the magazine cityscape october 2012

Lice

nsed

by

Inte

rnat

iona

l Med

ia P

rodu

ctio

n Zo

neN

icho

las

Publ

ishi

ng In

tern

atio

nal F

Z LL

C

OCTOBER 2012A 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.

InvEsTmEnTA strong economy, stable financial system and recent legal changes boost foreign property investment into Turkey. RETaIlA growing middle class with increasing purchasing power makes Turkey one of the most attractive markets for retailer expansion. TOuRIsmTourist 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

Your Guide To Emerging Real Estate Markets

Event Calendar

Jeddah 10 ~ 12 November 2012Jeddah Centre for Forums and Events, Jeddah, Saudi Arabia

Global 2 ~ 4 October 2012Dubai International Exhibition Centre, Dubai, UAE

Qatar 27 ~ 29 May 2013Qatar International Exhibition Center, Qatar

Riyadh 9 ~ 11 December 2012 Riyadh International Exhibition Centre, Riyadh, Saudi Arabia

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

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

Latin America 29 ~ 31 October 2012 Amcham Business Center, Sao Paulo Brazil

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

C

M

Y

CM

MY

CY

CMY

K

CS Corp_A4 Advert.pdf 1 8/23/12 5:03 PM

SPINE

A M

IDD

LE EAST P

ERSP

ECTIV

E ON

GLO

BA

L REA

L ESTATEO

CTO

BER

2012C

ITYSCA

PE M

AG

AZIN

E

www.sowwahsquare.ae

For leasing enquiries please call:

[email protected] Sowwah (769924)

OPEN FOR

BUSINESS

NEW FLEXIBLE, GRADE ‘A’, COLUMN- FREE OFFICES

LEED GOLD AWARD

offices available from 200 sqm (2,150 sqft)

• Four landmark towers situated in a prime CBD location

• outstanding onsite property management team

• Modern and convenient business lifestyle

• a true 24 hour mixed-use urban hub featuring:

– The Galleria at Sowwah Square, a 33,000 sqm luxury shopping and dining destination

– New iconic headquarters of the Abu Dhabi Securities Exchange (ADX)

– Two five star business hotels, Rosewood Abu Dhabi and Four Seasons Hotel Abu Dhabi

– Premium 364 bed multi-specialty hospital, Cleveland Clinic Abu Dhabi

Sowwah Square is already home to a dynamic mix of blue chip tenants:

Accenture ADcB Akin Gump Al mAmourA properties & services Al tAmimi & compAny BAker Botts BBvA Booz & compAny clevelAnD clinic ABu DhABi clifforD chAnce Deloitte DuniA finAnce Ge corporAte Goettsch pArtners Gulf cApitAl hABiB Al mullA herBert smith hoGAn lovells Jp morGAn kinG & spAlDinG lAthAm & WAtkins linklAters mesiroW muBADAlA Ge cApitAl muBADAlA oil AnD GAs norton rose perellA WeinBerG pArtners pillsBury prAmericA reGulAtion AnD supervision BureAu sAntAnDer BAnk societe GenerAle White & cAse the eXclusive Dry cleAners Jones the Grocer

1200874 SS A3 Landscape Ad V8.indd 1 16/05/2012 11:00

C

M

Y

CM

MY

CY

CMY

K

CityScape'12fullPageVprintReady.pdf 1 4/12/12 11:55 AM

OCTOBER 2012 I CITYSCAPE I 5

EDITOR’S LETTER

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, UAE

So far, 2012 has been a rather turbulent year

for many countries and markets around the world. Political instability in several Middle Eastern regions, the global economic crisis and the deepening of the Eurozone crisis have not been particularly positive to the development of the real estate markets in the affected countries. However, amidst all this, emerging economies around the world

have largely shown remarkable resilience despite the financial crisis and have emerged as safe havens for real estate investors.

As a result, markets that only a few years back would not have sprung to mind when thinking about profitable real estate investment now appear as highly lucrative opportunities. Take Albania for example, a country which after the collapse of communism in the early 1990s and the subsequent Kosovo crisis had to struggle with economic immaturity and civil disorder. Today, Albania’s economy is forecast to grow faster than the economy of any of its neighbouring countries. Now, as the Balkan State is becoming more popular among international tourists, Albania is coming to prominence among international developers and investors as new European property hotspot and a great investment opportunity.

Currently, Turkey is probably the most impressive example of real estate performance in emerging markets. Over the past decade, the country has embarked on a remarkable growth journey and last year was recognised as the second fastest growing economy globally after China. Real estate investors from around the world have their eyes set on Turkey while a recently passed law, facilitating property purchase by foreigners, is further expected to boost investment into the country. This edition features a special supplement about the Turkish real estate market, produced in line with Cityscape Global’s ‘Country of Honor’ program.

In the Middle East, Oman has recently gained recognition as a tourist destination while the government is working hard to promote the Sultanate’s image to an international audience. On the back of increased infrastructure improvement in the region, several foreign investors are now looking into Oman’s hospitality market which is said to offer

profitable opportunities. Dubai, as the region’s once hottest real estate market is also making a surprising comeback this year and with a steady increase in tourist arrivals, investor confidence is returning to the UAE.

We also look at Brazil, which, with a rapidly growing middle class, an immense housing supply deficit and an incredible growth in house prices clearly presents excellent conditions for real estate investors looking to capitalise on the boom of South America’s largest economy.

In Asia, the Vietnamese government has recently lowered interest rates significantly in an effort to stimulate the local real estate market. While Vietnam might not be the typical place where to expect a fast return on investment, experts believe that the country possesses immense potential and provides great opportunities based on long-term growth.

But not only emerging markets have performed well this year. Foreign investment in Australia’s property market has continued to increase in the first half of 2012 on the back of the country’s stable economy, while the uncertainty in Europe has motivated global investors to re-direct their funds to the land down under.

Not surprisingly, the global economic trend is also mirrored in global retail performance. As the world is becoming an increasingly borderless global marketplace, emerging markets including China, India and Brazil act as the primary drivers of growth and are affecting the structure of the global retail market. It is expected that by 2020, over half of the world’s population with a monthly income greater than USD 5,000 will live in India and China. The massive developing middle class in emerging markets clearly presents untapped opportunities for global retailers.

With the shifting dynamics of the global real estate landscape, the Cityscape Global Exhibition 2012 comes at a perfect time when emerging markets are showing growth and excellent investment opportunities. Taking place from 2 – 4 October at the Dubai International Exhibition and Convention Centre, Cityscape Global will once again bring together a myriad of real estate investors, developers, architects, designers and other real estate professionals from around the globe in the region’s largest and most influential international real estate event.

We look forward to seeing you there.

Anna Amin Editor

C

M

Y

CM

MY

CY

CMY

K

CityScape'12fullPageVprintReady.pdf 1 4/12/12 11:55 AM

6 I CITYSCAPE I OCTOBER 2012

CONTENTS

5 Editor’s letter

LATEST NEWSRegional8 • Asteco online property auction • Recovery for Cairo’s real estate market10 Qatar residential property rates gain traction12 • KSA’s first property search portal • Aldar Properties revenue grows • UAE Expo bid masterplan13 • Hamptons MENA extends valuation services • Sharjah Waterfront boost the emirate’s cultural identityAsia21 • Growth in Qingdao’s retail market • Caution prevails in India’s retail real estate22 • Trump Tower Manila breaks ground • Phuket is 2012’s hotel investment hotspotEurope29 • Istanbul office market performs well • Germany commercial investment down • Poland to hit EUR 2,5 billion investment total • Positive signs in Sweden’s office and industrial sectors • Prime central London rents slip • UK mortgage activity bounces back

Americas38 • Washington Union station to be transformed • Growth in US high-tech office markets

MIDDLE EAST INSIGHT14 Oman The Sultanate is realising its immense potential to evolve into a major tourist destination. Now time is ripe to invest in Oman’s hospitality sector.

18 Dubai During the first half of 2012, rents have bounced back in the region’s once hottest real estate market and investor confidence is returning to the emirate.

ASIA INSIGHT23 India Despite large-scale opportunities for real estate and infrastructure development, Indian cities mainly attract domestic investors who are familiar the market.27 Vietnam As the economy is picking up, foreign investors are seeking to capitalise on the long-term growth predicted in the country.

EUROPE INSIGHT32 Greece With property prices down as much as 20 per cent, herds of overseas buyers rush to purchase property in one of Europe’s most popular holiday destinations.

36 Albania In the light of the weakening Euro and uncertainty about the common currency, Albania emerges as an attractive investment destination.

AMERICAS INSIGHT40 Brazil A rapidly growing middle class coupled with an immense housing supply deficit offer excellent investment conditions in Latin America’s superpower.

SPECIAL FOCUS42 Australia A stable economy, fuelled by a boom in the mining and resource sector increasingly attracts global funds to the land down under.

REGULAR FEATURES45 Architecture DNA Barcelona Architects create iconic buildings designed to become a reference in the skyline of their respective cities.

48 Sustainability Masdar City is Abu Dhabi’s vision to create one of the world’s most sustainable cities in the heart of the UAE.51 Retail As the world is becoming a borderless global marketplace, emerging markets such as China, India and Brazil are the primary drivers of growth.

INDUSTRY PAGES53 A day in the life of…a property expert54 Cityscape Global 2012 A preview to the region’s largest and most influential international real estate event55 Conference preview Global Real Estate Summit, Retail City Conference and World Architecture Congress56 In the next edition A snapshot of our December edition’s editorial highlights

INSIDE: INvEST IN TURkEYA special supplement covering the Turkish real estate market with a focus on investment, retail and tourism.

Ricc

i Mila

n L.L.C.

ITA

LIA

N K

ITC

HE

N S

UP

PL

IER

www.riccimilan.ae - tel: 9714 3386008 fax: 9714 3386009 email: [email protected]

trip

od

med

ia

C

M

Y

CM

MY

CY

CMY

K

Ricci Milan_Italian Kitchen_March Issue_26th-02-2012.pdf 1 2/26/2012 5:35:07 PM


REGIONAL NEWS

Last month, UAE-based Asteco Property Management announced a new partnership with international real estate auction-marketing

company, LFC International Real Estate Brokerage.As online auctions continue to gain traction globally as an accepted

method to buy and sell real estate, the new partnership between Asteco and LFC will give Asteco’s clients a competitive advantage over traditional real estate sales and marketing tactics, while delivering broader exposure and accessibility to investors across the globe.

“The real estate market in the UAE, particularly Dubai, continues to draw a significant amount of interest from institutional and private investors from overseas. Furnishing these financiers with the opportunity to invest in local property through a safe, secure and transparent online auction will undoubtedly make it more convenient and therefore even more popular,” said Elaine Jones, CEO, Asteco Property Management.

LFC is a member of the US-based LFC Group of Companies, which has been auction-marketing residential, retail, commercial properties as well as land, worldwide for over 35 years. The partnership aligns Asteco’s strategic goal to deliver internationally-recognised sales and management solutions, by providing their clients with the capability to market properties internationally via an online auction.

“LFC has successfully auction-marketed thousands of properties, with sales in excess of $5 billion and for the last seven years, has conducted real estate auctions exclusively online,” commented Bill Lange, CEO & President of LFC.

