the magazine cityscape december 2012

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Egypt 16750UAE 800 02000 369KSA 800 8200 368Visit our new sales center:Extension of Thawra st.,Suez Road & Ring Road Intersection, Cairo, Egypt

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THE CITYSCAPE ANNUAL REAL ESTATE REVIEWOur comprehensive review of the real estate markets of the UAE, Qatar, Egypt, Saudi Arabia and Turkey reveals positive growth for the entire region.

SPECIAL FOCUS: SOUTH AFRICAAfrica’s economic powerhouse stands out as an internationally preferred location for doing business due to its undoubted growth opportunities.

GLOBAL INVESTMENT OUTLOOK 2013Who are the winning cities in today’s international real estate investment market? We highlight this year’s top markets and take a look at the year ahead.

DECEMBER 2012

SPECIAL SUPPLEMENT: INVEST IN RUSSIA Investment overview Tourism Retail Russia & the UAE

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Egypt 16750UAE 800 02000 369KSA 800 8200 368Visit our new sales center:Extension of Thawra st.,Suez Road & Ring Road Intersection, Cairo, Egypt

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CALENDAR OF EVENTS

Jeddah Jeddah Centre for Forums and Events, Jeddah, Saudi Arabia 2 ~ 4 March 2013

Egypt Cairo International Convention and Exhibition Center, Cairo, Egypt 28 ~ 31 March 2013

Abu Dhabi Abu Dhabi National Exhibition Centre, Abu Dhabi, UAE 16 ~ 18 April 2013

Qatar Doha Exhibition Centre, Doha, Qatar 27 ~ 29 May 2013

Asia Shanghai Convention Center, Shanghai, China 4 ~ 6 September 2013

Latin America Amcham Business Center, Sao Paulo, Brazil 1 ~ 3 October 2013

Global Dubai International Convention & Exhibition Centre, Dubai, UAE 8 ~ 10 October 2013

Riyadh Riyadh International Exhibition Centre, Riyadh, Saudi Arabia 8 ~ 10 December 2013

www.cityscape.org

Your Guide To Emerging Real Estate Markets

Hyde Park Properties for Development is a leading developer of integrated mixed-use developments, with a unique vision to create truly world class communities that contain within their boundaries every service and amenity a modern resident aspires. The Company’s flagship development is Garden Heights a breath-taking community being constructed in the booming suburb of New Cairo. The 6 million sq.m mixed use integrated development includes Hyde Park villas community, elite detached and attached villas, Centre Ville a world class apartment’s community inspired by the 1920’s downtown Cairo. Park Avenue regional shopping destination offers a unique unmatched shopping experience. The lung of Garden heights is the unique 140 feddans privately owned and landscaped park, the largest in Egypt.The project also comprises world class leisure and entertainment propositions as well as sporting and educational facilities that transform Garden Heights into a real destination.

“Despite the global recession in 2009 as well as the post-revolution economic slowdown, honoring our commitments and serving our clients continues to be on top of our priorities. We not only started delivering our units in 2012, but are also getting ready to launch new residential and commercial products. “We fully expect Garden Heights to be the destination of choice for discerning residents looking for a unique residential experience” said Magued Sherif, CEO of Hyde Park.

4 I CITYSCAPE I DECEMBER 2012

CONTENTS

5 Editor’s letter

LATEST NEWSRegional8 • Al Nakheel Tower Bahrain launched • Al Wa’ab City villas construction commences9 • Aldar financial results Q3 2012 • Dubai’s CRE sector gains traction10 • Emaar & Al Futtaim to develop Cairo Gate • Dubai properties transactions hit AED 83bn11 Northern Riyadh development to accommodate 700,000 peopleAsia24 FDI in India’s multi-brand retail allowed25 • Hong Kong the world’s most expensive city • Asia growth fuels global student housing demandEurope33 Prime London and the rest34 • Madrid office market take-up boostAmericas40 US high-tech job growth fuels office demand41 • Miami attractive to international buyers • US CBD office leasing up in Q3 MIDDLE EAST INSIGHT12 Cityscape Annual Real Estate Review Our comprehensive review of the real estate markets of the UAE, Qatar, Egypt, Saudi Arabia and Turkey reveals positive growth for the entire region.

ASIA INSIGHT26 Japan Although the earthquake of March 2011 brought the local real estate market to a temporary standstill, investor confidence soon returned to the country.31 Philippines BPO industry boosts residential and office sector.

EUROPE INSIGHT35 Poland Perceived as a stable country resistant to the economic crisis with high GDP growth, Poland continues to be an important real estate investment destination in the CEE region.38 Spain A recent drop in house prices has sparked a surge in Scandinavian buyers who are keen to snap up bargain homes along Spain’s sunny coastlines.

AMERICAS INSIGHT42 Canada Canada’s positive economic outlook is good news for the country’s retail and residential markets; Toronto seems to be the city of the moment.44 Mexico Positive manufacturing data and promising automotive production keep industrial investment and rental growth robust in the Southern American nation.

SPECIAL FOCUS48 South Africa Transparent market fundamentals and emerging economic strength make South Africa the location of choice for investors seeking foothold in sub-Saharan Africa.62 The world of real estate in 2013 With the New Year just around the corner, we take a look at the winning cities in today’s international real estate investment market and provide an outlook for 2013.

REGULAR FEATURES52 Architecture Global design firm Gensler draws on the Middle East’s unique cultural heritage to deliver innovative architectural concepts in the region.

56 Sustainability In the light of advancing global climate change, Cityscape magazine takes a look at the concept of sustainable real estate development in then UAE, current regulations and developments.60 Retail Brazil’s retail sector is set for substantial expansion over the next few years as the country prepares for the 2014 World Cup and 2016 Olympic Games.

INDUSTRY PAGES66 Legal commentary67 A day in the life of…a real estate valuations director68 Movers & Shakers69 Event review: Cityscape Global 201270 Cityscape events Cityscape Riyadh 2012, Cityscape Awards for Real Estate in Saudi Arabia, Real Estate Training Courses71 Conference preview: Riyadh Real Estate Summit 201272 In the next edition

INvEST IN RUSSIAA special supplement covering the Russian real estate market with a focus on investment, retail and tourism.

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DECEMBER 2012 I CITYSCAPE I 5

Project Director Simon Cole Editor Anna Amin Design Davis Mathai Advertising Adam Fox

Contributors Anna Amin, Simon Cole, Rohan Marwaha

Although every effort is made to ensure the accuracy of information contained in this magazine is correct, Cityscape cannot be held responsible for any errors or inaccuracies contained within the publication. All information contained in the magazine is under copyright to Cityscape and cannot be reproduced or transmitted in any form without first obtaining written permission from the publisher.

Partnership Enquiries: Simon Cole Tel: +971 (0) 4407 2640 Email: [email protected] Enquiries: Adam Fox Tel: +971 (0) 4408 2801 Email: [email protected] Enquiries: Anna Amin Tel: +971 (0) 4408 2898 Email: [email protected]

Cityscape Media, Informa Exhibitions, P.O. Box 28943, Dubai, UAEPublished by: Nicholas Publishing International FZ LLC

As the year is slowly coming to an end and

we take a look back at the dynamics that shaped global real estate markets over the last 12 months, it becomes clear that this year has been decisive in restructuring the world’s property environment.

In our October edition we featured a number of global markets which have benefitted from the economic uncertainty in the Eurozone and highlighted

several emerging economies that have shown remarkably resilient in the wake of the global economic crisis.

In this issue we take a closer look at the performance of a selection of Middle Eastern markets which have shown outstanding growth this year despite the world’s turbulent events. Our Cityscape Annual Real Estate Review traces the major factors that impacted on real estate development in the region and reveals some excellent news. Take Dubai for example, a place that experienced a sudden market crash in 2008 with property prices falling as much as 50 percent. This year, the emirate has witnessed a solid rebound in prices as economic recovery is well underway. In Turkey, a country which has seen its real estate markets boom across all sectors over the last few years, the introduction of a new law easing property purchases by foreigners is expected to further boost already strong real estate development and investment in the country. In Egypt, with the stabilising political situation following the election of President Mohamed Morsi in June, the market is finally seeing a welcome return of more settled conditions and investor confidence is returning to the country on the Nile.

In other global regions, Mexico is emerging as an alternative investment destination as opposed to the US. Positive manufacturing data and promising automotive production are expected to keep industrial investment and rental growth robust while the country’s hospitality sector is likewise experiencing a surge in investments.

In Asia, the Philippines have made headlines this year with increased demand and construction activity in the country’s residential sector, fuelled by significant growth of the Business Process Outsourcing

industry. In the first quarter this year, the Philippines had the highest GDP growth in the ASEAN region (6.4 percent) and came in second after China across all Asia.

In Europe, the markets have largely been overshadowed by the current regional crisis, however not without a few interesting developments. Currently, investor interest is strong in Poland, especially in the country’s retail sector. Supported by higher GDP growth than in most European countries, a strong industrial base and backed by a stable political situation, sentiment is expected to remain highly positive over the next few years.

This month, our special focus rests on South Africa. Historically perceived as a ‘dark continent’ not suitable for doing business, Africa is increasingly being viewed as an emerging investment destination and crucial growth market. South Africa is the continent’s most transparent market and the arrival of international real estate service providers in the country is expected to positively influence the level and quality of information about local market fundamentals.

In addition to our regular global coverage, this edition features a special supplement dedicated to the Russian real estate market. Russia recovered at an impressive speed from the effects of the global economic downturn; 2011 saw record investment volumes in the country’s CRE sector and today, vacancy rates in the warehouse and retail segment have already reached pre-crisis levels.

In the light of advancing global climate change and the undeniable impact of real estate development on the environment, we have also dedicated a special feature to green building practices in the UAE and look at current regulations and pioneering developments in the region.

Given the immense success of the Cityscape Global exhibition which was held in Dubai in October, we are particularly looking forward to our next event in Saudi Arabia. Cityscape Riyadh, taking place from 9 – 11 December 2012 at the Riyadh Exhibition Centre, will once again bring together a myriad of real estate investors, developers, government authorities, architects and other real estate professionals from around the globe in Saudi Arabia’s leading real estate event.

We hope you enjoy the read.

Anna Amin Editor

Front cover design: LUCKY YOU! design® www.luckyyou-design.com

EDITOR’S LETTER

ASEZAThe Aqaba Special Economic Zone Authority (ASEZA) is the financially and administratively autonomous institution responsible for the management, regulation, and the development of the Aqaba Special Economic Zone (ASEZ). Six ministerial – level commissioners headed by a Chief Commissioner, appointed by the Cabinet and reporting to the Prime Minister, each responsible for a major area of regulatory or operational activity and running the ASEZ, and is vested with zoning, licensing, and other regulatory powers that distinguish it from the rest of Jordan. ASEZA is a service – oriented organization offering one – stop assistance covering all investment needs.

An Introduction To ASEZAOur objective is to create a sound and attractive business environment in Aqaba that will provide a competitive operational base for firms seeking to expand markets, while enhancing their global positioning.The Aqaba Special Economic Zone (ASEZ) was launched in 2001 as a duty-free, low tax multi-sector development zone encompassing the total Jordanian coastline (27 km), the sea-ports of Jordan, an international airport, and the historical city of Aqaba with a current population of 115,000 people. It encompasses an area of 375 Km2 and offers global investment opportunities in an excellent business environment ranging from tourism to recreational services, from professional services to multi-modal logistics, from value-added industries to light manufacturing. Moreover, to accelerate the development of the Zone, ASEZA and the Government of Jordan also launched at the beginning of 2004, the Aqaba Development Corporation (ADC) to be the central development corporation for the ASEZ. ADC owns the port, airport and strategic parcels of land as well as the development/ management rights for these assets as well as for key infrastructure and utilities. ADC is mandated to develop ASEZ; build new infrastructure and required superstructure, expand existing ones; and create business enablers for the zone. ADC also manages and operates its key facilities; all through leading private sector developers and operators. With ASEZA as the regulator of the zone, ADC has also the responsibility to implement the ASEZ Master Plan in a manner that ensures integrated development and transforms Aqaba into a leading business and leisure hub on the Red Sea.

The AqabaSpecial Economic Zone AuthorityThe vision of transforming Aqaba into a world-class business hub and leisure destination has become reality.

Ayla project 75 hectares of manmade lagoons

Leisure DestinationAqaba is a naturally attractive tourism destination. Its most precious coral reefs and unique marine environment make it a must for divers and those who enjoy water sports. Furthermore, its proximity to Petra and the beautiful landscape of Wadi Rum (Jordan Golden Triangle) makes it a convenient and relaxing stop on visitors’ itineraries. Aqaba Special Economic Zone Authority (ASEZA), fully realize Aqaba’s potential and have anticipated in the master plan that no less 50% of investment will take place in the tourism sector

Investments attraction• 375 SQKM of investment opportunities within a duty-free

zone ranging from tourism to recreational activities, from professional services to multimodal logistics, and from value added industries to manufacturing.

• Ability to expand markets in the Middle East & North Africa region (Gateway into Levant and the wider Middle East and connecting GCC with the Levant and North Africa).

• A major trade hub and corridor for the reconstruction efforts in Iraq.

• Ability to create pools of multinational work teams.

• Ability to penetrate existing/new markets in a preferential manner (Free Trade access to the EU, US, Singapore and most Arab Countries and WTO member)

• Multi-modal transport hub whereby investors/traders can bring goods & passengers by land, air or sea

• Hub for regional distribution with free zone storage with full service seaports that handle all kinds of cargoes and an international airport which operates under an open skies policy.

• Serviced land/facilities for light / medium manufacturing, warehousing, residential and commercial uses.

Benefits of Doing Business in the ASEZ: The ASEZ enjoys a special fiscal regime, which is much milder

than that of the rest of Jordan; any “Registered Enterprise” status in the zone confers the following benefits:

• 5% income tax on income generated from activities inside the ASEZ or outside Jordan except for banking, insurance and land transport services.

• Exemption form sales tax on final consumption of goods and services, except for:

o 7% sales tax limited to final consumption of selected goods

o 7% sales tax on hotel, restaurant and car rental services

o Special variable tax on alcohol and tobacco

o 7% tax on cement and steel for construction purposes

• Duty-free import of goods in commercial quantities from the National Customs Territory and overseas (except cars)

• Exemption from Social Service Tax

• Exemption from Sales Tax on vast majority of goods and services

• Exemption from annual land and building taxes on utilized property

• Exemption from taxes on distribution of dividends and profits on activities in the ASEZ and outside Jordan.

• No foreign equity restrictions on investment in tourism, industry, retail, and other commercial services (100% foreign ownership allowed)

• No tariffs or import taxes on imported goods for individual consumption and Registered Enterprises

• No foreign currency restrictions and full repatriation of profits and capital

• Streamlined labor and immigration procedures (a project may employ up to 70% in foreign labor as an automatic right)

ADVERTORIAL

Saraya Aqaba Master Plan

Marsa Zayed Project


REGIONAL NEWS

AL NAkHEEL TOWER BAHRAIN REACHES 40% OCCUPANCY jUST THREE MONTHS AFTER COMPLETION

Earlier this month, Cluttons announced the successful launch of Al Nakheel Tower in Manama, Bahrain, as demonstrated by high occupancy levels of 40%, just three

months after completion, with further space currently under negotiation.The building, located in the Seef District, was handed over in August 2012 and comprises

of over 5,600 sqm of commercial space. It has established itself quickly as the address of choice for a number of leading international firms, including Bahrain International Medicine, Majali Enterprises, Grant Thornton and Qatar Airways. Further discussions for increased space are underway with a selection of other potential tenants.

Al Nakheel Tower has proven attractive to tenants due to its combination of competitive rates, option of fitted out space, flexible floor plates, quality finishing, a well-calculated car parking ratio including 120 car parking spaces and professional property management by Cluttons in Bahrain. In addition, the Seef District has established itself as a highly desirable office location due to its combination of easy access and good parking, which adds further to the popularity of Al Nakheel Tower.

Harry Goodson-Wickes, head of country for Cluttons in Bahrain commented: “I’m very pleased that Cluttons has been appointed to manage the Al Nakheel Tower. This type of prestigious, well serviced development with a range of amenities is just what the current market demands and both the tenants and landlords will benefit from our dedicated property management expertise. There is such a strong appetite for this type of tower that we’ve managed to let almost half the available space within a matter of weeks from completion. We expect demand from tenants to continue to grow.”

QATAR’S AL WA’AB CITY CELEBRATES THE COMMENCEMENT OF CONSTRUCTION FOR DELUxE vILLAS

Al Wa’ab City, one of the largest privately owned real estate developments in Qatar, last month has officially announced the re-launch of construction works for both Nour Al Wa’ab and

Janayin Al Wa’ab Villas. As of October 1st, main contractor Arabtec started remobilisation and has resumed full

construction work by the first of November 2012. Al Wa’ab City expects to deliver the first set of fully fitted villas by July 2013.

Commenting on the announcement, Sheikha Hanadi Bint Nasser Al Thani, CEO of Al Wa’ab City said: “We are very pleased to announce this ground-breaking milestone towards project completion. After completing Al Wa’ab showrooms and launching of Al Wa’ab offices, the delivery of the villas represents Al Wa’ab City’s commitment towards the full vision of the project to create lifestyle senses where life is celebrated at its fullest. This step reflects the company’s growing stature as a

credible business partner and a key player in Qatar’s economic diversification strategy. With strengthened rejuvenation, we renew our commitment to provide viable quality propositions of genuine value to Al Wa’ab residents, clients and partners.”

As of now, the company started receiving individual and corporate requests for residential leasing and sales opportunities at Al Wa’ab City. The prime investment value is inherent in the villas’ high standards that are set in exclusive gated communities, inspired by Qatari architecture, designed with contemporary quality finishes, and complemented with high-end amenities.

Nour A Waab Villas consist of 92 villas, with an area of 850 square metres each, with high quality finishes, fixtures and fittings, 5 master bedrooms, internal elevators, 3 car garages along with a private garden and a swimming pool. Nour Al Waàb private villas sit within secure, gated communities and are inspired by thoughtful Arabian architecture complemented by contemporary high-end finishes.

Janayin Al Wa’ab Villas consist of 181 distinct 4 bedrooms villas, with an area of 450 square metres each, 2 car garages, offering a contemporary living environment with a subtle hint of Arabian architecture while encompassing quality finishes. Set amidst landscaped surroundings, the Janayin Al Waàb homes are the perfect setting for families to thrive within a secure, well-maintained environment, complemented by neighborhood facilities such as clubhouses, swimming pools, sports courts and children`s play areas.

All villas will be maintained via the Al Waàb City facilities management service. Al Wa’ab City is planning to fully deliver the entire 273 villas within 2 years from today along with all recreational amenities.


REGIONAL NEWS

At the beginning of this month, Aldar Properties PJSC, one of Abu Dhabi›s leading property development, investment and

management companies, announced strong financial results for the third quarter of 2012 with revenue for the period of AED 1,604.5 million (Q3 2011: AED 3,132.9 million) and net profit of AED 205.7 million up 43% from AED 144.0 million during the same period last year. Revenues were driven mainly by the delivery and handover of 132 residential units, and 25 land plots at Al Raha Beach.

The company continues to have strong ongoing revenue and cash flow visibility with AED 12.0 billion cash still to be received, and AED 2.6 billion of revenue still to be recognised from land sales at Al Raha Beach, following the three main asset sale agreements signed with the Government of Abu Dhabi between 2009 and 2011.

Recurring revenues from investment properties and operating businesses were up 8% to AED 306.0 million in the third quarter (Q3 2011: AED 282.9 million) and broke through the AED 1.0 billion mark over the first nine months of the year. These were driven by increased occupancy year-on-year from the office portfolio, notably HQ, and maturing retail operations, in particular Gardens Plaza and IKEA.

Aldar has ample working capital and liquidity to deliver on its business plan. At the end of the period, free cash balances were AED 888.2 million, in addition to available and undrawn liquidity of AED 3.2 billion through revolving credit facility agreed earlier in the year.

The company’s ongoing programme of debt reduction followed a normal schedule of repayments during the quarter with AED 63.4 million repaid. A further AED 309.4 million will be retired on schedule in Q4. Aldar’s total borrowings stood at AED 14,429.3 million compared to AED 18,295.5 million as of 31 December 2011.

As a result of the recent detailed valuation exercise relating to the potential merger with Sorouh Real Estate PJSC, the company has updated the valuation of certain of its assets to reflect current conditions. The company has therefore elected to write down the value of its assets by a net amount of AED 737.1 million reflecting principally impairments to its hotel assets that are partially offset by fair value gains on Yas Mall. As a further result of the valuation exercise, the Company has written back AED 431.5 million of excess accruals and recoverable costs, which had been written off in previous periods.

Ali Eid AlMheiri, Chairman of Aldar Properties commented:“We are pleased to see that Aldar’s communities are starting to

thrive as more customers occupy our developments. We are proud of our contribution to Abu Dhabi’s ongoing growth and that our established delivery record continues to produce stable cashflows and profits for our shareholders. We have moved from strength to strength – both financially and operationally – and remain well positioned to execute our business plan and confirm our position as Abu Dhabi’s premier developer.”

DUBAI’S COMMERCIAL REAL ESTATE SECTOR GAINS TRACTION IN THIRD QUARTER OF 2012

Premier property services company Hamptons MENA has highlighted that commercial real estate in Dubai has gained traction in the third

quarter (July to September) of 2012. Recording robust growth in commercial leasing deals and enquiries since

the beginning of the third quarter, Hamptons MENA reports an increase in demand for office space in areas such as Downtown Dubai and Dubai International Financial Centre (DIFC).

Among the key drivers of demand for commercial real estate are factors such as large corporations continuing to show interest in upgrading their premises with more flexibility in terms of leases, and limited new supply entering the market.

“Large investors have started to draw their attention to the UAE’s property market, in particular the Dubai commercial property market as a source of stable returns,” said Niraj Masand, Head of Operations, Hamptons MENA. “Investors are more interested in buying commercial property that is currently occupied by tenants as a source of definitive returns on their investment.”

“The growth trend of the commercial sector is a strong demonstration of Dubai’s positive growth across all sectors of its economy. The city is underlining its credentials as a tourism and business hub, and this is reflected in the strong demand for commercial space,” he added.

Central business districts such as Downtown Dubai and DIFC have limited supply of single ownership space prompting companies to start looking at built to suit options. In line with global trends, occupier consolidation and portfolio optimisation remain the key focus in Dubai. Short term annual renewable leases have been replaced with long-term leases often in excess of three years, offering more security and consistency to both the tenant and the landlord.

New commercial developments such as Emaar’s Boulevard Plaza in Downtown Dubai records strong demand, according to Hamptons MENA. High quality commercial towers such as Currency House 2 in DIFC, Emaar Square and The H Dubai Office Tower on Sheikh Zayed Road welcomed new occupiers.

With restrictions on free zone businesses becoming less stringent and licensing made easier, a number of companies are taking advantage and relocating to offshore (free zone) areas. This has led to multinationals looking to rent commercial property.

Earlier this year Dubai Economic Department (DED) had announced that it would implement a ‘120-days hassle-free license’ initiative, aimed to give businesses in Dubai a head start and promote the emirate’s competitiveness, by the end of 2012. The new initiative will allow investors to have their licenses issued immediately from DED depending on the risk factors of the intended business activity. This, in turn, is expected to further drive demand for commercial real estate in Dubai.

ALDAR REPORTS STRONG FINANCIAL RESULTS FOR THIRD QUARTER OF 2012


REGIONAL NEWS

Sultan Butti Bin Mejrin, Director General of the Dubai Land Department (DLD) announced last month that the total value of

property transactions in Dubai reached more than AED 83 billion in the first 9 months of 2012.

The transactions were documented officially by the DLD’s Real Estate Development Department and consisted of 27,452 transactions dominated by sale and mortgage, and fewer number of usufruct rights registration (Musataha), donations and other types of property transactions.

The property transactions have become more mature and the investors are now much more aware. The market offers multiple-choices and Dubai property sector showed high flexibility in dealing with investors’ requirements and trends during the first 9 months, most notably first time investors who seek to benefit from investment opportunities that emerged due to price correction witnessed by the market over the past two years, according to Bin Mejren.

He noted that the price indication took a upward trend during the past few months due to the demand and purchase transactions of land, villas and apartments in certain distinguished projects in Dubai.

The lion›s share of total transactions was dominated by sale with 20,925 transactions at the value of more than AED 43 billion. The sale accounted for 52% of the total transactions in the first 9 months of this year while mortgages accounted for 44% of the total transactions at the value of AED 36.3 billion through 5,042 transactions.

The director general of DLD added that 1,485 transactions were registered as usufruct rights (Musataha), donations and other types of property transactions at the value of AED 3.7 billion which represented 4% of the total transactions. The 9 months results showed 65% of transactions were on land sale and mortgage, while apartments’ sale and mortgage exceeded the same transactions on buildings and villas by 86%.

He noted that the total number of land sale and mortgage of all kinds reached 5,488 transactions at more than AED 54 billion. There were 3,327 Land sale transactions of various types worth more than AED 20.5 billion, while land mortgage transactions were around 1,636 worth more than AED 30.9 billion.

The total number of sale and mortgage transactions on buildings and villas in the same period hits 1,451 transactions worth more than AED 4 billion, while the number of building sale reached 917 buildings worth more than AED 2 billion. The total number of mortgage transactions on buildings reached 487 building worth more than AED 1.6 billion.

