HONG KONG | SINGAPORE | KUALA LUMPUR | SHANGHAI | DUBAI | ABU DHABI | CAPE TOWN | LONDON

IP Global Ltd Suite 601-6, 6th Floor, Harcourt House

39 Gloucester Road, Wanchai, Hong Kong

T: +852 3965 9300 F: +852 3965 9399

info@ipglobal-ltd.com www.ipglobal-ltd.com

GLOBAL REAL ESTATE OUTLOOK

Q2 2015 Our latest look at the world’s property markets analyses and rates the cities in which we’re currently focusing our research and investment resources.

BERLIN

Europe’s third-largest city has emerged in recent years as a prime property investment market. Like many cities, demand far exceeds supply, while its cosmopolitan appeal and thriving education sector continue to drive population growth. Key regeneration projects have reinvigorated previously neglected parts of the city, but residential construction remains lacking, particularly rental stock – just 39 of the 229 developments currently in progress in Berlin will include rental apartments1.

Apartment prices rose strongly across 2014, with the average increase hitting 10.1%2, while the rental sector has also seen excellent recent performance with rents up 6.6% year-on-year to January 20153. The city’s rental market is a key factor supporting Berlin’s investment case; just 14-16% of the city’s residents are home owners4, making Berlin very much a landlord’s market.

At least 250,000 new residents by 2030

EUR5.4 billion Brandenburg Airport to open in 2018

Average apartment price growth of 10.1% in 2014

BRISBANE

Investment continues to pour into Brisbane. One of the world’s largest lottery operators is in the process of setting up their new AUD100 million national headquarters in Newstead, a development that will bring a further 1,300 jobs to the district, while Flight Centre will bring their global headquarters and 1,800 new jobs to South Brisbane in 2016. Investments such as this have driven the excellent performance of the city’s real estate markets, with prices recording 12 consecutive quarters of growth since early 20125.

This growth has seen Brisbane’s median unit price reach AUD422,000, a rise of 3.6% in the year to December 20146. With a shortage of housing stock still endemic across the city, further price rises are anticipated, with forecasts putting growth at 5-8% across 2015. A strong rental market, with the vacancy rate still tight at just 2.1% 7, is generating very healthy yields; properties in Brisbane average 5.4% per annum, among the highest seen in Australia, as of March 20158.

Population growth forecast at 34% to 2031

Queensland to benefit from AUD134 billion infrastructure investment to 2031

GRP to grow 48% by 2031

CHICAGO

The third-largest city and second-largest commercial centre in the US is also seeing the highest demand from growing and relocating businesses, with Chicago topping Site Selection magazine’s ranking for the second consecutive year in 2014. There are now 31 Fortune 500 companies headquartered in the city and The Loop – Chicago's primary business district – is now the fastest-growing urban centre in the country. In addition to being an important financial hub, Chicago is establishing itself as a leading technology capital – job growth in this sector rose by over a quarter between 2010 and 2013.

The condominium market slowed slightly midway through last year but picked up again in Q4 despite winter typically being the slowest season for real estate activity. Prices are up a healthy 25% in the two years to February 20159, with significant room for further growth remaining given the market remains 19% below peak10. South Loop remains

a key investment focus, with the area currently commanding a 15% rental premium on the citywide average11.

Metro population to exceed 10 million by 2030

Nearly 80,000 jobs created in 2014

Property market 17% below peak at February 2015

LONDON

The UK’s status as one of the world’s leading property investment markets remains firmly in place following the Conservative party’s recent election victory. After the usual pre-election lull, activity in London is picking up again, with investors buoyed by the certainty and continuity that the government will provide. Major regeneration and transport infrastructure projects, such as Crossrail, will continue to drive development across outer London, creating new pockets of value in places such as Woolwich and Ilford.