Typically the process for an owner to sell their property via the online auction begins with submitting an agreement, establishing the minimum bid and setting the bid deadline, which is usually 30 days after the property’s profile page is ‘live’ on the auction website Freedom Realty Exchange -FRE.com. Interested buyers can then view property images and conduct due diligence directly from the website, as well as place their

During Q2 2012, Cairo’s real estate market has shown signs of recovery following Egypt’s recent political and economic challenges that

impacted the country’s real estate market, a recent Jones Lang LaSalle Cairo Real Estate Market Overview has shown.

“While many real estate projects have seen significant delays, the construction process is still alive. The demand for major retail and commercial projects and the need to provide more affordable housing is ensuring that significant levels of new supply remain under construction,” the report said.

Hotel The tourism sector in Egypt is gradually improving with the number of

tourists (4.4 million) increasing by 29% Jan-May 2012 compared to the same period of 2011.

With increased tourist arrivals over the first half of 2012 (up by 26% over same period of 2011), the Cairo hotel market is starting to recover but performance remains well below the levels seen in 2010, before the revolution.

Average daily rates have also increased over the first six months of 2012 compared to the same period in 2011, reaching USD 60, the report said.

OfficeThe market has witnessed an increase in demand for office space, mainly

on the east side of Cairo (New Cairo & Maadi). Jones Lang LaSalle reports

an approximate 70,000 square metres of current potential demand for new office space.

RetailDespite Egypt’s recent challenges, the supply of mall based retail space in

Cairo has continued to increase with new openings over the past two years including Sun City Mall and Mall Of Arabia.

Carrefour has opened one more hyper market in Alexandria at Orouba Mall, located to the west of the city. The mall has a Gross Leasable Area of 36,000 sq m and will host a number of international and local brands.

ResidentialThere has been 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, JLL reports. Major developers such as Palm Hills Development (PHD) and 6th of October Development & Investment Company (SODIC) have led this shift towards mid-priced apartments. Emaar & Amer Group have attracted additional demand by extending their payment plans to offer 7 to 10 year programs.

“Egypt’s real estate scene is expected to flourish in the medium term. This potential will however only be realised once the current uncertainties are removed and investors have a clearer idea of where Egypt is heading under President Mursi,” the report commented l

RECOvERY FOR CAIRO’S REAL ESTATE MARkET

‘LOTS’ TO GAIN FOR ASTECO WITH ONLINE PROPERTY AUCTION

bids. Once the auction concludes and the reserve price has been met, the highest bidder is contacted, a solicitor is instructed to carry out all legalities, contracts are exchanged, funds released and the sale is completed.

“We live in a digital age and along with QR codes and smart phone ‘apps’ clearly online auctions have an integral part to play in the virtual property marketing mix, both now and in the future,” added Jones l

Elaine Jones, CEO, Asteco

World’s Finest Serviced & Virtual Offices

1 MONTH FREE TRIALNo Further Obligation

W | servcorp.me

Levels 41 & 42, Emirates TowersSheikh Zayed Road, Dubai T | 04 319 9100

Level 28, Habtoor Business Tower Dubai Marina T | 04 453 2800

PREMIUM LOCATIONS IN MIDDLE EAST | AUSTRALIA | NEW ZEALAND | INDIA | SOUTH EAST ASIA | CHINA | JAPAN | EUROPE | USA | UK

Prestigious and convenient locations in Dubai and Abu Dhabi

Dedicated reception, secretarial and IT support team

Access to worldwide network of meeting rooms

Flexible lease terms starting from one month

We help businesses succeed

Refer us business and benefit from attractive commissions or rewards.

Total business solutions for you and your clients

City Scape Ad - Dubai Sep 2012.indd 1 8/23/2012 1:40:58 PM


REGIONAL NEWS

Although on average, only marginal rental increases were witnessed across Qatar’s residential locations, strong demand for one and two-

bedroom apartments pushed their rental rates up by 8% compared with Q1, according to the Qatar Q2 2012 report from property management company Asteco.

“Demand for one-and two-bedroom apartments is now beginning to outstrip supply in various locations, particularly in the Diplomatic District and the Pearl-Qatar, both offering good quality accommodation, something tenants from mature overseas markets, will not compromise on,” commented Jed Wolfe, Managing Director, Asteco Qatar.

Rental growth for the remainder of the year may be limited, as a significant amount of apartments are scheduled to complete by the year end, but Wolfe remained upbeat.

“If demand continues to grow at this pace, the market could acquire a healthy supply and demand balance particularly in the one- and two-bedroom category,” he added.

The highest average rental rate for either a one-or two-bedroom apartment at the Pearl-Qatar in Q2 was QAR 9,750 (USD 2,680) and QAR 13,000 (USD 3,570) per month respectively.

Overall average villa rental rates were also up 4% due once again to supply and demand dynamics. The most expensive area, West Bay Lagoon,

averaged QAR 23,500 (USD 6,450) per month for a four-bedroom villa, while in Al Khraytiyat a similar property costs QAR 9,750 (USD 2,680) per month.

“The most modern, high quality and well serviced compounds, are now developing waiting lists for prospective tenants, such is the demand,” added Wolfe.

The residential sales market witnessed no material change in Q2, enquiry levels remained constant, but with a marked increase for one-and two-bedroom apartments, following the rental trend. That demand predominantly came from individual Qatari investors using property as an alternative to holding cash reserves.

“The smaller unit sizes also allow investors to limit their risk, by depositing limited equity, when using a mortgage to finance the purchase,” said Wolfe.

One major news story that surfaced recently was that United Development Company (UDC) the developer of the Pearl-Qatar, announced that it planned a reduction in the master community service charge of around 33%.

“This reduction is due to take effect imminently and when combined with the possibility that Qtel could acquire the full communications network to offer voice, broadband internet and TV entertainment, will have a positive effect on investors through lower operational costs and added-value for tenants,” said Wolfe l

QATAR RESIDENTIAL PROPERTY RATES GAIN TRACTION


REGIONAL NEWS

Saudi Arabia’s internet penetration rate has increased dramatically over the past decade, from just 5 per cent in 2001 to around 47.5

per cent in 2011. The Kingdom’s internet subscribers are now estimated at nearly 14 million, representing half of the country’s population. With 2 million homes needed by 2014 to cater to a population that has quadrupled over the past 40 years, the internet is emerging as a potent platform for property seekers to swiftly, conveniently and efficiently find available properties and interact with reputable agents and developers who in turn will be able to reach out to a broader market.

eSimsar.com, Saudi Arabia’s first professional property search portal that only lists properties by licensed real estate agents and developers in the Kingdom, plans to build on both the exponential growth in internet usage and the major real estate boom currently being witnessed in Saudi Arabia, to connect more property seekers with agents and developers.

eSimsar.com’s portal, which displays properties for sale and rent, provides a user-friendly and convenient search platform for residential and commercial property seekers. Visitors can browse through property sale and rental offers and acquire information on details such as floor plan, build and land area, price, real estate developer, pictures, description and more for free. They can also select the Estate Companies option where they can

UAE ExPO bID MASTERPLAN

Two leading international consultancies have been appointed to support the development of the masterplan for Dubai Trade Centre-

Jebel Ali, the UAE’s proposed site for the 2020 World Expo in Dubai.Jones Lang LaSalle (JLL) has been mandated to carry out a site analysis

and legacy masterplan review and will develop a long-term land use plan, providing a sustainable development strategy for both the Dubai Trade Centre-Jebel Ali site and surrounding areas.

Consultancy and construction company Mace has also been engaged by the Expo 2020 team to assist with cost management and planning, working closely alongside the bid masterplan architects to develop the overall scope of this important project. Mace has previously served as a delivery partner for the infrastructure for the 2012 London Olympics and Paralympic Games and was also responsible for the construction of the award winning UK Pavilion at the Shanghai Expo 2010.

In addition to JLL and Mace, numerous international architectural and design firms are currently working on the site masterplan.

“As this announcement demonstrates, we continue to strengthen the team leading the masterplan development of this specialised, highly connected 438-hectare site,” said Helal Saeed Al Marri, CEO of the Dubai World Trade Centre and member of the Higher Committee for Hosting the 2020 World Expo in Dubai.

“By partnering with the most expert firms from across the globe, we will ensure that Dubai Trade Centre-Jebel Ali serves as an ideal site to host the 2020 Expo — and as a permanent attraction, contributing to the city’s long-term appeal as a premier destination for global events,” Al Marri further commented.

“We are aware of the hugely beneficial impact that these events can have on their host cities. We think Dubai and the UAE has an extremely strong case to be selected for Expo 2020 and are delighted to be part of the bid team,” said Alan Robertson, CEO of JLL Middle East and North Africa.

“We are committed to helping establish a legacy through large-scale city planning schemes and we are delighted to work on such a significant global event alongside the Dubai World Trade Centre,” Stephen Pycroft, Chairman and CEO of Mace added l

ALDAR REPORTS SIGNIFICANT REvENUE GROWTH FOR Q2 2012

Aldar Properties PJSC, Abu Dhabi’s leading property development investment and management company, recently announced its

financial results for the second quarter of 2012 with revenue for the period increasing 497% to AED 4,631.2 million (Q2 2011: AED 775.7 million) and net profit of AED 417.9 million up 228% from AED 127.3 million during the same period last year. Revenues were driven by the successful handover of 1,058 residential units on Al Raha Beach units.

The company ended the period with a strong cash and liquidity position. At the end of the period, cash balances were AED 2,459.6 million and AED 3.2 billion of available liquidity from the credit facility with National Bank of Abu Dhabi, providing the Company with ample working capital and liquidity to deliver on its business plan.

Aldar’s ongoing programme of debt reduction continued during the quarter with repayments totalling AED 4.3 billion, including the early retirement of AED 1.9 billion term loan. This brings total borrowings down to AED 14,358 million (December 2011 AED 18,295 million) at the end of the period.

Aldar benefits from highly predictable and stable ongoing cash flows with AED 12 billion cash still to be received from the three main asset sale agreements signed with the Government of Abu Dhabi between 2009 and 2011. The Government asset sale agreements also provide a source of stable earnings, including AED 3.6 billion of revenue still to be recognised relating to serviced land sales at Al Raha Beach. These contracted sales provide the foundation for Aldar’s strong ongoing revenue and cash flow visibility over the coming quarters.

Ali Eid AlMheiri, Chairman of Aldar Properties commented:“Impressive quarterly performance has been driven by the delivery of a

substantial volume of units to our customers including the Government of Abu Dhabi. This stability enables us to focus on our long-term strategy - to remain Abu Dhabi’s pre-eminent developer. We have a strong pipeline of development projects to deliver over the second half of the year and into 2013 and we look forward to contributing profitably to Abu Dhabi’s future real estate pipeline.”

SAUDI ARAbIA’S FIRST PROFESSIONAL PROPERTY SEARCH PORTALview developer information and property listings.

For real estate companies, eSimsar.com enables them to reach a fresh online market at a very affordable subscription fee. The portal also facilitates the display of complete and clear property details not possible otherwise via conventional media. Real estate companies benefit as well, as seekers will contact and deal with them directly rather than through third-party agents.