The sale and mortgage on residential and commercial units reached 20,513 transactions valuing at around AED 25 billion whereas the sale transactions on units reached 16,681 transactions worth AED 2 billion while mortgage on other units reached 2919 at the value of AED 3.6 billion.

The vacant lands dominated the land transactions with 57% compared to lands with properties built on them. The transactions on units exceed those on buildings by 86%, according to Bin Mejren.

The DLD recorded Wadi Al Safa 5 as the most traded areas in term of a number of land transactions with 403 transactions. Burj Khalifa tops list of most traded areas in units terms with 3,305 sale transactions. While in the land mortgage transactions, Al Barsha South First was the most traded areas with 203 transactions whilst the Burj Khalifa saw 442 apartment mortgage transactions.

DUBAI PROPERTIES TRANSACTIONS HIT AED 83 BILLION IN 9 MONTHS

Al-Futtaim Group and Emaar, the two UAE based international real estate giants, last month announced an initial intention to enter into

an EGP 5 billion joint venture agreement to develop ‘Cairo Gate’, the largest lifestyle and entertainment development on an Emaar Misr property of 160 acres of prime land on the Cairo- Alexandria desert highway.

Cairo Gate will not only cater to discerning shoppers from Egypt and the world over, but also to those who appreciate a trendy lifestyle that has come of age. While the mega shopping mall will be the centerpiece of the development, Cairo Gate will be complemented by an office park with world-class facilities including a luxury hotel, schools, medical facilities and residences ranging from townhouses to villas and apartments.

Mr. Mohamed Alabbar, Chairman of Emaar Properties PJSC, said “We are proud of this partnership which will add tremendous value to the real estate and retail industry sectors at large, and we look forward to working together with Al-Futtaim Group and realising the full potential of this venture.”

Commenting on the prospects of the Egyptian market, he added, “As we boost our continued development portfolio in the Egyptian market we also demonstrate our belief in Egypt, its economy and its people”.

The first phase of Cairo Gate development will comprise a mall with a gross leasable area of 120,000 sqm, and will be anchored by Al-Futtaim’s retail brands such as IKEA, Marks & Spencer, Toys ‘R’ Us, ACE, Intersport, Guess, Esprit as well as a multitude of additional world-class shopping brands apart from restaurants, cafés and leisure outlets with a strong outdoor theme.

Mr Omar Al-Futtaim, Vice Chairman and Group CEO said: “This agreement represents a significant and long-term partnership between Al-Futtaim Group and Emaar who are on a new path for growth in Egypt. The agreement demonstrates our confidence in the Egyptian economy and will raise Egypt’s profile as a nation focused on innovation, excellence, and dynamic sustainable development in the retail and real estate sectors. Our Cairo Festival City development is already making strong headway in establishing Egypt as Centrepoint for the North African retail industry. The joint venture will further demonstrate our firm commitment to not only enhance Egypt’s development, but amplify the country’s leadership positioning within the regional and global economy.”

Mr Al-Futtaim added: “This is clear evidence to our positive view on the Egyptian economy and we are confident of the investor-friendly direction of the Egyptian Government especially in resolving any investors’ disputes.”

Cairo Gate has a frontage of one kilometre along the Cairo-Alexandria Desert Road near the Smart Village commercial precinct, and will complement the residential, hospitality and commercial components of Emaar Misr’s development. The primary catchment areas including 6 October City and Giza have a population of over six million residents.

EMAAR AND AL-FUTTAIM jOIN FORCES TO DEvELOP EGP 5 BILLION CAIRO GATE


REGIONAL NEWS

Real estate investments in Northern Riyadh are expected to grow stronger in line with the increasing focus across the region on residential and urban development, according to a recent report released by Injaz Development Co. The promising investment outlook coincides with the newly enacted Saudi Real Estate Mortgage Law, which has been introduced to provide funding for urban development projects across Saudi Arabia and ultimately boost the Saudi economy.

The report has emphasised the importance of the Real Estate Mortgage Law in sustaining the long term urban development initiatives being undertaken in Northern Riyadh and across the country, particularly in light of higher growth rates being observed in the real estate industry. Industry analysts have further pointed out that the real estate mortgage system will serve as a pillar for strategic Public Private Partnerships (PPP) in the country. PPP has been recognised as a driving force behind the growing number of residential and urban development projects across the country, which are vital to address the burgeoning demand for residential property, particularly with respect to the Kingdom’s fast growing population of which 60 per cent are youth.

The report further pointed out that real estate development activities have achieved positive growth overall across the country, with Northern Riyadh’s real estate sector growing by 43.42 per cent, based on Jones Lang LaSalle’s Riyadh Real Estate Market Performance Index Q2 2012, triggering radical changes in its urban and real estate landscape. The High Commission for the Development of Arriyadh (HCDA), on the other hand, has announced major developments in Northern Riyadh following the completion of several key infrastructure projects, including road networks, residential facilities and hospitality developments. Some of the latest projects that have been undertaken in Northern Riyadh include the Prince Sultan Bin Abdulaziz Humanitarian City and the 3.2 square kilometre Prince Salman Park in Banban.

As part of its commitment to promote Northern Riyadh as one of the most attractive investment destinations worldwide, Injaz Development Co. has been actively involved in projects that complement ongoing efforts to achieve a well balanced, sustainable urban development. The Riyadh-based master developer and property investment firm has launched a number of projects that support the urban development strategy being implemented in Northern Riyadh. The urban development projects in the region ultimately aim to accommodate the needs of its rapidly growing population, which is expected to reach over 700,000 by 2030. Moreover, it will create more job opportunities for residents and generate greater economic contributions from the private sector.

Taking advantage of the favorable market conditions in Northern Riyadh, Injaz has revealed plans to launch new projects in the region, including Al Gamra 10, one of the four blocks in Al Gamra Project – a 2.5 million sqm project with a strategic location in Northern Riyadh. With 403 land plots spread over a total area of 566,000 sqm, Al Gamra 10 is an integrated project offering ready-made residential, commercial and investment building blocks that are specifically designed to meet the needs of residents and businesses. The project will include infrastructure for electricity, water, lighting and road networks, making it an ideal residential destination in the region.

Omar Al-Kadi, CEO and Managing Director, Injaz Development Co., said: “The real estate boom in Saudi Arabia is mainly driven by the newly introduced Real Estate Mortgage system, which is part of a five-point system to generate real estate funding in the country. The favorable market outlook as well as several other influential factors will stimulate

URBAN DEvELOPMENT PROjECTS IN NORTHERN RIYADH TO ACCOMMODATE 700,000 PEOPLE BY 2030

urban development in Northern Riyadh, particularly in the development of high quality residential properties of varying sizes. Moreover, we can also expect the rapid development of other key amenities, including service centers, integrated services, modern road networks and interactive public transportation systems.”

“We expect a continued flow of investments for urban development across Northern Riyadh in the foreseeable future to meet the demands of the region’s growing population. The development of a central road network within Northern Riyadh, along with a number of other vital projects, including the King Abdullah Financial District and the Princess Nora Bint Abdul Rahman University, will help reinforce the reputation of Riyadh as a first class investment destination. In this regard, the Al Gamra 10 project is being undertaken to complement the government’s urban development plans, as it will serve as a tool to generate more investments in Northern Riyadh,” concluded Al-Kadi.

Omar Al-Kadi, CEO and Managing Director, Injaz Development Co.


MIDDLE EAST

THE CITYSCAPE ANNUAL 2012 MENA REAL ESTATE REvIEWAgainst a backdrop of volatility in the global property market, many emerging regions including the Middle East have proven remarkably resilient to the economic crisis and have emerged as favourable real estate investment destinations. The Cityscape 2012 Annual Review looks back at the performance of the markets of the UAE, Qatar, Egypt, Saudi Arabia and Turkey and provides an outlook for 2013. Although market fundamentals differ within the respective countries, the region as a whole is headed for a promising future.

On a global level, sentiment and levels of activity in the world’s major real estate markets experienced many ups and downs during the

first half of 2012. Although the second quarter saw a modest rebound in investment and leasing turnover after a slow start to the year, economic uncertainty continues to affect investor sentiment, the Jones Lang LaSalle Global Market Perspective Q3 2012 observed. “Deals are taking longer to close and the market remains polarised as investors steer clear of risky assets, focusing instead on prime product in core markets like London, Paris and New York,” the report said.

Amidst the global economic uncertainty and the deepening of the Eurozone crisis, many emerging markets around the world, in particular in the Middle East, have shown noticeable resilience and have gained increasing attention as safe havens for international investors.

The UAE is probably the most striking example of healthy recovery in 2012 so far. Heavily hit by the financial crisis in 2008, Dubai’s property prices had fallen as much as 50%. This year, property prices have bounced back in key locations in the emirate and experts predict a bright future for Dubai’s real estate market.

Qatar, the world’s richest country by per capita GDP has continued with high economic growth, thanks to a rebound in oil prices and its massive natural gas reserves. In 2012, the Gulf State has continued with massive

infrastructure and real estate developments in anticipation of the FIFA 2022 World Cup, which will transform Qatar’s real estate landscape.

In Egypt, the last months of this year have for the first time seen a welcome return to more settled and stable conditions in the market. Following the election of President Morsi in June, investor confidence has begun returning to the market as the country regains political stability.

Saudi Arabia, as the Middle’s East’s largest economy, has introduced its long awaited mortgage law this year which, if fully realised, will help combat the lack of availability of housing for low to mid-low income earners and encourage greater professionalism in the home building industry.

Finally, Turkey, which has seen its real estate markets boom across all sectors in recent years, continues to attract significant interest from foreign investors, which is further heighted by the introduction of the Reciprocity Law that came into effect in May. The law lifts the condition of reciprocity for private persons to buy property in Turkey and is expected to further boost development and investment activity in the real estate market.

Following the immense success of the Cityscape Global exhibition, held in Dubai in October this year, it becomes clear that emerging economies around the world are shifting the dynamics of the global real estate landscape and are gaining increasing attraction as real estate investment destinations.

IntRoduCtIon:


MIDDLE EAST

Population: 8,264,070 (2010 estimate)Capital City: Abu dhabiLargest City: dubaiCurrency: uAE dirham (AEd)GDP: $258.825 billion (2011 estimate)

duBAIAfter over three years of declining rents and limited sales activity, in 2012,

Dubai’s property marked has bounced back as rents and sales prices in the emirate’s most sought after areas have increased. Supported by a steady increase in tourist arrivals, investor confidence is returning to the market.

According to statistics complied by Dubai FDI, the foreign investment office in the emirate›s Department of Economic Development (DED), Dubai attracted AED 16.5 billion (USD 4.5 billion) in foreign direct investment during the first six months of 2012, marking a 7% increase from the same period last year. According to Dubai FDI, this increase reflects a heightened confidence globally on the growth prospects across key sectors of the emirate’s economy, including real estate.

According to the Dubai Land Department (DLD), Dubai property transactions grew 21% to AED 63 billion (USD 17.15 billion) in the first half of 2012, compared to Q3 and Q4 2011. Figures published by the Dubai Government show that foreign investors buying real estate were responsible for acquisitions of AED 28.3 billion (USD 7.7 billion) in the first half of 2012, up 36% from the same period last year.

Niall McLoughlin, Senior Vice President of DAMAC Properties, commented:“The Dubai property market has performed strongly throughout 2012

and we expect this growth to continue well into 2013. There is a mid to long-term view of investment in Dubai’s property market now which will see consistent growth in the coming years. This is a natural cycle for a maturing real estate industry which will create many opportunities for impressive returns in both rental income and capital gains, outstripping the money markets.”

Looking at the residential sector, Jones Lang LaSalle (JLL) says that the first half of 2012 has seen higher levels of residential sales activity and the overall market is now considered to have bottomed out. According to the firm, the recovery in prices is most pronounced in the villa sector where sales prices have increased 21% in the year to May. With regards to rental prices for quality residential developments, property management company Asteco reports an average rental increase of 6% and 9% for apartments and villas respectively (Q2 2012).

However, improvement in prices is largely confined to high-end products in prime locations, with less established locations still experiencing declines in both rents and prices.

“Luxury apartments have continued to drive the resurgence in Dubai’s real estate market through 2012. Recent reports has valuations up nearly

5% and closing in on 2008 peak prices,” McLoughlin said.“As liquidity returns to the market investors are looking to ensure they

have a well balanced portfolio and real estate is a key element of that. As the market has matured and the speculators have moved out, mid to long-term investors recognise the intrinsic value of real estate in Dubai. We believe this steady growth will continue well into 2013.”

On the commercial side, although there has been no movement in office sales and rental prices due to a lack of demand and transaction activity throughout the most part of 2012 (Asteco), the outlook for investment in the sector is nevertheless one of cautious optimism. According to real estate specialist Cluttons, a surprising number of transactions were recorded during the normally quiet summer months this year, totalling AED 2 billion (USD 545 million), with major commercial deals taking place in DIFC, TECOM and Downtown areas.

According to Cluttons, the hospitality sector has been enjoying sustained occupancy levels and profitable room rates, boosted by Dubai’s ranking as the world’s eighth most attractive tourist destination by MasterCard’s Worldwide Index of Global Destination Cities.

McLoughlin agrees, adding that now is a good time to get into the emirate’s luxury hotel market.

“Investors can see hotels in Dubai more than 80% full across the whole year and RevPAR [Revenue Per Available Room] rates in excess of USD 100. Dubai’s hotel serviced apartments sector is currently under supplied and this is the ideal opportunity for buyers to get into the luxury hotel industry,” he said.

Looking at opportunities in dubai’s residential real estate market in the coming year, McLoughlin commented:

“We will see the biggest expansions in serviced apartments as developers bring this relatively new investment opportunity into the Dubai property market. Elsewhere, there will be a lot of work completed on Al Khail Road and other developing areas. Where infrastructure is already in place such as Sheikh Zayed Road, the Burj Area and Dubai Marina, luxury properties are commanding a premium price.”

“Location and quality remain the two factors which people use to decide where to live and these areas are currently attracting huge interest. Where infrastructure is still under development, such as around the projects on Al Khail Road, there are many opportunities available to investors. Prices in Jumeirah Village Circle and IMPZ, for example, will increase dramatically in the next couple of years and are great investments for the medium term,” he concluded.

unItEd ARAB EMIRAtES

dubai 2012 Highlights

• Economic recovery well underway due to strong growth of key sectors such as tourism, commerce, retail, hospitality and logistics

• Residential property prices up for the first time in 3 years• Strong performance of the hotel sector due to an increase in

tourism, occupancy levels close to 80%


MIDDLE EAST

ABu dHABIThe development of the market in the UAE’s capital has been quite

different to that of its neighbour Dubai. Here, selective new prime developments offering high quality finishes and amenities have generally been able to sustain rental levels over the last quarter given strong levels of demand (Asteco Q3 Abu Dhabi report).

Ahmed Al Fahim, Executive Director of Marketing, Communications, Sales and Leasing at Tourism Development and Investment Company (TDIC), a master developer of major tourism destinations and prime residential projects in Abu Dhabi, commented:

“We are pleased to see that the property market has started to show healthy signs of recovery during the year, which is evident through the increased interest in TDIC’s residential offerings.”

TDIC has received high levels of interest for their top-end residential projects, particularly in areas such as Saadiyat Island, a leisure, residential and tourism hub expected to become the capital’s cultural centre.

However, the residential market is currently experiencing polarised performance. Older buildings formerly considered prime have seen vacancy levels increasing as tenants relocate to new developments, leading to landlords reducing rents (Asteco).

Matthew Green, Head of Research UAE for CBRE Middle East, commented:“The residential market in the capital will experience further rental

deflation over the next six months, although performance will be highly polarised. Premium properties are expected to hold quite firm on rents, with secondary locations off-island forecast to see a more pronounced dip in rates as occupiers continue to upscale amidst greater affordability.”

In addition to the increased demand in prime property, recent legislative changes may also impact on the shape of the emirate’s residential landscape. The Abu Dhabi government is implementing new regulations with regards to linking the renewal of residency visas with accommodation arrangements, which is expected to have an impact on the residential market with an increase in demand for mid- to low budget apartments in the centre of the capital (Asteco).

On the whole, the Abu Dhabi market started the year in quite subdued fashion and this trend has continued throughout the rest of the year with weak occupier demand prevailing, Green commented.

“The emirate is experiencing a sustained period of downward rental pressures as supply and demand imbalances persist within segments of the residential and office sectors.

Significant new supply has been delivered over the course of the year across virtually every asset class. This has heightened already competitive leasing conditions, emphasising the tenant led market scenario,” Green said.

While leasing in the commercial sector has continued to improve with tenants taking advantage of the availability of higher quality office space and attractive lease terms (Asteco Q3 report), secondary and inferior office products continue to suffer from widespread rental deflation which has averaged 8% since the start of 2012, the CBRE Q2 2012 Abu Dhabi Marketview said.

According to Green, the retail sector currently seems to be showing the most stability despite the fact that a considerable amount of new supply will be delivered to the market over the next four years. Depending on the pace of ongoing construction works, total retail supply could potentially be doubling by 2015, he said.

TDIC also commented that during 2012, the residential and retail sectors have been very appealing to various types of investors, prospective tenants and homeowners. “There’s a strong appetite for residential developments across Abu Dhabi especially for those who are looking for unparalleled quality of homes and prominent locations,” Al Fahim said.

The company says it has already leased out 98 percent of its apartments at The Residences at The St. Regis Saadiyat, sold out 80 percent of its high-end luxury Saadiyat Beach Villas and leased out 75 percent of its first phase of luxury Eastern Mangroves Residences within a month of its launch.

Looking ahead, tdIC is optimistic about the emirate’s residential market performance:

“The property market has started to show healthy signs of recovery during the year and we anticipate that the residential market keeps the same momentum hopefully next year. We believe that [distinctive properties] will remain attractive to a wide range of prospective homeowners and tenants in 2013, whilst offering unparalleled high quality homes and flexible financing options,” Al Fahim said.

As for the future performance of Abu Dhabi’s real estate market on the whole, Green commented:

“The market is likely to remain constrained amidst ongoing demand and supply imbalances brought about by the influx of new inventory. Greater stability may start to be felt towards the end of 2013, as the impact of recent Government legislation changes start to take effect.”

Abu dhabi 2012 Highlights

• Market tenant favorable across all asset classes• Residential market continued to see sale price and rent declines• New hotel supply in Q4 expected to put downward pressure on

Average Daily Rates


MIDDLE EAST

QAtARPopulation: 1,757,540 (october 2012)Capital City: dohaLargest City: dohaCurrency: Riyal (QAR)GDP: $182.004 billion (2011 estimate)

oAtARQatar has prospered in the last few years with continued high real GDP

growth, making it the world’s fastest growing economy in 2010. This year, the Gulf State was named the world’s richest country by Forbes magazine, with an average annual per capita income exceeding USD 88,000.

Although the country felt the delayed impact of the global financial crisis, Qatar has weathered the global downturn better than many economies around the world.

Dr. Bassim Halaby, CEO Benchmark International, Al Wa’ab City Executive Management commented:

“The delayed impact was relatively mild when compared with other GCC countries such as the UAE, with several factors contributing to Qatar’s resilience; from the announcement of the Qatar National Vision (QNV) 2030 in the same year, to the surplus liquidity from rising oil prices in 2009, to the successful bid to host the World Cup 2022 in 2010, and finally to the announcement of the National Development Strategy (NDS) in 2011. Real estate recovery was not only inevitable but a more sustainable route to a diversified economy has been paved.”

According to Jed Wolfe, Managing Director of Asteco Qatar, the elated market sentiment of 2011 has calmed slightly this year.

“There was a great deal of euphoria and consequential market expectation in 2011, following FIFA’s announcement that Qatar was to hold the 2022 World Cup. 2012 started with a more realistic market outlook with the understanding that the World Cup alone would not mitigate any negative global economic factors. There was also a wider understanding that the benefits of such an event would be realised over time and that there was much work to do to meet the country’s development schedule,” Wolfe explained.

“I think 2012 has been a year of reassessing one’s holdings and real estate strategies in order to maximise returns in the lead up to the World Cup,” he further said.

Commenting on the dynamics of the Qatari real estate market this year, Halaby said:

“Leading up to 2012, preliminary application of [the 2030] vision is evidenced through the renovation of Doha Airport, the installation of Lusail City infrastructure, the launch of Musheireb project as a major urban renewal project, and the upgrade of the city road network. Although executed over a delayed timeline, moderate growth in the real estate sector

is still witnessed in 2012 through improved volume and value of sales transactions, higher land valuation, and increased demand for residential and commercial spaces.”

In the residential sector, marginal residential rental increases were witnessed across most of the locations during Q2 2012, according to the latest Asteco report. Rental rates increased by up to 8% for one- and two-bedroom apartments in certain locations while villa rental rates increased by 4% on average. This was mainly due to limited supply and waiting lists are now being seen at the very best quality villa compounds (Asteco).

“The growth in this market has been stimulated by a steady increase in population and undersupply of certain types of product. I believe the population growth will continue but supply will increase. Indeed, our research for quarter 3 indicates rents have stabilised again, [which is due] to the delivery of more residential product,” Wolfe said.

According to Halaby, a distinctive feature of the Qatari market is not only that it has grown rapidly in the past 10 years, but that there has been a growing trend to decentralised ‘lifestyle centres’, breaking away from the centre of Doha. One of such sub-centres is Al Wa’ab City, a large-scale mixed-use development covering an area of 1.25 million square metres.

“Coupled with local ownership restrictions, this growing trend of decentralised ‘lifestyle centres’ has led to stronger family-based transactions and more inherent, less speculative land purchases. Needless to say, this has shielded the real estate sector from any bubble threats in the forthcoming future,” he said.

Other sub-centres include the historic downtown of Musheireb, the festival city of Doha, Lusail City and the Pearl.

Looking at 2013, Wolfe sees a healthy year ahead. “In my opinion 2013 will be more positive than 2012. The Government

seems to be very close to announcing finalised plans for a number of infrastructure projects. If this happens and contractors and developers mobilise to begin these works, 2013 could be a healthy year for real estate.

Real estate markets the world over have found recent years a tough challenge. I believe developers who focus on providing quality assets at the right price points will realise the greatest returns,” he said.

According to Halaby, the outlook for 2013 is one of continued growth.“The government continues with its diversification mission to endorse

real estate developments in the sports, cultural, and educational sectors sustained by public transit systems, medical facilities, residential communities and commercial corridors. This strategy will transform Qatar into an advanced country that provides a high standard of living for all its inhabitants – for generations to come,” he concluded.

Qatar 2012 Highlights

• The government’s economic diversification program boosts quality community real estate developments

• Rental rates up to 8% for apartments and 4% for villas• Waiting lists are now being seen at the very best quality villa compounds

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MIDDLE EAST

EGYPtPopulation: 82,000,000 (2012 census)Capital City: CairoLargest City: CairoCurrency: Egyptian pound (EGP)GDP: $533.739 billion (2012 estimate)

EGYPtFollowing the Revolution of February 2011 which ousted former President

Hosni Mubarak, Egypt was struggling to regain political and economic stability which had an immediate impact on the country’s once thriving real estate market. Now, things are finally looking up.

After one and a half years of civil unrest and political turmoil, the past three months have seen a welcome return to more settled and stable conditions following the election of President Mohamed Morsi and the appointment of a new government, the latest Jones Lang LaSalle Cairo Real Estate Market Overview said.

While Egypt’s economy was hit hard by the Revolution, with real GDP of just 1.8% recorded last year, the new government is aiming to achieve nominal growth of 4% to 5% this year (JLL).

According to JLL, an indication of returning economic confidence is that 703 new companies have started operations across Egypt. The government is also undertaking major efforts to boost tourism as this sector contributes to 12% of GDP and employs 4 million workers (12.6% of the labour force).

With a large, young and growing population, Egypt presents numerous opportunities to real estate investors.

“[Egypt’s] most distinctive characteristic when compared with other parts of the MENA region is the inherent demand for residential properties due to the continuous annual population growth, plus the backlog of demand which hasn’t been fulfilled to date. [There are] 500,000 new marriages [and a] 1.8 million net population growth per annum. No other market in the region has that kind of demand,” commented Ibrahim El Missiri, Development Director at Madinet Nasr for Housing and Development (MNHD).

ResidentialIn 2012, the residential middle-income sector has witnessed the

most activity and currently experiences the strongest demand, with a huge spike in activity and demand since September 2012, El Missiri said. Coldwell Banker New Homes, one of Egypt’s premier real estate agents, confirmed this while adding that the strongest demand is directed towards apartments within gated compounds.

This is supported by JLL, who have reported a major shift from high end luxury villas to apartments aimed at middle income earners within gated compounds over the past two years, as this sector was previously under supplied.


MIDDLE EAST

“The bulk of the supply pre-revolution was for the high-end, this has now shifted to the under supplied middle-income [sector] which is the where the bulk of the demand is. It’s now about providing high-end lifestyles to the middle-income market,” El Missiri explained.

As a result of the high demand for apartments, sales prices for apartments have increased in both New Cairo and 6th of October City; Cairo’s satellite cites which hold the majority of the capital’s gated compound developments.

According to JLL, in New Cairo, the average price for apartments has increased 1.5% per square metre from Q2, currently sitting at USD 1,198. The firm says similar trends have been experienced in 6th of October City, with apartment prices up 8% to USD 990 per square metre.