Greater London saw growth of 12% in the year to January 201512. Outer London’s growth potential in particular is

reflected in projections for 2015-19 which put prime central uplift at 22.1% and outer boroughs at 25.8%13. Such

forecasts remain supported by a structural undersupply of housing stock – a shortfall of some 21,000 homes every year – combined with ongoing population growth; inner London is expected to add 23,428 new households in 2015

while outer London adds 32,15414.

HONG KONG | SINGAPORE | KUALA LUMPUR | SHANGHAI | DUBAI | ABU DHABI | CAPE TOWN | LONDON

IP Global Ltd Suite 601-6, 6th Floor, Harcourt House

39 Gloucester Road, Wanchai, Hong Kong

T: +852 3965 9300 F: +852 3965 9399

info@ipglobal-ltd.com www.ipglobal-ltd.com

London housing supply shortfall now at 21,000 homes a year

GBP15.9 billion Crossrail project to open in 2018

Outer London property prices forecast to rise 25.8% by 2019

MANCHESTER

A new addition to our Investing category, Manchester’s investment case stands firmly on its thriving economy, cosmopolitan culture, rapidly growing population and significant residential undersupply. Residents of the City of Manchester now number well over half a million having recorded growth of more than double the national

average over the past decade and a half15. The city centre has grown even faster, with the area’s population

quadrupling over the last 20 years16. At the centre of the government’s Northern Powerhouse vision, Manchester’s

pioneering of the push for increased regional devolution across the UK has allowed for the emergence of strong leadership with the scope to deliver a Manchester-focused vision for the future.

Capital growth in Manchester steadied in 2014 following a spike the year before, increasing confidence that the market presents real long-term investment potential. Prices were up 5.4% in the 12 months to March 201517, while

city centre apartment prices rose 6.3%18 over the same period. Despite this record of positive growth, city centre

apartment prices remain 17.3% below peak19, with the average City of Manchester home still valued at less than half the average seen in London. Prices are forecast to rise to close this gap, with new projections putting

Manchester price growth at a strong 26.4% to 201920.

City centre population rose 300% over past 20 years

At the heart of the government’s GBP7 billion Northern Powerhouse vision

Property price growth of 26.4% to 2019

MELBOURNE

Melbourne’s stable economy and swelling population continues to drive capital growth, with apartment prices up 5.2% in the year to March 201521 and the city’s low vacancy rate of 2.1%22 keeping rental yields healthy at an average of 4.1% as of March23. A 3% surcharge on stamp duty for foreign nationals in Victoria will be implemented from the beginning of July 2015, but with Australia remaining one of the most transparent and straight-forward markets for overseas investors, we expect the city to retain its status as one of the world’s investment hotpots.

Fringe suburbs within ten kilometres of the CBD should be a key focus for investors, with trendy Brunswick a clear standout24; prices in Brunswick West have risen by an average of 8.2% per annum over the last nine years25 while the area’s popularity is keeping the vacancy rate beneath even the low citywide average, at just 1.5% as of March26. Brunswick is one of the suburbs set to be boosted by the AUD4.3 billion Regional Rail Link programme that will upgrade links to the city centre and play a key role in enhancing the area’s appeal to both businesses and employees.

95,000 new residents every year27

42.5% of population is in further education28

Property price growth of up to 9% in 201529

MIAMI

Miami continues to rebound well from the downturn, and the city’s Downtown area has become increasingly popular as a residential location. The district’s population grew 99.6% between the 2000 Census and 201430, while key investment neighbourhood Brickell recorded an increase of 151.8% over the same period31. The district’s population is projected to continue growing strongly, with a further increase of 13.9% forecast to 201932.

Miami was one of the best performing US real estate markets across 2014, with growth in the double digits through the first nine months of the year33. This levelled out over Q4 to result in annual growth of 9% to February 201534, putting the market average still at a great-value 17% below peak35. Condominium performance has been even better, with median prices up 10% year-on-year in Q1 while average sales time has fallen 17%. The strength of the US dollar has made entering the market a little more difficult for investors holding other currencies, but with very little leverage on the market, the slight slowdown this could cause shouldn’t have a long term negative impact.