“Internet is emerging as a vital platform for doing business across Saudi Arabia and reaching out to the Kingdom’s increasingly tech-savvy population. Since its launch a few months ago eSimsar.com has generated huge interest and proven the suitability of the internet as a productivity tool for major real estate companies such as Rafal, Urjuan, Cayan, Affordable House and Al-Zamil, and a convenient and reliable resource for prospective residential and commercial property seekers. We are working on more features and improvements to optimise the internet’s use as an information and business hub for the real estate sector’s stakeholders,” said Tarek Zeitoun, Managing Director, eSimsar.com

eSimsar.com aims to cover all real estate companies across the Kingdom to provide comprehensive search content for seekers. The portal is currently reaching out to around 5,000 real estate offices in Riyadh and will move on to other key cities in Saudi Arabia l


REGIONAL NEWS

Al Majaz Waterfront, the debut project of Sharjah Investment and Development Authority (Shurooq) and the newest leisure and tourist

destination in the Emirate, which was opened in December 2011, has seen a vast public turnout throughout the month of Ramadan and the three days of Eid Al Fitr, thus establishing itself as one of the most prominent tourist attractions in the country.

During the holy month of Ramadan and Eid Al Fitr, Al Majaz Waterfront firmly established itself as a favored destination for families - a fact that is attributed to the rich and diverse programme of activities offered by Shurooq, which was designed specifically to meet the different tastes of all members of the family, and which succeeded in bringing together families from various cultural backgrounds in one place to enjoy the cultural combination that reflects the resilience of the Emirati community and its deep-rooted culture.

Speaking on the occasion, Ahmed Obaid Al Qaseer, Chief Operating Officer of Shurooq, said: “Ramadan and Eid Al Fitr this year were exceptional for Al Majaz Waterfront, especially as it was the first opportunity for this landmark location to welcome tourists and visitors on such an important

festive occasion.”Al Qaseer added: “In light of significance of the occasion, we were eager

to offer competitive yet unique events and shows that would appeal to families. We were able to achieve this goal, the proof of which was clearly manifested in the strong turnout of visitors at Al Majaz Waterfront. Looking forward, we are considering new plans to enhance our approach towards making this location a truly sustainable destination for families and tourists.”

The Eid package of activities at Al Majaz Waterfront comprised various events including multimedia shows on the fountain, cinema screenings, poetry as well as a host of workshops for children.

Community members praised Al Majaz Waterfront’s various amenities and commended the arrangement and organisation of the various events and activities, all of which were specially designed for Ramadan and Eid Al Fitr. Visitors also lauded the outstanding attention and special care afforded to the children’s play areas in terms of safety and flexibility, as well as the availability of restaurants, rest and relaxation spaces, the Sharjah Fountain and various other modern and attractive facilities l

Property services company Hamptons MENA offers specialised advisory

service and valuations of all real estate assets including offices, retail, residential, industrial, hospitality and special uses such as power stations, hospitals and schools for secured lending, litigation, transactional purposes, rent and sale advice, audit, landlord and tenant negotiations and rent reviews.

The company has a strong Valuations & Research Department with a team of qualified valuation experts providing exclusive reports for individual and business requirements.

The valuation service has recently been strengthened in line with the current thrust by the financial institutions to have scientific valuation reports to evaluate financing requirements. These reports also assist in undertaking audits, thus giving a fair value of the property under consideration.

AL MAjAz WATERFRONT bOOSTS SHARjAH’S TOURIST AND CULTURAL IDENTITY

HAMPTONS MENA TO OFFER vALUATION SERvICES FOR AUDIT AND SECURED FINANCE

“With a strong track-record in undertaking property services in the region and working closely with the various industry stakeholders, Hamptons MENA has strong domain knowledge of the property market. Today with demand for complex valuations on the rise, we have strengthened our Valuation & Research Department’s offerings to provide special reports that suit a wide array of customer requirements,” a spokesperson of Hamptons MENA said.

The Valuation & Research Department employs a range of comprehensive methodologies to undertake the valuation services covering mixed-use developments, residences, commercial property, retail outlets, industrial developments, hotels and land.

The reports are undertaken in accordance with the parameters outlined by the Royal Institution of Chartered Surveyors using advanced software systems. The valuation services are undertaken across all property developments in the UAE and other parts of the MENA region by highly experienced staff members and by leveraging an efficient database. Among the clientele of the company are renowned banks, financial institutions and corporations.

Hamptons MENA offers the full spectrum of property services including residential and commercial property sales, residential and commercial leasing and property management, international property sales, valuations, research and feasibility studies, and independent mortgage consultancyl


OMAN

SUNRISE FOR THE SLEEPING bEAUTYBlessed with fascinating natural beauty and supported by increasing infrastructure improvement in the region, Oman is realising its immense potential to evolve into a major tourist destination. Now, time is ripe to invest in the Sultanate’s hospitality sector, experts believe.


OMAN

Nestled on the southeast coast of the Arabian Peninsula and bordered by the Arabian Sea and the Gulf of Oman in the east, the Sultanate of

Oman covers an area of roughly 310,000 square kilometres and currently has a population of nearly three million.

Oman is an absolute monarchy, headed by Sultan Qaboos bin Said Al Said. In 2011, the revolutionary wave that swept across many Arab nations was also felt in Oman where several demonstrations occurred. Protesters were demanding salary increases, the creation of more jobs and called for a fight against corruption. As a response to the uprisings, the Sultan pledged to create more jobs, implement reforms and grant more powers to the Council of Oman. In January this year, the government announced plans to boost budget spending by 26 per cent in its five-year plan, (ending in 2015), in order to create jobs and improve living standards in the country.

According to the April 2012 Oman property market update by property consultants Cluttons, the Gulf state’s economy showed significant growth during 2011. GDP was up 23.3 per cent against the previous year and rose to nearly $52 billion. Like many countries in the region, Oman relies heavily on oil and gas resources but is increasingly looking at implementing economic diversification strategies. In 2011, the country’s contribution of non-petroleum activities to GDP grew by 13.1 per cent, Cluttons reports. The industrial sector grew by 18 per cent, mainly due to growth in the manufacturing sector while the service sector showed growth of 11.5 per cent.

Analysts also expect the Sultanate’s financial sector to grow throughout 2012. According to a recent report by credit ratings and research firm Moody’s, the outlook on Oman’s banking system remains stable, reflecting the country’s benign operating environment, which is underpinned by high oil prices and increased government spending. According to Moody’s, this will continue to support Omani banks’ lending growth and profitability, and sustain their solid funding bases over the next 12 to 18 months.

Gaining recognition as a tourist destinationFor years, Oman has been widely regarded as more of a secret holiday

destination, far away from mass tourism and overcrowded beaches. Today, things are starting to look a little different.

Earlier this year, Muscat has been chosen as the 2012 Capital for Arab Tourism by the Arab Tourism Ministers’ Council, and has also been ranked as the second best city in the world to visit in 2012 by Lonely Planet. In addition to this, the Sultanate was also ranked in the top 20 destinations in the world by National Geographic magazine, as the only Arab country on the list.

“The fact that Oman has been identified as one of the premier tourist destinations in the world by publications such as National Geographic and Lonely Planet will help to further raise the Sultanate’s profile to international tourists and should act as a spur for inbound tourism,” said Matthew Wright, Associate Director of Strategic Consultancy & Industrial at Cluttons Oman.

Wright added that significant efforts have also been made to increase awareness of the Sultanate by staging international sporting events such as the Asian Beach Games 2011, the Beach Handball World Championship 2012 and the recent choice of Wadi Shab for the final event of the Red Bull Cliff Diving World Series 2012.

“An increase in tourism numbers in the Sultanate would naturally provide a boost for the potential for further real estate development in the hospitality sector. Raising Oman’s profile to the international tourism market will be one of the keys to achieving this,” he said.

Initiatives to boost tourismSeveral ambitious projects show that Oman indeed aims to flourish into

a tourism hotspot and finally do justice to its unrivalled natural beauty and stunning coastline. According to the Ministry of Tourism, which has a clearly defined marketing and promotional strategy, the Sultanate aims to attract a potential 12 million visitors by 2020 (from approximately 1.6 million in 2010).

Muscat International Airport is currently being expanded in a $1.8 billion project and will be able to accommodate more than 12 million annual visitor arrivals once completed in 2014. Construction includes a new terminal building, 32 air bridges and an additional runway while the existing runway will be upgraded to handle the super-sized Airbus A380.

Last year, Muscat also saw the opening of the Royal Opera House which

“An increase in tourism numbers in the Sultanate would naturally provide a boost for the potential for further real estate development in the hospitality sector”


OMAN

hotels. The campaign offers travellers ‘One Free Night in Oman,’ designed to attract cost conscious consumers.

“Launched in February this year, this joint venture of the Oman Ministry of Tourism, Oman Air and the hotels is expected to bring a boom and has already shown a marvellous response,” said Haitham Mohammed Ghasani, Director of Tourism Promotion at the Oman Ministry of Tourism.

In June, Oman Air announced that its net passenger revenue grew by 28 per cent compared to the same period last year, making 2012 the airline’s most successful year in its history so far. Passenger numbers also grew by 19 per cent the carrier said.

This summer, Air Arabia, the region’s low cost carrier, also launched direct flights to Salalah from the UAE in an effort to boost tourism to the city, which over the summer months becomes a popular holiday destination in the region due to its significantly cooler monsoon climate.

In another effort to boost tourism, the government has reduced the cost of a short term tourist visa by 75 per cent from $52 to $13.

Hospitality real estateEarlier this year, Oman has announced the construction of a $ 1 billion

tourist resort in Salalah, the Sultanate’s second largest city. In addition to this, several large integrated tourism complexes are currently under development, including Majid Al Futtaim Properties’ ‘The Wave,’ a luxury housing project resort in Muscat.

“Given the opportunities offered by Oman, we are currently working on

three proposed hotels in The Wave – our master-planned community in the Sultanate,” said Salman Haider, Managing Director of Majid Al Futtaim Properties at a recent industry event.

Spread over 2.5 million square metres, the development will feature an 18-hole green golf course, a 300 berth marina, 4 luxury hotels, over 4,000 apartments, villas and townhouses in addition to retail and restaurant outlets. The development was also first in the Sultanate to allow 100 per cent foreign ownership of freehold property and has already sold 25 per cent of its total properties, CEO Michael Lenarduzzi said.

Other projects include the $1.7 billion hotel complex Jebel Sifah, located south of Muscat which has five hotels, 950 residential units, a golf course, marina and commercial centres, developed by Orascom, as well as Salam Yiti, developed by Sama Dubai.

In July this year, Qatari Diar Real Estate Investment Company signed a memorandum of understanding (MoU) with the Omani Ministry of Tourism for the development of three world-class leisure destinations in the Sultanate.

The Ras Al Hadd development, which forms part of the latest MoU, has a 5-star hotel and spa, residential villas, apartments, souks, a marina and villa plots, while the second of the three developments features a 5-star luxury resort hotel and spa as well as residential villas and apartments. The third project will have a yacht club and marina, a sports academy, and three boutique hotels.

Despite the current investment in the Sultanate’s hospitality

is designed to attract tourists from all over the world. Government plans also exist to turn the recently discovered Friday Mosque in Qalhat, an ancient city that has been largely protected by human development, into a major tourist attraction with the construction of an archaeological park and a museum at the site.

