Asia Pacific Real Estate
Market Outlook
Alastair Hughes
Chief Executive Officer, Asia Pacific
13 June 2011
Adelaide
Brisbane
Canberra
SydneyPerth
Melbourne
Beijing
Chengdu
Qingdao
Shanghai
Hong Kong
Shenzhen
MacauGuangzhou
Taipei
Tianjin
Jakarta
Sapporo
Tokyo
Osaka
Seoul
Auckland
Wellington
Cebu CityManila
Singapore
Phuket
Bangkok
Hanoi
Ho Chi
Minh
Chandigarth DelhiGuragon
MumbaiPune
Kolkata
HyderabadChennai
Kochi
Bangalore Coimbatore
13 Countries
77 Offices
20,000 Staff
“One platform, one culture”
Jones Lang LaSalle Asia Pacific
3
Asia Pacific real estate markets are in good shape
based on
3
• Sustained tenant demand from Asia Pacific corporations and
Western MNCs looking to grow in Asia Pacific
• Asia Pacific capital looking to buy Asia Pacific real estate with
high levels of equity
4
Today, we will look at……….
Asia Pacific Office Rents – Update and Outlook
Likely Trends over Next 12 Months
Asia Pacific Capital Values – Update and Outlook
4
5
Rental Trends
80
90
100
110
120
Q1
2007
Q2
2007
Q3
2007
Q4
2007
Q1
2008
Q2
2008
Q3
2008
Q4
2008
Q1
2009
Q2
2009
Q3
2009
Q4
2009
Q1
2010
Q2
2010
Q3
2010
Q4
2010
Q1
2011
Asia Pacific
North America
Europe
Prime offices – rental trends 2007 to 2011
North America – average of 6 markets; Asia Pacific –weighted average of 26 markets: Europe – weighted average of 24 markets
Ren
tal I
ndex
(Q
1 20
07 =
100
)Global rents fell during crisis
Source: Jones Lang LaSalle, April 20116
77
Figures relate to the major submarket in each city and represent the rebound from the last trough / peak to 1Q 2011
Hong Kong
50%
Tokyo
1%
Singapore
34%
Shanghai
30%
Mumbai
10%
Source: Jones Lang LaSalle (Real Estate Intelligence Service), 1Q 2011
Peak to 1Q11Trough to 1Q11
Hong Kong
-14%
Singapore
-49%
Shanghai
-15%
Mumbai
-39%
Tokyo
-46%
40
60
80
100
120
140
160
180
200
220
4Q06 2Q07 4Q07 2Q08 4Q08 2Q09 4Q09 2Q10 4Q10
Net
Eff
ecti
ve R
ents
(4Q
06 =
100
)
Shanghai Hong Kong Tokyo Singapore Mumbai Sydney
Sydney
6%
Sydney
-33%
Asia Pacific rent not yet back at peaksRental value changes, key Asia Pacific markets
8
Projected additions to office stock in 2011 to 2013
44.9%Shanghai
26.9%Singapore
6.5%Sydney
15.2%Tokyo
5.2%Hong Kong
Beijing
29.4%14.6%Seoul
37.4%Kuala Lumpur
8.5%Bangkok
Figures relate to grade A overall market, except Tokyo (3 kus). Sydney, prime grade for actual and all grades for forecast
Source: Jones Lang LaSalle (Real Estate Intelligence Service), 1Q 2011
74.2%Mumbai
84.5%Delhi
8
9
Asia Pacific growing stronglyAnnual GDP growth
Source: IHS Global Insight, May 2011
2010 2011
World 4.1 3.5
US 2.9 2.7
EU 1.7 2.0
Asia Pacific 7.0 4.9
0
3
6
9
12
15
Ch
ina
Ind
ia
Vie
tnam
Ind
on
esia
Sin
gap
ore
Ho
ng
Ko
ng
Taiw
an
Ph
ilip
pin
es
So
uth
Ko
rea
Mal
aysi
a
Th
aila
nd
Au
stra
lia
New
Zea
lan
d
Jap
an
Bra
zil
Ru
ssia
Ger
man
y
US
UK
y-o
-y (
%)
2010 2011 (May 2011 Forecast)
9
10
Take-up is strengthening
Source: Jones Lang LaSalle (Real Estate Intelligence Service), 1Q 2011
0
1
2
3
4
5
6
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011F 2012F 2013F
Net
Ab
sorp
tio
n (
mill
ion
sq
m)
0%
2%
4%
6%
8%
10%
12%
14%
Ave
rag
e V
acan
cy R
ate
India (DL, MB, CN, BG) China (BJ, SH, GZ) North Asia (TK, OS, SL)
Australia (Six Cities) Singapore Hong Kong
Other Average Vacancy Rate
10
11
2010
1 Million SqmTake Up of Space
&
London
Manhattan
12
