Global Market Perspective - JLL .Global Market Perspective , Fourth Quarter 2012 Global Market...

download Global Market Perspective - JLL .Global Market Perspective , Fourth Quarter 2012 Global Market Perspective

of 33

  • date post

    27-Jun-2018
  • Category

    Documents

  • view

    226
  • download

    0

Embed Size (px)

Transcript of Global Market Perspective - JLL .Global Market Perspective , Fourth Quarter 2012 Global Market...

  • GLOBAL MARKET PERSPECTIVE Global Foresight Series 2012

    COPYRIGHT JONES LANG LASALLE IP, INC. 2012. All Rights Reserved

    Global Market Perspective Fourth Quarter 2012

  • COPYRIGHT JONES LANG LASALLE IP, INC. 2012. All Rights Reserved 2

    Global Market Perspective, Fourth Quarter 2012

    Global Market Perspective Fourth Quarter 2012

    Investment and Leasing Markets Diverge The global property markets continue on their forward path, but as we move towards the end of the year there are signs of divergence between relatively resilient investment markets and more subdued leasing markets.

    The global investment markets are now consistently delivering around US$100 billion in commercial real estate transactions each quarter and have established a firm base of transactional activity in line with the long-run trend; a level that is expected to be maintained, if not exceeded, through 2013. By contrast, leasing volumes have weakened as corporate occupiers adopt a holding pattern in the face of economic uncertainty. Decisions are generally being postponed rather than cancelled altogether, which suggests that sustained improvements in confidence and greater certainty will support an uptick in leasing activity from the second half of 2013.

    The key highlights from the Fourth Quarter 2012 Global Market Perspective are:

    Economy: Some cause for optimism but economic headwinds persist, notably the Eurozone debt crisis and U.S. fiscal cliff. Soft patch is not confined to developing economies - economic growth in emerging markets is slowing.

    Investment Volumes: US$100 billion of capital transactions registered in Q3 - a consistent pattern emerges.

    Capital Markets Outlook: On track to achieve US$400 billion investment volumes for full-year 2012. US$100 billion per quarter to continue into 2013, with upside potential.

    CMBS: CMBS activity in U.S. on track for post-recession high.

    Corporate: Corporate occupiers adopt a holding pattern.

    Leasing: Leasing activity subdued in Q3. Full-year 2012 leasing volumes are expected to be 15% below 2011.

    Vacancy: Vacancy continues to edge downwards the global office vacancy rate is now 13.2%.

    Construction: New office deliveries at lowest level for more than a decade. Construction gradually increasing in U.S. and Europe, but still well below historic norms.

    Rents: Rental growth slows, but remains positive. Global Office Index increases by 0.2% in Q3 and by 2.0% year-on-year.

    Capital values: Capital appreciation decelerates to an annualised rate of 4.4% (across 24 office markets).

    Star markets: Jakarta, Mexico City, Rio de Janeiro, Beijing and San Francisco record strongest rental growth.

    Retail: International retailers boost demand in key gateway cities and across emerging markets.

    Industrial: Pockets of strength in the U.S.; market polarisation in Europe; retail sales underpin demand in Asia.

    Hotels: Full-year 2012 hotel investment volumes likely to be 10% below initial forecasts. Strong investor focus on gateway cities, notably New York and London.

    Residential: U.S. rental apartment market remains robust, with burgeoning development pipeline; German residential market is attracting institutional investors.

  • Global Market Perspective, Fourth Quarter 2012

    COPYRIGHT JONES LANG LASALLE IP, INC. 2012. All Rights Reserved

    Global Market Perspective Fourth Quarter 2012

    Contents

    Global Economy ................................................................................................................................................................ 4

    Global Property ................................................................................................................................................................. 6 Capital Markets Outlook.......................................................................................................................................... 7 Leasing Markets Outlook ........................................................................................................................................ 8

    Global Real Estate Health Monitor ................................................................................................................................... 9

    Real Estate Capital .......................................................................................................................................................... 10

    Corporate Occupiers ...................................................................................................................................................... 14

    Office Markets ................................................................................................................................................................. 16 Office Demand Dynamics ..................................................................................................................................... 16 Office Supply Trends............................................................................................................................................. 18 Office Rental Trends.............................................................................................................................................. 21 Office Capital Values and Yield Trends ............................................................................................................... 23

    Retail Markets .................................................................................................................................................................. 24

    Industrial Warehousing Markets .................................................................................................................................... 26

    Hotel Markets ................................................................................................................................................................... 27

    Residential Markets ........................................................................................................................................................ 29

    Recent Key Transactions ............................................................................................................................................... 30

  • Global Market Perspective, Fourth Quarter 2012

    COPYRIGHT JONES LANG LASALLE IP, INC. 2012. All Rights Reserved 4

    Global Economy Some cause for optimism, but economic headwinds persist

    Recent months have brought some positive developments, but generally the economic news has been disappointing. Once again, the root causes lie in the developed world, though the spread of the slowdown to the more dynamic markets of Asia is increasingly a concern. The Eurozone remains the main threat to recovery; some progress has been made on securing effective support for its fringe economies, but politicians are still far from resolving all the internal contradictions within the system. Elsewhere, the key fear is that the impending U.S. fiscal cliff will reinforce the deflationary bias in the global economy next year.

    The financial position of the euro has stabilised over recent months underpinned by new European Central Bank (ECB) initiatives, though this has come too late to reverse the economic damage. Spain is at the centre of the latest upheaval, with rumours that the government is preparing to seek a bailout, despite denials that this was needed only recently. The scale of the support required for Spain will dwarf all previous packages and finding agreement will be a stiff test for the Eurozones leaders. But the biggest concern will be the spillover impact on Portugal, Greece and (most seriously) Italy.

    The latest IHS short-term forecasts show some significant changes in the outlook over the quarter. Downward revisions were most obvious for emerging Asia China and India as the global slowdown weighs down on the performance of these fast-growing economies. In Europe, growth expectations have been broadly stable, with the biggest change occurring in the UK. Forecasts for 2013 have been more heavily downgraded of late, especially in the Eurozone.

    GDP Projections 2012 in Major Economies Recent Movements

    Australia China France Germany India Japan UK USA

    July 2012 3.3 7.8 0.0 1.0 6.5 2.4 0.0 2.0

    Oct 2012 (Latest) 3.4 7.4 0.0 0.9 5.1 2.3 -0.2 2.1

    Change (bps) +10 -40 0 -10 -140 -10 -20 +10

    Source: IHS Global Insight, October 2012 Monetary tap turns back on, but will it help?

    Since the summer, unease about stagnating global growth has brought central banks back to the rescue in the developed world. At the September FOMC, the Federal Reserve agreed to provide an additional US$40 billion in liquidity for the U.S. with bond purchases. This move is likely to be mirrored in Japan and the UK over the coming months, while the Fed has backed up its extra cash with a promise of low interest rates until 2015. These signals were greeted enthusiastically and helped support a global stock market rally.

    In Europe, intervention is more complex. The ECB followed its rate cut in July with a plan for outright monetary operations - a commitment to unlimited support for beleaguered sovereign states. There was initial optimism that this, along with German approval of an expansion to the European Stability Mechanism, was the bazooka that the Eurozone required to fend off market pressure. But this hope was soon dissipated in arguments over how this support can be used to support local banks. Until these issues are r