In an effort to increase its global recognition, the country is also currently building the $1 billion Oman Conference and Exhibition Centre (OCEC) in Muscat, due for completion in 2016. According to OCEC, “this world-class facility is ideally suited to host international, regional and national conventions, exhibitions and business events.” Amongst numerous facilities, the Centre will include a tiered auditorium with a capacity of up to 3,200 people and will offer 22,000 square metres of total exhibition space.

Over recent years, the region’s cruise ship industry has experienced steady growth as a result of increased passenger handling capacities by major aviation hubs such as Dubai, Abu Dhabi, Bahrain and Doha, as well as the entry of new cruise companies into the market. While several Gulf States are redeveloping their cruise ship facilities, Oman is also progressing with a masterplan to transform Port Sultan Qaboos into a world-class cruise destination.

According to the Ministry of Tourism, Muscat’s cruise ship passenger arrivals soared to 231,100 in 2010/2011 from just 44,885 in 2007 while this number is expected to exceed 300,000 by 2015.

Earlier this year, Oman Tourism has introduced its high value stopover campaign in conjunction with Oman Air and a number of

Oman Conference & Exhibition Centre (OCEC)

OCEC


“The Sultanate’s culture, heritage and natural beauty provide outstanding attributes to form the foundations on which to build the tourism sector”

infrastructure, Wright suggests investors should act carefully, saying that the significant pipeline of proposed hotels in the Muscat capital area currently in the planning or development stage would effectively double the supply of 3 to 5 star hotel rooms in the capital area over the next five years, adding between 3,500 to 4,000 rooms to the Muscat market.

“In light of declines in hotel occupancy levels over recent years, it is evident that the hotel sector in Muscat is in danger of entering an over-supply if all of the proposed projects are developed over the next few years, particularly in the 4 and 5 star sector,” he said.

“We consider that investment in the hospitality sector in the Sultanate will need to be very carefully considered and targeted for the foreseeable future. With a potential oversupply of 4 and 5 star hotels, we would identify potential gaps in the market as being boutique hotels in niche locations and the budget to mid range sector,” Wright added.

“An example of a well considered hotel development in a niche location is the Al Jabal Akhdar Resort Hotel in the Hajar Mountains which is currently being constructed by the Government’s tourism development arm, Omran. The hotel will provide 86 luxury rooms on completion in late 2013 and will be operated by the Singapore based hotel chain, Alila,” he further commented.

Cluttons considers that the Al Jabal Akhdar Resort Hotel will provide a

mountain top facility which will complement rather than directly compete with the higher end hotels currently available and proposed in Muscat.

ChallengesDespite the government’s initiatives to heavily boost the tourism sector,

Cluttons identifies both external and internal challenges the Sultanate’s tourism industry faces.

Wright commented: “The main external challenge to the growth of the tourism sector is the ongoing fragility of the global economy following the global financial crisis of 2008. This has and continues to act as a significant constraint on development of the tourism sector, particularly with respect to increasing tourist numbers from the traditional source markets in the West. A recent initiative by the Ministry of Tourism has refocused its marketing strategy with a greater emphasis on the GCC and Indian markets.”

“The Sultanate’s culture, heritage and natural beauty provide outstanding attributes to form the foundations on which to build the tourism sector. We consider that the main internal challenge for the Sultanate will be to facilitate real estate development catering to the requirements of the hospitality sector but which avoids compromising the unique features that attract visitors in the first instance,” Wright concluded l

OMAN


UAE

ON THE ROADTO RECOvERYDuring the first half of 2012, Dubai’s property market has bounced back as rents and sales prices in the emirate’s most sought after areas have increased. Coupled with an increase in tourist arrivals, investor confidence is returning to the region’s once hottest real estate market.


UAE

Just in time when Dubai has announced its bid to host the World Expo 2020, positive news about the Gulf state’s property market

performance walk the beat and once again stimulate global investor confidence.

According to projections by the Dubai Economic Council, the Dubai economy is expected to grow by between 4 per cent and 5 per cent in 2012. The GDP growth is expected to be driven by strong trade and tourism sectors.

According to the CBRE Q2 2012 Dubai Market View, the UAE continues to see positive economic growth whilst foreign direct investment (FDI) is also on the rise. During 2011, FDI into the country witnessed a huge increase of nearly 40 per cent, totalling USD 7.7 billion compared with USD 5.5 billion in 2010 (World Investment Report 2012, United Nations Conference on Trade and Development ).

The Jones Lang LaSalle Q2 2012 Real Estate Market Overview states: “Signs of improved investor confidence have flowed into the real estate sector, with continued demand for quality, well located, income producing assets. The main transactions that took place in the first half of 2012 were the sale of Building 6 in Gate Precinct in DIFC and the transfer of the 50% Kerzner share in Atlantis the Palm Jumeirah to Istithmar World. In addition, around 11,400 sq ft of mixed use space was sold in Burj Khalifa in June.”

Real Estate TransparencyAccording to Jones Lang LaSalle’s Global Real Estate Transparency Index

2012, Dubai maintained its status as MENA’s most transparent real estate market.

In addition to this, JLL reports that a new law aiming at protecting real estate investors from delays or unilateral changes will soon be issued by the Dubai Land Department. According to the latest draft of the law, investors can cancel their contracts and get their money back in cases where developers violate the terms and conditions.

“The new law is expected to pressurise developers to finish their projects and increase investor confidence. It will also ensure more transparency and better regulation of the real estate market,” the firm said.

Residential real estateAccording to CBRE, the residential market in Dubai continues to

outperform the commercial office sector with average lease rates for apartments and villas reflecting positive growth during the first half of 2012.

“Lease rates in established community locations have been appreciating at notably higher levels, outperforming the wider market,” the CBRE report said. The firm observed a rental growth of 5 to 8 per cent in established areas such as The Greens and Downtown Dubai while newer districts such as Jumeirah Village witnessed a 5 per cent drop in lease rates.

Data from property management company Asteco shows that quality residential developments in Dubai bounced back during Q2 2012, with average rent increases of 6% for apartments and 9% for villas. Sales prices recorded double-digit increases in three developments, with rises of 6-8% elsewhere.

“After three years of declining rates and limited sales activity, the real estate market is on the way to recovery, with established quality communities showing increases in values and higher transaction volumes,” said Elaine Jones, CEO at Asteco.

Abu Dhabi’s leasing market was also extremely active in the first half of the year and is expected to remain so for the remainder of the year, with “demand being driven by continued internal movement filtering through to all sub-sectors of the residential market and leading to further rental adjustments as an additional 7,000 new apartments and 4,560 villas ready

for release in the next six months” (Asteco).Increased residential sales transactions in H1 2012 were credited

primarily to the completion of designated investment area projects and the availability of competitive mortgage interest rates and attractive selling prices.

“Investors have started to re-enter the market since rental return prospects have started to improve due to price reductions and more affordable mortgage options,” said Jones.

Abu Dhabi’s commercial real estate sector also enjoyed positive levels of transactional activity, again fuelled by internal movement.

Asteco reports that as landlords become more competitive, tenants who previously adopted a ‘wait and see’ attitude have increasingly begun to commit. There was also a substantial increase in enquiry levels as the new law requiring companies to operate from purpose-built offices came into effect and demand was led by fitted-out buildings with good parking ratios and competitive pricing.

UAE offers high rental returnsA recent report by Global Property Guide has revealed that the UAE is

among the top 5 countries in the MENA region in terms of rental yields. The study compared the rental yields of apartments, all about 120 square metres in size, across various countries. With gross rental yields of 6.89 per cent per annum, the UAE ranks slightly behind Jordan, but is ahead of Egypt, Morocco and Lebanon.

“The UAE has higher rental returns than some of the most popular locations for property investment in the world. With yields at 6.89 per cent, the UAE offers much higher rental returns than for example the UK and more than double the rental yield of Hong Kong” said Niall Mc Loughlin, Senior Vice President of DAMAC Properties, commenting on the report.

Another important factor for investors to consider is the favorable tax environment in the UAE. Rental income is tax free, and there are no capital gains taxes levied on the sale of properties.

“Now that prices have stabilised in premium locations, the high yields make investing in the UAE property market an attractive proposition for any global investor,” said Mc Loughlin.

“The UAE has higher rental returns than some of the most popular locations for property investment in the world. With yields at 6.89 per cent, the UAE offers much higher rental returns than for example the UK and more than double the rental yield of Hong Kong”


UAE

Hotel sectorPositive economic signs also include the strong performance of Dubai’s

aviation sector with an increase of 13 per cent in passenger numbers as compared to the same period last year (CBRE).

According to JLL, Dubai International Airport is expected to overtake London’s Heathrow and become the third busiest international airport by 2020, handling 100 million passengers per annum. The emirate is investing around USD 7.8 billion as part of the airport’s expansion plan.

MasterCard’s Worldwide Index of Global Destination Cities ranked Dubai as the world’s number eight tourist destination, outshining cities such as New York, Barcelona and Rome. The index predicts visitor spending in Dubai to increase by 19% in 2012 reaching USD 8.8 billion, while visitor numbers are projected to reach 8.8 million in 2012, up 15% compared with the previous year (JLL).

The strong performance of the tourism sector and increasing number of visitors has also supported a growth in the hotel and hospitality sector. According to JLL, the recovery of the hotel sector witnessed during 2011

has continued further over the first half of 2012, with occupancy levels improving to 83% from 79% in the same period last year.

“The positive upswing in tourism volumes in Dubai has raised confidence levels and following a slowdown witnessed in the last couple of years, there has been an increase in the number of announced projects in the city including the Four Seasons Dubai, three hotels (St. Regis, Westin and W) at the Metropolitan site and some midscale properties in the Bur Dubai / Deira area,” JLL said.

In 2012, around 4,500 additional guest rooms are expected to be completed in Dubai with major projects including JW Marriott Marquis (Business Bay), Al Khor Rayhaan (Al Ghurair City), Fairmont The Palm and Conrad Sheikh Zayed Road.

Taking place for the 11th time from 2 – 4 October 2012 at the Dubai International Convention and Exhibition Centre, Cityscape Global is expected to grow by 25 per cent this year; a definite sign that investors and developers from around the globe look to the region for promising business opportunities l

Dubai International Airport


ASIA NEWS

According to Subash Bhola, Senior Research Manager at Jones Lang LaSalle India, 2012 has been a challenging year for most of the key

sectors of the Indian economy, including the retail real estate sector. The demand in terms of net absorption has remained subdued in H1 2012 amid careful expansion by retailers.

In H1 2012, net absorption of retail space fell by 57% from the levels seen in H1 2011. The watchful stance by retailers, coupled with the lack of quality malls and the fact that some select quality projects postponed construction, were the main causes for the sluggish absorption, Bhola explained.

In the past six months, only 2.3 million sq ft of operational retail space has been added to the market across the top-seven cities of India. On the back of this small supply, the overall vacancy rate declined to 18.8% at the end of Q2 2012. Because of the uncertain economic climate and weaker business sentiment, developers have been and continue to be cautious about new mall launches.

In H1 2012, 22% of the total retail supply for 2012 became operational, with the remaining supply in advanced stages of construction and 51% of it ready for fit-out. As compared to other cities, Kolkata and Pune have higher pre-commitments in projects that are ready for fit-out and expected to commence operation in H2 2012, with large spaces signed by

anchor retailers and large-format stores in these cities. About 32% of the retail space expected to become operational in H2 2012 is in the ‘50-100% structure ready’ stage.

