Jones Lang LaSalle global property update for Q3 2012 shows edges towards recovery. It has released its quarterly Global Market Perspective, which captures in-depth data and analysis on the global property market in the year to date.
Following a lull in activity during Q1, the global property market has resumed a steady recovery path. Investment volumes recovered to US$108 billion in Q2, 24% up q-o-q, signaling that capital markets are on track to achieving US$400 billion volumes for full-year 2012.
Other key highlights on the quarter include:
· The global economic outlook has weakened as euro strains re-emerges. Asia Pacific markets will continue to drive global growth this year, however, a deceleration is increasingly apparent.
· In a climate of uncertainty, corporate occupiers have adopted a ‘wait and see’ approach to expansion as global take-up volumes have fallen year-on-year. Corporates are trending towards sale and lease back transactions as they look to release capital.
· Leasing activities have improved from the Q1 lull, but is still below 2011 levels due to weak jobs growth, slow corporate hiring and the downward reset of global growth projections. Gross leasing volumes for full-year 2012 expected to be 10% lower than in 2011.
· On the other hand, vacancy continues to edge downwards, with the global office vacancy rate falling to 13.3% in Q2, the lowest since 2009. Regionally, the Americas and Asia Pacific regions have continued to see vacancy rates fall, while they have remained unchanged in Europe.
· With global office supply still falling, the Jones Lang LaSalle Global Office Index, which tracks the rental performance of prime office space across 90 major markets, has continued to grow, up by a further 0.6% during Q2 2012.
· In residential, high trading volumes have been recorded for Germany, while momentum has been maintained in the U.S. rental apartment market. In Asia, residential sales have improved in China and Hong Kong and remain resilient in Jakarta, driven by investor interest, low lending rates and rising rental returns.
· Retail exhibited a mixed picture. While Greater China recorded strong demand and healthy rental growth, market conditions were relatively flat in the US. In Europe, demand is expected to drive rents in the top retail locations in London, Moscow and Paris in the second half of 2012, while most other European markets will remain broadly stable.
India Perspectives:
· Slowing economic growth, even in the powerful emerging markets of China, India and Brazil, continues to create a subdued and uncertain operating environment for corporate occupiers.
· Expansion of both MNCs and domestic firms slowed in China and India, but more relocation and decentralisation was evident. In India, some opportunistic occupiers are taking advantage of more affordable rents to upgrade.
· Average rents in India were flat or saw marginal growth.
· India has experienced a substantial influx of capital by Dutch pension fund manager APG, who has acquired a 6% stake in Lemon Tree Hotels and invested close to US$350 million in a joint venture to develop a portfolio of mid-market hotels by 2016.
