and tourist spending.

However, the impact of wage increases on cost operations means that international corporates are beginning to consider whether to onshore manufacturing.”

Michael Ippolito, Global Corporate Services, Americas, said “The decision-making process is critical for companies; not only for CRE organisations, but across the board for every business unit. How companies and organisations make decisions plays a key role in successful operational and financial outcomes, from improved productivity to increased profits. Corporates are increasingly realising the importance of technology in this process as a force to align internal data with global real estate strategies to achieve their goals.”

Colin Fitzgerald Managing Director – Hong Kong colin.fitzgerald@hk.knightfrank.com +852 2846 4848

Michael Ippolito Chairman, Global Corporate Services mippolito@newmarkkf.com +1 212 372 2048

35

RESEARCH

Americas USA Canada Caribbean Australasia Australia New Zealand Europe UK Austria Belgium Czech Republic France Germany Hungary Ireland Italy Monaco Poland Portugal Romania Russia Spain Switzerland The Netherlands Ukraine Africa Botswana Kenya Malawi Nigeria South Africa Tanzania Uganda Zambia Zimbabwe

Europe, Middle East and Africa Matthew Colbourne Senior Analyst, International Research +44 (0) 20 7861 1238 matthew.colbourne@knightfrank.com

Asia-Pacific Nicholas Holt Research Manager, Asia-Pacific +65 6228 7313 nicholas.holt@asia.knightfrank.com

Darren Yates Partner, International Research +44 (0) 20 7861 1246 darren.yates@knightfrank.com

The Americas Newmark Knight Frank Research +1 212 372 2000 researchdepartment@newmarkkf.com

Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, corporate institutions and the public sector. All our clients recognise the need for expert independent advice customised to their specific needs.

Asia Cambodia China Hong Kong India Indonesia Macau Malaysia Singapore South Korea Thailand Vietnam

Knight Frank Reports are also available at www.knightfrank.com

Š Knight Frank LLP 2012 This report is published for general information only. Although high standards have been used in the preparation of the information, analysis, views and projections presented in this report, no legal responsibility can be accepted by Knight Frank Research or Knight Frank LLP for any loss or damage resultant from the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is allowed with proper reference to Knight Frank Research.

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