In accordance with the preference of retailers, most of the recent absorption is skewed towards malls with better quality. This trend is largely prevalent in major Tier I cities such as Mumbai and NCR-Delhi. At the end of Q2 2012, NCR-Delhi and Mumbai together accounted for 64% of the total retail space in India, housing 149 of the 240 malls currently operational in the country’s top-seven cities.

Persistently high core inflation and lower GDP growth forecasts for 2012/2013 are likely to moderate consumer spending over the coming quarters. The absorption rate is predicted to moderate to 27% by the end of 2012, falling from the 41% figure recorded in 2011. This is due to subdued absorption in H1 2012 and a low level of pre-commitment in the malls expected to commence operations in H2 2012.

Because of the limited availability of new malls and the low vacancy rates in the existing prime malls, retailers in cities such as Hyderabad, Chennai and Bangalore continue to actively lease space on high streets. A policy change could be a significant boost for absorption, and therefore supply; however, it is uncertain when India’s Government will allow FDI in multi-brand retail, Bhola concluded l

POSITIvE GROWTH FOR QINGDAO’S RETAIL REAL ESTATE MARkET

China’s retail sector is growing, and with it are the malls across the country. Recently, Qingdao has made headlines with several

shopping centres currently under development and in the planning stages, the June 2012 Jones Lang LaSalle China Property Market Monitor said.

CapitaMalls plans to build 100,000 sqm shopping mall in Qingdao’s Sifang District. According to the Qingdao Bureau of Commerce, Singapore’s CapitaMalls plans to develop a 100,000 square metre shopping mall in New City Heart Area. With many residential projects already under construction and Metro Line 3 scheduled to run through the area upon completion in 2014, Sifang’s government has made the development of this area a priority.

On 26 May, Zendai Plaza, located at the intersection of Haier Road and Tongan Road in Laoshan, Qingdao, officially opened with 75,000 square metres of retail space. The first integrated urban complex in Laoshan, Zendai Plaza features serviced apartments, a hotel and a shopping mall. The mall features a 17,000 square metre China Resources Vanguard supermarket, H&M (1,500 sqm), Uniqlo (2,000 sqm), China Film Cinema, Watsons (560 sqm) and F&B outlets. The commitment rate is currently over 90% and the occupancy rate is at 80%.

The third Wanda Plaza in Qingdao is expected to open in Licang District in September. Brands that have secured spaces within the property include Van’s Department Store, China Resources Vanguard, Flyhigh, Wanda Cinemas, Haagen-Dazs and Watsons. Licang Wanda Square is an urban complex with a total gross floor area of approximately 200,000 square metres, in accordance with Wanda’s standard development plans. The mall is expected to open officially this month.

“The property market in Qingdao has long benefited from both logistics and tourism industries. In 2011, annual foreign trade of USD 71.3 billion and over 50 million tourist visits provided a strong foundation for the local

CAUTION PREvAILS IN INDIA’S RETAIL REAL ESTATE SECTOR

economy, and boosted demand for office and retail space. In order to meet this demand, by 2015 new supply in the office and retail markets will reach 1.2 million square metres and 2.0 million square metres, respectively. With Government policy support for development in western Qingdao (Huangdao and Jiaonan), we expect accelerating growth and more mixed-use developments to be constructed in these areas,” commented Albert Yeung, Managing Director at JLL Qingdao l


ASIA NEWS

A recent report by Jones Lang LaSalle Hotels said that Phuket hotel investments have surged and are predicted to reach a record THB 10 billon (USD 318 million)

in 2012 as international investors target landmark properties.“Phuket has seen record investment in the first half of 2012 and the market looks

on track to enter a renewed period of growth as savvy international investors strategically secure landmark properties in Asia’s premier resort destination,” said Mike Batchelor, Managing Director of Investment Sales at Jones Lang LaSalle Hotels.

Since the start of the year, Jones Lang LaSalle Hotels has advised on and managed the sale of prominent properties in Phuket, including the acquisition of the 368-room Movenpick Resort and Spa, the 260-room Evason Phuket and Bon Island at Ravai, and 254-room Laguna Beach Resort.

“With international passenger volumes surging 30% in 2011, the island’s international appeal remains strong. In fact, international visitors to Phuket exceeded domestic arrivals for the first time. This growth has been fuelled by excellent air links and the expansion of low cost carriers across the region,” Batchelor commented.

Other factors driving growth to the region include a USD 180 million planned airport upgrade slated to commence later this year, which will double the existing capacity to 12.5 million passengers per annum. In addition, political stability in Thailand since the 2011 elections has seen international confidence return to the region as evidenced in the spate of recent sales, the report added l

Ground works have commenced on the Trump Tower Manila, designed by global architecture, urbanism

and design practice Broadway Malyan, with the tower set to be the tallest residential skyscraper in the Philippines and Manila’s definitive landmark when completed in 2016.

Trump Tower Manila will be the centrepiece of developer Century Properties’ bold and innovative four hectare mixed-use development in the heart of the city’s most prestigious financial and commercial district, Makati City, dubbed ‘MoMa’ or Modern Makati. When completed it will stand approximately 250 metres tall and feature 220 residential units over 58 storeys.

Director Ian Simpson, who has led the practice’s team, said: “Ground breaking is a major milestone in the delivery of this landmark project, which has drawn on the skills, expertise and experience of our world-class design team working in partnership with the client, with the tower set to redefine lifestyle living in Asia as well as the Makati skyline”

Broadway Malyan’s design is based on the concept of a ‘peeled façade’ of an extruded square, articulated with internal box ledges and external terraces at the top and bottom corners that peel away and accentuate the dynamic form of the tower.

An environmentally-responsive skin, featuring light shelves and shading systems to react to the building’s orientation in relation to sun’s path, will help to improve building performance whilst maximising the spectacular panoramic views of the city.

The building’s compact footprint and extruded form are designed to balance the architectural delight, of what is set to be the most noticeable icon in the Philippines, with sustainable restraint, with energy consumption reduced through a low surface to volume ratio to set a new benchmark in lifestyle green living.

Suites of approximately 57 square metres and above (613 square feet) comprising of one to four bedroom apartments, and penthouses of approximately 425 square metres, will provide a diversity of unit types to cater for different spatial and economic needs.

The luxury residences will offer world-class city living with exclusive facilities, with the tower set to be the first condominium in the world to offer a selection of Hermès home collections for its amenities and common areas.

Lifestyle is central to the concept and a range of different recreational, health and well-being facilities will be positioned throughout the tower. The intermediary skygarden located on the 30th floor will host amenities including an infinity lap pool, juice bar, gym, stylish spa lounge, treatment rooms, sauna and steam rooms, as well as a beauty salon.

Meanwhile, the business centre will provide an exclusive space with meeting, function and video rooms, a library, lounge and garden terrace, and a fine-dining restaurant will be located on the ground floor.

The tower’s green credentials are further enhanced by a high-performance curtain wall system that incorporates light shelves that act as shading devices as well as a means of bouncing light deeper into the apartments. Vertical fins to the east and west elevations will also counteract the negative attributes of low angle sun, while preserving the panoramic views across the City.

A series of sky terraces and extended box ledges of differing sizes will peel back from the façade at the top and bottom corners of the tower to counteract the highest impact of the sun and function as an effective shading device l

TRUMP TOWER MANILA bREAkS GROUND IN THE PHILIPPINES

PHUkET IS 2012’S HOTEL INvESTMENT HOTSPOT


INDIA

A TALE OF THREE CITIESRapid urbanization is expected to offer large-scale opportunities for real estate and infrastructure development in Indian cities. However, issues with regards to policy implementation currently deter the interest from foreign capital while domestic investors almost exclusively focus on Mumbai, Delhi and Bangalore.


INDIA

According to analysts, India’s economy showed resilience despite the global financial slowdown of 2008 and has reported robust growth

over the last three years. With regards to real estate development, Jones Lang LaSalle (JLL) India says that rapid urbanisation offers significant opportunities for real estate development in the country.

“India is witnessing urbanisation on an unprecedented scale with the share of the urban population increasing from 28% in 2001 to 31% in 2011. At this rate, an estimated 843 million people will live in Indian cities by 2050, a figure which is the combined population of present day USA, Brazil, Russia, Japan and Germany,” said a recent JLL report titled ‘India Realty Through the Looking Glass.’

“This rapid urbanisation is expected to offer large-scale opportunities for real estate and infrastructure development in Indian cities, as well as access to a large skilled workforce,” the JLL report added.

However, in recent times, the Indian economy has faced challenges with regards to policy implementation that negatively impact on the inflow of foreign capital into the real estate sector.

“The delay in reforms to open up sectors to foreign direct investment (FDI), delays in approvals for real estate and infrastructure projects, along with uncertainties over implementation of General Anti-Avoidance Rules (GAAR), are causing anxiety among foreign investors who want to explore opportunities in India,” the JLL report said.

According to JLL, policy reversals and rollbacks in recent times coupled with a lack of bold decisions by the government has put India in a bad light and has negatively impacted the country’s reputation among foreign investors. But in order to unlock the logjams to fast track real estate development in India, the country needs a robust investment climate, JLL says.

“FDI is of acute importance to the growth of the Indian real estate market primarily because of the sector’s unprecedented scale of capital intensive

requirements. While banks have played an important role in the real estate transformation, by increasing the availability of funds, bank credit is still quite expensive in India and can only be a limited source of funding for risky projects,” the firm said.

Furthermore the report commented: “The FDI policies need to be relaxed progressively to attract interest from investors and provide them with a profitable exit strategy in the future. Foreign investment is required not just for meeting the huge capital requirements of Indian industry but also to enhance the competitiveness of Indian enterprises through access to global designs, better practices and technology. This calls for a cohesive approach from the industry as well as the government towards creating a better investment climate to ease the current liquidity crunch among developers.”

Looking at the current dynamics of the Indian real estate investment market, Shobhit Agarwal, Joint Managing Director of Capital Markets at Jones Lang LaSalle India, identifies the three major cities of Mumbai, Delhi and Bangalore as the key areas that attract investment.

“Over the last year, there has been an unequivocal crystallization of Indian cities that continue to attract serious investment into real estate. This is directly correlated to the economic dynamics now working in the country. If India is to achieve even a conservative GDP growth of 6% per year, it emerges that only three cities – Mumbai, Delhi and Bangalore – have the potential to deliver. The reason for this is that close to 2/3rd of the overall development of office space in the country is now taking place in Mumbai, Delhi and Bangalore,” Agarwal said.

According to the JLL India Office Real Estate Half Year Review, Mumbai (with a 32% share) was the top contributor to the total absorption in the pan-India region during H1 2011 and came in second place compared to Delhi in the first half of 2012. “On average, the share of net absorption from the new completions during H1 2012 in Mumbai and Delhi has remained around 60%, as opposed to the national average of 29%,” commented


INDIA

Hariharan Ganesan, Senior Manager - Research & REIS at JLL India.

The unbeatable trinityAgarwal further explained that the three cities of Mumbai, Delhi and

Bangalore have been displaying an extremely fast pace of real estate growth exceeding 30% per annum, generating the bulk of employment in the country and therefore empowering their citizens with the highest spending power.