The provision of affordable homes has also been a major topic in the Egyptian residential market, with the country currently facing an immense shortfall of 1,500,000 affordable homes. As a measure to combat this shortage, last year the Ministry of Housing announced plans to construct one million residential units throughout Egypt over the next five years. In addition to this, in 2012 the government has been going forward with providing low income housing under the Youth housing program launched in 2007 (JLL).

However, in order to be able to reach the high demand for affordable homes, experts believe government action alone is not sufficient.

“In order to overcome and reduce this gap between supply and demand, a major strategic collaboration between the government and private sector should take place, as well as input of the mortgage finance system in order to spread awareness [about the availability of home financing services] among the low-income population,” Coldwell Banker New Homes commented.

RetailFor the retail market, 2012 is proving to be a much more positive year than

2011, with sales figures starting to pick up and purchasing habits returning to a more normal pattern, JLL said.

According to the firm, despite further expected delays in many projects, the supply of retail malls is expected to increase significantly in 2013 and 2014. The major new addition in 2013 will be Cairo Festival City, which will include IKEA (34,000 square metres) and Kidzania, along with 15 other major anchors.

“Egypt has a significant shortage of supply for retail space, hence the significant number of shopping centres in the pipeline,” El Missiri said.

“Expressing their confidence in the future of the Cairo real estate market, Al-Futtaim Group and Emaar Properties (two of the UAE’s largest developers) have announced plans to join forces to develop Cairo Gate, a USD 830 million retail and entertainment complex on a 16 acre site on the Cairo Alexandria desert highway,” JLL further commented.

Majid Al-Futtaim (MAF) is also continuing its expansion plans in Greater Cairo, with the announcement of a major new centre ‘Mall of Egypt’ located in 6th of October City. Construction of this 163,000 square metre centre (with around 380 shops) is due to commence by the end of 2012 for completion in mid 2015 (JLL).

CommercialIn the office sector, Cairo has not witnessed any significant completions

in Q3 and the current stock of office space in Cairo therefore remains unchanged at around 744,000 square metres. Vacancies in Grade A buildings have dropped to 31% (from 38% in Q2) due to increased take-up, mainly on the east side of Cairo (New Cairo & Maadi) (JLL).

“Given Cairo’s over crowded downtown and old districts, most of the new office supply to be delivered over the next few years will be in New Cairo and 6th of October. Demand is increasing in these locations as more residential projects are completed in the new urban settlements,” JLL said.

outlookLooking at the year ahead for the Cairo market, El Missiri predicts positive

performance for the residential sector.“The middle-income residential sector will remain strong, within gated

compounds. The high-end residential demand will start to increase as the country becomes more stable. We’ve seen a spike that has been sustained since the election of the President,” he said.

Coldwell Banker New Homes shares an optimistic outlook for the residential market in 2013, given the increase in sales volume during both Q3 and the first month of Q4 2012.

In the office sector, the picture is slightly different. “The administrative units’ market segment will continue to struggle along with the economy as businesses are not investing in new office space until there is clarity and the economy starts to move. Most of the work in 2012 was the completion of pre-revolution projects that had stalled,” El Missiri commented.

Despite current economic challenges, the Egyptian real estate market offers attractive real estate investment opportunities.

“People are investing [in Egypt] due to the fact that it is a resilient market that has inherent strong local demand. It is not an opportunistic market that is driven by external demand or speculation. This is apparent in the fact that the prices have held throughout the past two years,” El Missiri said.

“Opportunities lie in the better developed middle-income housing compounds where the demand is high and rental yields are high,” he concluded.

Egypt 2012 Highlights

• With a stabilising political situation, investor confidence is returning to the market

• Significant amount of quality retail stock soon to enter the market with major shopping centres currently under development

• Residential sales volumes have increased with a preference for apartments in New Cairo and 6th of October City


MIDDLE EAST

SAudI ARABIAPopulation: 28,376,355 (2011 census)Capital City: RiyadhLargest City: RiyadhCurrency: Saudi riyal (SAR)GDP: $733.143 billion (2012 estimate)

RIYAdH

Saudi Arabia has one of the world’s largest oil reserves and oil revenues continue to boost the Kingdom’s budgetary position. In 2012, real GDP is expected to grow by 5.1% (Jones Lang LaSalle Riyadh Real Estate Overview Q2 2012).

With high oil revenues enabling the government to post large budget surpluses, Riyadh has been able to substantially boost spending on job training and education, infrastructure development, and government salaries. 2012 has also been a good year for the capital’s real estate market.

Kristian Syson, Director of Professional Services at Cluttons Bahrain commented:

“Year-on-year the real estate market in Saudi tends to perform well, as real estate has been seen by Saudis as a safe investment, to be handed down to future generations.”

This year’s biggest news in the Saudi real estate market came with the announcement of the approval of the Kingdom’s long awaited Mortgage Law. According to JLL, the law is a very important step in broadening home ownership across the Kingdom and will help tackle one of the country›s most pressing social issues. It is also expected to generate significant benefits for the economy and should, encourage greater professionalism in the home building industry.

However, it will take some time before the full benefits of the mortgage law are realised and its initial impact will be limited, experts believe.

“In order for [the mortgage law] to function effectively, a change is required to the legal frame work surrounding the law. For example, a review of the foreclosure system is necessary as under Sharia law, it is not permitted to take someone’s home. The land registry process will also need to be reviewed in order to give lenders comfort that the property which they are taking charge over is actually owned by the borrower,” Syson explained.

“Whilst it is not doubted that the introduction and implementation of the mortgage law will open up the possibility of home ownership to a larger proportion of the market, many commentators have suggested that the main benefit will be to provide cheaper real estate finance to the affluent parts of society and will not address the needs of the growing younger generation of the population,” he further commented.

However, it is understood that a number of large employers in the

Kingdom and the Government are looking at ways in which they can support their employees in obtaining mortgage finance once the law is implemented, Syson added.

Looking at Riyadh’s performance in the residential sector, average villa prices have increased across most districts, however average prices in the centre area have declined in Q2 as most sales have been of older/refurbished projects due to the lack of new product available for sale (JLL). During Q2, the average sale price of apartments has increased in Riyadh’s districts to the east, south and west of Riyadh.

“Increases in rates are a product of a slight imbalance in supply and demand in favour of the property developer (in the case of sales) and in favour of the owner (in the case of rentals). In the more popular areas of the Kingdom this imbalance is driving up prices as people wish to relocate to newer products. It should also be noted that these increases are not startling and in most cases are limited to single digit percentage increases,” Syson commented.

Riyadh’s office market will see a major increase in new supply in 2013 when the first office buildings in both the King Abdullah Financial District (KAFD) and the Information Technology and Communication Complex (ITCC) projects will enter the market. Despite the substantial addition of new supply (over 1 million sqm by 2014), JLL says demand for high quality space will remain strong, mainly driven by the Government, Saudi conglomerates and the multinational sector.

Looking at the year ahead, Syson commented: “The general market outlook for 2013 remains positive, as the

Government continues to invest heavily in infrastructure, education and healthcare projects within the Kingdom.”

However, potential oversupply in certain sectors will pose a challenge to the performance of the Riyadh real estate market in the near future.

“The main challenge in 2013 will be the inelastic nature of the real estate sector which will generate a potential oversupply in certain sectors, such as office and hospitality in Riyadh, and a potential undersupply in other areas, such as international grade industrial, warehouse and logistics space across the Kingdom,” Syson said.

“A real concern in the medium to long term is the generation of demand for the sectors which are currently oversupplied and whether this oversupply situation will have, as is expected, a negative impact on the surrounding market as occupiers will look to relocate to cheaper, better quality accommodation for less cost,” Syson concluded.

Riyadh 2012 Highlights

• Approval of the long awaited Mortgage Law by the Council of Ministers

• Expansion of King Khalid International Airport (KKIA) commenced in November, tripling its capacity within 3 years

• Retail point of sales have grown by 17% YOY in Q2, reflecting continuous growth in retail spending


MIDDLE EAST

JEddAH2012 was a fairly good year for Saudi Arabia’s Red Sea destination.Martin Cooper, Head of Consulting Middle East, DTZ, commented:“Jeddah’s real estate market has performed relatively well for the most

part of 2012. There continues to be strong levels of demand, particularly in the residential (primary accommodation) and hospitality sectors.”

While residential sales prices for both villas and apartments rents have increased significantly during the first quarter of 2012 (JLL), this was confined to certain locations.

“Residential sales prices in Jeddah have escalated in certain prime locations in the city. However, sales prices (and volumes) on the Jeddah Corniche remain below the peaks reached in 2007 as full confidence has yet to return to the investment market. Levels of primary residential demand remain high in the city and this means that well located, designed and built properties will remain good prospects,” Cooper explained.

On the rental front, villa rents have increased by 3% in the preferred Northern regions of Jeddah in Q2 2012, says the Jones Lang LaSalle Q2 Jeddah Real Estate Overview. Villas located in residential compounds have shown the greatest increase in rents, due to the preferences of many expatriate families to live within gated compounds, the JLL report further said.

As with many countries in the MENA region, the provision of affordable housing is a pressing issue in Jeddah.

According to the latest JLL report, government and semi government entities are working on different projects to develop affordable housing in Jeddah as the private sector is finding it challenging to provide solutions for lower income households.

According to the firm, the Ministry of Housing has identified two locations in Jeddah for affordable housing projects, however no details are available yet as to what those projects include.

“There are a number of government initiatives in place to address the shortfall of affordable homes in the Kingdom (which typically target those in the lowest third of income groups in The Kingdom of Saudi Arabia [KSA]). These initiatives include increasing the supply of long-term housing loans disbursed through the Real Estate Development

Fund (REDF); a commitment to develop 500,000 new affordable homes across the Kingdom over the next five years; and residential public private partnerships (PPPs), such as the Jeddah Development & Urban Regeneration Company’s Al Ruwais and Qasr Khozam projects,” Cooper of DTZ commented.

JLL added that in a rare private project aimed at the affordable sector, the Henaki Group has started a 1,000 unit apartment project in the Kandarah area, which will be one of the first large scale projects targeting low to middle income families.

In the office sector, annual performance so far has been affected by oversupply in the sector.

“Demand for office accommodation in Jeddah continues to be dominated by relatively small requirements (between 100 and 350 square metres) for space in multi-tenanted buildings, rather than large single tenant occupiers looking for sizable floor plates. Some key office schemes in the city have yet to reach full occupancy,” Cooper said.

According to JLL, a total of around 125,000 square metres of office space is expected to complete in the second half of 2012, bringing total CBD stock to around 699,000 square metres. The firm further added that although the credit situation has eased, actual project deliveries may be lower than expected in 2012 as developers perceive the over supply situation could worsen over the coming year.

The hotel market has performed extremely well in 2012. According to JLL, Jeddah has been one of the best performing markets in the Middle East during H1 2012, with strong growth recorded in both occupancies and Average Daily Rates. During the first half of 2012, occupancy rates have averaged 80%, marking a significant 11% increase compared to the same period last year. JLL believes the strong performance of the hotel sector reflects the continued attractiveness of Jeddah as a leisure destination for Saudi families.

Looking at the city’s future performance, Cooper commented:“Overall, real estate market prospects within KSA remain strong. The

fundamental drivers of the KSA real estate market (a population of around 28 million and a labour force of around 8 million) are the strongest in the GCC.”

“However, risks remain around inflationary pressures, as well as potential oversupply in the office sector in key cities in the Kingdom. Supply shortages are also likely to remain in the residential sector within KSA, with an estimated 50% supply gap in Jeddah over the next 2-3 years,” Cooper concluded.

Jeddah 2012 Highlights

• Strong levels of demand in primary residential sector• The hotel sector recorded strong growth in both occupancies

and Average Daily Rates• Government and private sector are increasingly looking at

providing solutions for the provision of affordable housing


MIDDLE EAST

tuRKEYFuelled by sustainable economic expansion over the past decade, Turkey

has seen its real estate markets boom across all sectors.After seeing an impressive GDP growth of 8.5% in 2011, the Turkish

economy grew by 3.2% in the first half of this year, marking an expected slowdown after the remarkable growth in 2011 (Turkish Statistics Institute TurkStat).

Despite the slowdown, investor interest in Turkey has strongly revived in 2012, with negotiations continuing on a few potential transactions, the July 2012 JLL Turkey Real Estate Overview said.

Hasan Rahvali, General Manager of Agaoglu Group of Companies, one of Turkey’s largest developers, commented:

“There are three main reasons for the high real estate demand in Turkey. First of all the country’s demographics, secondly the fact that there is a need to renovate a large part of existing housing due to poor quality, and finally the introduction of the new liberalisation law.”

Turkey has a large and very young population, 75% of which lives in urban areas. In May this year, the Law of Reciprocity came into effect which lifts the condition of reciprocity for private persons to buy property in Turkey and is expected to boost development and investment activity in the real estate market.

Looking at the performance of the various real estate sectors in 2012, Melkan Gursel Tabanlioglu, Partner and Architect at Tabanlioglu Architects, commented:

“Residential or office-led mix-use projects have been the most promising types, and the government is currently investing in public housing projects all around Turkey.”

In 2012, the residential market has gained momentum, especially in Ankara. According to the latest Colliers report, numerous new investment areas have been shaping up across the city due to both the ongoing urban development and the growing diversity in residential demand.

According to the firm, Ankara has recently been expanding westward along Eskişehir Highway. “Çukurambar, an area located to the south of Eskişehir Highway and to the west of Konya Highway, has also become the focus of new residen¬tial projects. Average sales prices of Class A residential units developed along both Eskişehir and Konya Highways range between USD 1,800/sqm and USD 4,000/sqm, with an average of

approximately USD 2,200/sqm,” Colliers said.In the office sector, occupier demand remained strong in H1 2012 in

Istanbul, Turkey’s largest office market. Vacancy rates have decreased on both the European and the Asian side of the city. As of the third quarter of 2012, the total Grade A office stock in Istanbul comprised approxi¬mately 1.5 million square metres (Colliers).

Jones Lang LaSalle added that while demand remains strong, in line with positive economic conditions compared with many Middle Eastern and European countries, various multinational firms choose Istanbul as a regional hub.

Retailer demand also remained strong, both in Istanbul and the rest of Turkey, despite the envisaged economic slowdown for the 2012 – 2013 period (JLL). Many mass brands have continued their expansion and shopping mall development in the country continues. During H1 2012, 13 shopping centres were opened, adding a GLA stock of 377,000 square metres to the existing 8 million square metres across Turkey. By the end of 2013, a further 1.9 million square metres leasable area will be completed, bringing total GLA in Turkey to 9.9 million square metres (JLL).

Although tourist arrivals to Turkey have slightly decreased during the first few months of 2012, the country continues to be one of the most attractive destinations for holidaymakers in Europe.

“Turkey offers a great mix of attractions, ranging from historical attractions to natural reserves. Since 2000, there has been an increase of 303% in tourist arrivals. Average room rates are growing and occupancy generally never sits below 70%. Although most rooms are in the resort areas, large potential exists in city hotels which offer a huge opportunity over the next 10 - 20 years,” said Alaeddin Babaoglu, President & CEO of Ampilo Real Estate Investments, Turkey.

The Turkish Ministry of Tourism is working hard for Turkey’s image as a global tourist destination while promoting new locations within the country. These efforts are likely to further increase tourist arrivals over the coming years.

Looking ahead to 2013, JLL predicts that retail will remain the priority market for investors, with interest not only limited to shopping centres but also shopping centre portfolios covering secondary cites. According to the firm, a recently published report by PriceWaterhouse Coopers is expected to become strong evidence for investors who are keen to enter the Turkish market. The report highlights that Turkey will become the 12th largest economy in the world by 2014 and its population will reach 90 million in 2041, with more than half of the population being under 40. Clearly, this provides a perfect basis for real estate investment.

tuRKEYPopulation: 74.724.269 (2012)Capital City: AnkaraLargest City: IstanbulCurrency: turkish lira (tRY)GDP: $1.288 trillion (2012 estimate)

turkey 2012 Highlights

• Moody’s upgraded Turkey’s credit rating from Ba2 to Ba1, placing the country one notch below investment grade

• Retail remains the priority market for investors• The new Law of Reciprocity is expected to further boost

investment and development activity in Turkey’s thriving real estate market

HAPPY NEW HOME...

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ASIA NEWS

With the recent decision by the Indian government to allow foreign direct investment in multi-brand retail, this topic currently attracts

a lot of attention. Pankaj Renjhen, Managing Director of Retail Services at Jones Lang

LaSalle India shares his view.“There are various points of view regarding the impact it will have on

the retail sector in specific and the Indian economy in general, but the decision is a big step in the direction of strengthening organised retail in the country. To get the complete picture, it is important to understand the situation which exists currently and how the new regulations are going to change the retail landscape.

Till recently, FDI in retail (except under single-brand product retailing, with conditions) was not allowed in India. In other words, for a company to be able to get foreign funding, products sold by it to the general public needed to be of a ‘single-brand’. The government has now opened a gateway for foreign funding into the sector. In 1997, FDI in cash-and-carry (wholesale) with 100% ownership was allowed under the government approval route. It was brought under the automatic route in 2006. 51% investment in a single-brand retail outlet was also permitted in 2006. FDI in multi-brand retailing was prohibited in India.

This was changed to increases FDI in single-brand retail to 100% while creating a path for FDI in multi-brand retail to the tune of 51%. Cities with populations of more than 10 million are eligible for this. With yesterday’s announcement, 51% FDI has been permitted in multi-brand retail - with certain caveats, and also subject to final the approval from respective states to allow implementation within these states.

There are still some apprehensions on how this policy will be implemented due to the given caveats. However, it does signify a strong positive outlook for this sector.

The retail sector in India has been plagued with problems at all the areas of its life cycle - back end, technology, supply chain, real estate and human resources. There has been a lack of investment in all of these areas. Consequently, the retail sector has not been able to match the pace of other growing sectors in India. There has been a lack of investment in the logistics of the retail chain, leading to an inefficient market mechanism. Lack of storage infrastructure has been one of the most alarming of these infrastructure gaps.

The technology being used in Indian retail is largely obsolete and does not meet international standards, resulting in poor efficiency at the supply side and average consumer experience on the demand side. Intermediaries often bypass the ‘mandi’ norms and their pricing lacks transparency. The public procurement and distribution system calls for a lot of improvement.

In spite of heavy subsidies, overall food based inflation has been a matter of great concern.

FDI will be a powerful catalyst to the required growth in the retail industry and, in long term, will prove beneficial to all the major stakeholders. The new policy can benefit both foreign retailers and their Indian partners. The benefits to foreign players will be access to local market knowledge and an increased consumer base, while Indian companies will benefit by global best management practices and technological know-how. There will be investment in storage and transportation infrastructure, technology and supply chain operations.

The increased flow of capital, if used effectively, will benefit both the farmers and the consumers. Farmers will benefit from the better price indexing and direct selling to the retailer. The consumer, in addition to having a better shopping experience, will benefit from the competition and the resultant reduced prices.

The real estate retail industry will benefit immensely due to increase in demand and increased investor confidence. We can also expect increased transparency in the retail real estate sector. Additionally, the country will flourish in terms of quality standards and consumer expectations, since the inflow of FDI into the retail sector is bound to pull up the quality standards and cost-competitiveness of Indian producers in all the segments.

In the light of above, it would be prudent to encourage FDI in retail further. Of course, sufficient consideration should be given to the interests of SMEs, farmers and consumers while finalising this decision.

With this move, along with the caveats, the Government has indeed taken an important step. From a retail real estate point of view, it will be open up immense opportunities in the medium and long term, as the demand for quality real estate will rise. Currently, some retailers are cash-strapped and this will provide a sort of bail-out option to them. Overall, the investment by local and new international retailers that are likely to flow into the sector will definitely also take the form of investments into real estate at the front end in terms of retail store spaces and of the back end in terms of better quality warehouses.

The new international entrants will be willing to take longer term bets and invest in stores which will be sustainable over the long haul. Competition will increase as Indian retailers shape up and intensify their expansion plans - which had been fairly low over the past few years. Also, it will increase the interest and confidence level of real estate developers to set up quality shopping centres. They now have reason to set behind them their experiences post 2008 and can once again consider investing in this asset class with a clear vision to long-term profit.”

INDIA: FDI IN MULTI-BRAND RETAIL - THE GATEWAY FINALLY OPENS


ASIA NEWS

GLOBAL RESIDENTAIL PRICE GROWTH: HONG kONG TOPS THE TABLE

This year the residential markets of the world’s leading cities have become more localised. The strongest price growth has been seen in those world cities that were buoyed by domestic demand, while international investor cash has retreated to a few core markets with established, long-term investment credentials, said international real estate advisor Savills.

The firm’s Autumn World Cities Review, published last month, reveals that the top performing markets are fuelled by domestic wealth generation. Hong Kong topped the list with half year price growth of 7.4%, followed by Moscow and Sydney, which recorded 5.5% and 3.7% respectively, all well ahead of the index average of just 1.2%. This confirms Hong Kong’s position as the world’s most expensive city, with values now 82% ahead of second most expensive London and five times those of Mumbai.

‘Old world’ markets of London and New York continued to attract international equity seeking long term stability and growth, with values rising 2.8% and 1.1% respectively. The biggest fallers were Paris (-3.4%), Shanghai (-2.6%) and Mumbai (-1.7%), which suffered as investor sentiment wavered.

outlookHong Kong has been the real winner so far this year. Mainstream market

recovery, supported by domestic buyers and a loosening of mortgage availability, helped to boost values to another all time high in June. Although it seems that the price falls of late 2011 were a temporary blip, this is a volatile market that could turn negative again.

At the other end of the scale, Paris is the biggest loser of 2012 and faces a period of uncertainty. The Eurozone crisis continues to discourage investment in euro-denominated assets, and the market has been dealt a double blow by President Hollande’s proposed increases to taxes on high end property and investor gains. Further price falls now seem unavoidable in the French capital, and London is the potential beneficiary as international money seeks an alternative haven within the geography of Europe, but outside the Eurozone.

London remains the second most expensive world-class market, but uncertainty regarding the impact of new stamp duty rules, announced in the March budget, has already slowed activity and price growth at the top of the market. A period of flat prices now seems likely, though market fundamentals (high occupier demand and limited supply) favour growth longer term.

Cities set for growthThe outlook for many of the ‘new world’ cities in the Savills index (e.g.

Shanghai, Mumbai, Moscow) depends on their ability to continue to generate wealth, and for that wealth to be invested in real estate. Singapore’s strong domestic market suggests the potential for further growth, while Hong Kong continues to ‘defy gravity’ thanks to its proximity to its mainland ‘domestic’ market.

“Emerging markets, and Chinese buyers in particular, still have the potential to move other world city markets,” says Yolande Barnes, director of Savills Global Research. “Last year we said that the unleashing of high net worth Chinese investor monies could boost London’s prime markets by 15% and the same must be true of other top cities, but this will require the relaxation of currency export controls and overseas ownership restrictions.

“By contrast, China’s lead world city, Shanghai, will need to see its market adjust to a more sustainable domestic consumption model in the future before significant price growth can resume.

“What is clear is that - whether boosted by international or domestic wealth-generation- the select band of cities that are measured in our index have increasingly more in common with each other than with their own domestic markets or economies.”

ASIA GROWTH FUELS RISE OF STUDENT HOUSING AS A GLOBAL REAL ESTATE ASSET CLASS

The increasing number of students from Asia choosing to study outside of their home country has played a key role in developing the student housing sector into a global real estate asset class, according to Jones Lang LaSalle’s new Global Student Housing Report, released earlier this month.

In recent years, Asia has increased its market share as a source market for international students from 48 percent in 2004 to 52 percent in 2009. In fact, the top five source markets globally are China, India and South Korea, followed by Germany and France in fourth and fifth. On the flip side, the most popular destinations for these students are the US, the UK, Australia, Germany and France.

“Strong economic growth in the key Asian markets has fuelled higher education enrolments globally. Over the past decade, countries like China, India and Vietnam have experienced rapid growth in the wealthier middle class, which has spurred demand for higher education and better housing options in destination countries,” said Philip Hillman, Lead Director, Student Housing and Higher Education, Jones Lang LaSalle.

Globally, the student housing market as a whole is estimated to be worth in excess of USD 200 billion, with study-abroad student numbers expected to increase from around 165 million today to 263 million by 2025. Market transaction volumes worldwide for the year ending June 2012 were USD 4.7 billion, with more assets trading above USD 50 million, showing healthy investor appetite for this asset class.

While ownership of student housing has traditionally been dominated by developer-operators, increasingly, equity funds, sovereign wealth funds, pension funds, investment managers and REITs are entering the market. The sector’s solid investment fundamentals have been characterised by its counter cyclical nature, high occupancy rates, strong demand drivers and positive income and rental growth.

“Student housing is one of the most vibrant Indian real estate markets in the foreseeable future,” said Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India. “Dense student populations that exist around prominent colleges positively affect the demand for residential spaces as well as restaurants and small retail spaces. As such, educational institutions lend value to a location.”

In fact, the future of this sector in India is extremely promising. “The country’s top 10-15 corporate schools have plans to develop

a total of 800–1000 schools over the next decade, aiming to deliver quality education to far-flung parts of the country,” Puri said. “The corporate higher education industry is expected to build close to 10 million square feet of educational institution space over the next few years - and this does not include the rapid expansion plans that are underway to build new IITs, IIMs, SPAs and other reputed educational institutions. The demand for the right kind of student housing that such a scenario presents can well be imagined.”