Downtown population nearly doubled in 15 years

3.4% job growth in South Florida professional and business services in 2015

37 consecutive months of property price growth

BOSTON

The commercial hub of Massachusetts is also an international centre for higher education and research. The sixth-largest metro economy in the US ranks 19th on the Economist Intelligence Unit's Global Liveability Ranking and attracts some 12 million visitors every year. The southwest of the city is the subject of an ambitious government regeneration programme which has seen the Boston Redevelopment Authority approve ten development proposals worth over USD215 million.

Boston’s real estate market didn’t suffer a dramatic fall during the recession and has had a strong record of growth since early 2012. Inventory in the city is currently very low however, having shrunk by 28% between 2010 and 201436, and this is driving prices up, with the average condominium up 8% in the 12 months to February 201537. This undersupply has been exasperated by local developers’ continuing focus on catering to the city’s luxury segment, leaving buyers in the middle and low end of the market short of options.

DUBLIN

Dublin has been on our watch list for some time, and with a recent upswing expanding the national economy by 5% in 2014 to bring GDP within 1.7% of its 2007 peak38, we’re ready to begin exploring this recovering market for new investments. In Dublin, over 100,000 jobs have been created since 201239 and net migration to the Irish capital is strong enough for the local property market to be looking increasingly appealing to investors.

On the housing market, Dublin is another major capital city where a shortage of supply in the face of rising demand is set to put upward pressure on prices. Construction completions hit an all-time low in 2013, and the scarcity of development finance remains a key issue40. With a shortage of large-scale developments on the horizon this lack of supply will remain a feature of the market for the foreseeable future, with estimates putting the shortfall at 8,853 units across 2014-1841. Given this, some forecasts put price increases in Dublin at up to 20% across 201542.

HONG KONG | SINGAPORE | KUALA LUMPUR | SHANGHAI | DUBAI | ABU DHABI | CAPE TOWN | LONDON

IP Global Ltd Suite 601-6, 6th Floor, Harcourt House

39 Gloucester Road, Wanchai, Hong Kong

T: +852 3965 9300 F: +852 3965 9399

info@ipglobal-ltd.com www.ipglobal-ltd.com

EDINBURGH

Edinburgh remains a strong market with high potential, but an extreme lack of supply continues to make entry difficult. The first few months of 2015 saw strong price growth, with average prices increasing 21.5% year-on-year43, however this was also accompanied by weaker transaction growth. This temporary fluctuation of the market was due to April’s implementation of the Land and Buildings Transaction Tax44. Many buyers of properties priced below GBP330,000 are set to benefit financially so delayed their purchase until the new tax came into effect, while above this price threshold purchases have spiked to avoid the slight hike in fees. We expect the second half of 2015 to see the reverse – a higher volume of sales dominated by transactions below this price threshold.

This short term volatility in the market also preceded May’s UK General Election. Now that the uncertainty of election time is over, and with the Scottish National Party proving so popular, investors can expect renewed stability within the Edinburgh market which is underpinned by a historically buoyant economy. Continued high demand within the city’s private rental sector is expected to build on the 7.9% rise seen throughout 201445 and with house prices forecast to rise by another 25% in the four years to 201946, this is an excellent time for buy-to-let in the Scottish capital.

LOS ANGELES

Los Angeles is already a top pick for Chinese buyers looking abroad, and Chinese developers are in the middle of transforming the city’s Downtown area with multi-million dollar real estate investments. The city’s appeal is clear; as well as its status as the hub of the entertainment business, Los Angeles is the second-largest metropolitan centre in the US and the world’s third-largest economic centre after New York and Tokyo by Gross Metropolitan Product. Ranked second in AT Kearney’s Global City Index 2014, it’s also the US’s number two hub for education, and is home to 68,000 international students3.