Growth Slowing Rents Falling
Decline SlowingRents Rising
Office Rental Clock
Seoul
Beijing Singapore
Shanghai,
Hong Kong
Tokyo
Kuala Lumpur
1Q101Q11
Delhi
Bangkok
Sydney
Source: Jones Lang LaSalle (Real Estate Intelligence Service), 1Q 2011
JakartaMumbai
Kuala Lumpur, Tokyo
Beijing, Hong Kong
Shanghai
Mumbai
12
13
Rental values – 2011 outlook
Figures relate to the major submarket in each city
-5%
28%
20%
18%
22%
7%
6%
8%
-1%
-7%
2%
0 200 400 600 800 1000 1200 1400 1600 1800 2000
Bangkok
Kuala Lumpur
Sydney
Delhi
Beijing
Seoul
Shanghai
Mumbai
Singapore
Tokyo
Hong Kong
Net Effective Rents (USD per sqm pa)4Q11 RV 4Q10 RV
13
Source: Jones Lang LaSalle (Real Estate Intelligence Service), 1Q 2011
14
Capital Trends
15
Asia Pacific luxury residential price growth
100
120
140
160
180
200
220
4Q
03
1Q
04
3Q
04
1Q
05
3Q
05
1Q
06
3Q
06
1Q
07
3Q
07
1Q
08
3Q
08
1Q
09
3Q
09
1Q
10
3Q
10
1Q
11
4Q
03
= 1
00
City
Quarterly
Change
1Q11 vs 4Q10
Yearly Change
1Q11 vs 1Q10
(Local
Currency)
Hong Kong 8.3% 20.0%
Beijing 3.2% 12.3%
Shanghai 0.4% 5.4%
Singapore 0.0% 8.2%
Bangkok 0.8% 1.8%
Kuala Lumpur -1.1% 12.1%
Jakarta 2.9% 5.3%
Mumbai 0.0% 6.7%
(Local
Currency)
15
60
70
80
90
100
110
120
Q1
2007
Q2
2007
Q3
2007
Q4
2007
Q1
2008
Q2
2008
Q3
2008
Q4
2008
Q1
2009
Q2
2009
Q3
2009
Q4
2009
Q1
2010
Q2
2010
Q3
2010
Q4
2010
Q1
2011
Asia Pacific
North America
Europe
Prime offices – Capital value trends, 2007 to 2011
North America – average of 6 markets; Asia Pacific – weighted average of 26 markets: Europe – weighted average of 24 markets
Source: Jones Lang LaSalle, April 2011
•Cap
ital V
alue
Inde
x (Q
1 20
07 =
100)
Global capital values fell during crisis
16
80
90
100
110
120
Q1
2007
Q2
2007
Q3
2007
Q4
2007
Q1
2008
Q2
2008
Q3
2008
Q4
2008
Q1
2009
Q2
2009
Q3
2009
Q4
2009
Q1
2010
Q2
2010
Q3
2010
Q4
2010
Q1
2011
Asia Pacific
North America
Europe
1717
Capital Value Changes - Key Asia Pacific Markets
Hong Kong
97%
Tokyo
3%
Singapore
35%
Shanghai
82%
Mumbai
12%
Figures relate to the major submarket in each city and represent the rebound from the last trough/peak to 1Q 2011
Peak to 1Q11Trough to 1Q11
Hong Kong
34%
Tokyo
-54%
Singapore
-21%
Shanghai
13%
Mumbai
-38%
40
60
80
100
120
140
160
180
200
4Q06 2Q07 4Q07 2Q08 4Q08 2Q09 4Q09 2Q10 4Q10
Cap
ital
Val
ues
(4Q
06 =
100
)
Shanghai Hong Kong Tokyo Singapore Mumbai Sydney
Sydney
4%
Sydney
-20%
Capital value index shows some markets over peak
Source: Jones Lang LaSalle (Real Estate Intelligence Service), 1Q 2011
18
Asia Pacific - Direct Commercial Real Estate Investment2003 - YTD 1Q11
Figures exclude transactions below USD5mil, land acquisitions and developments
Source: Jones Lang LaSalle, April 2011
0
20
40
60
80
100
120
140
2003 2004 2005 2006 2007 2008 2009 2010 Q1
2011
US$ bn
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Domestic Cross-Border Cross Border (%)
$86bn
$66bn
$95bn
$121bn
$46bn
$27bn
$66bn
$85bn
$27bn
18
19
Asia Pacific - Commercial Real Estate Investment Volumes1Q11 vs 1Q10
0 1 2 3 4 5 6 7 8 9 10
Other Asia Pacific
India
Malaysia
Taiwan
Thailand
Australia
South Korea
Hong Kong
Singapore
China
Japan
US$ bn
1Q11
1Q10
▲ 308%
▼ 5%
▼ 16%
▲ 64%
▲ 52%
▼ 61%
▲ 2,072%
▲ 54%
▲ 82%
▼ 25%
▲ 96%
19
Figures exclude transactions below USD5mil, land acquisitions and developments
Source: Jones Lang LaSalle, April 2011
20
Who are the buyers?