Hillman added: “Institutional investors in this sector require scalability – the potential to secure significant operational portfolios with a development pipeline. The biggest barrier to major financial institutions investing in many of the emerging student accommodation markets is the lack of quality stock to invest in. However the sector in these emerging markets should benefit from an accelerated acceptance of the investment characteristics of the sector, as a result of the growth of the UK and US markets.”


JAPAN

LEADING THE REGION’S INvESTMENT REBOUNDThe earthquake of March 2011 hit at a time when Japan’s real-estate market was showing signs of recovery, especially in Tokyo and a handful of other cities popular with foreign investors. Although the natural disaster brought the real estate market to a temporary standstill, investor confidence soon returned and in Q2 2012, Japan led Asia Pacific’s rebound in investment volumes.


JAPAN

“The Tokyo residential market is a stable investment environment most suited for investors seeking core/core-plus returns. Rents in the mid-market are not prone to volatile fluctuation and occupancy rates have remained consistently high since the global financial crisis.”

In the wake of recovery from the global financial crisis, Asia Pacific markets will continue to drive global growth for the remainder of

the year, according to the Jones Lang LaSalle (JLL) Q3 Global Market Perspective.

According to JLL , in Q2 2012, Asia Pacific was the only global region to show a year-on-year (YOY) increase in investor activity, up 30 per cent compared to last year, while Japan led the rebound in investment volumes (+290% YOY) on the back of recovery from the earthquake in March 2011.

According to a 2011 research report by Nomura Research Institute, despite the weak economic growth of last year, Japan is expected to remain ahead of high-growth countries including India, Brazil and Russia up to at least 2020. Tokyo will remain the world’s top metropolis in terms of population and GDP.

The Japanese market, of which Tokyo represents 70%, is the third largest in the world after the US and China. Compared to the US and China, however, Japan, which has investable properties worth more than USD 2 trillion, has a much smaller land area. Therefore, most of the properties are concentrated in a few cities. In fact, the Tokyo region alone accounts for 70% of the total value of investable properties in Japan (Source: Nomura Research Institute).

Real estate post March 2011The tragic earthquake of 2011 evidently had an immediate effect on the

country’s real estate market, however investor confidence soon returned.Will Johnson, Associate at Savills Japan, commented:“The market ground to a standstill in the first quarter following

the earthquake. Overseas investors were concerned in the months immediately following the disaster but this has subsided as reported damage to property was negligible and the risk of radioactive contamination in the major cities non-existent. After the initial post-quake shock, domestic firms resumed investment activity within the quarter and the debt markets reopened in earnest.”

The earthquake has also brought several pre-existing concerns to the foreground.

“Seismic resistance has always been a factor in building selection, but it has become a higher priority. The market was in a beginning phase of a recovery when the earthquake struck and soon after the Euro crisis [started]. This had a dampening effect on the recovery [of the market],” commented James Fink, Senior Managing Director at Colliers International Japan.

Will Johnson further added:“From a leasing perspective, tenants are showing a strong preference

for modern properties built to up-to-date seismic codes. Newly built properties equipped with latest seismic technology are achieving a demand premium, especially those with independent power generation facilities.”

ResidentialGenerally more stable than retail and office, the residential sector is

currently said to offer the most attractive investment opportunities in the country. According to the Q1 2012 Japan Investment Update Report by Colliers International, middle income and compact rental units have performed much more steadily than the high-end subsector in Tokyo, with relatively strong rental demand and have continued to be relatively stable investments in terms of rents and occupancy.

According to the Q2 2012 Savills Residential Research Report, “residential demand for mid-market assets in Tokyo’s central wards in recent quarters has been supported not only by the capital’s dominant concentration of economic infrastructure and sheer weight of people, but also by continued in-migration from regional towns and cities.” The firm expects the mid-market segment to remain robust over the short to mid term, supported by the influx of new residents from regional towns.

Will Johnson, Associate, Research & Consultancy at Savills Japan, commented:

“The Tokyo residential market is a stable investment environment most suited for investors seeking core/core-plus returns. Rents in the mid-market are not prone to volatile fluctuation and occupancy rates have remained consistently high since the global financial crisis. Given its stability, Tokyo mid-market residential assets benefit from strong and steady demand from domestic institutional investors, including Japanese corporates and the J-REITs. This mitigates exit strategy risk for foreign funds and institutional investors active in this sector.”

Johnson adds that since 2008/2009, liquidity has dramatically improved, with domestic lenders favouring Tokyo residential above any other sector and in some cases willing to offer LTVs of up to 70-75% on well-positioned assets, which has increased competition for Tokyo mid-market residential.


JAPAN

officeSince 2008, vacancy rates sit at a relatively high level of about 8%

(Colliers), however experts predict the office sector will be one of the key asset classes for investment opportunities in the coming year while the Tokyo Government is working on re-invigorating external demand.

“The Tokyo Metropolitan Government has adopted policy measures to provide assistance to multi-national entities that specifically locate within so-called Comprehensive Special Zones for International Competitiveness Development, which may act to bolster external demand going forward. The proposals include a system of tax breaks and incentives to reduce corporate taxes for new international occupiers from approx. 40% to the mid-20% range, making Tokyo more competitive as an Asian headquarters location and a base for R&D,” Johnson said.

“[The Government] aims to see at least 50 companies in five years establish integrated back-office operations and R&D centres for their Asian business and to attract at least 500 other global companies. The zones will target selected growth industries, including ITC , content and creative, medical and chemical, electronics and precision equipment, and finance and brokerage. The geographical areas selected for the zones include central Tokyo and waterfront sites incorporating 1) Tokyo, Shimbashi, Roppongi, Toyosu and Ariake stations; 2) the area around Shinagawa and Tamachi

stations; 3) the Shinjuku Station area; 4) the Shibuya Station area, and 5) land by Haneda Airport,” Johnson further explained.

Retail“Despite its relatively small population, Japan remains the third largest

economy in the world with GDP per capita over 8 times larger than that of China. (IMF World Economic Outlook, April 2012). Although higher growth markets get the bulk of the media limelight, the sheer depth of the Japanese retail market makes it one that can’t be ignored for investors with diversified portfolios,” Johnson commented.

Looking at the current performance of the sector, the decline in monthly household income and a drop in monthly household spending over the last 12 months have caused consumer demand to remain relatively weak (Colliers). The firm says there has been a noticeable shift away from luxury goods to reasonably priced casual fashion competing for the most prime sites.

“While still demonstrating a strong appreciation for high-quality products, Japanese consumers have become more price conscious since the global financial crisis. High street brands that provide the right balance between quality and price are therefore performing strongly. Fast-fashion retailers are tapping into this demand, with domestic brands such as UNIQLO and

“Although higher growth markets get the bulk of the media limelight, the sheer depth of the Japanese retail market makes it one that can’t be ignored for investors with diversified portfolios.”


JAPAN

G.U. as well as overseas rivals such as H&M and Zara pursuing aggressive expansion strategies in Japan,” Johnson added.

Johnson also mentioned that 2012 has seen notable new entrants to the market including Zara’s sister brand Bershka, Forever 21, Old Navy and American Eagle Outfitters, while the latter’s two new locations in Tokyo are reported to have received over 100,000 visitors during their five days of opening, with 1,000 people queuing outside to enter.

“For both mainstream and high-end brands, location will remain key. Strong demand for prime retail space will keep vacancy close to zero and support rents in the main commercial districts of Japan’s major cities,” Johnson further commented.

The analyst also said that the traditional department store format appears to have gone out of favour with many younger Japanese consumers. “However, given their location on some of the country’s strongest retail thoroughfares, they have attracted popular casual fashion brands such as Forever 21 and H&M as flagship tenants. This trend has the potential to continue provided department stores adapt and evolve their retail strategies to fit consumer tastes and should help to support their profit margins going forward,” he said.

Looking at the dynamics of the sector and opportunities for retailer expansion, Fink commented:

“Prime retail always has demand. When the luxury sector lags, value retailers move in and the trend reverses somewhat when retail rents strengthen. Large scale retail is still relatively limited so brands like Ikea and COSTCO have room for further expansion.”

outlook/Investment opportunitiesLooking at the sectors offering the most attractive investment

opportunities, both Johnson and Fink identify residential (as the long time favourite), office and prime retail.

According to Johnson, investors should consider core residential assets in major markets outside of the capital, such as Osaka, Fukuoka and Sapporo. “Like Tokyo, ongoing urbanisation in these markets is supporting demand for mid-market residential. Moreover, the acquisition yields commanded by such assets tend to be comparatively higher than those in Tokyo,” he said.

In addition to residential assets, Johnson says new mid-large sized offices in Tokyo offer good opportunities. “In terms of market cycle, rents are at historic lows and supply is high, therefore there is scope for rental growth and capital appreciation when the market enters an up-swing,” he explained.

Fink agrees, saying that there is a growing sense that the Tokyo office market may start to bottom and that the best opportunities going forward are in the office sector.

Lastly, prime high street retail assets in Japan’s major urban centres, such as Tokyo, Osaka, Kyoto and Fukuoka are interesting products according to Johnson. “Such properties are often leased on long fixed-term leases with strong tenant covenants, so can provide solid, stable returns. If the acquisition price is right, high demand for such assets from domestic and overseas investors, both institutional and private/family office, may help to achieve yield compression over the holding term,” he concluded l


PHILIPPINES

In Q1 2012, the Philippine economy grew by an impressive 6.4%, higher than the 4.9% registered in the same period last year, the Q2 2012

Philippine Real Estate Market overview by Colliers International showed. The country’s GDP for the period was the highest in the ASEAN region and came in second after China (8.1%) across all of Asia, the report further stated. Amid the global economic slowdown, the strong economic growth was mainly attributable to higher government expenditures (+24%), robust consumer spending (+6.6%) and a resilient service sector (8.5%), of which the real estate subsector contributed a remarkable 24.3% growth, Colliers said.

“Business executives are now more optimistic on the economy, given the country’s healthy investment scenario and strong macroeconomic fundamentals,” the firm commented. With regards to the property sector, real estate loans grew by 20% year-on-year to PHP 524 billion (USD 13 billion); the interest rate is at its lowest levels with lending rates sitting between 5% – 8% as opposed to the range of 12% – 15% a decade ago (Colliers).

Rick Santos, Chairman and Founder of CBRE Philippines, commented:

“We’re seeing the strongest market and best fundamentals in the last 20 years. The Philippines has cut through the global headwinds to progress as one of the best performing real estate markets. We have a booming office market, an expanding retail industry driven by the large working population and robust spending, a strong residential sector and a growing leisure/tourism sector which is catching up the pace of our neighbours. The country will see more real estate developments from local companies and increasing investments from foreign businesses.”

One factor which has proven highly advantageous to the Philippine economy and real estate sector is that the country finds itself ideally positioned to take advantage of the global outsourcing boom. In 2011, employment in the Philippine Information Technology and Business Process Outsourcing (IT-BPO) industry grew by 22% to 638,000 people, according to the Business Processing Association of the Philippines (BPAP). The BPO industry had USD 10.9 billion in revenues in 2011, but is expected to employ 1.3 million workers and generate USD 25 billion in revenues by 2016 (BPAP). If the target is reached, the BPO sector will become one of

RESHAPING MANILA’S URBAN LANDSCAPESignificant growth of the Business Process Outsourcing industry coupled with an increasing inflow of Overseas Filipino Workers’ remittances have lead to increased construction activity in the country’s office and residential sectors. Backed by the highest GDP growth rate in the ASEAN region during the first quarter this year, international real estate investors have their eyes set on the Southeast Asian islands.


PHILIPPINES

the largest contributors of foreign exchange revenues in the country.

office sector growthSo far, the office sector has benefitted the most from the country’s BPO

boom. “Strong demand from local and multinational companies and the

continued evolution of the Business Process Outsourcing industry may propel the Philippine office property market to become one of the major markets in the Asia Pacific region in the next few years,” commented Jones Lang LaSalle Leechiu (JLLL).

Colliers further added that currently, strong demand from the Offshore and Outsourcing sectors has resulted in increased construction activities; the firm says total office stock is projected to reach 7 million square metres in 2014, over 20% higher than the previous year.

“The Philippines is becoming the lifeboat for many US & European companies that need to outsource in order for their businesses to survive and actually preserve jobs back in the US and Europe. We expect the outsourcing and offshoring industry to expand at a compounded annual growth rate of 18% within a 5-year horizon,” commented Santos of CBRE.

“By 2016, the target is to reach at least 10% of global revenues. Also, because of the strong economy, we see that more multinational companies will be expanding their base in the country. The office sector will go from strength to strength, with the Philippines being one of the most cost-effective destinations in Asia. Demand is catching up with supply, and with strong pre-leasing commitments,” Santos further explained.

According to JLL, over the next three years, five new BPO firms are expected to enter the country with six existing firms planning to expand, potentially creating jobs for an estimated 20,0000 Filipinos. Major players that will be expanding include Sutherland, Accenture, Teleperformance, SPI, Infosys and IBM.

Strong residential demand“The Philippines is experiencing democratisation in the housing sector—

from a nation of renters to owners—through low interest rates and flexible financing schemes. With rising income, a huge housing backlog and a very liquid market, the strong demand for residential projects is sustained,” commented Santos of CBRE.

“The increasing inflow of OFW [Overseas Filipino Workers] remittances is supporting the residential market. While a huge proportion of demand is coming from OFW families, the improving local labour markets are giving other buyers like start-up families and young professionals the means to purchase residential properties,” Santos further commented.

Colliers reports that total residential stock is forecast to grow 30% by 2014. According to the firm, Makati and Fort Bonifacio (Metro Manila) currently have the strongest residential development activity. In Makati, total new supply will reach to 1,750 units this year, 5% more than in 2011, while Fort Bonifacio is projected to deliver 1,600 units in the second half to reach 4,511 units for the year, Colliers stated. Furthermore to Colliers, take-up in Metro Manila remains consistently strong despite the substantial number of supply in the pipeline.

While Overseas Filipinos’ remittances power the low-end to mid-range residential property market, premium residences have continuously been supported by expatriate demand. As of Q2 2012, the vacancy level for prime condominiums sat at a low 5% and luxury 3-bedroom rental rates in the Makati CBD increased by 6% (Colliers).

“The continuous growth in expatriate population spurs the demand for luxury condominium units. A growing BPO industry translates not only to more expatriate buyers but also to more investor buyers. Strong leasing demand from expatriates is keeping the rental market active, making luxury condominiums more appealing to investors, particularly those looking for yield-accretive assets,” Santos said.

Increased tourist arrivals boost hotel sectorAccording to the Department of Tourism, tourist arrivals to the Philippines

have witnessed a 14.6% growth YOY (June 2012). Colliers reports that in 2011, tourist arrivals in the Philippines breached

the government’s forecast to reach 3.9 million. According to the firm, the influx of foreign travellers is a good indicator that the government will hit its target of about 4.6 million visitors in 2012 and eventually its 10-million target by 2016.

“This growth potential has encouraged developers to venture into hospitality-related projects all over the country. In Metro Manila alone, over 11,000 new hotel rooms are expected to be completed in the span of five years,” Colliers said, adding that new supply this year may reach 2,340 units, 1,500 units more than the new rooms introduced in 2011.

Santos added that the rising inflow of tourists also prompted the surge in the construction of new resorts, hotels and condominium hotels in key destinations like Cebu, Davao, Palawan and Boracay. “Likewise, older hotels are being renovated to be at par with the newer ones. Leisure and hospitality facilities are becoming attractive investment opportunities and we are seeing investors actively seeking condominium hotels for long-term leases or bulk acquisitions to be operated for recurring income,” he said.

Long term opportunitiesLooking at long term investment opportunities in the Philippines, Santos

identifies several promising options.“Considering the long term, [placing capital] in the leisure/gaming/

tourism sector will be a very sound investment. There is optimism in this area because of the Philippines advantage in having varied tourist attractions.

Likewise, the office market will remain a major driver of the local real estate market. The growth in the office market will not be limited to Metro Manila but will extend to major cities in the provinces.

Massive infrastructure investments planned for the Philippines will be able to support the expansion of offices outside Metro Manila. The sustained growth of the BPO industry will continue to generate opportunities in the office market,” he said.

On a final note, Santos commented on the importance of the Philippines spreading its positive image.

“The Philippine property market is resilient, and is at its best from the past 20 years. A crucial role the government, media, and stakeholders have to perform is to ensure that a positive and enticing image of the country is promoted not only within the country, but also outside the country,” he concluded l

“The Philippines is experiencing democratisation in the housing sector—from a nation of renters to owners—through low interest rates and flexible financing schemes. With rising income, a huge housing backlog and a very liquid market, the strong demand for residential projects is sustained.”


EUROPE NEWS

After three and half years of price growth, prime London house prices are likely to see a period of little or no growth says global

real estate provider, Savills in its forecasts, released earlier this month. This slowdown comes on the back of high price rises since 2009, which have completely bucked the trend in the rest of the country and leave prime central London values 22% above their 2007 peak.

“Prime London is an equity-driven, volatile market which experiences regular, short-lived adjustments when it is fully-valued,” said Yolande Barnes, Director of Savills World Research. “After such strong growth, we now expect prices to plateau in 2013. Increased taxation, including the stamp duty levy, strengthening Sterling and a weakened global economic outlook could all provide catalysts for a slowdown, but the fundamentals in prime London remain strong so we expect that growth will resume in 2014.”

Prime central London has seen price growth of 53 per cent since bottoming out in the first quarter of 2009, rising to 58.4 per cent for ultra prime (av value >£15m). This growth has been driven primarily by inflows of international equity and net new money flowing into this market has totalled an estimated £19.5 billion since 2007 according to Savills research. London remains a major world city destination for real asset investment and this is likely to continue after the brief lull expected in 2013.

Prime central London is expected to outperform all other market sectors over the mid term, with price growth totalling 26 per cent by the end of 2017. The very best ultra prime properties and high spec new developments are expected to continue to buck wider economic trends and outperform the prime central London average.

“It became clear last year that the UK’s residential property market had polarised between prime London and the rest, and this distinction has become increasingly entrenched,” said Barnes. “We knew there would be a lull in prime central London price growth, but were not sure what the trigger would be. Increased taxation could prove to be the catalyst and it certainly will take time for the market to absorb the change.

“There are still clear global reasons to invest in real assets and we are confident that London will remain on the shopping list of world city buyers. Yields remain solid, the market remains stock constrained and the prospects for global wealth generation amongst core buyer groups are sound over the medium term. We have, however, noticed less urgency among buyers of late and even a stalling of purchasing plans until the rules surrounding taxation and stamp duty are made clearer. Sellers may need to reduce their expectations for all but the very best properties in 2013.”

outer prime London marketsBeyond the prime central locations, London’s other prime markets

have traditionally been more heavily dependent on domestic wealth generation, particularly in the past from the financial sector. Prices recently have been boosted by a recycling of domestic wealth from buyers reluctant to relocate out to the commuter zone and some displacement of international wealth from prime central London.

Prime property values in areas such as southwest and north London are now 12 per cent above their previous peak levels. They are expected to plateau in 2013, rise by 3.5 per cent in 2014 and grow by 22.1 per cent by the end of 2017.

“In the absence of significant new City wealth generation, we expect these prime outer London prime locations to be increasingly reliant on the displacement of wealth from prime central London,” said Barnes. Evidence of this trend is already clear in Fulham, for example, where international buyers now account for around 44 per cent of the market compared to just 20 per cent two years ago.

Beyond London – commuter hotspots to see growth in 2013

Rarely, if ever, has there been a bigger gap between what is happening in prime London and what is happening in prime markets outside London. The weak economic recovery has continued to suppress sentiment across the prime regional markets, with key commuter hotspots only a very recent exception.

Savills expects the long-awaited ripple of wealth to be seen in the prime commuter zone around London next year, meaning locations such as Sevenoaks, Guildford and Beaconsfield will see values rise by 1.0 per cent, making this the only part of the prime market to see any price growth in 2013. Five year price growth will total 21 per cent in the prime inner commuter zone and 19 per cent in the outer commuter zone.

Further afield, prime regional markets will begin to bottom out in 2013, before resuming growth in 2014, but the further they are from London, the weaker the expected growth will be. Consequently, Savills expects many prime regional markets will perform closer to the mainstream market.

“Although the gap between prime London and prime regional prices has never been wider, buyers have lacked the confidence during the recession to exploit this gap,” said Barnes. “As the economy, and particularly confidence improves, we expect that this will begin to change, but it will require London and the prime suburbs to remain active and it could be 2016 before the effects of wealth migration are felt right across the UK’s prime markets.”

A STORY OF PRIME LONDON AND THE REST

Source: Savills Residential Property Focus London Q4 2024


EUROPE NEWS

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According to Savills latest Madrid office market report, take-up in the third quarter of 2012 exceeded all expectations reaching

70,000 sqm, despite ongoing economic difficulties. The firm noted that this boost was primarily due to a number of larger transactions of over 5,000 sqm, which accounted for 26% of take-up during this period.

The international real estate advisor finds that the increase of refurbished space coming to the market was an instrumental factor in Q3 12 take-up numbers with three of the largest transactions in this time period agreed on this type of space, including Alcalá 65, Paseo de la Castellana 50 and Almagro 40.

Despite a higher than expected take-up in Q3 12, the total accumulated figures since January stand at 210,000 sqm, which is down 16% YOY. Savills predicts that the total take-up for 2012 will be approximately 300,000 sqm.

Savills reports that supply in the Madrid office market rose to 1.6 million sqm in Q3, up from 1.55 million sqm in the previous quarter. This has pushed the average vacancy rate in the city up to 12%, from 11.75% in Q2 12, and marks an all time high in terms of supply and vacancy rate. However, the firm notes that the CBD vacancy rate remained below 4% during the third quarter and highlights that the increase in supply is predominantly due to occupiers vacating existing space rather than new space being delivered. Looking forward to 2013 an additional 150,000 sq m of offices are due to come to the market, 70% of which

is refurbished space.Ana Zavala, director of office agency at Savills Spain, comments: “The

deterioration of the country’s economic climate has had a direct effect on the Madrid office market, with rents on a continued downward spiral, excess supply and limited take-up. However, we have recorded a higher than expected take-up in Q3 and vacancy rates remain at a low level in the CBD compared to other markets. The prospect for the office market is largely dependent on an improvement in the wider economic recovery, which remains uncertain.”

The office investment market in Madrid remains stagnant according to Savills as a result of the fragile economy. Total investment volumes in the city from January to September 2012 stand at €100m, excluding the €400 million sale of Torre Picasso, which is a 56% YOY decrease.

Pablo Pavía, capital markets director at Savills Spain, commented: “We do have a small group of active domestic investors in the market and they are looking for very specific types of property, however the supply is just not fitting their requirements. Of the little investment we have seen, both sale and leaseback opportunities and properties with the potential for residential use have proved popular.”

Yields in both the CBD and the prime areas outside the M-30 are currently 100 basis points higher than in Q3 2011 at 6% and 7.50% respectively. Savills predicts yields will remain stable towards the end of 2012.

MADRID OFFICE MARkET SEES Q3 TAkE-UP BOOST DESPITE CONTINUED ECONOMIC STRAIN


POLAND

Since the fall of the communist government in 1989, Poland has steadfastly pursued a policy of liberalising the economy and today

stands out as a successful example of the transition from a centrally planned economy to a primarily market-based economy. On 1 May 2004, the post-communist nation became a member of the European Union (EU) and in 2009, Poland had the highest GDP growth in the Union. As of February 2012, although the Polish economy’s growth did slow down in the wake of the global financial crisis, the country avoided full recession thanks to its very low private debt, robust domestic demand and flexible currency, a report by global business news provider Bloomberg has claimed.

Brian Burgess, Managing Director of Savills Poland commented: “The economy continues with positive GDP growth, higher than average

EU growth. Poland’s economy is also positively supported by the effect of EU funds, which is expected to stay this way for the next 3 years or so.

[…]The political situation is stable and there is a [good] production and industrial base in the country.”

Looking at investment, Savills Poland has reported that despite the lower number of transactions, investment activity in H1 2012 confirmed that Poland is still the major investment market in the Central and Eastern Europe (CEE) region. In the first half of 2012, the total volume of commercial property transactions was EUR 856 million (USD 1.1 billion).

According to Dominika Jędrak, Director of Research and Consultancy Services at Colliers International, Poland, several different factors make the CEE nation an attractive country for real estate investments:

“Poland continued to be an important country in the CEE region for real estate investments thanks to its attractiveness in terms of liquidity and available investment opportunities. It is perceived as a stable country, resistant to the economic crisis and with a high GDP growth (2.5%, Q2

THE PEARL OF CENTRAL & EASTERN EUROPE2012 has seen strong investor interest in Poland so far, especially in the retail sector. Supported by higher GDP growth than in most European countries, increasing retail sales and a stable political situation, investment sentiment is expected to remain highly positive.


POLAND

2012), high purchasing power (1.2% higher in Q1 2012 in comparison to Q1 2011), relatively low level of inflation (4%, July 2012) and pretty high consumer optimism ratio,” she commented.

“[The] country [has] a large population (over 38.5 million) which is an important argument for investors from the retail sector. There is also a well educated labour power. There are low labour costs when compared to western, ‘old’ Europe. Poland is centrally located in Europe, the real estate market in general is still not saturated and the consumer market is still emerging,” Jędrak further said.