Los Angeles’ condominium market was hit hard by the financial crisis, with prices falling 41% peak-to-trough, but the market has been on a rapid comeback since early 2012. Prices were up 6% in the 12 months to February 201547, putting them back up to 15% below peak48. The city’s rental market has seen spectacular growth in the past year, with median monthly rents up 18% in the 12 months to March 201549, while the citywide vacancy rate fell to just 3.4% as of the end of 201450.

NEW YORK CITY

New York has been a star performer for some time, with condominium prices in the city up 6% year-on-year to February 201551. In Manhattan itself, price growth continues to slow; the cost of a median condominium was USD1.36 million in Q1 2015, representing year-on-year growth of just 0.4%52. Rents were up 6.1% over the year53, while the rental vacancy rate rose slightly to 2.4%, and with yields low due to the high prices Manhattan is looking more and more challenging for investors.

The news is brighter in New York’s outer districts. The mayor announced a USD55 million six-line ferry plan to begin in 2017, which is set to connect Queens, Brooklyn and Manhattan’s Lower East Side, with the scheme intended as much to spur commercial development in the outer boroughs as it is to carry employees into Manhattan. Prices in Brooklyn and Queens have already been rising as buyers are driven from Manhattan by the island’s high prices; Brooklyn’s median condominium price jumped 17.5% in the year to Q154, while the median home price in Queens rose 20.7%55.

TOKYO

Confidence in the Japanese capital is rising, with a strong economic outlook, low interest rates and a weak Yen making Tokyo an interesting prospect for international investors. The world’s largest metropolitan economy has been chosen to host the 2020 Olympics and is expected to benefit from major regeneration and infrastructure investment as a result. Japanese developers are already signalling their intent, with a surging residential construction pipeline. Last year units available on the market hit their lowest level since 2000, but looking ahead some 50% of all new apartments set for delivery in Japan from 2015 onwards will be found in the 23 wards of Tokyo.

Prices have been tracking upwards for seven consecutive months as of March 201556, with higher increases closer to the centre of the city. While the Greater Tokyo average was up 3.3%, the average across the city’s 23 wards surged 9.4%, and the six most central wards saw an even greater rise of 13%57. Perhaps one of Tokyo’s strongest selling points for property investors are the excellent yields that are achievable. With rents rising along with prices, the average gross rental yield of Tokyo apartments was 6.6% in April, a level high enough to raise the possibility of achieving cash-flow positive leveraged investments in the city.

MADRID

Madrid is a vibrant market that stands out as among the most promising in Spain as the national economy continues to pick up in the wake of the recession. The end of 2014 saw the country record its third consecutive year of annual GDP growth58, and forecasters expect to see that growth nearly doubling to 3% in 2015. Many commentators believe that Spain’s economy has reached a turning point on the road to recovery, driven in large part by the consolidation of the tourism industry59, the recent drop in oil prices60 and the country’s low-risk international exposure61.

There are emerging signs that Madrid’s property prices are ready to bounce back, with wealthy Latin American buyers beginning to re-enter the market after a decade-long rollercoaster ride that saw the 2008 peak followed by a price drop of 44.6%62. Sales activity was up 17% in 201463 and prices grew 1% in February 201564, but the market retains disparities and insecurities that make it difficult to be entirely confident of ongoing stability. There is growing demand for residential properties in Madrid, and supply is very limited – the number of new home completions in 2013 was 93% lower than the market’s peak in 200865 – so there is a feeling that prices could continue to rise. However, for the time being ongoing instability of this market will see investors remain cautious as they wait for further signs of security.

SYDNEY

Sydney has been a favourite for investors in Australia for some time. Capital growth in the city remains high, with an increase of 9.7% in the 12 months to March making it the stand-out performer nationally. In addition, the well-performing rental market, with a vacancy rate of just 1.6%66, is keeping yields at a healthy 4.3%67.

