MIPIM Asia 2011 Wrap-up

Wrap Up

MIPIM Asia 2011

Remembering: MIPIM Asia 2009

• Growing sense of optimism– Asia weathered the storm– Capital is flowing in

• Chief concerns:– US double dip recession– Housing bubble in China

Remembering: MIPIM Asia 2010

• Strong sense of optimism• China is leading the way• Great diversity of opportunities• Chief concerns– Housing bubble in China– Limited availability of quality assets

2010 optimism was justified

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How is your business activity this quarter compared to same quarter last year?

Optimism in the data

Company Still Buying? Company Still Buying? Company Still Buying?Unibail- Rodamco Blackstone Morgan Stanley Morgan Stanley Tishman Speyer National Pension Service (NPS)Avestus Capital Partners - Lehman Brothers Holdings Inc- Prudential Goldman Sachs** - Morgan Stanley Mitsubishi Estate IVG Immobilien GE Capital - CapitaLand Limited Metrovacesa - Goldman Sachs Wheelock & Co Aviva PLC Beacon Capital Partners Sino Land Company Limited -Aberdeen Property Investors Broadway Partners - LaSalle Investment ManagementPirelli & C. Real Estate SpA - Brookfield Asset Management Macquarie Glob Prop Advs (MGPA)Pearl Group - Prudential RE Investors China Vanke Co Ltd Electra Ltd - BlackRock DB RREEF ING Group Centro Properties Group - Tokyo Tatemono Co Ltd RREEF TIAA- CREF GIC RE (Govt of Singapore) Prudential PLC Lightstone Group Nan Fung Group Propinvest Group - CalSTRS Kerry Properties Limited SEB Group Chetrit Group China Overseas Land & Invt LtdLehman Brothers Holdings Inc- CalPERS K Wah International GE Capital - Simon Property Group Sun Hung Kai Properties LimitedImmofinanz JP Morgan Hong Leong Group Evans Randall Dubai World - Tokyu Land Corporation

Europe United States AsiaPac

Looking forward: mixed picture

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What is your perspective on your real estate market compared to last year?

2011: Focus on China, cautious optimism

• China in the driver seat• Nuances across– Investment horizons: short and long term– Property types– Investment structures– Chinese provinces– Asia Pacific markets

China: Strong fundamentals

• Scale and performance of the economy• Favorable long term trends– Continued urbanization– Unavoidable export sector– Strengthening domestic demand

China: Mixed short-term perspective

• Global economic crisis– China – US – European Union

• Global tensions– Currency exchange rates – Terms of trade– Current account imbalances

China: Mixed short-term perspective

• Government’s ability to engineer – Continued growth

– Availability of debt to the small-medium businesses– Demography

– A soft landing• Chinese regional disparities

China: Real estate perspective

• Maturing real estate market– Sustainability– Exit strategies, insurance companies– Greater quantity of investment opportunities

China: Real estate perspective

• In the hands of the policymakers– Supply – competition– Availability of credit– Investment performance

• Critical to foreign investors: The local partnerThe regulations

Latest Regulatory Changes which Have an Impact on Real Estate Market

Increase land supply for low-income housing, no less than 70% of the total land supply for residential purposes

Crack down land stocking and land speculation

Formulate detailed planning and construction conditions for each plot of land before tendering of land

1. Land Supply


Shorten the payment term for Land Grant Contract; and increase the deposit for land bidding

Reform the Land Bidding System

Strengthen control for land supply in second and third tier cities by central government


2. Financing Policy

Lower risks associated with real estate development loan - No loan for delay in development

- No loan for land premium - Under-construction will be used as collateral Increase down payment and interest rate for housing loan

Monitor risks associated with real estate investment trust plan


3. Expand Purchase Limit to More Cities

cities that have experienced a significant increase in the purchase price and transaction volume of newly constructed

residential properties;

cities in close proximity to major cities that have already implemented restrictive regulations.


4. Encourage Low-income Housing

increase land supply for low-income housing; 70% of the land marked for residential properties will be used for low-income housing;

increase investment by central and local government; all revenue from housing public fund and 10% of land premium will be invested in low-income housing;

Increase credit support for low-income housing by banks;

Reduce and exempt taxes and fees in connection with the building, selling and operating of the low-income housing.