“It follows naturally that the demand for commercial and residential real estate is also the highest in these three cities. Axiomatically, whatever capital is now chasing real estate in India is almost exclusively focused on Mumbai, Delhi and Bangalore,” the analyst said.

“That said, the days when international capital was seduced by the Indian real estate are over – at least for now. Today, it is only domestic fund companies and managers such as IndiaReit, Kotak Realty Fund, Red Fort Capital and ASK that are carrying the show. Global funds have turned a jaundiced eye on the Indian real estate story, largely because of the negative press and ongoing policy paralysis that continue to plague the sector,” Agarwal further commented.

“The picture that this presents is not geared to attract global fund managers, who require a reasonable degree of stability and transparency before they venture into any market. Whatever FDI remains is very selectively allocated, and in close consultation with local investment agencies. On the other hand, domestic fund managers who are more informed and wired into the Indian real estate sector find the overall operating environment is extremely promising,” he added.

Rules of attractionAgarwal identifies three key issues currently present in Indian real estate:

a high cost of debt (16% for construction and 20% for acquisition finance), staggering developers’ input costs with the cost of construction per

square foot up by 20% compared to last year and low property valuations.“At the same time, demand for the right projects in the right locations

remains high. For domestic investment managers, this is the best time to invest into the sector,” he said.

Seduction points“Residential projects continue to be the high-focus area for the

international and domestic funds that are still focused on real estate. However, they have clearly lost their taste for affordable housing. This yesteryear poster boy of the Indian real estate story has fallen off the capital markets hit parade because of the low returns it yields and the higher gestation period involved,” Agarwal explained.

“Likewise, luxury housing is also out of favour because the project sizes are not large enough to warrant FDI or attract domestic funding. Today, 80% of all available capital for real estate is being plugged into mid-income housing,” he added.

“FDI is of immense importance to the real estate sector in India. Unlike most developed economies, India does not allow Real Estate Investment Trusts. Many would point to the M&A route, which again is a lacklustre option as it comes at a cost of about 20%. With all these routes being plugged because of the risk involved, FDI is clearly the only life-saver which the real estate sector can look to,” Agarwal further commented.

In order to attract a significant amount of FDI back into real estate, India has to implement several important steps. “To start with, the sector is in need of investor-friendly, streamlined policies from the government, the allowing of 100% FDI in most real estate segments with relaxation of certain agreed-upon parameters, the formation of a dedicated regulatory body and ramping up the speed of the approval process. These, coupled with increased transparency, adopting modern designs and technology for improved project execution and timely delivery from the industry are essential for attracting FDI back into Indian real estate,” Agarwal concludedl


FUTURE CITIES

FUTURE CITIES2 – 4 October 2012, Dubai International Convention & Exhibition Centre

Overcoming tomorrow’s urban challenges through transformation and innovation

Over the next thirty years, two thirds of the world’s population are expected to live in urban locations. This mass migration to the cities creates a significant challenge for city planners as they work to create a sustainable infrastructure to support the vast population growth, whilst being sensitive to the preservation of cultural heritage and historic landmarks as well as existing structures already shaping the development of the dense conurbation. Ensuring that environmental awareness and protection, economic growth and social wellbeing remain at the heart of a city’s urban strategy is also paramount to success.

Dubai Municipality, Environmental Centre for Arab Towns, Arab Towns Organization and Informa Exhibitions are delighted to announce the 2nd annual Future Cities Conference and Exhibition taking place from 2-4 October 2012 at the Dubai International Convention and Exhibition Centre.

Future Cities is the critical event for senior government officials, policy makers, master planners, not-for-profit organisations and urban designers who are looking to source solutions and long term strategies for ensuring social, economic, urban and environmental development.Below is a snapshot of our extensive expert speaker panel who will give insight into innovative ways on how to transform urban areas during the 3-day event.

Geoff TurnbullSenior Planning & Landscape Architecture Manager, Aldar Properties, UAEGeoff Turnbull is a Senior Project Design & Management Professional with over twenty years of international experience in development consulting, representing owners and leading large multi-disciplinary teams and general contractors with an outstanding record of expanding responsibility and achievement. Experienced in development, design, project and construction management to senior project manager level with his most recent experience focused on large scale master planning projects of urban nature for ALDAR Properties PJSC – Abu Dhabi’s largest real estate development, management and investment company.

Conference topicsSpeaking in the panel discussion on ‘Addressing the scarcity of water resource in the Middle East,’ Geoff will focus on effective urban design and irrigation water consumption in large projects. He will talk about the complexity of introducing new technologies that reduce usages of up to 80% and their potential first large scale use in the UAE while directly relating these to some of Aldar’s projects.

Nidhal Abdul Rahman TaibahDirector of Cities Urban Planning & Development, Economic Cities Authority – SAGIA, KSANidhal has over 20 years of experience with both the private and public sectors of the building and urban development industries in several parts of the Arab world. After working with the Jeddah Municipality as General Manager of the Jeddah Strategic Plan Development Department for two years, he moved to the Economic Cities Authority of Saudi Arabia in April 2011. Nidhal holds a Bachelor of Science degree in Architecture from King Abdul Aziz University in Jeddah, Saudi Arabia.

Conference topicsParticipating in the panel discussion on ‘Sustaining economic growth by attracting investment, talent and enterprises,’ Nidhal will speak about developing clusters and hubs to attract multinational companies to create employment opportunities, talk about sustaining growth by securing inward investment to diversify the local economy and identify the key factors of attracting top talent and citizens.

Eng. Rana N. ArdahStudies & Consultation Specialist, Royal Scientific Society, JordanRana has eight years of professional experience in different water related fields. She is deeply involved in managing several projects on water (surface, ground and reclaimed) and wastewater reuse, including quality monitoring and assessment for compliance against national and international standards and guidelines. Rana is also a member of different national technical advisory committees, including in the Jordan Standards and Metrology Organization (JSMO) and the German International Agency (GIZ).

Conference topicsIn her presentation titled ‘Risk monitoring and assessment for wastewater use,’ Rana will discuss Jordan’s water situation, the country’s water scarcity, water demand management and wastewater reuse and outline Jordan’s water related strategies, policies, and regulations.She will also introduce the “WHO/ 2006 Guidelines for the Safe Use of Wastewater, Excreta and Greywater/ Wastewater Use in agriculture” and speak about risk monitoring and management for the safe use of wastewater in agriculture. In addition to this, she will give an overview of the “Mixing Ratio Study,” its methodology, results and recommendations.


vIETNAMAs Vietnam’s economy is picking up, foreign investors are seeking to capitalise on the long-term growth predicted in the country. In addition to Ho Chi Minh City and Hanoi as major concentration points for investment, coastal areas such as Danang are gaining increasing investor interest.

SOUTHEAST ASIA

Although Vietnam’s GDP growth has been relatively weak during the first quarter of 2012, recently, the economy has shown continuing

positive signs with inflation appearing well under control, the lowering of the deposit rate and decreases in interest rates, a recent report by global real estate advisory firm Knight Frank says.

Focusing on internal growth, the Vietnamese government has shown its commitment to economic liberalisation and international integration. Structural reforms needed to modernise the economy have been

implemented, helping to produce more competitive, export-driven industries.

In relation to real estate, the recent lowering of interest rates facilitates the access to loans for developers and home buyers significantly, thus helping the economy and the real estate market recover. In Q2 2012, many commercial banks were offering good incentives to their clients, who intend to purchase residential real estate, Knight Frank reports.

Ho Chi Minh City and Hanoi are the country’s two main metropolitan


centres for investment, given their population profile, extent of FDI and their location, however other areas that present good opportunities are tourist and resort areas along the coast, such as Danang, Vung Tau and Phu Quoc Island.

Major coastal areas like Danang, Vung Tau and Phu Quoc Island are also seeing significant interest and development tied to the growing tourism industry, analysts say.

Danang is a major port and economic hub, advantageously positioned between Ho Chi Minh City and Hanoi. Well known for its beautiful beaches and in close proximity to many historical and UNESCO-listed world heritage sites as well as to China Beach, it attracts a large number of visitors. An assortment of resorts is already located here, and investors are increasingly looking to that area.

Here, VinaLiving, Vietnam’s largest developer on the central coast, is currently developing the Danang Beach Resort, designed to become “Vietnam’s first truly integrated international standard resort.”

The 260 hectare site will comprise luxury villas, high-end apartments, world-class golf courses and many other premier facilities, with panoramic views of the mountains, beaches and ocean.

VinaLiving is part of VinaCapital, one of the leading foreign real estate investors in Vietnam.

Neil MacGregor, Managing Director at Savills Vietnam says that in addition to a demand for hotels and resorts in places like Danang, there is currently a strong demand for holiday home type properties.

On behalf of VinaCapital, global architectural, urbanism and design practice Broadway Malyan is designing and supporting the delivery of the World Trade Centre Danang, set to become a major mixed-use real estate scheme in Danang and a catalyst for driving new development on the west bank of the Han River.

The nine-hectare scheme broke ground in early 2008, with the luxury 32-storey and 225-apartment Azura tower having topped out in late 2011, making it the tallest condominium tower in central Danang. Work on the retail, commercial, residential and hotels is now continuing. The 46,600 square metre retail project will be the first shopping centre in Vietnam to include a department store.

Jochum Ledgister, Associate Director at Broadway Malyan commented:“The city of Danang is set to expand east across the Han river towards

China Beach therefore the scheme has the potential to create a new centre of gravity for Danang with spending power that can support a new development of this size. There is also ongoing development of the resort and golf offering moving south along China beach toward Hoi An and this has the potential of creating a new market of longer-stay holiday-makers.”

By breaking into Vietnam the practice is seeking to capitalise on the long-term growth predicted in the country, as well as the wider region, which is expected to see increased investment through the growing economic integration between members of the Association of Southeast Asian Nations.

“The long-term positive outlook has been the subject of a number of long-term growth reports […]. A long-term growth model is by its very nature a slow-growth model, and the market in Vietnam falls perfectly to-pattern as the government has adopted a steady conservative approach to opening up the market for development, both locally and through foreign direct investment,” Ledgister explained.

Despite the fact that the economy is picking up and investor confidence is increasing, Vietnam faces several challenges that impact on real estate development in the country. For MacGregor of Savills, these are largely based on three main issues.

“Access to good projects is very difficult for investors who are not familiar with the market. The key issues investors face are a low level of market transparency, finding sites with clear ownership and title, and pricing. Land and property in Vietnam is seen as very expensive in relation to the wider

economy,” he said.According to Ledgister however, some of the major challenges to

development in Vietnam are based on external misperceptions, such as that there is a closed market, and says that these misperceptions are typically held by those who hold return-on-investment models based on a much quicker turnover.

“However, when one considers investment in Vietnam, all the indicators point to the strong market driven by a young and aspirational population, an increasing affluence and a middle class which is swelling in size through the increase in white collar employment. Another factor is the entrepreneurial spirit of the Vietnamese people, and especially that of the younger population which is keen to explore non-traditional investment opportunities,” Ledgister concluded.

MacGregor agrees on the strength of Vietnam’s macro-economic characteristics:

“Vietnam has a very large and young population with 30% of people below the age of 35. There is a rising middle class seeking independence from traditional family structures and wanting to purchase their own home. In the long term, this rising segment of the Vietnamese society also presents immense potential growth opportunities for the retail market,” he said.