However, the strong focus on Sydney from many investors has resulted in an overvaluing of the city’s real estate market that only continues to grow. The median apartment price reached AUD600,000 in March, and SQM predicts recent movement is shifting the market to the point where it will be 40% overvalued. There’s no doubt the fundamentals are there in Sydney, with high population growth, a stable economy and unemployment beneath the national average, but we’d urge investors to remain cautious for now.

HONG KONG | SINGAPORE | KUALA LUMPUR | SHANGHAI | DUBAI | ABU DHABI | CAPE TOWN | LONDON

IP Global Ltd Suite 601-6, 6th Floor, Harcourt House

39 Gloucester Road, Wanchai, Hong Kong

T: +852 3965 9300 F: +852 3965 9399

info@ipglobal-ltd.com www.ipglobal-ltd.com

1 CBRE Housing Market Report Berlin 2015 2 CBRE Housing Market Report Berlin 2015 3 CBRE Housing Market Report Berlin 2015 4 CBRE Housing Market Report Berlin 2015 5 ABS 6 REIQ 7 SQM research 8 RP DATA 9 Case Shiller 10 Case Shiller 11 Zillow rent list price in March. 12 UK Land Registry 13 Knight Frank Residential Research London Hotspots Residential Development Opportunity Areas 2015 14 Knight Frank Residential Research London Hotspots Residential Development Opportunity Areas 2015 15 Manchester Council Residential Report March 2015 16 Manchester Council Residential Report March 2015 17 UK Land Registry 18 JLL UK Research Northern England Residential Forecasts January 2015 – New Beginnings 19 JLL UK Research Northern England Residential Forecasts January 2015 – New Beginnings 20 JLL UK Research Northern England Residential Forecasts January 2015 – New Beginnings 21 REIV 22 SQM research 23 RP DATA 24 Domain 25 Residex 26 SQM research 27 Australian Bureau of Statistics 28 Melbourne Council 29 SQM research 30 Miami Downtown Development Authority 2014 Demographics Report 31 Miami Downtown Development Authority 2014 Demographics Report 32 Miami Downtown Development Authority 2014 Demographics Report 33 Case Shiller 34 Case Shiller 35 Case Shiller 36 Curbed link 37 Case Shiller 38 Savills World Research Ireland Residential Property Q1 2015 39 Savills World Research Ireland Residential Property Q1 2015 40 Savills World Research Ireland Residential Property Q1 2015 41 SCSI Annual Residential Property Review and Outlook – 2015 Report 42 SCSI Annual Residential Property Review and Outlook – 2015 Report 43 Rettie Scottish Housing Market Bulletin Letting March 2015 44 Knight Frank Residential Research Prime Scottish Property Index Q1 2015 45 Rettie Scottish Housing Market Bulletin Letting March 2015 46 JLL UK Research Scotland Residential Forecasts January 2015 47 Case Shiller 48 Case Shiller 49 Zillow rent list price 50 Marcus & Millchap 51 Case Shiller 52 Douglas Elliman Manhattan sales Q1 2015 53 Douglas Elliman Rental Q1 2015 54 Douglas Elliman Brooklyn Sales Q1 2015 55 Douglas Elliman Queens Sales Q1 2015 56 Japan property central link 57 Japan property central link 58 Savills World Research Spain Investment Market Report February 2015 59 Savills World Research Spain Investment Market Report February 2014 60 Savills World Research Spain Investment Market Report February 2015 61 Funcas Spanish Economic and Financial Outlook March 2015 62 Fotocasa.es via Financial Times – http://www.ft.com/intl/cms/s/0/248a1efa-e440-11e4-9039-00144feab7de.html?siteedition=uk 63 Property Wire – http://www.propertywire.com/news/europe/spain-real-estate-market-2015010610006.html 64 Fotocasa.es via Financial Times – http://www.ft.com/intl/cms/s/0/248a1efa-e440-11e4-9039-00144feab7de.html?siteedition=uk 65 Knight Frank Residential Research Spanish Prime Residential Insight September 2013 66 SQM RESEARCH 67 RP DATA April national news release