2012 Global Market report - NAI Global

Area Type Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011
Asia Pac Commercial $ 17,192,943,561 $ 14,039,182,064 $ 20,051,078,142 $ 25,251,218,789 $ 21,503,391,516 $ 20,492,011,589 $ 18,388,955,819
Land $ 73,723,342,403 $ 41,127,619,910 $ 56,985,104,261 $ 91,517,897,184 $ 82,438,288,775 $ 57,254,175,662 $ 74,415,868,629
Europe Commercial $ 27,064,359,069 $ 27,054,246,831 $ 25,839,117,962 $ 42,661,539,095 $ 37,379,631,966 $ 35,722,913,615 $ 34,843,975,506
Land $ 2,107,758,023 $ 2,061,090,749 $ 2,264,360,265 $ 3,017,932,542 $ 1,801,765,383 $ 1,945,274,100 $ 2,350,726,612
Americas Commercial $ 11,986,348,608 $ 17,283,088,673 $ 23,856,108,169 $ 39,425,246,472 $ 21,643,962,766 $ 37,944,154,803 $ 31,802,368,075
Land $ 1,177,306,212 $ 1,378,077,610 $ 1,587,973,681 $ 2,157,422,220 $ 1,846,346,110 $ 1,852,157,503 $ 1,931,185,948
Kuala Lumpur and Beijing retail rents have already seen reduced growth in recent
quarters, and we expect further slowing.
Industrial
Rental rates in Singapore and Hong Kong appear to have peaked, with a softening of rates
forecast for 2012. In contrast, Tokyo industrial rates are close to the bottom with some
increases anticipated over the coming quarters. Beijing and Shanghai have achieved some
good rental growth and will likely see growth projection scale back in the coming period.
Investment
While the Americas and Europe still have higher annual transaction volumes for
commercial property sales above US $10 million, there is a rising trend in commercial
property transaction volumes in Asia and a sleeping giant (land sale transactions) that is
not reflected in commercial building sales figures.
The chart above displays transaction volumes in recent years. The high land transaction
volumes in Asia reflect the high cost of land in major, developed, urban centers in Asia as
well as the land sale activity to meet the urbanization of populations and the resulting huge
demand for new real estate developments in growing, developing countries like China.
Source RCA
All Property Types - Globally
Market Volume (in $mil) Cap Rate
NYC Metro 39,679 6.30%
London Metro 34,479 5.81%
Beijing 31,397
Shanghai 25,528
Tokyo 24,047 5.54%
Singapore 22,642 6.68%
Hong Kong 22,555 3.27%
DC Metro 19,404 6.45%
Paris 18,388 6.32%
Seoul 17,533 6.68%
LA Metro 16,024 6.29%
SF Metro 12,678 6.42%
Wuhan 11,698
Chicago 11,291 7.06%
Kunming 10,716
Tianjin 10,323
Suzhou 10,112
Dalian 9,272
Chongqing 9,244
Hangzhou 8,931
Source RCA
In addition, Asia grabs 13 of the top 20 spots for the most active global property markets
in the last 12 months (as of November 2011).
Major Trends in China
China now has the highest annual GDP growth rate of any major global economy (9.1%),
the largest foreign currency reserves in the world (US $3.2 trillion), the second largest
economy in the world (almost US $7 trillion), the largest standing military in the world
(2.25 million), the largest population in the world (almost 1.34 billion) and was the winner
of the most gold medals in the 2008 Olympics (51 gold medals).
European financial ministers must now kowtow to China for Chinese financial support to
invest in the €1 trillion European Financial Stability Fund (EFSF) bond fund, needed to
rescue Greece and the eurozone. US Treasury Secretary Timothy Geithner traveled to
China to encourage the Chinese government to purchase US debt. It is difficult to miss
how dramatically the global economic cards have turned in favor of the Chinese in the
last few years.
The Chinese economy is predicted to grow 8.5% in 2012, the slowest growth rate in a
decade. The world’s second biggest economy is cooling as weakness in developed
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