Looking at investment opportunities, MacGregor says the tourism market has continued to perform well and therefore the interest in the hotel market is rising. Secondly, there is currently a shortage of good quality office space in both central Hanoi and Ho Chi Minh City, offering opportunities for development. Lastly, there is a demand for so called ‘landed properties’ such as villas and townhouses as opposed to apartments, coming from wealthy Vietnamese owner occupiers, MacGregor concluded l

SOUTHEAST ASIA


EUROPE NEWS

The investment market for commercial properties in Germany saw a total investment volume of €9.4 billion in the first half of 2012

and thus 15% less than in the same period of last year, the H1 2012 CBRE Germany Investment MarketView showed.

With €4.3bn, around 46% of the volume was achieved in the second quarter. As investors continue to focus on core products, net initial yields are still under pressure. In particular due to the country’s robust overall economy the German investment market continued to assert its position as one of the securest investment locations worldwide.

With almost €4.4bn, office properties were once again the dominating asset class and accounted for approximately 46% of the invested volume. The investment volume increased by almost 50% compared to the same period of the previous year. At the same time, the share of retail properties decreased significantly. While retail properties accounted for more than half of the overall investment volume in the first half of 2011, their share dropped with €3.2bn to only a good third of the volume in the first six months of the current year.

The downward development of retail investments and low overall share can be mainly attributed to a shortage of attractive and suitable investment options and not because retail properties are becoming a less attractive asset class. The fundamental data such as a continuously decreasing employment rate and increasing household incomes due to higher trade agreements in some sectors amongst others speak in favour of property investments in Germany, the largest and most stable European retail market.

The demand for logistics properties increased to almost €830m or 8.8% of the investment volume (+5.1%), compared to the same period of the previous year. Considering hotel investments, the number of deals remained almost unchanged. Nevertheless the German hotel investment market showed a weak performance with investments of less than €200m in the first half year (-65% compared to H1 2011).

The top 5 investment locations Berlin, Dusseldorf, Frankfurt, Hamburg and Munich accounted with almost €4.3bn for approximately 46% of the overall German investment volume in the first half of 2012. Thus, their overall share increased from 43% in H1 2011 although more was invested in absolute terms (€4.7bn) in the previous year. Within the top 5-locations, Munich ranked first with an investment volume of approximately €1.5bn. In

COMMERCIAL ASSET CLASS DOMINATES GERMANY’S MARkET

Over recent years, Turkey’s real estate market has experienced significant growth across all sectors. In the office market, occupier demand remained strong in H1 2012, the July 2012 Jones Lang LaSalle Turkey Real Estate Overview said.

“While the demand remained strong in line with positive economic conditions compared to many Middle Eastern and European countries, several multinational firms from various sectors such as pharmaceutical and communications chose Istanbul as a regional hub,” the report said.

Prime office rent has remained EUR 30 (USD 37) per square metre since the second half of 2009, and is envisaged to remain constant through 2012 due to strong pipeline supply, JLL reports. Meanwhile, the accelerating occupier demand is expected to have an ascending effect on the rent levels in the medium term.

The vacancy rate in Grade-A Istanbul offices decreased from 9.1% in end 2011 to 8.6% in H1 2012, due to high demand. Vacancy in the CBD slightly increased since the end of 2011, from 4% to 5% in H1 2012. The non-CBD

Europe still has the highest vacancy rate at 11.6%, decreasing from 13% at the end of 2011, while the vacancy rate in the Asian Side was recorded at 10.5% in H1 2012, down from 12% at the end of 2011, the report said.

The realised take-up volume in Istanbul during H1 2012 was 114,000 square metres. The Asian Side accounted for the largest share of the take-up volume at 52%, followed by the CBD at 27% and the non-CBD Europe at 21%.

“Considering the positive outlook, it is expected that the take-up volume will accelerate during the rest of 2012, pushing the rent levels upwards in the medium term. The major leasing transactions that were finalised in H1 2012 were the 15,744 square metre office in Aeropark in Kurtköy, leased by Netaş Telecommunications, the 13,888 square metre office in Akkom-4 in Ümraniye, leased by Vakıfbank, and the approximately 11,000 square metre office space leased by Yıldız Holding in Altunizade.

As of H1 2012, the existing Grade A office stock in Istanbul was approximately 2.94 million square metres, compared to 2.67 million square metres in the same period last year (JLL) l

ISTANbUL OFFICE MARkET PERFORMS WELL

a year-on-year comparison, this is an increase of 101%.Berlin ranked second with €931m (+3%), followed by Hamburg with

€771m (37%), Frankfurt with €732m (-47%) and Dusseldorf with €349m (-25%).

Prime yields (net initial yields) for office properties continued to decrease in parts due to the high demand for investment products in the core segment. Quarter-on-quarter, prime yields in Munich declined by five basis points and in Hamburg by 15 basis points to 4.75% in both cities. In Berlin and Dusseldorf, prime yields remained unchanged at 5.10%, in Frankfurt at 5.00%. Prime yields for retail and logistics properties also remained almost unchanged despite high demand-side pressures. (CBRE) l


According to Savills research, commercial property investment volumes in Poland are set to exceed €1 billion in the second half of

2012, beating the H1 volume recorded at €856 million. The firm attributes this significant rise to a healthy pipeline of preliminary agreements and investment transactions in progress and expects Poland’s total investment volume to reach between €2 billion to €2.5 billion by year end, similar to 2011 levels.

The international real estate advisor notes that although in transactional terms H1 2012 was 15% lower than H1 2011, Poland remains the major investment market in the central and eastern European (CEE) region, and predicts that it will maintain this position.

“With levels of domestic investment increasing and Poland as popular as ever among international investors, it has firmly established its position at the top of the CEE market. As several significant preliminary agreements have been signed and other major transactions are in progress, we look forward to a very positive H2 2012,” said Michal Cwiklinski, Head of Investment at Savills Poland.

Four deals in the retail sector accounted for circa 70% of the H1 2012 investment volume according to Savills data. This is primarily due the acquisition by a fund managed by AXA Real Estate and CBRE Central Europe of a major stake in the 113,500 square metre Zlote Tarasy mixed-

use retail and office centre in Warsaw.The largest office deal in H1 12 was the acquisition of the second phase

of Harmony Office Center in Warsaw by Azora for €54m, while the most significant warehouse deal in this period was the sale of a portfolio of 11 properties by Prologis to Hines Global REIT for €98m. Savills anticipates an increase in activity in the warehouse sector in the coming months due to an improved occupational market.

Warsaw continues to be the country’s most sought after location for investment, particularly in the office sector, which saw just one out of five deals in H1 taking place outside the capital.

International investors continued to dominate the market in the first half of 2012, accounting for two thirds of transactions. Nonetheless Savills notes that domestic investors are playing an increasingly importantly role in all sectors, with total acquisitions in H1 2012 amounting to almost €47m. Savills expects that German, UK and US investors will continue as the most active buyers in Poland going forward.

Michal Stepien, Senior Consultant in the research team at Savills Poland, commented: “International and domestic investors are primarily targeting top prime and opportunistic assets, making the Polish market increasingly polarised. We expect prime yields to remain stable for the remainder of 2012, particularly in the Warsaw CBD ” l

POLAND ON TRACk TO HIT €2.5 bILLION INvESTMENT TOTAL IN 2012

Despite the change of the economic climate in Europe in 2011, Sweden’s transaction volume in the investment market reached

almost the same level as in 2010, adding up to SEK 105 billion (USD 16 billion), with the most attractive investment segment being offices, the H1 Colliers International Nordic Real Estate Review showed.

For the remainder of 2012, the most active buyers will be the institutional investors, but Colliers also expect to see increased activity among international investors due to the current stability of the Swedish economy, compared to most other European countries. The firm also believes that investments will increase in residential properties in larger cities with a positive growth.

OFFICEDespite the signs of a weakened economy in the past six months the

office rental market had a good year with increasing rents, although lead time has increased for new leases. The rental levels have not been affected nor has the demand for sub-lettings increased. The outlook for 2012 is that the long lead times will continue. Colliers doesn’t expect to see any increased vacancies or decreased rents in Stockholm, Gothenburg and Malmö. However, the development of the Swedish economy will control the rental market in the current year, the firm said.

INDUSTRIAL AND LOGISTICSThe demand for logistic space was strong in the whole country during

2011 and despite the obvious economic threats and the general uncertainty in the market there are just a few actual signs for a drop in demand in 2012. The rents for B-class secondary space in Malmö and Gothenburg have been stable. In Stockholm there has even been an increase in rents driven by a decreasing supply of space. The general demand from tenants are

premises about 3,000-5,000 square meters with a typical lease of 3-5 years, Colliers says. The only option for these tenants is B-class secondary space, since speculative developments are very rare.

2012 will be the third best year, only beaten by 2006 and 2009, in terms of take-up of newly built logistic space since Colliers started monitoring the logistic developments in 2002. There are 13 ongoing developments of 300,000 square meters of logistic space. During late 2010 and beginning of 2011 Sweden had a significant GPD growth which made it possible for investors and end users to invest in developments. This is the reason for all the ongoing developments in 2012, Colliers added l

POSITIvE SIGNS IN SWEDEN’S OFFICE AND INDUSTRIAL MARkETS DESPITE EURO CRISIS

EUROPE NEWS


Rents fell by 0.8% in prime central London in July, taking the annual decline to a modest -1.1%. However, as Liam Bailey, Head of

Residential Research at Knight Frank explains, weak performance in headline rents is disguising notable improvements in lettings volumes.

Knight Frank have noted how rents have been edging down in prime central London (PCL) since October last year. The rate of this decline has been fairly sedate, and while July’s 0.8% fall marks the biggest decline since monthly records began in April 2011, rents in PCL are still 25% higher than the trough of the market in the second quarter of 2009, the firm says.

“There is no doubt that the prime rental market has been affected by the downturn in financial sector employment caused by the slowing UK economy and the Eurozone crisis over the last year,” Bailey commented.

Recent figures from the Centre for Economics and Business Research (CEBR) suggested that the number of finance jobs in the City of London had fallen to 255,000 this year, down from 354,000 in 2007.

Despite this unsettled background, July saw a noticeable upturn in the lettings market in volume terms, with 30% more tenancies being agreed compared to the same month in 2011.

July also saw a reversal in the trend towards weaker new applicant and

new viewing volumes, which had been seen in the first half of 2012. New applicant volumes were higher by 2% in July year-on-year, and viewing volumes were higher by 13%, Knight Frank reported.

The supply of rental properties coming on to the market, which rose earlier in the year, stabilised in the three months to July, however with just a 0.7% increase compared to the same period in 2011. The ratio of new applicants to new instructions stood at 3.0 in July, down marginally from the 3.3 seen in July 2011.

Despite the headline rental decline for PCL, some areas are seeing rental growth, with rents in the City of London increasing by an average of 0.6% during July (up 2.1% over the past 12 months), while rental growth in Notting Hill hit 4.5% in the year to July.

Tim Hyatt, Head of Knight Frank Residential Lettings, commented: “The data shows a more negative picture than our results. Savvy tenants have seen the Olympic period as a good time to look for property as getting around and normal daily life has not been as problematic as predicted.