High net worth individuals
Funds
Corporates
20
Explosive growth in private wealth
Asia-Pacific: High Net Worth population 3 million, equal to HNW in Europe
HNW wealth up 31% to $9.7 trillion
Forbes Asia: 332 billionaires in 2011, versus 79 in 2001
Rise of high net worth investor
Chinese Estates Holdings
River Court, London
HK private wealth
£280 million, January 2011
Sources: Jones Lang LaSalle21
Kerisvale Pte Ltd
One Finlayson Green, Singapore
Private equity group
S$ 277 million, March 2011
22
Corporate Occupiers in Asia Pacific
Corporations in Asia Pacific
generate 30% world’s output
- About 40% manufacturing world
output
Asian corporates have savings to spend
Sources: Jones Lang LaSalle
Owner occupied
Shanghai World Finance Centre
5 floors sold to owner occupiers
$40 million a floor
January 2011
Sale and leaseback
Singapore industrial property portfolio
5 buildings sold by Freight Links toSabana Shari’ah Compliant Industrial REIT
$148 million approximately
November 2010
Corporations buy or develop real
estate for their own occupation
- Part of trend that leads on to sale
and leaseback in market maturity
cycle
23
Asia Pacific institutional capital inter-regional
Sources: Jones Lang LaSalle
Asian pension assets to double 2000 - 2015
Employer’s Provident Fund (EPF)
1 Sheldon Square, London
Rreef for Malaysian pension fund
£157 million, November 2010
National Pension Service (NPS)
O’Parinor shopping centre, Île-De-France
Rockspring on behalf of Korean pension fund
€223m for 51% share, November 2010
24
Figures exclude transactions below USD5mil, land acquisitions and developments
Source: Jones Lang LaSalle, April 2011
0
20
40
60
80
100
120
140
2003 2004 2005 2006 2007 2008 2009 2010 Q1
2011
US$ bn
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Domestic Cross-Border Cross Border (%)
$86bn
$66bn
$95bn
$121bn
$46bn
$27bn
$66bn
$85bn
$27bn
Asia Pacific direct commercial real estate investment 2003 to YTD 1Q 11
25
Figures relate to the major submarket in each city
-7%
32%
11%
14%
18%
4%
23%
3%
Source: Jones Lang LaSalle (Real Estate Intelligence Service), 1Q11
1%
15%
-5%
0 5000 10000 15000 20000 25000 30000 35000 40000 45000
Bangkok
Kuala Lumpur
Delhi
Mumbai
Seoul
Beijing
Sydney
Shanghai
Singapore
Tokyo
Hong Kong
Capital Values (USD)4Q11 CV 4Q10 CV
25
Capital values – 2011 outlook
26
Economic growth tenant demand rental growth capital value growth
More investment activity as buyers and sellers meet on price
Traditional Residential buyers will turn to Commercial property
Japan will attract foreign capital despite earthquake and slow economy
Offices and Industrial will perform best, then Retail, then Residential
Cyclical recovery but also shifting fundamentals
26
Likely trends over next 12 months
27
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