MOC delegates its power to approve any foreign investment below US$ 300 million falling into encouraged categories to the local government, as well as the foreign investment below US$50 million falling into the restricted categories.

MOC Filing applies to all foreign investment in real estate.

5. Foreign Investment in Real Estate

Beyond China?

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China Australia/NZ Japan

Where are the best opportunities for real estate investment in Asia-Pacific?

Beyond China?

• Australia – New Zealand• Japan • Taiwan• Hong Kong, Singapore• India, Russia• Indonesia• Thailand, Malaysia, Vietnam, Philippines,…

Global Office Property Clock Q3 2011

Mexico City

Rental GrowthSlowing

RentsFalling

Rental Growth

Accelerating

RentsBottoming Out Abu Dhabi

Dubai, Seoul, Detroit

MadridAmsterdam, Brussels, Los AngelesRome, Tokyo, ChicagoFrankfurt, Johannesburg, Atlanta

Berlin, Sydney

Milan, Washington DC, TorontoMumbai, Dallas, Dehli

New York

StockholmSan Francisco

Paris, Beijing, São Paulo

London West EndLondon City

Moscow, Zurich

ShanghaiSingapore

Hong Kong

The Jones Lang LaSalle Property ClocksSM

AmericasAsia-PacificEMEA

Note

• This diagram illustrates where Jones Lang LaSalle estimate each prime office market is within its individual rental cycle at end of September 2011

• Markets can move around the clock at different speeds and directions

• The diagram is a convenient method of comparing the relative position of markets in their rental cycle

• Their position is not necessarily representative of investment or development market prospects.

• Their position refers to Prime Face Rental Values

Source: Jones Lang LaSalle IP, October 2011

Asia Pacific real estate markets in 2012

Strong Asian economic

fundamentals

Sustained tenant demand

Capital values stable

Federal cheap lending rates

are not showing signs of increase

Borrowing costs might rise

Undersupply of investable

stock

Risk and uncertainty

Source: Jones Lang LaSalle Capital Markets Research

Negative real interest

rates

Volatile Dollar, Pound and Euro

Appreciating Asian

currencies

Real estate markets in the global cycle

Expansion Downturn

RepairRecovery Latin America

USJapan

Advanced Europe

Europe, Middle East,

AfricaEmerging

Asia

Households

Banking Sector

Valuation

Credit conditions

Asset quality

Corporate fundamentals

Phases of the Credit Cycle

Source: Jones Lang LaSalle Capital Markets Research

China: Why go elsewhere? (2010 GDP at PPP)

Guangdong 1,152 South Korea 1,466

Jiansu 1,037 Indonesia 1,033

Shandong 999 Australia 884

Zhejiang 690 Taiwan 824

Henan 581 Thailand 589

Hebei 512 Malaysia 417

Liaoning 463 Philippines 369

Sichuan 428 Hong Kong 327

Shanghai 428 Singapore 293

Hunan 403 Vietnam 277

Hubei 401 New Zealand

119

Source: China NBS Statistical Data and IMF

The rise of the discerning investor

• Within China– Performing local governments

– Strong balance sheets– Strong small and medium enterprise

– Growing service sectors• Within the Asia-Pacific region– Secure/efficient business environment– Trade flows with China– Local Chinese communities

The discerning governments?

Emerging marketsImperative to act• Improve the legal/business environment• Improve the physical infrastructure


China• First stage of growth: economic adjustment

• Transfer of resources across sectors• Infrastructure investment

Easy to manage and plan

• Sustainable growth: growth in productivity• About R&D• About Innovation

Tough for government to pick winners


ChinaThe key question for the future:Pace of reforms toward freer markets to unleash innovation in SME

In the end…

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How has MIPIM Asia changed your outlook?

And outstanding award-winning projects

Marina Bay Financial Center

Singapore

Shanghai Shimao Wonderland Intercontinental

Date post:	09-May-2015
Category:	Real Estate
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