Burgess of Savills added that one of the reasons why Poland is one of the most demanded occupier destinations is the fact that the country has a favourable investment framework.

“There is a transparent legal and planning structure, modern triple-net lease format, low transaction costs and understandable tax and company structures. In a sentence, transacting property investment in Poland is transparent and inexpensive,” he said.

RetailThe first half of 2012 has seen strong investor interest in the Polish

market, especially in the retail sector. Retail sales have also continued to grow, with volume increasing by 4.3% year-on-year in May this year (Cushman & Wakefield Q2 2012 Poland Retail Snapshot).

Jędrak of Colliers commented: “In H1 2012, Poland’s retail market was relatively stable; over 250,000

square metres of modern retail space were delivered to the Polish market. This result is comparable with the level recorded in H1 2011. Nearly half of the new retail supply was delivered in smaller cities. Both small cities (30,000 – 100,000 population) and city agglomerations, especially Warsaw and Silesia can still offer attractive locations for retail concepts.”

According to Colliers, retail has recently accounted for approximately 45 percent of the total investment volume. Investor interest is spread nationwide with a focus on Warsaw and major secondary cities, including Kraków, Wrocław and Katowice. With regards to products, Colliers said the most sought-after shopping centres are those which are food-anchored and dominant within their respective catchment areas.

In smaller cities however, the situation is slightly different. Here, the picture of the local retail market is predominantly determined by the presence of a modern shopping centre, one that is able to attract bigger, well known retail chains.

“In general what really determines the success of a planned investment in a particular location is, among others, local authorities’ attitude and infrastructure development. These factors may facilitate the investment process, or, on the contrary make it almost impossible. Identifying a particular location requires detailed analysis of local conditions, both in terms of existing and future competition, as well as socio-economic

“The prognosis for the industrial market for the next few months is optimistic. Rising demand for modern warehouse space results in the decrease of vacant space level in certain markets which may increase rental rates.”

situation and planned infrastructure investment etc.,” Jędrak said.Burgess of Savills further added:“Much of the focus remains on the development of shopping centres

in the large cities and the re-commercialisation of older centres in good locations. For specialist investors there are also retail parks and factory outlets offering cheaper forms of retail sales for those [with limited purchasing power].”

IndustrialIn addition to the retail sector, 2012 has also seen a stable interest from

investors in the industrial market and activity is expected to increase further (Savills Q1 2012 Poland Investment Market Report).

“Investors are watching the activity in the occupier market (leasing as well as design & build), which has picked up recently. Also there is the potential for growth, bearing in mind that rents are [currently] at a low level, meaning that a modest increase could return a relatively high percentage growth on the investment,” Burgess explained.

Jędrak shares Burgess’ view on the positive outlook of Poland’s industrial market:


POLAND

“The prognosis for the industrial market for the next few months is optimistic. Rising demand for modern warehouse space results in the decrease of vacant space level in certain markets which may increase rental rates. Almost all projects under construction are already leased,” she said.

Despite such overall positive news, there are also several issues that impact on the growth of the Polish real estate market in general. For Burgess, the major challenge the market currently faces is of monetary nature:

“Of course, the conditions for obtaining (and sometimes keeping) bank finance remain tight. This has the result that there is lower new build supply and difficulties in supporting transactions of completed buildings,” he said.

“There is also the high cost of equity, resulting in a lethal combination when linked with tighter bank finance. Thus there is the challenge to continue producing assets that investors can buy against a difficult financial background,” the analyst further explained.

OutlookCushman & Wakefield believe that despite forecasts of slowdown, the

Polish economy should continue to outperform most of Europe in 2012 and

will prove an attractive expansion target for retailers with healthy demand for new space.

With regards to investment, Colliers claims that core yields in the mid-term will continue to be dependent on the macroeconomic fundamentals of the Eurozone and the CEE region in the wake of the sovereign debt issues and capital requirements of the financial institutions.

However, both Savills and Colliers anticipate that Poland will still be the major investment market in the CEE region, despite slowing economic growth.

“In our opinion the market will grow stronger and the volumes in the long term will exceed the EUR 2.5 billion mark which we witnessed over the last 2 years. The preferences of investors will remain focused on core assets, whereas well-located development projects will also generate traction,” Jędrak said.

“Warsaw CBD office buildings, modern shopping centers dominant in their respective catchment areas as well as prime logistics assets leased to reputable covenants for long term (also as Built-to-Suit projects) located in the proximity of the expanding road infrastructure will be prioritised by the international and domestic investment community,” she concluded l

38 I CITYSCAPE I AUGUST 2012

SPAIN

The Eurozone recession has had an impact on almost all global real estate markets, but especially on a number of south European

markets. In our October edition, the Cityscape magazine featured Greece and showed how the drastic drop in house prices has lured herds of overseas investors to purchase property in one of Europe’s most popular holiday destinations.

A similar ‘success’ can be attributed to Spain which has remained the most popular country regarding property purchases in August this year, thanks to a large number of distressed properties on the market, according to data from TheMoveChannel.com, a leading independent website for international property.

Dan Johnson, Director of TheMoveChannel.com commented: “It’s hard to remember a time when real estate headlines were not overshadowed by

the Eurozone crisis. The recession has meant different things for different countries. Despite Spain’s poor financial outlook, international buyers have seized the chance to snap up bargain holiday homes along the Costas.”

In October, specialist property sales portal Kyero released its Q3 2012 House Price Index, stating that over the last 12 months, the average asking price of Spanish property has decreased from EUR 267,000 to EUR 244,000, indicating an 8.5% reduction. House prices are highest in Barcelona with an average asking price of EUR 606,500 (248% above national average), followed by Mallorca and Girona.

David Vaughan, International Residential at Savills UK, commented:“In Spain, where unemployment has reached 25%, [property prices]

along all of the Costas have fallen considerably and further in areas such as Marbella where there has been an enormous amount of construction of

SPAIN’S COSTAS MORE ATTRACTIvE THAN EvERWhile Spain has always been among the top destinations for foreign property buyers with regards to holiday homes, a recent drop in house prices has now sparked a surge in buyers from Scandinavian countries who are keen to snap up bargain homes along the country’s sunny coastlines.


SPAIN

new apartments, townhouses and villas over the last 25 years.”Vaughan added that even in areas where the developer has not over-

built, such as Sotogrande, new properties sales have already doubled this year compared to 2011 and re-sale properties have sold at an average of a 30% discount.

Estimates in price drops are even more drastic according to the Savills Sotogrande office.

“There is a general feeling among estate agents that the market for quality property has bottomed. It is off between 35% and 40% from 2007 and even more if you take into account some sellers’ crazy perceptions as to the value of their property at the top of the market. Anybody not making this adjustment will not sell unless their property has a particularly unique quality. The market has officially dropped 32.9%,” the firm said.

Buyer interest in Spanish holiday homes is coming from mostly European countries.

“Around a majority of the Costas, the buyers have been mostly from eastern and western Europe with a small number from the USA and the Middle East. The UK buyers have been the most prolific for the last 30 years and in the last 20 years, there has been a large amount of buyers from Germany in Spain and especially Mallorca,” Vaughan said.

“The Germans remain the largest buyers in Mallorca and in the last years the buyers in the Costas have been mostly Scandinavian and predominately Norwegian and Swedish. After them there has been a far greater amount of different nationalities from the Ukraine and Russia coming to Spain to catch the bottom of the market,” he further commented.

Property sales portal Kyero confirms that there has been a recent surge of Scandinavian buyers in Spain. According to the portal, several factors (besides the warmer climate) are responsible for the fact that Spanish property sales to foreigners, particularly to those from Scandinavian countries, are on the rise.

First of all, countries such as Norway and Sweden have strong local economies, meaning there are funds available for investment. Secondly, traditional, in-country investments are producing modest gains while strong local currencies give Scandinavian buyers even more leverage when buying property in Euros. Lastly, reduced property prices in Spain help mitigate the currency and property market risk (Kyero).

While British buyers have traditionally been by far the most active ones in Spain, accounting for over 30% of foreign buyers, this has changed since 2009.

“Because of the exchange rate drop to near parity between the euro and the pound in 2009, British buyers practically disappeared, however a rate of around EUR 1.25 over the last months has brought more British buyers back showing interest,” Savills Sotogrande said.

In terms of geographical regions, Spain’s south is undoubtedly the winner in attracting buyer interest.

“The south of Spain from Sotogrande in Andalucía to Murcia in the east is the warmest and most popular area and has outstanding communications with international airports and motorways. The south of Spain also has the leading residential and sporting developments like Sotogrande and La Zagaleta and the largest amount of superstores and international shopping, golf courses, sporting facilities, medical centres, schools, colleges and many of the finest gastronomic restaurants in Europe,” Vaughan commented.

In addition to the Costa del Sol and the Costa Blanca, the Balearic Islands will always be popular among property buyers not only because of their weather but also because of their unique charm, Savills Sotogrande added.

Looking ahead at price growth in the near future, property portal Kyero commented:

“Starting in 2013, we expect a slight upturn in prices will signal a more widespread return of buyer confidence, and the start of the next upswing in Spanish house prices. Hopefully, the drastic market peaks and troughs

of former years will be tempered by more sustainable lending practices.”“If the market continues to exhibit a 10 year peak to trough cycle, we

should see steady house price growth in Spain between 2013 and 2018,” the firm further added.

Savills Sotogrande has a slightly different view, saying that before any price growth can take place, buyers will have to accept that the market has bottomed, which, according to Savills, has already happened. The firm believes sales volumes will gradually increase through 2013 but does not see any significant price increases until 2014 at the earliest.

Vaughan added:“Nobody can predict what the markets are going to do in Spain or

anywhere elsewhere until we see a united Europe, a strong growth in the USA and a time when the banks will lend again to stimulate growth” l

“It’s hard to remember a time when real estate headlines were not overshadowed by the Eurozone crisis. The recession has meant different things for different countries. Despite Spain’s poor financial outlook, international buyers have seized the chance to snap up bargain holiday homes along the Costas.”


AMERICAS NEWS

In a year of tepid overall employment growth, job gains in software and other high-tech services have provided a welcome infusion of

economic activity and demand for office space in select markets across the nation, says Jones Lang LaSalle in San Francisco. The high-tech services segment added 108,500 jobs in the 12 months ended Aug. 31, an increase of 4.6 percent. That growth rate is more than 2.5 times faster than in overall office-using employment, which increased by 2.3 percent with the addition of 28.5 million jobs in the same period, the firm said.

While the impact of the sector’s employment growth is strongest in long-established hubs including San Francisco, Seattle, New York and Boston, mobile technologies pioneered by the industry have enabled its employers to branch out and permeate major office markets across the nation. In a promising development for landlords, a growing scarcity of available, qualified workers in established innovation centers is driving new clusters of activity in Phoenix, Las Vegas and other emerging markets.

“The high-tech industry is driving employment gains throughout the country at a much faster rate than almost any other sector,” said Amber Schiada, Research Manager for Northern California at Jones Lang LaSalle. “The labor pool is tighter in more established tech markets such as the Silicon Valley, Austin, and Seattle, prompting companies to look for space and set up shop in less-traditional markets such as Atlanta, Chicago, and Washington, DC.”

With high-tech companies providing one of the strongest engines of job growth and demand for office space, savvy landlords are increasingly catering to the technology sector’s preferences for open space, quirky buildings and amenity-rich, urban environments where ‘less is best.’ Jones Lang LaSalle delineates these trends and others in its 2012 High-Technology Outlook report that tracks 20 US markets and provides an overview of the sector’s impact on office space supply, demand and pricing conditions.

Battle for High-tech talentThe high-tech industry has experienced a fundamental shift since

the dot.com bust, with concentrated investment in hardware and chip manufacturing giving way to a more recent explosion in services and software development in particular. Mobile phone applications, cloud computing, social media, and game developers are shaping the tech industry of today, and unfettered by manufacturing activities that tied an earlier generation of companies to specific markets.

Technology companies today are more likely to base site-selection decisions on access to intellectual capital, and favor markets that offer the urban living and amenities that young knowledge workers seem to prefer. Even in largely suburban communities such as San Diego, Austin, and Phoenix, tech activity is increasingly clustered in urban cores.

Rather than go head-to-head with other employers to hire programmers, marketers, and business developers, a growing number of companies are locating in emerging markets that offer lower costs and more affordable space. Las Vegas, for example, added 6,898 tech jobs in 2011 for a 22.9 percent year-over-year gain, taking the No. 2 spot on Jones Lang LaSalle’s ranking of markets by high-tech employment growth. San Francisco retained the lead with 28.6 percent annual job growth in 2011, the most recent year for which individual market numbers are available.

On the opposite end of the spectrum, Orange County and Los Angeles

were the only two markets posting high-tech job losses, with minimal contractions in each.

In a herald of real estate demand to come, venture capital activity is ramping up and supporting start-up activity that will likely bring future job creation as new firms gain their footing and begin to grow. Venture capital dollars flowing into high-tech companies totaled USD 15.5 billion in the four quarters through June 2012, up 13.1 percent from the same period a year ago. Start-up activity is concentrated around markets with high intellectual capital, typically university centers and urban locales.

Forecast 2013High-tech clusters accounted for nearly one-third of net absorption

gains in the past year. For a sector with a proportionately smaller job base, this speaks volumes about the impact this industry is having on the office market as a whole.

Jones Lang LaSalle expects this trend will continue into 2013; strong global consumer demand for an ever more social and mobile world will drive industry growth and venture capital funding for the foreseeable future. The high-tech industry is in the early stages of the business cycle and has room to grow.

Innovators face fewer barriers to entry to get a company off the ground in this tech cycle than they did 12 years ago. Reliance on the cloud rather than numerous servers, multi-channel advertising that better targets consumers and a larger potential customer base overall are driving company formation and reducing the initial capital investment required. While it may be easier for more businesses to be formed, longer-term, the industry will work through merger and acquisition activity and show signs of maturation.

Jones Lang LaSalle predicts steady employment growth and continued demand for real estate throughout the country from this unique industry cluster.

HIGH-TECH SERvICES jOB GROWTH MORE THAN DOUBLE RATE OF OTHER OFFICE USERS

High-tech Report Highlights• High-tech services make up just 8.6 percent of

office-using jobs in the U.S. but accounted for 17 percent of annual employment growth. Of the more than 653,000 office-using jobs created in the four quarters through August 2012, 108,500 were in high-tech services.

•Total venture capital dollars flowing into high-tech companies reached $15.5 billion in the four quarters through June 2012, up 13.1 percent from the year-ago period.

•Total IPO activity is off significantly in this cycle compared with 1999 and 2000, reflecting the move toward mergers and/or acquisitions as the exit strategy, rather than reliance on the public markets.


AMERICAS NEWS

Strong demand from buyers in Miami mean that the total number of listings, including single family homes and condominiums that

pended last month increased by 40%, a recent report by global property news service Propertywire claimed.

Compared to September 2011, the number of single family and condominium listings that pended in September increased 58.5% and 27.5% respectively (Miami Association of Realtors).

“The Miami market needs more inventory to satisfy strong demand for local properties. Since pending sales are an indicator of future closed sales, this activity points to continued demand. This is an excellent time for sellers who have been waiting to put their homes on the market to do so, as limited supply and significant demand continue to drive price appreciation,” Martha Pomares, Chairman of the Board of the Miami Association of Realtors told Propertywire.

Despite the dwindling supply, Miami’s real estate market continues to perform robustly, particularly when compared to the rest of the nation, explained Patricia Delinois, Residential President of the association.

“Our market is by a wide margin the top choice for international buyers and investors, who along with population growth continue to fuel demand for local housing, boost the local economy, and greatly enhance our communities,” she said.

Nationally, the Pending Home Sales Index, a forward looking indicator based on contract signings, rose 0.3% to 99.5 in September from 99.2 in August, according to the National Association of Realtors. The index is 14.5% higher than the 86.9 index reported in September 2011.

Increased pending sales are an indication of increased future sales. A sale is listed as pending when a contract is signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.

Meanwhile, the most recent RE/MAX National Housing Report, which covers data from 52 metropolitan areas, shows August home prices

were flat compared with July, but 6.3% higher than prices seen in August 2011.

Median home prices have risen above last year’s prices for seven consecutive months and home sales were 8.5% above the mark set last year, and for fourteen straight months have pushed higher than last year.

“As we move from summer to fall it’s very encouraging that this year’s home selling season began strong and finished even stronger,” Margaret Kelly, CEO of RE/MAX told Propertywire. “Nearly every month in 2012 experienced increased sales and prices over 2011, showing that we’ve definitely passed the bottom and we’re looking forward to 2013 being an even better year,” she added.

August home sales rose 2.5% higher than sales in July and 8.5% higher than sales at the same time last year. August marks the 14th consecutive month with sales higher than the same month in the previous year. Despite the apparent loss of sales to a tight inventory, historically low interest rates and renewed consumer interest have resulted in strong sales in August and through the entire summer.

Of the 52 metro areas surveyed 44 saw higher sales than a year ago and 29 of those metro areas saw double digit increases including Trenton, New Jersey up 35.6%, Raleigh Durham in North Carolina up 28.9%, Chicago up 28.1% and Nashville up 27.8%.

The median sales price of homes sold in August was USD 168,685, which was essentially flat from July, down only 0.2%. Prices peaked this summer in June, but remained higher than 2011 in both July and August.

The August median price was 6.3% higher than last year, which marks the seventh month in a row with a YOY increase. Of the 52 metro areas surveyed 46 reported price increases over last year, with 15 metro areas experiencing double digit gains including Phoenix with a 33.9% increase in median prices, San Francisco up 22.6%, Las Vegas up 19%, and Miami up 17.8%.

New leasing activity in U.S. office markets picked up during the third quarter of 2012, though levels are down from this time last year,

according to Cushman & Wakefield’s third quarter statistics for the U.S. Central Business District (CBD) office market.

Overall leasing activity for U.S. CBDs totaled 47.9 million square feet at the end of the third quarter of 2012, with 18.1 million square feet leased from July through September, compared to 14.2 million square feet leased during the second quarter and 15.6 million square feet leased during the first quarter. Year-over-year, overall leasing activity for 2012 is down 18.4 percent from the 58.7 million square feet leased at this time last year. While leasing activity declined year-over-year in the majority of U.S. CBDs tracked by Cushman & Wakefield, some markets, including San Francisco, Boston and Philadelphia saw increases of at least 10 percent.

“This quarter has seen a growing demand for office space, albeit slowly,” said Maria Sicola, Executive Managing Director and Head of Americas Research for Cushman & Wakefield. “While leasing activity in CBDs is down nearly 20 percent compared to last year, we›ve seen less of a significant decline in the suburbs, suggesting that pricing is still playing a role in companies’ real estate decisions.”

The overall vacancy rate for U.S. CBDs remained at 13.4 percent at the end of the third quarter, unchanged from the previous quarter, and at its lowest level since the first quarter of 2009, when the overall vacancy rate was 12.5 percent. Year-over-year, the overall vacancy rate declined

0.4 percentage points from 13.8 percent at this time last year. Quarter-over-quarter, overall vacancy declined in 15 of the 30 U.S. CBDs tracked by Cushman & Wakefield, increased in 13 and remained unchanged in two. The largest quarter-over-quarter declines were in Jacksonville, Fla. (down 2.6 percentage points), Houston (down 1.8 percentage points), and Miami (down 1.8 percentage points).

Overall rental rates averaged USD 38.61 per square foot at the end of the third quarter, a USD 0.59 or 1.6 percent increase from USD 38.02 per square foot at midyear 2012, and up USD 1.81 or 4.9 percent from USD 36.80 per square foot at this time last year. San Francisco, Denver and Boston were among the markets with the greatest increases in asking rents.

Overall absorption - the net change in occupied space - was positive year-to-date, totaling 2.5 million square feet, though down from the positive 11.2 million square feet of absorption at this time last year. Eighteen of the 30 markets tracked by Cushman & Wakefield recorded positive absorption in the first nine months of the year.

No new construction was delivered to U.S. CBDs in the third quarter. Year-to-date, 503,805 square feet of new construction has been added to the U.S. CBD office market, including new buildings in Portland and Washington, D.C. An additional 11.5 million square feet is currently under construction, with projects throughout the U.S. expected to be completed through 2014.

MIAMI CONTINUES TO SEE STRONG DEMAND FROM INTERNATIONAL BUYERS

U.S. CBD OFFICE LEASING UP IN Q3, THOUGH DOWN YEAR-OvER-YEAR


CANADA

Despite being closely linked to the US economy, Canada, in the aftermath of 2008, emerged more quickly and with higher GDP

growth rates than its southern neighbour. Canada’s conservative banking oligarchy and strong resource sector lifted the economy by creating thousands of jobs and bol¬stered the value of the Canadian dollar (which has been within four cents of parity with the U.S. Dollar since 2010), the mid-year global retail report by Colliers International stated.

The positive economic outlook is not only good news for the country’s retail sector; the residential market is currently said to offer favourable conditions for investors seeking to capitalise on Canada’s strong economic fundamentals.

In September, property investment company IP Global issued its Q3 2012 ‘Property Barometer’ with a particular focus on North American cities, highlighting Canada as an appealing destination for real estate investment.

“An attractive North American investment alternative is Canada, where unemployment is significantly lower than in the United States. Toronto is the city of the moment, currently enjoying very low rental vacancies, strong house prices and an excellent economic outlook, with only 1.4% of rental properties unoccupied in the city last year. The strong economic

foundation of the Canadian economy and its well-capitalised banks are likely to support continued stability in the housing market there,” the firm commented.

torontoWith over 2.5 million residents, Toronto is Canada’s largest city while the

Greater Toronto Area (GTA) counts a population of over 6 million people (Statistics Canada, 2011 Census of Population). IP Global predicts bright prospects for Canada’s commercial capital:

“Supported by a strong local economy, Toronto’s housing market has continued to see strong gains highlighted by 6.5% growth from August 2011 - August 2012 according to the Toronto Real Estate Board. Of particular interest is the fact that prices continued to climb despite stricter mortgage lending guidelines instituted in an attempt to slow the market’s growth. While talk of a Canadian housing bubble persists, home buyers and investors seem to remain confident about the ability of the market to maintain momentum,” the firm said.

According to the Toronto Real Estate Board (TREB), the average selling price for August 2012 transactions was USD 479,095 – up by almost 6.5

A MODEL OFSUCCESSIn the wake of the global financial crisis, Canada has shown remarkable economic growth and solid market fundamentals, in stark contrast to the US, making the country attractive to investors looking to place capital in the country’s residential property. With strong house prices and low vacancies, Toronto seems to be the city of the moment.


CANADA

per cent compared to August 2011. “Strong ownership demand relative to the number of homes available

for sale has resulted in strong year-over-year rates of price increase. This has especially been the case for low-rise home types, including single-detached and semi-detached houses and town homes,” commented Jason Mercer, Senior Manager, Market Analysis, TREB.

Mercer also added that price growth on the sale side for condominiums has not been as strong. “With many new projects completing over the past year, the number of units listed in the resale market has expanded. With more choice for buyers, the pace of average price growth has slowed for condos,” he said.

Looking at the rental performance of the GTA condominium apartment market however, figures are more positive. “Investors looking to rent their units have benefited from strong demand relative to supply, resulting in average rent increases above the rate of inflation for one bedroom and two bedroom units,” Mercer explained, adding that condominium apartments are sought after by tennants because of their modern finishes and amenities coupled with locations close to transportation alternatives.

Looking ahead, Mercer sees an overall positive picture in terms of future price growth for the region. “The average rate of price growth for all home types will be in the high single digits for 2012 as a whole. The average selling price will continue to grow in 2013, but at a slower pace - likely in the low to mid single digits. The slower pace of price growth will result from a better supplied market, with buyers benefiting from more choice,” he concluded.

VancouverPredictions for Vancouver vary. According to IP Global, prospects for

Canada’s coastal city are not as bright as those for Toronto.“Talk of an overheated property market in Vancouver has continued

despite the city’s strong economic fundamentals, as evidenced by flat price growth and rental growth only just beating inflation. Stable transaction volumes suggest that a significant market correct is unlikely; investors appear to be content to take a wait and see approach until the long term direction of the market becomes clearer,” the firm commented.

Scott Brown, Senior Vice President, Western Canada at Colliers International Residential Marketing, believes pessimistic views about Vancouver’s real estate market result from one-sided research.

“The market has only experienced flat price growth recently yet tends not to over inflate anyhow. The more expensive areas of Vancouver are being driven up by offshore demand and influx of wealthy [individuals] from around the world. This is expected to be a long term trend and should see values in Vancouver downtown for instance increase from USD 700 per square foot on average to USD 1,000 per square foot ,” he commented.

Brown added that recent commentaries about Vancouver’s housing market have been focused primarily on USD 1,500,000+ single family dwellings in prestigious Westside neighbourhoods, although this market only represents a small portion of the overall market, thus creating a distorted view.

“Outside downtown, the market is driven by end users and remains stable. We do expect a number of successful launches in the next 3 - 6 months that will show the resilience of the market once again. All of these projects will attract the local and foreign investor because they are integrated into our evolving rapid transit system and therefore prime for rental. Rental rate growth here has been stable but is expected to increase in these key areas over the next 5 - 10 years,” he explained.

According to the analyst, the future of Vancouver’s real estate market is certainly a bright one.

“The long term outlook sees average prices in key areas rising by 10 to 20%. We also expect to see international and local investors very active in select areas with the former being driven to Vancouver in part by restrictive investment measures being implemented in the UK and Australia,” Brown concluded l


When newly elect President Enrique Pena Nieto of the Institutional Revolutionary Party (PRI) resumed office in September, he took

over at a time when Mexico’s finances were in good order and the economy started to improve. He has promised to lift economic growth to about 6 percent a year (Reuters), create jobs and combat a long-lasting drug war; his main reform proposals include allowing more private investment in Mexico’s state-run oil industry.

With regards to real estate, the Q3 2012 Global Market Perspective by Jones Lang LaSalle observed a gradual recovery in Mexico’s capital markets, with higher investment volumes seen in recent months than in 2010 and 2011. Guillermo Diaz, Director Buy Advice at Jones Lang LaSalle Mexico commented:

“Recovery in real estate capital markets is mainly due to investments made by a new type of fund called a CKD Trust. These are investment vehicles created by some of the main developers to raise capital from Mexican pension funds (AFOREs) by issuing an equity security called CKD (Certificados de Capital de Desarrollo). More than 20 CKD issues have been listed in the Mexican Bolsa since 2009, raising in excess of USD 3 billion.

We have also seen international private funds seeking to diversify their portfolios by acquiring prime real estate in Mexico.

Tapping into the new sources of capital, buyers have been able to bid more aggressively for the acquisition of income producing properties. As a result, several transactions have closed this year at record low cap rates, 7% for class-A office buildings with dollar-denominated rents, 8% for retail property with peso-denominated rents.

The success of several transactions closed this year suggests that more CKDs will be issued and more money will be looking for suitable acquisition targets in the near future.”

Industrial – diversifying the spectrumAccording to a report published by leading online research portal

marketresearch.com, Mexico’s GDP is forecast to grow 3.4% in 2012. The report claims that commercial and manufacturing data in particular are surprising to the upside, providing a steady base from which real estate investment can grow. Automotive production remains a promising market for Mexico, which is expected to keep industrial investment and rental growth robust in the face of any caution from the US (marketresearch.com).

JLL also reports positive news for Mexico’s industrial sector, saying that the majority of the country’s markets continued to experience growth

during the first half of the year, although strength in fundamentals varies greatly by region (industrial markets in Central Mexico are faring best, with manufacturing employment growth rates twice the national average while many border markets are still facing difficult market conditions; JLL).

“Automotive has been the propeller for industrial development in Central Mexico bringing in Tier One suppliers and eventually creating spaces for other related business like third-party logistics or packaging. At least 4 new industrial parks are being built to serve suppliers for new car manufacturing plants from HONDA, MAZDA and NISSAN. Earlier this month, AUDI from Volkswagen Group, advised by Jones Lang LaSalle, selected a site in the state of Puebla to build a new SUV plant, taking advantage of the already skilled labor force in the region and the closeness to the port of Veracruz to export their product to Europe,” commented Gerardo Ramirez, Industrial Sector Director at Jones Lang LaSalle Mexico.

Ramirez added that the Food and Agro industrial business, as the traditional regional business for Mexico’s Central States, is also growing. New plants from Ferrero and Nestlé will be built diversifying the industrial spectrum in the area and taking advantage of the existing infrastructure, the analyst said.

“Over the past few months, Mexico’s share of US imports has been

AN ALTERNATIvE TO THE US?As markets worldwide are recovering from the global financial crisis, some more quickly than others, Mexico seems to be holding up well. With investments into the US’s southern neighbour increasing, Mexico’s real estate market is showing healthy signs of growth, especially in the industrial and hospitality sector.

MEXICO


MEXICO

“As long as consumer confidence in the US continues to recover, sustained growth can be expected in Mexico’s industrial sector.”


MEXICO

growing, signaling a good outlook for the sector. However, it is important to keep in mind that the growth of the industrial sector in Mexico is highly correlated to the health of the US economy, since Mexico is mainly a durable-goods manufacturing platform for the US market. As long as consumer confidence in the US continues to recover, sustained growth can be expected in Mexico’s industrial sector,” Ramirez concluded.

Hotel investment on the riseAccording to JLL, Mexico experienced a high level of activity in the first six

months of the year, totalling USD 266.5 million. Part of the reason for the increased volume during H1 2012 were several large transactions such as the sale of the Nikko Hotel in Mexico City to Hyatt and the Rosewood Hotel in San Miguel de Allende to a group of private investors, JLL said.

“The main driver, however, is the realisation by opportunistic investors that the market has passed the bottom of the cycle and both the tourism industry and the real estate market have started a sustained recovery. This recovery is reflected in hotel occupancy statistics which are recovering to pre-crisis levels,” the firm said.

Gilberto Riojas, Tourism Sector Director at Jones Lang LaSalle Mexico further elaborated:

“Distressed hotel sales are finally getting scarce, visitor numbers are back to 2007 levels and although ADRs (Average Daily Rates) [have not yet increased], occupancy and the industry in general is again growing...investors are looking at an imminent growth cycle. The future of the hospitality and second home industry will grow solidly as the basic motivators for US visitors/investors (although losing some ground to their European and South American peers, still by far the largest in Mexico) remain unchanged.”

According to Riojas, these motivators include proximity and ease of travel from and to the US, familiarity in hotel brands in both seaside and inner city destinations, excellent CCC offer (Culture, Climate, Cuisine) and the region’s best hospitality grade.

Looking at investment in other sectors, experts believe both the retail as well as the industrial sector currently provide prime opportunities.

“In the retail sector, large funds such as MRP and Planigrupo are aggressively looking for acquisitions which should translate into an increased level of transaction activity,” commented Jorge Velasco, Research Analyst at Jones Lang LaSalle Mexico.

As mentioned earlier, Mexico’s performance in the industrial sector is largely dependent on the performance of the US economy.

“In the industrial sector, the key driver is the speed of recovery of the US economy, which is reflected in the level of activity in the Mexican manufacturing sector and then in the industrial real estate market. Since no significant change in the US economy is expected in the short term, things will remain stable for the remainder of this year in the Mexican industrial market,” Velasco concluded.

In general, the outlook for Mexico’s real estate market is positive, JLL believes.

“The implications for the future of the real estate market are that the transaction volume is likely to increase, as both owners and investors arrive at the conclusion that property prices will start to increase. As a result, more owners will seek to sell some properties, as prices reach acceptable levels, and more buyers will jump into the market in search of the remaining bargains,” the firm said.

new governance, old challengesAlthough President Nieto is seeking to promote structural changes in

the Mexican oil industry, quick, dramatic change is unlikely, Diaz explained, saying that in order to promote the development of the real estate market, a few major challenges need to be overcome which cannot be addressed by government action only.

The analyst identifies two main obstacles:“The income flat tax (IETU) is the major obstacle in closing real estate

transactions, since it burdens the sale of property developed or acquired before 2008 with a 17.5% tax against which no deductions can be made. For property acquired after 1.1.2008, there is no problem since the acquisition cost can be deducted from the sale price. It is uncertain if the new administration is willing to make the necessary changes to the tax code to solve this problem.

Secondly, in the office sector, the main challenge is the mismatch in cap rate expectations between buyers and sellers, mostly due to unrealistically high price expectations by sellers. As a result there is an acute scarcity of product available for sale. The new financing alternatives described above are narrowing the gap, and some potential sellers are becoming interested in considering offers at current (historically low) market cap rates,” Diaz concluded l

Dubai’s beautiful new towers reaching for the sky is an urban growth model. However, once leaving this vibrant core a different living environment emerges. There are two forms of growth: dense vertical towers, and less dense horizontal neighborhoods. Horizontal growth, or ‘suburbia’, is the subject of this article. Today’s Middle Eastern suburbia flourishes as home buyers demand space for their families, emulating the sprawling developments in the USA, however, often at greater densities sacrificing the space that makes suburbia desirable. Suburban developers seeking to maximize density squeeze as many units as possible using minimum dimensions allowed by regulations. The typical suburban ‘cookie-cutter’ pattern is limited by CAD (Computer Aided Design) automation which inhibits more imaginative approaches. ‘Repetitive’ CAD functions are why newer suburban development lacks variety making new developments worse – not better. Governments seek sustainability, yet the suburban landscape sprawls with unsustainable wasteful patterns designed as if the Tee-Square and Triangle were the latest technologies.

Prefurbia – A preferred way to develop land:Rick Harrison Site Design Studio (RHSDS) was formed to solve these suburban growth problems. Over two decades RHSDS pioneered design methods and technologies to create better places to live while reducing infrastructure (i.e. costs). To date, over 300 developers commissioned over 750 projects in 46 US States, and in 17 countries to use methods collectively coined: Prefurbia.Exceeding Regulations: Traditional design seeks to reduce building sites to the absolute minimum (guaranteeing minimal ’value’). Prefurbia gains efficiency by exceeding minimal requirements (increasing value) and guaranteeing approval. This provides more space for families without sacrificing density! You may think that increasing efficiency by exceeding minimums is impossible. That ‘SmartPhone’ in your pocket would have been thought impossible just 30 years ago. We live in a world of possible!

Reducing Infrastructure: Exceeding minimums without sacrificing density is made possible by decreasing length of infrastructure (streets, walks, utilities). Reducing infrastructure has a greater impact on a developers profits than squeezing an extra home or two on a site. Prefurbia reduces infrastructure compared to an existing conventional ‘before’ plan a demonstrated average of 25%.

Safe and efficient connectivity: Prefurbia provides greater separation of vehicular traffic and pedestrian systems. Reducing infrastructure gains space allowing walks to gracefully meander and

Rick Harrison Site Design Studio (RHSDS) enters into the Middle East MarketsThe ‘land plan’ is essentially a developers ‘business plan’ and is the basis for a regions growth. RHSDS introduces Prefurbia; a new more profitable and sustainable development standard to the Middle East and Asia

Visit our Rick Harrison Site Design Studio exhibit at CityScape Jeddah 2013 or contact us directly with information about your current development plans at: Rick Harrison Site Design Studio – 8832 7th Ave North – Golden Valley, Minnesota USA 55427 – Phone +1-763-595-0055 www.rhsdplanning.com or E-Mail direct [email protected]

direct pedestrian routes to be created. The Prefurbia science of ‘flow’ reduces vehicular energy consumption while also reduces time in transit and discourages speeding (eliminating the need for irritating speed bumps). To enhance flow, Prefurbia replaces traffic circles (roundabouts) ‘diffusers’ which maintains traffic flow and avoiding backups and long waiting.

Enhanced Architectural Opportunities: Prefurbia housing design blends living spaces within the home to surrounding open spaces. Imagine providing homes that take advantage of views to enhance livability (and value) at virtually any income level. Housing at higher densities no longer have to sacrifice curb appeal and marketability.

Land Use Transitions: The most important impression of a neighborhood is the first one, yet in many large developments of mixed housing prices, a planner locates the lowest valued housing at entrances. This lowers the perception of the neighborhood and reduces values. Prefurbia solves those problems.

Summary: Advancing design is impossible to accomplish within a robotic CAD system designed to expedite design. Rick Harrison Site Design Studio created Prefurbia to create the best possible neighborhoods. Over the next five years RHSDS will be introducing these methods into the Middle East, in an uncompromising movement that will forever provide a ‘preferred’ environment for people to live, work and play – sustainably.

ADVERTORIAL


SOUTH AFRICATHE CONTINENT’S ECONOMIC POWERHOUSEHistorically perceived as a ‘dark continent’ by many international investors and corporations, Africa is increasingly being viewed as an emerging investment destination and crucial growth market. South Africa stands out as an internationally preferred location for doing business and attracts significant foreign capital. Despite ever-present challenges in the real estate sector, the country presents undoubted growth opportunities.

SPECIAL FOCUS


The days when foreign investors tended to forego Africa as a place not suitable for doing business seem to be over. This is not to say

that challenges don’t exist, however growing volumes of foreign capital investment in the continent are evidence that the perception about Africa is changing, said Jones Lang LaSalle (JLL).

The JLL Global Foresight Series 2012 on sub-Saharan Africa commented:“As mature economies continue to face economic challenges and

stagnating growth, ever more international corporations and investors are considering expanding into Africa to benefit from its high growth potential. This is resulting in a growing demand for real estate, corporate headquarters and the subsequent development of the commercial real estate sector.”

BackgroundSouth Africa’s economy has been completely overhauled since the

advent of democracy in 1994. According to Webber Wentzel, a leading corporate law firm in the country, South Africa’s abundance of natural resources (particularly gold, platinum group metals and a wide variety of other minerals), well developed and highly regarded banking and financial sector, growing manufacturing sector and considerable tourism potential all contribute to its vibrant emerging market economy.

Prior to the global financial crisis, South Africa enjoyed an unprecedented 62 quarters of uninterrupted economic growth, the firm said. “Although growth was brought to a halt by the global financial crisis, thanks to its gold exports however the impact of the recession was softened. In 2010, the economy began to recover and after only two quarters of negative growth, GDP increased during the fourth quarter of 2010. That year South Africa was also host to the FIFA World Cup and the overhaul of the country’s infrastructure fuelled by the advent of the tournament is expected to impact on economic and social development in subsequent years,” Webber Wentzel said.

Economy today2012 presents a slightly different picture. The IMF continues with its

downward revision of the world growth outlook including regions such as the United States, Europe, China and India, which are South Africa’s major trading partners. The World Bank and the Reserve Bank have subsequently revised South Africa’s growth expectation down to 2.5% following the disappointing output from the country’s major trading partners and moderate consumer spending.

In addition to the pessimistic global growth outlook, a series of strikes that have swept the country since August this year is having a damaging effect on the economy. Finance Minister Pravin Gordhan told Bloomberg in November that strikes in South Africa’s mining industry are expected to reduce exports by 12.5 billion rand (USD 1.4 billion) and cut GDP by 0.5 percent this year. He also commented that export losses exceed direct losses as mining has strong links with other sectors of the economy, which are also negatively affected.

In an effort to stimulate economic demand and boost spending in both business and consumer sectors, the Reserve Bank cut the bank lending rate by 50 basis points in July this year (JLL). “Bank lending rates are now at their lowest level since the 1970s. It is unlikely however that the rate cut will immediately boost growth and employment but it is expected to uplift the consumer and business confidence that has been dwindling since early 2011,” JLL said.

Real estateAccording to the Jones Lang LaSalle Global Real Estate Transparency

Index (GRETI)*, South Africa is the continent’s most transparent market and the only country in Africa to sit in the ‘Transparent’ category (ranked 21st globally in the GRETI). South Africa is also ahead of all the fellow members of BRICS (Brazil, Russia, India, China and South Africa), which it joined in 2011.

SPECIAL FOCUS

*The Jones Lang LaSalle Global Real Estate Transparency Index (GRETI) quantifies real estate market transparency across 97 markets worldwide. South Africa has featured in the index since 2008.


“The high ranking is a result of several factors, including rigid listed vehicle governance, strong auditing and reporting standards, a highly-developed legal system, the fairness and efficiency of the regulatory framework relating to real estate taxation, planning and building codes, enforceability of contracts and title and a strong tradition of property rights,” the Jones Lang LaSalle Global Real Estate Transparency Index 2012 report on sub-Saharan Africa said.

Sanett Uys, Group Research Manager at Broll South Africa, a CBRE affiliate, added:

“From an institutional and legal framework South Africa is very transparent. There is good governance in place and the property industry is part of the legal framework. However, we are not that transparent when it comes to the sharing of property information and statistics.”

The increasing entry of international real estate providers into South Africa however is likely to positively impact on the availability of property related information in the country.

“The quality of data is improving with a number of real estate service providers and data companies making inroads across different real estate sectors and encouraging an improvement in the quality of market analysis. The entrance of international real estate service providers is likely to further influence the level and depth of information on market fundamentals (JLL).”

According to Uys, over the last 6 to 12 months, the South African real estate market remained fairly stable with no major movements.

“The prime areas have continued to perform well and the secondary areas continue to have vacancies and rental adjustments. South Africa has annual rental escalations so rentals continue to grow at a rate of approximately 8 - 10%. However, we are seeing that rentals which have escalated above market related rentals are being adjusted back to current market rental levels,” she said.

The analyst further commented that prime properties in all sectors continue to post solid performance. In addition to this, there continues to

be a shortage of prime industrial units in some regions, she said.South Africa is home to the continent’s most mature office market.

Johannesburg, the country’s largest city, continues to be the focus of occupier demand. According to data from JLL, office stock in Johannesburg increased by 41,000 square metres in Q2 2012, while most completions were seen in the preferred nodes of Rosebank and Illovo. Commitments for developments slowed in Q2, reflecting a cautionary response in the market due to the subdued economic outlook. The development pipeline has also declined since 2009 (JLL).

On a national level, Broll is expecting the office market to remain stable throughout 2013 with no major movements. New businesses expanding their footprint as well as new businesses and retailers entering the market are the current main drivers of demand for office space, Uys commented.

In Johannesburg, the Central Business District is regaining favour with occupiers and property investors as improving security and building decay are addressed by the authorities and developers, JLL reports. According to the firm, this confidence is further boosted by the recent building development for the international insurer Zurich.

Discussing the major challenges the South African real estate market faces at the end of 2012, Uys said those were the same factors that influence most markets, including economic growth, both locally and globally, political stability, new space [entering the market], the suitability of space and parking ratios.

“We are expecting a positive festive season,” she said.JLL is optimistic about South Africa’s future.“South Africa showcased its strong project management skills and

developing infrastructure during the successful 2010 FIFA Wold Cup. Its deep pool of skilled labour, emerging economic strength and improving transparency are increasingly making it the location of choice for international companies and investors seeking foothold in sub-Saharan Africa,” the firm concluded l

“As mature economies continue to face economic challenges and stagnating growth, ever more international corporations and investors are considering expanding into Africa to benefit from its high growth potential.”

SPECIAL FOCUS


ARCHITECTURE

REDIFINING ARCHITECTURAL POSSIBILITIESThrough incorporating elements of distinct cultural heritage, global architecture firm Gensler designs unique architectural concepts with the ambition to ignite imagination, create connections and transform people as well as communities.


ARCHITECTURE

Many architects would agree that their industry has never provided more possibilities than in today’s age. The total conceptual freedom

of 21st century architecture allows architects and designers to give free reign to their imagination and to bring to life unique architectural projects that only a few decades ago would have been unimaginable.

In the Middle East, global design firm Gensler is currently expanding its presence from the company’s base in Abu Dhabi. Networked across 42 locations in five continents, Gensler have been active in the Gulf for the past 18 years and are the creative force behind a number of high profile planning, architectural and interior schemes in the region.

The firm’s portfolio includes the masterplan for Saadiyat Island, Maryah Island and the flagship development Tameer Towers in Abu Dhabi; the headquarters for the Abu Dhabi Commercial Bank and the Abu Dhabi Investment Authority; the masterplan for the Dubai International Financial Centre (DIFC), the DIFC Gate Building and the new Ritz Carlton in Dubai, as well as masterplans in Doha, Mecca and Oman.

Tareq Abu-Sukheila, Managing Director at Gensler Abu Dhabi, says the company is driven by the belief that design has the power to transform people, organisations and communities on many different levels.

“Our philosophy centres on redefining what’s possible, through design that’s inspirational as well as performance-driven, and founded in the

specific vision and aspirations of each client,” he said.This year, Gensler has been going forward with two major projects in

the region: The World Trade Centre (WTC) at the King Abdullah Financial District (KAFD) in Riyadh, Saudi Arabia, scheduled to open in 2014, and the District Expansion of The Avenues shopping centre in Kuwait City, Kuwait’s largest shopping destination, which had its soft opening mid-November this year.

World trade Centre KAFd, RiyadhAfter successfully winning an international competition for the design of

the tower, Gensler were commissioned by the development’s owner, the Riyadh Investment Company, and its builder, the Saudi Bin Laden Group, to design the 303 metre tall tower.

The WTC will occupy a significant corner site in KAFD’s Financial Plaza. Envisioned by Gensler as a gateway for international trade, the tower is differentiated by its positioning to attract small to medium sized tenants requiring the prestige and facilities normally associated with global headquarters.

“As a fully speculative office building, the WTC has been designed with the ’little guy’ in mind. This means that priority has been given to small tenants,” commented Nathan Morgan, Senior Associate at Gensler.


ARCHITECTURE

“The typical office floor plate has been designed in a way which provides all tenants with a prominent ‘Front Door’ from the central atrium volume which links all internal functions. This flexible multi-tenant layout promotes interconnectivity and interaction in shared public spaces, creating a living environment at the heart of the tower. The floor plate has also been designed in a way which eliminates the multi-tenant common landlord corridor, therefore, efficiency is maximised and the floors benefit from a more open feel,” he said.

Morgan explains that in order to further enhance the office space provided for the ‘little guy’, priority is given to shared amenity space throughout the building. “16% of the GFA [Gross Floor Area] has been dedicated for business lounges, conference centres, meeting suites, restaurants, cafes, an auditorium and an observation deck.

These spaces are centred around the public realm which is extended from the business centre at the base of the tower through the central atrium and onto the three double stacked sky lobbies. These hubs promote interchange and a shared atmosphere for the business community providing a headquarters environment for every tenant,” he said.

As the WTC’s completion date should coincide with completion of the infrastructure for the entire KAFD development, tenants will be able occupy space immediately, Gensler added.

Architecture and cultureThe interconnectedness of architecture and culture is particularly evident

in developments in global regions which carry thousands of years of unique cultural heritage, such as the Middle East.

For Gensler, the incorporation of cultural aspects in contemporary design forms the basis of successful projects.

“Attending to cultural sensitivities is a primary driver in our design process, and if done well right from the beginning of a project, this is hardly noticeable as they are ‘built-in’ versus being a forced element of the design,” Abu-Sukheila commented.

“Gensler views design as an opportunity to ignite imagination, reinforce institutional identity and create a connection to the community, and we incorporate these aspects into our design approach consistently across all our global offices.

The intent is to create experiences that work toward the ‘purpose’ on every level. Ultimately, a successful design means transforming a client’s vision and expectations within the context of how they carry out their activities, their traditions and cultural norms, and then collaboratively developing a project scope that facilitates innovative design,” he further explained.

The Avenues district Expansion, Kuwait CityThis link between regional traditions and architectural design is in fact

part of the major challenge Gensler identified in delivering the concept for the District Expansion of The Avenues shopping mall in Kuwait.

“Designing retail environments in Kuwait is challenging on several different levels. The two main factors which stem from these different challenges are climate and culture,” commented Tariq Shaikh, Senior Associate at Gensler.

“Culturally, Kuwaitis are very sociable people with extended families and large circles of friends. Being a ‘dry’ country, there are no bars or


ARCHITECTURE

“Design is ever innovating and transforming. Today’s designers have seemingly unlimited access to a plethora of materials and technologies to create new forms, structures and institutions, that often limited bygone eras, where there was distinct architectural homogeny.”

tareq Abu-Sukheila Managing Director, Gensler Abu Dhabi

The Avenues district Expansion FactsArchitect: GenslerDeveloper: MabaneeRetail space: 900,000 square feet Shops: 400+Food outlets: 40+Completion date: november 2012

nightclubs in Kuwait. People find their entertainment in other ways such as hosting or visiting friends, shopping or going out to eat. Often these are combined. Kuwaitis are also generally wealthy and well travelled, and although the country is predominantly Muslim, they are aware of the latest fashions and happy to wear either traditional or western style clothes,” Shaikh explained.

Kuwait has a population of about 3.5 million, including 2 million expatriates. The car is heavily relied upon as a form of transport, with most families owning several while taxis or public transport are seldom used by Kuwaitis.

“With these conditions in mind, creating a new and exciting retail environment for Kuwaitis was our challenge. There are already three big malls in Kuwait, and we were extending onto one of the larger and more successful malls. However, we felt that just another mall was not what Kuwait needed. It needed something new and exciting that Kuwaitis haven’t seen before,” Shaikh commented.

According to Gensler, the massive expansion which doubled the mall’s size, is as much about ‘placemaking’ as it is about retail design. Rather than entice customers to spend money quickly and leave, the intention at The Avenues is to invite them to come, linger, shop, dine, enjoy—and return the next day.

“We set out to create a large central pedestrianised high street environment as one might find in any large city. The scale of the street is wide enough to allow Kuwaitis to walk in their social or family groups abreast of each other as they like to do. There are mini places of interest along the length of the Avenue which open up off the high street into further retail districts, each with its own unique identity,” Shaikh said.

Gensler divided the project into distinct districts, each with its own character. The Grand Avenue is the organising spine that runs through the retail city and establishes the overarching natural theme. Other districts include The Mall, which links the new addition to the existing sections; SoKu, an acronym for South of Kuwait which borrows from the SoHo district of New York; The Prestige district, home to high-end brands and the Souk for small retailers.

In addition to regional cultural customs, the harsh Kuwaiti climate was also determining in Gensler’s design approach to the mall’s expansion.

Given the high summer temperatures and frequent dust storms, the high-end mall had to be enclosed, resulting in The Avenues expansion becoming a small retail city under one roof. In order to create a park-like setting and engender the feeling of outdoor gathering spots, the architects placed high importance on natural lighting and views of the sky. Natural light pours in through the transparent roof, enabling an interior environment where trees and plants can thrive, resulting in a family-friendly refuge from the intense heat outdoors l

SUSTAINABILITY

GREEN BUILDING IN THE UAEIn the light of advancing global climate change and the undeniable impact of real estate development on the environment, Cityscape magazine looks at sustainable real estate as a whole, its meaning, importance and challenges as well as at current regulations and examples in the region. Lastly, transcending various disciplines relating to real estate, we look at sustainable urban design and the particular importance of this concept for both the population and the environment of the UAE.

In today’s age, ‘green debate’ is an intrinsic part of public discourse relating to almost all aspects of daily life. In recent years, the concept

of ‘green building’ has also become an increasingly important topic as it becomes clear that real estate has an important part to play in the conservation of our natural resources.

In the UAE, a major role with regards to the implementation of sustainable real estate development is inherited by the Emirates Green Building Council (EmiratesGBC). Formed in 2006 as an independent, non-governmental entity, the EmiratesGBC helps advance green building practices in the UAE through encouraging all stakeholders to become active participants in the move towards sustainability in the built environment.

Sustainable real estate, to a large part, comes down to developing energy efficient buildings.

Adnan Sharafi, Chairman of the EmiratesGBC commented: “Sustainable real estate development is the integration of ‘green’ practices in any built environment – be it buildings under construction or existing buildings that are being modified and revamped to incorporate energy efficiency measures. The essence of sustainable green buildings is the application

of initiatives that will promote energy efficiency – right from design to various aspects of construction to eventually building operation.”

Further to this, Saeed Alabbar, Director at Alabbar Energy and Sustainability Group (AESG) added: “Sustainable real estate development in its simplest sense means developing better buildings. That is buildings that consume less energy and water, cost less to operate, use materials in an environmentally responsible manner, provide a healthy and safe environment for occupants and workers, are better integrated with the surrounding environment and infrastructure and are crucially more economically viable.”Why is sustainable real estate development so important?

According to the International Iron & Steel Institute, the building construction industry consumes more natural resources than any other human activity: 40% of all raw material consumption, 17% of all fresh water usage, 40% of all energy produced, 25% of global wood harvest and 40% of global greenhouse gas emissions. It is therefore absolutely vital for any nation to implement sustainable practices in their built environments in order to minimise the impact on the environment.

“Adhering to sustainable building practices is important given the role that the construction sector plays in accelerating global warming and contributing to greenhouse gases. According to estimates, nearly 5% of all global man-made carbon dioxide emissions are from the cement sector alone,” Sharafi said.

Alabbar agreed, adding that since buildings account for the majority of carbon emissions worldwide, developing sustainable real estate is one of the most effective means to combat global climate change.

“Also, given the rising consumption in energy demand, and with the Middle East region focusing on massive infrastructure development, it is important to focus on energy efficiency measures in the buildings, to manage the rising consumption of energy and water resources. The UAE is expecting a 71% increase in primary energy demand by 2019, and by adopting green building practices, we can further ease the burden on energy needs,” Sharafi added.

In addition to conserving our planet’s natural resources and minimising impact on the environment, Alabbar added that employing green practices is also vital because there is an increasing future demand for green buildings.

“Tenants are beginning to demand that their buildings are sustainable so


developing unsustainable real estate is a risky venture as the asset would not be future proofed for future demand,” he said.

‘Green’ buildings in the uAELooking at some examples of pioneering ‘green’ buildings in the

region, Sharafi identifies the Dubai Chamber of Commerce & Industry headquarters, the first existing building in the Arab world and fourth outside North America to receive a LEED (Leadership in Energy and Environmental Design) certification for existing buildings from the United States Green Building Council (USGBC).

“Its retrofit initiatives generated savings of around AED 7.1 million [USD 1.9 million] from reducing its water consumption by 77% and energy by 47%. The building uses grey water for landscaping and flushing toilets, as well as light censors and energy saving bulbs to conserve electricity and follows an effective recycling programme,” he said.

Sharafi also mentioned Majid Al Futtaim Properties’ Mirdif City Centre which was built according to LEED standards, making it the region’s first ‘green’ shopping mall.

Furthermore, “ten government schools located in the Abu Dhabi suburbs were designed to comply with Abu Dhabi Urban Planning Council’s Estidama under the Abu Dhabi Education Council’s Future School Programme. The schools are the first buildings to receive three-pearl rating certification. The initiative is a part of ADEC’s ten year strategic plan to transform Abu Dhabi’s education system,” Sharafi said.

Alabbar also highlighted the Standard Chartered Tower, an office building in Downtown Burj Khalifa, Dubai, which is currently well on track to achieve a LEED Gold Rating.

“One of the most impressive aspects is the water efficiency of the building. [It] has been designed to consume less than half the water that a similar building in the US consumes. Furthermore, [it] is predicted to be approximately 20% more energy efficient than similar buildings in the UAE. This is achieved primarily by a well insulated facade and the incorporation of appropriate technology such as energy recovery units, day lighting controls, efficient lighting and a solar hot water system,” he said.

Current regulations and rating systemsAs part of the UAE Governments’ target to achieve a 120% reduction in

the UAE’s carbon footprint by 2015, the Abu Dhabi Urban Planning Council has implemented its Estidama Pearl Rating System, which requires new buildings to meet strict sustainability requirements in respect of energy and water consumption efficiency to receive approval for construction in Abu Dhabi.

“Such regulations further encourage the developers to follow them as they serve as an industry guideline,” Sharafi said.

“Developers can utilise the system as a referral point in streamlining their operations effectively according to the governmental requirements. The Pearl Rating can be beneficial in considering various factors such as the operation of buildings, how developers fit into the urban environment – including aspects of transport and logistics – as well as general human behaviour,” he further added.

In other emirates, Dubai Municipality has likewise published green building regulations and specifications in line with the Dubai Strategic Plan 2015, which will be implemented in the near future. In addition to this, LEED is currently mandated by a number of developers in the UAE and is enforced across all projects within Dubai World’s jurisdiction, Alabbar said.

Sharjah is also increasingly looking at enhancing general sustainability awareness through organising seminars with an objective to advocate balanced and sustainable growth based on the principle of responsible use of energy resources.

The Northern Emirates are also making increasing efforts towards green practices, as Sharafi explains:

“The Lands Department and Properties in Ras Al Khaimah has set a regulation on the application of green spaces in its buildings. The initiative aims to contribute to the country’s sustainable development, in line with the overall strategic plan of the country.”

Lastly, although not directly related to real estate, Fujairah Municipality joined hands with EWS-WWF to establish a sustainable natural reservation in an effort to protect the country’s water reservoir from over usage. “The purpose was also to find an economic incentive consistent with the concept of protecting the environment, while making the project a unique model and an example to follow in the area,” Sharafi said.

The myth of costWith all the benefits and rising popularity of green building practices,

“Adhering to sustainable building practices is important given the role that the construction sector plays in accelerating global warming and contributing to greenhouse gases. According to estimates, nearly 5% of all global man-made carbon dioxide emissions are from the cement sector alone.”


how come there still are so many misconceptions about sustainable development, especially with regards to cost?

“A lot of people think that going green means investing into solar panels and expensive equipment. However, there are numerous strategies that can be incorporated in building designs that add no cost; such as optimising building form and orientation, optimising glazing ratio or maximising the insulation of the facade. Studies worldwide have shown that sustainable buildings do not need to cost more than standard buildings and this is something that we have also seen on projects we have worked on in the region,” Alabbar said.

Another factor is realising that initial investments translate into long term savings, as Sharafi explained:

“Technology systems used in retrofitting or constructing a building and initial higher operational costs are often misunderstood as ‘expensive’. It has to be realised that these investments actually turn into a benefit in the long run as adapting sustainable practices enhance operational and economic efficiencies.”

“The key consideration is the design: this could involve optimising building orientation and insulation or maximising the use of day lighting while the actual construction practices can include the use of concrete mixes and other building materials that are environmentally less polluting,” Sharafi added.

Thus, “when approached correctly from the start of design, buildings can be made to be far more sustainable, energy efficient and water efficient at absolutely no extra cost. This is not only a benefit for the environment but also improves the value of the asset,” Alabbar said.

Public misperceptions about cost and a lacking awareness of green practices are also the main challenges with regards to spreading sustainable development in the region.

“The biggest challenge when we set up operations was to enhance awareness – and we believe we have been able to make a clear difference. This is underlined by the strong interest to our membership drive – we already have over 120 corporate members in our organisation and the numbers are growing,” Sharafi said, adding that since its inception, the EmiratesGBC has seen a significant change in the attitudes and demands related to the sustainable built environment.

Alabbar agrees, saying that while the biggest challenge of sustainable real estate development is often cited as the climate (which can be overcome with cost effective design solutions), he feels that the biggest challenge is perception in the market.

“Mindsets are certainly changing but as an industry we need to definitely look at the issue of sustainability in buildings more seriously as we are currently at cross-roads where energy consumption worldwide is increasing at an alarming rate. Therefore, drastic steps need to still be taken to tackle the challenges of resource scarcity and climate change,” he said.

Sustainable urban designIn discussing the importance of sustainability in relation to real estate, it

is also vital to take a look at the broader picture, at the buildings that form entire communities and towns.

Parvathi Nampoothiri, Senior Urban Designer at Abu Dhabi-based multidisciplinary design firm Otak International, commented:

“At the crossroads of urban planning, architecture and landscape architecture, urban design is the work of shaping spaces in our cities to improve the overall quality of life for their residents and visitors. Urban designers aim to make these spaces not just beautiful but also more active, better connected to the natural and built environment, and respond better to the economic and cultural needs. The work is collaborative and transcends various disciplines as it moves through stages from visioning to implementation.”

From an urban design perspective, sustainable real estate development in the UAE is essential for several reasons.

“Demand for affordable housing and increasing economic activity in the region are two important factors that make sustainable practices essential to the real estate industry. A growing population and availability of land in the vast expanses of the desert makes sprawl the obvious choice,” Nampoothiri said.

“However, this leads to extensive investments in infrastructure, inefficient street and utility networks and increased pollution, and puts more strain on the economy and environment. Developments that support a mix of uses and encourage density can meet these needs more effectively leading to efficient use of land, water and fossil fuels,” he explained.

In addition to creating connected communities based on an increasing population and its related infrastructure development, sustainable urban design in the UAE also faces several other challenges.

“The extreme climatic conditions pose challenges to sustainable development. Soaring temperature during the summer months requires extensive air conditioned spaces and the limited availability of potable water pose the need for energy intensive solutions like desalination. Another key challenge is the heavy subsidy on utilities, providing little incentive for users to conserve water and power usage in their homes and places of work. Such subsidies need to be minimised to create monetary benefit to conservation, which has been very effective in other parts of the world,” Nampoothiri commented.

“Finally, the transient nature of the expat individuals and families, who constitute the majority of UAE’s population, pose challenges to creating a cohesive, vested community that participates in the implementation of sustainable practices. This also makes the efforts at sustainability awareness and education of the wider population much more challenging,” he concluded l

“When approached correctly from the start of design, buildings can be made to be far more sustainable, energy efficient and water efficient at absolutely no extra cost. This is not only a benefit for the environment but also improves the value of the asset.”

SUSTAINABILITY

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In our last edition we featured Brazil, which, due to its rapidly emerging middle class and immense housing supply deficit, is firmly on the radar of

foreign investors seeking to capitalise on the country’s booming economy.Earlier this fall, at a Cityscape Global conference session on assessing the

shape of the global real estate markets following the Eurozone crisis, the expert speaker panel agreed that Brazil offers some of the most promising investment opportunities in 2013. While our October article on investment in Brazil largely focused on the residential sector, the heightened investor interest in South America’s largest economy is also directed to the country’s retail real estate.

The latest Colliers International mid-year global retail report commented:“As much of the global economy flounders, Latin America presents

a far rosier scenario for retail real estate. LATAM countries’ GDP grew by an average of 4.4% in 2011; the 2012 regional forecast, 3.7%, is one of the world’s most robust. Mexico, Brazil, Chile, Peru, and Colombia have become attractive destinations for expansion-minded foreign brands, developers,

and investors.”Colliers said reasons for this are a combination of attractive demographics,

low import tariffs and open economies that allow for easier repatriation of foreign capital. Inflation remains under control for most of the region’s major economies except Argentina (Colliers).

International brands expanding in Brazil A.T. Kearney’s Global Consumer Institute’s 2012 Global Retail

Development Index ranked Brazil the top developing economy for retail expansion for the second year in a row. Retail sales per capita in Brazil have grown 12% per year over the last four years and the size of the retail market increased 15% in 2011. (Source: Cushman & Wakefield Global Cities Retail Guide 2012)

“Brazilians’ wealth is growing, both among the ranks of a swelling middle-class and newly minted millionaires, fostering huge consumer demand for luxury products. MCF Consultancy estimated the country’s luxury market

BRIGHT PROSPECTS FOR BRAZILWith high GDP growth, a rapidly growing middle class and two major global sporting events just around the corner, Brazil’s retail sector is set for substantial expansion over the next few years as foreign investor interest in the sector is increasing.

RETAIL


at approximately USD 9.2 billion, with more than half (53%) of luxury consum¬ers living in São Paulo,” Colliers said.

Rents on São Paulo’s Oscar Freire, a luxurious shopping street in the city’s Jardins district, rose nearly 20% YOY, the most rapid growth rate on the continent, to USD 122/sqm. Earlier this year, Iguatemi Group’s JK Iguatemi mall opened to record crowds; international brands make up one-third of the mall’s tenant mix and 30 retailers, many of them luxury, are new to Brazil (Colliers).

“Although São Paulo and Rio de Janeiro continue to dominate the market in terms of quality, international brands have begun to consider expan¬sions into other parts of the country including Recife, Salvador, and Belo Horizonte, Brasília, and Porto Alegre—all locations for 2014 World Cup matches. Low vacancy rates are also common in the Midwestern part of the country, which includes the states of Mato Grosso, Mato Grosso do Sul, and Goiás. Lower unemployment and higher incomes have increased demand for retail space, as has wider availability of consumer credit,” Colliers said.

Brazil has also attracted the attention of three of the world’s largest regional mall developers. General Growth Properties, which has invested in Bra¬zil for the better part of a decade, partnered with Nacional Iguatemi and Gávea Investimentos to form Aliansce Shopping Centers and holds a non-ownership interest in 16 retail properties. In August 2011, Australia-based Westfield acquired a 50% stake in the Almeida Junior Shopping Centers, which operates four centers with a fifth opening later this year. Then, in April 2012, Simon Property Group formed a joint venture with Rio-based BR Malls Participacoes SA to develop outlet centers in Brazil; the first will open next year in Sao Paulo, with a goal of building 12 new projects by 2019, Colliers said.

FIFA World Cup and olympic Games to boost growthIn addition to Brazil’s favorable demographic profile and increasing private

wealth, the anticipation of the 2014 FIFA World Cup as well as the 2016 Olympic Games are major draws for internationals retailers seeking to enter the market.

Leandro Angelino, Research & Market Intelligence Coordinator at Colliers International, Brazil, commented:

“The supermarkets and hypermarkets sector is likely to continue to grow. Over the coming years, there will be a marked increase in foreign participation in the sector with new investments coming directly or institutionally.”

In a similar fashion, the apparel sector is expected to experience strong growth and foreign investor interest in the sector is rising, Angelino said. To date, C&A is the only apparel company which is directly controlled by an

international group.

E-commerceWhilst being a total novelty only two decades ago, online retail today is

an intrinsic part of the overall retail experience. E-commerce is on the rise globally, with more and more retailers ‘opening’ their online stores.

In Brazil, since 1994, with the stabilisation of the Brazilian currency, the development of e-commerce and the arrival of international networks, competition in the retail scene increased, forcing the industry to meet and integrate with international management standards, Angelino explained.

However, several factors prevent the local online retail sector from flourishing.

“Although e-commerce business in Brazil has gained BRL 10.2 billion (USD 5 billion) in the first half of 2012, the lack of knowledge in technology, difficulties on the part of service providers and the scarcity of fast, dynamic internet services make Brazil’s entry into the world of online shopping difficult,” Angelino said.

“Many established companies still hesitate to open an online shop, despite the optimistic figures in the industry. Research shows that Brazil has 37.6 million e-commerce users. On top of that, 2012 is expected to end with a 20% increase in online sales compared to 2011,” Angelino further said.

Brazilian shopping malls in the futureThe concept of the shopping mall as a point of social gathering rather than

as a place where people simply shop is something that has determined shopping centre development in many parts of the world for a long time now.

In Latin America however, the idea of malls primarily serving as meeting places where people network, socialise and enjoy themselves is somewhat new. In the future, developers will have to incorporate this phenomenon into their shopping centres if they are to be successful, Angelino claims.

“Elements such as architecture and landscaping will become very important in the development of new malls. The store mix and shopping service has to adjust to the new consumer motivation. Affordable fashion, wellness and personal care will gain more space, as well as entertainment options.

Future malls will also have more good restaurants as a growing number of customers will want to sit comfortably at tables with friends and family instead of eating at fast food outlets,” the analyst said.

“In a nutshell, the keyword for successful malls in the future is ‘relationships.’ In a way, shopping is going to become almost like an offline social network,” Angelino concluded l

“As much of the global economy flounders, Latin America presents a far rosier scenario for retail real estate. LATAM countries’ GDP grew by an average of 4.4% in 2011; the 2012 regional forecast, 3.7%, is one of the world’s most robust.”


THE WORLD OF REAL ESTATE IN 2013With the New Year just around the corner, it’s worth taking a look at the dynamics of today’s global real estate investment landscape and what’s in store for 2013. A recently published research report by global real estate solutions provider Cushman & Wakefield titled ‘Winning in Growth Cities’ identifies the winning cities in today’s international real estate investment market. Against a backdrop of volatile sentiment and activity in the global property market, major cities have continued to buck the trend by seeing better demand and more stable pricing, with New York leading the way as the world’s largest investment market.

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Global real estate markets 2012/2013

“true global cities have gone from strength to strength in the past year, and the investment hierarchy is now well defined. However, the top targets are really ‘safety first’ choices and will be challenged when recovery comes. In our opinion the hierarchy will in fact expand as cities mature, higher quality property is developed in emerging locations and crucially, as occupiers lead the way into new markets.”

- Glenn Rufrano, President & Global CEO, C&W

north AmericaRecovery in the US is relatively healthy but undoubtedly

slower than expected, with the domestic recovery disappointing, global risks pre-occupying some markets and the fiscal cliff to worry about next year. Nonetheless, while the economy may be volatile, it is steadily going in the right direction and with companies cash-rich, even a weak growth economy will slowly expose areas of undersupply given the lack of development in recent years.

Core cities remain the target for investment, although there has been more demand in some second tier markets as investors seek out yield. New York is the top pick for most players from home or abroad given the tightness of office supply and the level of pricing relative to replacement costs.

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Cities such as San Francisco, Seattle and Denver have been boosted by technology driven growth while foreign investors tend to stick to the States top three cities (New York, San Francisco and Washington).

Residential demand is broader, but at current cap rates, more investors are turning to development rather than asset purchases to hit their hurdle rates. Tenant demand has been pushed up as home ownership has become less attractive or accessible.

The fundamentals of the industrial market are steadily improving as vacancy drops, with a focus among occupiers and investors on institutional-grade warehousing in hub-locations. South California is the top market by some margin, followed by New Jersey, Miami and Chicago, and steady growth is expected next year.

In the retail market, trends are bottoming out for the best space. Among investors, high streets are favoured in the top six cites, as well as grocery anchored strip malls where the anchor is strong. The market is heavily polarised with outlet and discount centres performing well at one extreme and luxury retailing at the other. Western US is performing best as well as gateway cites such as New York, Washington, Miami and Las Vegas as well as Toronto and Vancouver in Canada.

Latin AmericaDemand is generally solid in Latin America but more cautious than

seen last year with supply shortages now as much a driver for growth as occupier demand. Increased global risk aversion does not play kindly in the region but nonetheless a growing number of global players are still looking at the market.

Housing markets in the region remain undersupplied for low cost property, and government action plus increasing mortgage availability are boosting the market. Retail has also been a bright spot, with the growth of the urban middle class drawing in international retailer interest and creating opportunities for investors and developers to feed the under-supplied market with new and larger units. Mexico is the healthiest at present, but

Brazil remains the most enticing long term market even though short term growth could be more muted.

Office markets in the region have fared relatively well, with São Paulo, Lima and Bogota showing the strongest rental growth this year.

Inward foreign investment is boosting industrial demand regionally, but most notably in the auto sector in Mexico, focused in central areas, followed by northern towns such as Tijuana. Brazil is seeing near record low vacancy rates due to strong demand for modern logistics space, focused on the main industrial markets of São Paulo and Campinas.

Asia PacificEconomic growth has moderated in much of Asia and the domestic pick

up forecast in markets such as China and Japan have not been reached, underlying the interconnectedness of global regions. Nonetheless, in general a soft landing is still expected, with a range of actions having already occurred including monetary easing and other policy initiatives planned to boost consumer spending.

Office prospects are generally viewed to be good, at least with respect to Grade A space which is subject to rental growth pressures in markets such as Beijing, Shanghai, Guangzhou, Bangalore, New Delhi, Jakarta, Bangkok and Manila.

Logistics demand will be buoyed by the growth of modern retailing as well as e-tailing, with the best opportunities in key cities such as Hong Kong, Tokyo, Sydney, Singapore and Seoul in addition to mainland Chinese markets around Beijing and Shanghai.

Asia is a growing driver for the profits of global retailers, particularly China, followed by India and parts of South East Asia with a focus on tier 1 cities. India is also set to benefit from a relaxation in regulations on foreign investment as well as a cut in excise duties.

EuropeThe European market may be slower and more cautious than others, but

0 5 10 15 20 25 30 35

New York Metro London Metro

Tokyo Paris

Los Angeles Metro Hong Kong

San Francisco Metro Washington DC Metro

Chicago Toronto

Shanghai Dallas

Boston Houston

Singapore South Florida (Miami)

Sydney Stockholm

Seoul Seattle Atlanta

Berlin Moscow Phoenix

Denver

US$ Billion

Source: Cushman & Wakefield, Real Capital Analytics

top 25 cities for global property investment in 12 months to Q2 2012 Excludes development sites, greater city area, closed deals, uS$ 5 mn plus


high demand continues for quality property in core cities. In the light of current economic conditions, buyers remain focused on

historic areas of strength to a large degree. Strong bidding has continued in London as well as in the top German cities and in Paris, with a handful of foreign players dominating the Paris market of late.

Office markets have suffered increased uncertainty due to the renewed weakness of the economy as well as the troubles facing the banking sector. However, it has gained in popularity among investors, taking 54% of trading activity in the first half of the year versus 41% in the first half of 2011.

Industrial markets face similar pressures with occupier caution, consolidation driven demand and limited development. Retailers are the most active players of the demand profile with e-commerce driving change and leading to a polarisation between major distribution hubs that are seeing activity continue and other markets where demand and activity have weakened.

Emerging markets are more in favour among retailers than they were before and typically still offer a better supply of new shopping centre space, particularly in Russia and Turkey. In Central Europe, Poland is the top pick for both retail and offices.

top destinations for investment in property

Whilst falling in recent months, overall trading volumes in 2012 (twelve months from Q2 2011 to Q2 2012) were a marginal 0.8% ahead compared with the previous year. The top four spots for property investment in 2012 were the same as in 2011, with the wider New York City Metro attracting the most capital for real estate (excluding development sites), followed by Greater London, Tokyo and Paris.

The fifth to eighth places in the ranking were also consistent with those of 2011, although the order has slightly changed to the following: Los Angeles Metro (5th), Hong Kong, San Francisco Metro and Washington Metro (8th).

Since the onset of the financial crisis, the prime end of the market has seen the bulk of activity. As a result, the gap between primary and secondary markets has continued to widen further.

“Investors are focusing on top-quality core assets in ‘international’ cities that – despite the fragility in the global economy – are holding their value. Although overall tolerance and interest for second tier cities and product has waned slightly, it is set to grow as occupier confidence in the market stirs.”

top destinations for retail investmentHong Kong retained the top spot for retail sector investment over the

twelve months to Q2 2012, with volumes reaching USD 8.7 billion, boosted by the substantial USD 2.4 billion sale of Festival Walk. London claimed the second position, moving up three places due to the sale of a 50% share of Westfield Stratford City for USD 1.4 billion. Tokyo climbed from sixth place to third, with Los Angeles and New York taking fourth and fifth, respectively.

South American cities, although not in the top 50 globally, are witnessing good interest, underpinned by positive economic fundamentals. Although a lack of supply has been a key inhibitor to improved investment and leasing, activity is increasing as global interest grows in these rapidly expanding markets.

“demand for retail investment is increasing as investors – particularly cross-border players – look for safe areas with long term growth potential. Shopping centres are the best performing retail sub-sector, with investors seeking either established ‘elite’ schemes or those that can offer active management angles.”

top destinations for office investmentOverall trading volumes in the global office market were up by 2.3% in the

twelve months to Q2 2012, with London once again taking the top place for office property investment as investors look to safe havens during the current turbulent times. The top five spots in 2012 are the same as in 2011, with New York second place, followed by Paris, Tokyo and Washington DC. In this year’s ranking, the top 5 locations recorded a total of USD 68.8 billion worth of transactions – a marginal increase of 2.4% compared with the twelve months to Q2 2011, albeit driven by growth in Paris and New York.

“Centrally located offices dominate the sector, with a clear preference for schemes that possess good covenants which support their income streams. While investors are seeking yield in some areas, secondary quality buildings or those located in secondary locations are still largely being ignored.”

top destinations for industrial investmentLos Angeles comes out on top for 2012, moving up one place from 2011.

North American cities as a whole dominated industrial investment activity this year, with the region taking 15 of the top 25 places in the ranking. However, there have been signs that over time, North America is beginning to lose ground to the increasingly competitive Asia Pacific markets.

Tokyo was the most active Asia Pacific city, displacing Singapore from first place (which consequently fell to 14th place). A number of markets in the region, both emerging (e.g. China) and mature (e.g. Japan) have an undersupply of Grade A space, causing prices to come under pressure and sparking increased investor interest. Europe also managed to squeeze into the top 25 cities ranking, securing three places. E-tailing continues to be a driver of logistics globally and key locations are expected to see an increased level of activity over the next 12 months. As sustainability becomes increasingly important to occupiers as companies look to future costs, green schemes will become more of an interest in the industrial market too.

“overall investment globally into the industrial market was slower in 2012 than the previous 12 months as both the uncertain economic environment and the limited availability of prime product in core markets impact on activity.”

top destinations for hotel investmentsHelped no doubt by the Olympics, London rose to claim first place as

top destination for hotel investment, surpassing New York in the process. Down from six in 2011, five of the top ten cities by trading volumes were in the USA, making way for the reappearance of Hong Kong from the Asia Pacific region and first time entrants Tokyo and Osaka.

Globally, investment into the hotel sector was down 12.4% in the twelve months to Q2 2012 compared with the previous year as economic headwinds have lengthened deal closing times and slowed activity. Given the constraints on lending by banks, equity investors and high net worth individuals, alongside sovereign wealth funds, are expected to continue to be most active players in the sector. These investors will focus on core products leased to top branded operators with proven income streams. As a result, the gap between the first tier and the rest of the market is likely to widen further.

“Gateway locations with proven business and tourist footfall will serve as target markets for investors, although brand positioning will also remain a key factor in the decision-making process.”

Source: Cushman & Wakefield, ‘Winning in Growth Cities’, October 2012

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16-18 APRIL 2013ADNEC, ABU DHABI, UAE

www.ecoConstructexpo.com


With recovering rental rates and real estate values in general, there are opportunities for investors in the UAE. This article sets out an overview of some of the key legal issues which overseas investors should consider before venturing into the real estate market in Dubai or Abu Dhabi.

Where can I invest?Unlike many jurisdictions, there are restrictions in the UAE both on

where non-UAE nationals (including entities wholly owned by them) can hold property interests and what those property interests can be. These ownership restrictions are prescribed on an emirate by emirate basis.

dubaiIn Dubai, non-UAE/GCC nationals are only permitted to own property

“freehold” in certain areas which have been designated for foreign ownership pursuant to relevant legislation. Outside of these areas, non-UAE/GCC nationals are only permitted to hold short-term leasehold interests (i.e. less than 10 years) which do not require registration with the Dubai Land Department. These “designated areas” include:

• Downtown Dubai• Business Bay• The Dubai International Financial Centre (DIFC)

A number of the “free zones” in Dubai also offer freehold ownership to non-UAE/GCC nationals. However, not all of them do and some will only grant long-term leasehold or usufruct interests. Such interests offer the security to the tenant of being registrable with the Dubai Land Department and being capable of being mortgaged while also allowing the landlord to retain control of the freehold and take the property back at the expiry of the term of the lease or usufruct.

Abu dhabiThe position is more restrictive in terms of ownership in Abu Dhabi where

only UAE nationals and entities wholly owned by them are permitted to own property throughout Abu Dhabi. GCC nationals are permitted to own property within certain “investment zones” (these are conceptually the same as the “designated areas” in Dubai referred to above) and non-GCC nationals are permitted to own “floors” in buildings constructed within such investment zones but not the underlying land.

Non-GCC nationals are permitted to hold long-term leasehold/usufruct interests in investment zones and also rights of musataha. A right of

musataha is akin to a development lease and the grantee (or musateh) is granted a right to use and construct upon the land which is the subject of the musataha. Rights of musataha offer the same level of security of tenure as usufruct interests but specifically provide for development of the relevant land. It is because of these characteristics coupled with the fact that a right of musataha can be held by non-GCC nationals that it is a commonly used interest for commercial/industrial premises in Abu Dhabi and it is the primary interest granted to entities taking industrial premises at KIZAD, the new industrial zone in Abu Dhabi.

other considerations for potential investorsThere are other legal issues which an investor will need to consider

depending on what type of real estate asset the investor is looking to acquire, be it bare land to develop and then hold or sell on, finished assets (tenanted or untenanted) or part of a building.

Bare landOne important consideration for any investor who is looking at developing

a plot of land is that in order to be licensed as a contractor in the UAE, the relevant development company is likely to be required to have the majority of its shares held by UAE nationals. This means that there is necessarily a limit as to what proportion of the shareholding of the relevant development company foreign investors can hold (i.e. no more than 49% in aggregate). This will need to be borne in mind when considering the most appropriate investment structure to hold and develop the land and we would recommend engaging specialist advisors in order to put in place a suitable structure.

Completed assetsThe position is, in theory, more straightforward for investing in completed

assets. Provided that the interest is one which can be validly held by a foreign investor (see previous section), no specific licenses will be required to be an owner of the relevant property. A license may be required for leasing and asset management services if these are to be undertaken by the owner/investor itself but such license is open to non-GCC nationals and should not be particularly onerous to obtain. In our experience, the main difficulty to date has been locating suitable Grade A commercial properties to invest in. As the market continues to mature and grow however, property owners and developers in the UAE are increasingly understanding what international investors are looking for in real estate assets and as a result we are seeing improved real estate opportunities for foreign investors l

LEGAL COMMENTARY

COMMERCIAL REAL ESTATE INvESTMENT IN THE UAE FOR OvERSEAS INvESTORS:SOME kEY LEGAL CONSIDERATIONS

Adrian King, Senior Associate at Clifford Chance’s real estate team, provides an insight into some key considerations for investors looking to place capital in the UAE’s commercial real estate sector.Clifford Chance is an international law firm with specialists in the real estate sector and one of the leading real estate practices in the Middle East. The firm handles the entire property ‘life-cycle’ from initial acquisition, development, leasing, joint venturing and financing through to the final exit and advises individuals and companies wishing to invest or conduct real estate transactions in the region.

Niketan Gawade, International Property Consultant, provides an insight into some key considerations for investors looking to placecapital in the UAE’s commercial real estate sector.Niketan is a consulting strategist for developers, corporate andindividual investors.He handles the entire property ‘life-cycle’ from initial acquisition, development, leasing, joint venturing and financing through to the final exit and advises individuals and companies wishing to invest or conduct real estate transactions in the region.


INDUSTRY INSIGHT

A DAY IN THE LIFE OF... A REAL ESTATEVALUATIONS DIRECTOR

How would you describe your role?I have responsibility for the Professional Services business line at Knight

Frank in the UAE. The core functions of Professional Services include provision of real estate valuation advice, feasibility studies, highest and best use analysis and market research as well as consultancy work. The majority of our work is providing clients with real estate valuation advice on the value of land and or property assets.

My role is focused around winning new business, managing existing client relationships and servicing existing clients. I oversee the work of the team, write reports and am responsible for quality assurance and delivery to clients. Our team works closely with the Leasing, Residential and Investment teams within Knight Frank in order to share up-to-date information on the market and to identify business opportunities.

How did you get into the real estate business?I gained work experience in the real estate profession whilst at school on

a work placement, enjoyed it, took a Bachelors Degree in Real Estate and have worked in the real estate sector ever since.

Could you give us a rundown of what is a typical day for you?A typical day would involve team meetings where we will review existing

workloads, identify new business targets and identify outstanding debtors (clients do not pay on time in the UAE!!). A large part of my role is meeting clients to understand their needs and preparing bids and proposals for new work – often Government and quasi-governmental entities have to go through a tender process and seek competitive bids, hence the need to pitch for this type of work.

Where we have instructions from clients, much of our time is spent inspecting real estate, whether this be raw land, commercial or residential property, hotels or industrial property. This involves site meetings, photographs, inspections and measurement of property and collection of market data in the form of sales prices and rents which will enable us to most accurately and comprehensively assess the value of the property.

Where we have successfully completed the inspection of a report, our time is spent compiling a comprehensive report identifying the market value of the property. This involves report writing, detailed analysis of data, and then running cash flows on properties to understand what the potential value could be. Our reports need to stand up to scrutiny from banks, developers and any third parties relying upon the report, and so all the teams’ reports have a peer review prior to being sent out to clients to ensure presentation and content are satisfactory.

What do you enjoy most in your job?Knight Frank is a privately owned partnership which allows us to be

flexible and focus directly on the needs of our clients. We have an excellent team, working closely together across the different service lines we offer in the UAE, and everybody is pulling for the success of the business in the

same direction. The offices in the UAE have an excellent atmosphere and it is enjoyable to go into the office for work every day.

I also greatly enjoy getting out of the office and meeting new, interesting people most days of the week, in a professional capacity. I have been fortunate enough to be able to visit different countries for business in my 6 years in the UAE and have been able to undertake work in the UAE, KSA, Bahrain, Qatar, Oman, Pakistan, Syria, Egypt, Jordan and Kuwait from my UAE base.

What are the main skills your role requires?My role is very client facing, and as such it requires strong interpersonal

skills, being able to deal with clients of different cultural backgrounds, different languages and different ways of looking at real estate. It requires great patience, and strong client management skills, understanding what your client wants, and how you can best help him achieve it. Managing client expectations and deliverables is an important part of my job.

My role involves presenting to potential clients and bidding for assignments, presenting Knight Frank and myself personally in a favorable and professional light. I could be presenting to a room full of investors or a consortium of clients, and therefore I need to have good presentational skills. Being computer literate is definitely a huge plus given the work that is needed on presentations to clients!

Providing comprehensive valuation advice to clients requires strong financial and numerical skills, as clients are often CFO’s, accountants or financial professionals and need our advice on the value of their assets for a wide variety of purposes – for example they may be planning a stock market or sukuk flotation, preparing their year-end financial statements or be planning to raise debt against the value of their real estate assets as part of a wider financial transaction.

Clients are extremely reliant on our reports, as banks will provide finance to a client, but will rarely ever see the asset they are financing. Therefore we need to have strong report writing skills, describing property and highlighting all positive and negative aspects of it, so that clients can make informed decisions.

What would you describe as the major challenges in your role?The major challenge I face day to day includes educating clients on how

we actually do our job. Everybody has an opinion on what real estate is worth, and half of the challenge is being objective. Telling an investor his real estate is worth half what he paid for it 2 years ago is a major challenge!

The real estate market in the UAE is still very opaque and we face challenges in obtaining accurate, truthful information on real estate transactions. The market in the UAE is still to some degree very secretive, with people very reluctant to share information on prices paid, despite much information being openly available from the various land registries. We truly hope that as the market matures, information will be more freely available as it is in more mature western markets.

Encouraging clients to pay on time is a major challenge we face! l

Stephen Flanagan

director of Professional Services

Knight Frank

uAE


his expertise in sustainability having led the development of an industry-leading environmental and sustainability modeling tool within the firm.

Matt has provided expert engineering and sustainability advice on a wide range of landmark projects across the UK, Europe and the Middle East, including the re-masterplan for North YAS in Abu Dhabi and the environmentally progressive and iconic ‘Gherkin’ building in London.

Sleiman Mallat appointed as Senior Mall Manager for Beirut City Centre

A Lebanon native with extensive retail experience in the market, Mallat brings a wealth of knowledge and management proficiency, enhancing the Beirut City Centre management team. Set to open in the first half of 2013, Majid Al Futtaim Properties› Beirut City Centre is currently under development and will be one of

Lebanon’s largest shopping and entertainment destinations.As Senior Mall Manager for Beirut City Centre, Mallat brings more than

seven years of experience in the Lebanese shopping malls market where he diversified his retail industry experience across asset management, operations, customer service and retail delivery. Now taking up his position with Majid Al Futtaim Properties, Mr. Mallat›s key objectives for Beirut City Centre include ensuring all targets are met, recruiting a team of strong local and regional Lebanese talent and setting new standard levels for malls in the region.

Murray Strang, Associate director at Cluttons in dubai elected to the RICS board

Real estate specialist Cluttons recently announced the appointment of Murray Strang to the UAE RICS (Royal Institution of Chartered Surveyors) National Association Board.

The RICS is the world’s leading professional body for qualifications and standards in land, property and

construction. RICS accreditation ensures that a company can be trusted to act and provide services in line with the strict global standards set by the organisation. Clients have the assurance that companies accredited by the RICS must be ethical, diligent and professional. Strang was elected onto the board having been an active member of the institution for over nine years in both the UK and now the UAE.

RICS board members are expected to demonstrate a desire and enthusiasm to improve market awareness of their membership base and the body’s objectives, along with dedication to drive forward the standard of the services provided, both to the members and the UAE’s wider real estate market.

Jones Lang LaSalle appoints Peter Bibby FRICS as national director and Co-Head of its Saudi Arabian operations

Jones Lang LaSalle has appointed Peter Bibby, a Fellow of the Royal Institution of Chartered Surveyors (FRICS) in the UK and a long standing expert on the Saudi real estate market, as its new National Director and Co-Head of its Saudi Arabian Operations.

Working alongside John Harris, the company’s other National Director in Saudi Arabia, Peter brings over 30 years of experience in the real estate industry. He started his career in London working for Jones Lang Wootton (the predecessor firm of Jones Lang LaSalle) and has subsequently worked across major markets including the USA, the UK, Europe and the Middle East. In addition, he has worked in both East Africa and Bangladesh on behalf of occupational clients. Up until 2010 Peter was the Country Manager for DTZ in Saudi Arabia and has extensive experience advising on real estate projects in the Kingdom.

dtZ appoints Adrian Powell as Head of EMEA Retail

Adrian has been with DTZ since the acquisition of Donaldsons in 2007, having joined the retail specialist firm in 1994. Most recently his role has been Head of Retail Development at DTZ. On behalf of core DTZ clients, Adrian’s team has been responsible for many of the most significant UK regeneration projects and shopping

centres opened in recent years and proposed schemes in the development pipeline.

Reporting to John Forrester, Head of EMEA, Adrian’s new role involves responsibility for go-to-market retail services in Continental Europe, Middle East and Africa with the UK and Ireland. These services include retail Real Estate Management Services, leasing, valuation, investment, development and research across the 31 countries that make up the DTZ EMEA Region.

Matt Kitson new Regional director for Hilson Moran Qatar

Kitson, whose career with engineering consultancy Hilson Moran spans more than 12 years, is based in the company’s new office, located in the West Bay region of Doha. In his new role as Regional Director, Kitson will strengthen the existing team with

INDUSTRY NEWS

MOvERS & SHAkERS Each edition we profile a selection of real estate professionals who have recently taken on new positions across the MENA region. Read on to find out what your industry colleagues have been up to…


Held at the Dubai International Convention & Exhibition Centre from 2 – 4 October 2012, Cityscape Global’s 11th edition was a resounding success with a 50% increase in size as

compared to last year. More than 40% of the exhibition consisted of international real estate companies.

“This year’s Cityscape has beaten all expectations and has certainly been the busiest show in four years. Cityscape Global remains a bellwether for the industry in the region and continues to influence the trends defining the market today. This is our tenth year at the show and it has been one of the most influential in many ways.” Niall McLoughlin, Senior Vice President, DAMAC Properties

2012 provided to be a record year in terms of dedicated international pavilions, with country pavilions from Turkey, Russia, Qatar, Egypt, USA, UK, India and Iraq taking centre stage. Many of the exhibitors at these pavilions used the event to launch flagship projects. Major international exhibitors taking part included: the Ministry of Construction and Housing of Iraq (Iraq Pavilion), Tata Housing Development Company (India Pavilion), Agaoglu and Tahincioglu (Turkey Pavillion), the United Development Company and Barwa (Qatar Pavilion) and Northern Caucasus Resorts Company (Russia Pavilion) to name but a few.

A major development at this year’s Cityscape Global 2012 was the announcement of Turkey as the Country of Honour. This coincides with the new Law of Reciprocity introduced in May 2012, which allows foreign nationals to invest in Turkey and eases foreign investment restrictions.

“Cityscape Global was identified as a key platform for Agaoglu Corporations Group to globally launch our new development and showcase Turkish real estate. It is the first time we have launched a development during an exhibition, but we have seen increasing investment interest being shown by GCC and Middle East countries in our developments and we have had very positive conversations during the event.” Ali Agaoglu, Chairman of Agaoglu

Cityscape Awards for Emerging MarketsCelebrating excellence in real estate development and architecture, the 2012 Cityscape Awards

for Emerging Markets brought together key architects, developers and industry VIPs from around the world, in Dubai. Held at the highly exclusive Armani Hotel, Burj Khalifa (the tallest building in the world), there was no better place to celebrate and reward the innovators and initiators behind some of the world’s most high profile real estate projects.

“The entries for this year’s awards took a big step forward with all projects demonstrating an impressive depth of field in terms of geography, creativity and ingenuity. The quality of the entries has definitely improved, raising the bar further and bringing the Cityscape Awards for Emerging Markets increasing credibility on an international scale.” Chris Seymour, Managing Director, ARCADIS Gulf & Judge of 2012 Cityscape Awards for Emerging Markets

ConferencesThe Global Real Estate Summit, Retail City, World Architecture Congress and Alternative Dispute

Resolution Conference were the highlights of the event as they brought the latest news, analysis and insights on the world’s foremost real estate markets, involving the most influential and respected

leaders in the industry. The four conferences attracted 929 participants, proving to be an integral part of the Cityscape Global event.

“Cityscape Global is the premier event for the real estate industry and we want to reassure people and inform the public about the role of the Dubai Land Department and our initiatives. This is first time we have held a conference on alternative dispute resolutions and we are very proud to have partnered with RICS to produce such a forum on a global stage.” Eng. Marwan bin Ghalaita, CEO, Real Estate Regulatory Agency (RERA)

EVENT REVIEW

CITYSCAPE GLOBAL 2012: A RESOUNDING SUCCESSA review of the region’s most influential real estate investment and development event

Cityscape Global 2012 Show Profile

number of participants: 25,053

Participating countries: 93

Exhibitors: 172

Exhibiting countries: 31

Floor space occupied: 20,000 sqm

“This year’s Cityscape has beaten all expectations and has certainly been the busiest show in four years. Cityscape Global remains a bellwether for the industry in the region and continues to influence the trends defining the market today. This is our tenth year at the show and it has been one of the most influential in many ways.”

Niall McLoughlinSenior Vice PresidentDAMAC Properties


CITYSCAPE EVENTS

CITYSCAPE RIYADH 2012Riyadh Exhibition Centre, Saudi Arabia, 9 – 11 december 2012

Cityscape Riyadh will once again bring together the full spectrum of real estate professionals to network and discuss critical issues affecting business decisions in the Riyadh and Saudi Arabian real estate market.

Cityscape Riyadh 2012 will prove to be the arena for Saudi real estate stakeholders to showcase their projects and services, network with key investors and developers from around the world and participate in content driven discussions with industry leaders.

The event is a unique opportunity to network with the most liquid real estate investors, real estate developers, government authorities, architects, consultants and other senior level real estate professionals involved in the design and construction of major public and private commercial real estate developments.

Taking place alongside the three-day high powered exhibition will be the Riyadh Real Estate Summit, the most important gathering of real estate professionals in the Kingdom. Please refer to the opposite page for detailed information about the conferences.

CITYSCAPE AWARDS FOR REAL ESTATE IN SAUDI ARABIA9 december 2012, Riyadh, Saudi Arabia

Now in its 4th year with previous ceremonies taking place at our Cityscape Jeddah event, the Cityscape Awards for Real Estate in Saudi Arabia will once again reward industry professionals and companies that have shown outstanding real estate development and architecture for both built and future projects in the Kingdom.

The prestigious annual event is intended as an incentive for the continued pursuit of excellence for those in Saudi Arabia’s real estate industry and to focus attention on their contribution to architecture, culture, invention and imagination, respect for people, the planet and environmental awareness.

As the largest urban center of the region and home to the nation’s government agencies, the City of Riyadh provides the ideal venue to showcase the Kingdom’s ambitious growth plans to Cityscape’s global audience at the Cityscape Awards for Real Estate in Saudi Arabia.

Certificate in Real Estate Investment, Leasing and Management 19 – 22 May 2013 24 – 27 November 2013

Certificate in Real Estate development23 – 26 June 2013 8 – 11 December 2013

Visit www.iirme.com for more details.

REAL ESTATE TRAININGCertificate in Real Estate Finance and Investment17 – 20 February 2013 30 June – 3 July 2013

Certificate in Real Estate Modelling25 – 28 March 2013 15 – 18 September 2013

Certificate in Real Estate Valuation14 – 17 April 2013 20 – 23 October 2013


The summit will be chaired by dr. Saud E. Al Malaq, Vice Chairman of KSSG Investment, KSA. Prior to heading one of the largest real estate investment and development companies in the GCC, Dr. Al Malaq served as Chief Advisor & Director General of International Organisations and Regional Trade Agreements at the Ministry of Commerce & Industry in Riyadh. He holds a Ph.D. from the University of Denver in Colorado, USA.

Abdulrahman MoulayGroup CFo, Fawaz Alhokair Group, KSA

Abdulrahman has 22 years of experience in the finance, accounting, and internal control domains throughout Saudi Arabia, Europe, and the Middle East. He led and managed assignments with market leaders in the banking, telecommunication, energy, manufacturing, retail and financial services industries and governmental institutions. He has spoken as a guest speaker at many national and international conferences and is considered one of the regional Saudi experts.

CONFERENCE PREVIEW

RIYADH REAL ESTATE SUMMITRiyadh Exhibition Centre, 9 – 11 december 2012

Building on our previous success we are delighted to announce the 3rd annual Riyadh Real Estate Summit taking place at Cityscape Riyadh. The event is the most powerful meeting of real estate professionals covering the hottest topics such as the new mortgage law, development opportunities in affordable housing and industrial real estate, as well real estate in the Eastern Province.

Riyadh Real Estate Summit is the key networking event for developers, government officials, investors and financiers shaping the real estate industry in the Kingdom’s capital.

Below is a snapshot preview about what some of our expert speakers are going to cover at the conference.

Conference topicsAt the Riyadh Real Estate Summit, Abdulrahman will identify the next

investment opportunities in the home financing market and examine the opportunity to establish home financing companies and products under the new mortgage law. He will also look at the short term risk and challenges of investing in the mortgage market.

Majed Al HogailCEo, Rafal Real Estate development Company, KSA

Majed has 22 years of work experience and held many senior positions in SAMA, national and multi-national companies in the Kingdom of Saudi Arabia.

As CEO of one of the region’s leading quality developers, Majed possesses exceptional leadership qualities and is a recipient of the ‘Best CEO KSA Awards 2010’ in the property development sector. He holds an MBA from the University of Illinois, USA.

Conference topicsAt the Riyadh Real Estate Summit, Majed will look at ways the

government housing strategy helps address the affordable housing issue and discuss how local regulatory changes will help improve the quality of urban development and affordable homes. Majed will also examine why gated or semi-gated communities may be favourable developments in Saudi Arabia in particular as opposed to other countries.


CITYSCAPE MAGAZINE MARCH 2013

Next year, Cityscape magazine will be produced quarterly with our first edition to be published in March.In addition to our regular features on architecture, retail and sustainability we will once again cover some of the world’s most promising real estate investment markets and highlight their most lucrative opportunities.

MARCH EdItoRAL HIGHLIGHtS

Egyptian Affordable Housing With a current shortfall of 1.5 million affordable homes, the largest number in the MENA region, Egypt offers excellent investment opportunities in the low to mid-low income housing sector.

Africa FocusAfrica is increasingly being viewed as an emerging investment destination and crucial growth market. This chance in perceptions is evidenced by growing volumes of foreign capital investment in the continent and intra-regional trade, particularly in areas that were once marred by conflict and are now achieving sustainable growth. Cityscape magazine takes a closer look at a selection of African countries, their opportunities and developments.

Spotlight on EuropeHow has the Eurozone crisis affected real estate development in the region? Has the distribution of ‘power’ changed in the wake of the crisis and if so, who are today’s top performers in the European market? Cityscape magazine takes a look at current market dynamics.

IN THE NEXT EDITION

A Middle East perspective on global real estate

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OCTOBER 2012

A Middle East perspective on global real estate

Invest in

Investment: A strong economy, stable financial system and

recent legal changes boost foreign property investment into

Turkey.

RetaIl: A growing middle class with increasing purchasing power

makes Turkey one of the most attractive markets for retailer

expansion.

touRIsm: Tourist arrivals are increasing and new locations

across the country become more popular; Turkey’s hotel sector

is booming.

InvEsTmEnT

A strong economy, stable financial system and recent legal

changes boost foreign property investment into Turkey.

RETaIl

A growing middle class with increasing purchasing power makes

Turkey one of the most attractive markets for retailer expansion.

TOuRIsm

Tourist arrivals are increasing and new locations across the country

become more popular; Turkey’s hotel sector is booming.

ThE nEw faCE Of CITysCapE – yOuR glOBal pROpERTy InvEsTmEnT magazInE

ARE You A SuBSCRIBER? If not, now is the time to join our community. Go to www.cityscape.org/magazine and subscribe today to stay on top of global property investment news.