Knight Frank’s Residential Lettings team has recorded extraordinary results for July, making it the best month on record for us. This doesn’t take into account the income generated by the Olympic lets achieved, which have been far less than the hype predicted ” l

The latest National Mortgage Index from the Mortgage Advice Bureau (MAB) shows that UK mortgage activity bounced back strongly in

July, with borrowers defying weak economic data and taking advantage of the increase in competitive products, a report by global property news service Propertywire reports.

Using data from more than 500 brokers and 800 estate agents, the National Mortgage Index found application activity for both purchase and remortgage activity rose in July, up 14.6% from June. Following the latest round of Quantitative Easing and ahead of the launch of the funding for lending scheme a number of lenders launched more competitive mortgage products in July.

The independent mortgage broker says that as a result there was renewed appetite among borrowers, and the average loan to value on purchase applications rose to 70.4% in July from 68.2% in June, halting six straight months of falls. As a consequence the average deposit on applications fell to 66,832 from 67,512 in June. The rate on the average two

year fix fell from 4.72% in June to 4.68%, and was joined by the average five year fix which dropped from 4.9% to 4.87% in July.

“Mortgage activity levels are still volatile from month to month, and this pattern looks set to continue for some time to come. Application levels increased significantly last month following the washout in June, but they were still below the peak we saw in May,” said Brian Murphy, head of lending at Mortgage Advice Bureau.

“Last month saw lenders a rash of competitive products launched as lenders revised products in advance of the funding for lending scheme. We hope this will stimulate more lenders to increase lending targets and launch more competitive products in the coming months,” he explained. The fantastic London Olympics in August will create a temporary halo effect across many industries, but as mortgage activity traditionally slows during this month we are expecting a return to stability this month rather than another big increase,” he added. (Propertywire) l

PRIME CENTRAL LONDON RENTS SLIP, bUT LETTING vOLUMES IMPROvE

Uk MORTGAGE ACTIvITY bOUNCES bACk

EUROPE NEWS


GREECE

GREAT bARGAINS FOR OvERSEAS PROPERTY

bUYERS


GREECE

Will Greece leave the Euro or not? While this question continuously occupies a prime spot in international

news coverage, overseas buyers are becoming increasingly interested in property in Greece as people expect prices to plummet if the country leaves the Euro.

Several estate agents claim prices could fall another 20% as economic uncertainty continues, saying that now, people are naturally expecting to pick up good opportunities.

High-end estate agent Aylesford typically sells property in the €1 million to €10 million sector and specialises in the islands of Corfu and Paxos.

“Prices have already fallen by about 20% and could fall by about the same amount again if Greece leaves the Euro,” Piers Williams, Director of International Sales at Aylesford told Reuters.

London based luxury agent Beauchamp Estates’ office on the island of Mykonos is receiving three or four email enquiries per day, compared with about five or six per week a year ago. The agent thinks that prices will drop another 20% whether or not Greece leaves the Euro.

According to Ross Michaelides from Buy and Sell Estate Agency in Crete, Greece’s exit from the Eurozone would definitely prove positive to overseas homeowners. “People who have incomes in Sterling or Euro and live in a country that has Drachmas will enjoy a better lifestyle for less money. Services and goods are bound to be cheaper and foreign home owners who live and work in our area will also see an increase in business as a return to the Drachma will affect tourism positively,” the company said.

Looking at recent trends in investment in Greece, Colliers International says that investment volumes dropped to historical lows in 2011 since the recession affected the investment market harder than the rest of the economy.

“In 2011, the Greek market turned into a buyer’s market as a result of lack of financing. The buyer interest that existed primarily came from local private investors looking for bargain deals and distressed properties providing typically high returns on equity,” the Colliers 2012 Research and Forecast Report Greece said.

Alexandros Moulas, Valuer & Property Advisor at Savills Greece said that investors have always been cautious with regard to Greece’s ‘diachronic symptoms’ such as bureaucracy, tax/legal system, instability and lack of incentives, which have currently been intensified because of the increased risk related to scenarios about the

“Overseas private investors have placed Greece on their radars, especially with regards to second home properties in prime tourist destinations, and they are looking for bargain deals”

Shaken by political and economic uncertainty, Greece’s property prices have fallen as much as 20% in the first half of 2012 and are expected to drop further, luring herds of overseas bargain hunters to purchase property in one of Europe’s most popular holiday destinations.


GREECE

country’s possible exit from the Eurozone.“Due to the lack of financing, the Greek market has turned into a cash

buyer market. Equity buyers are looking for best prime properties at attractive prices. We have noted that price levels are about 30 - 40% below the peak year of ‘08, and we could say that they are now at the same levels of 2000/2001 (Greece’s Eurozone induction),” Moulas said.

“Overseas private investors have placed Greece on their radars, especially with regards to second home properties in prime tourist destinations, and they are looking for bargain deals. Owners are willing to negotiate lower prices although there is a minimum threshold determined by the following reasons: 1) many properties have been financed, so owners are not allowed by the banks to proceed with a ‘distressed’ sale, and 2) the inelastic cost of construction; offers below that cost are usually unacceptable,” he further commented.

Greece has always been, and will continue to be, a popular tourist destination and the tourism industry in fact concentrates the highest demand from both local and foreign investors, Moulas said.

“Seafront properties (large development plots, villa complexes, hotel units etc.) on island and mainland prime touristic locations are now in demand. The interest comes from countries like Russia, Ukraine, Serbia, Kazakhstan as well as USA, Australia, Italy, Austria and Israel. The most sought-after areas of Greece are the well established tourist locations, such as the Dodecanese Islands (mainly Rhodes, Kos), the Cyclades Islands (mainly Mykonos, Santorini, Paros), the Ionian Islands (mainly Corfu), Crete (South Aegean Sea), Chalkidiki (North Greece) and the Peloponnese,” he commented.

Savills believes that there is great opportunity for Greece to become an established global high-end tourist destination. “During the last years, some of the world’s best resorts have started to operate in the country, including the Costa Navarino luxury resorts on the west coast of Peloponnese (Pylos area, Messenia) operated by Starwood Hotels & Resorts and the Amanzoe Resort managed by Aman Resorts on the east coast of Peloponnese (Porto Heli, Argolida). There are also 5-star resorts around Greece which dispose of 5-star hotel units, signature golf courses, exclusive villas, casinos, marinas as well as potential for future development. Indicatively, we mention the Porto Carras Grand Resort in Chalkidiki (North Greece) and the Elounda Beach Hotels & Villas in Crete (South Aegean Sea),” Moulas explained.

Looking ahead at Greek’s economic performance, Colliers International

said that GDP is expected to grow after 2012 following the restructuring of the economy and increasing competitiveness. “The extent to which this scenario is realised will greatly depend upon the ability of the Greek government to retain and build confidence among international investors and the money markets, as it reigns in government debt and deficits,” the firm said, adding that this could prove positive for the real estate industry with the government recently announcing ‘renewed’ plans to sell government owned and occupied real estate and land holdings to raise capital.

With regards to the privatisation of state-controlled assets, Moulas commented: “The Hellenic Republic, through the Hellenic Republic Asset Development Fund (HRADF) which is the fund responsible for the privatisation programme of the state owned assets (corporations and real estate), is determined to move forward this program, through either sale or long-leasehold of its assets.

There are mature projects that are currently progressing well and it is expected that their implementation will build confidence among international investors and greatly improve the country’s image.”

“The most important project at the moment is the ‘Hellinikon’ (former Hellinikon airport area), a mega project which will comprise the most significant project in Europe (in terms of location and size). The ‘submission of expression of interest’ phase has been completed with success as there was strong international investor interest. The fund is expected to announce the investor list soon. We generally anticipate sufficient demand for investment opportunities from both local and international players as soon as the first privatisation project will start to implement,” Moulas concluded l

Greece Retail Market 2011

Although commercial sales activity decreased by over 50% across all retail sectors, the request from international retailers for stores of 1,200 square metres and above in the central markets of large cities such as Athens, Thessaloniki, Patras, Larissa and Heraklion remained stable. Shopping centres and retail parks have become the preferred format of foreign and local retailers.

Source: Colliers International

Raise your profile by sponsoring or exhibiting at this premier industry event.Contact [email protected]

Raise your profile by sponsoring or exhibiting at this premier industry event.Contact [email protected]

TechnologiesMarket Trends

Marketing BrandingStrategies Stores

C

M

Y

CM

MY

CY

CMY

K

FutureRetail_Cityscape magazineAd_H297mmx210.pdf 1 8/14/12 1:40 PM


ALBANIA

bALkAN bLISSSouth East Europe’s best performing growth market is increasingly expected to attract foreign direct investment, especially in the tourism sector. In the light of the weakening Euro and uncertainty about the common currency, emerging European markets are now seen as positive alternatives to the Eurozone.


ALBANIA

Albania is situated on the south-eastern coast of the Adriatic Sea and in the western part of

the Balkan Peninsula and is bordered by Montenegro to the north, Kosovo and Macedonia to the east, and by Greece to the south. This year, Albania’s population lies at about three million of which around 700,000 live in the capital Tirana.

After the collapse of communism in Europe in the early 1990s, the Balkan state embarked on its journey to become a democratic society and began adopting free-market principles. However, a lack of strong institutions and an underdeveloped financial sector caused the development of fraudulent financial schemes in which many citizens lost their savings. Consequently, civil disorder broke out in 1997 after the collapse of the schemes while the Kosovo crisis two years later further impeded on Albania’s progress towards political and economic stability.

According to the ‘Investment in Albania 2011’ report by global auditing and advisory firm KPMG, in the last few years, major changes have taken place which have led to a significant economic shift in the country. Construction and services replaced agriculture as the main contributors to gross domestic product. Although the global economic crisis affected the local economy as well, its impact was softened by the boost in public spending especially during 2008 and 2009, KPMG reports.

During 2010 and the first quarter of 2011, the Albanian economy already experienced a fairly positive trend; economic activity increased and risk premiums in the financial markets have gradually decreased, data from the Bank of Albania shows.

More recently, the economy has further stabilised and sustained economic growth is predicted. According to the latest IMF forecast, in 2012, Albania’s economy is expected to grow at 3.5 per cent, faster than the economy of any of its neighbouring countries.

“Things are looking up for Albania on what has been a slow economic ride for practically every nation in Europe thus far, and we are certain that this news will further boost confidence,” said Ravin Maharajah, Partner of Lalzit Bay Resort & Spa, a luxury residential development located on Albania’s hotly tipped Adriatic coastline.

Until recently, the Balkan state was mainly considered a destination for the rather adventurous traveller and had to struggle with all sorts of clichés. Things seem to have changed as last year, Albania was chosen as the No.1 Destination in Lonely Planet’s list of ten top countries to visit for 2011, and is increasingly becoming more attractive to tourists who are drawn to the country’s beautiful beaches and mountains, good food and abundance of heritage sites.

Today, the positive economic news comes at a time when the Albanian Ministry of Tourism has begun drafting a national tourism strategy 2013-2020. In May this year, Albania’s Minister of Tourism Aldo Bumci, told Albanian media that there is the need for a well-studied plan, which will provide for a sustainable long-term development of tourism in Albania. The national tourism strategy also covers strategies for the development of mountain tourism, the improvement of service quality in the tourism sector, as well as the promotion of Albania as a tourist destination in general.

“Tourism in Albania continues to grow - over 4 million visitors came in 2011 and given the positive news from the IMF, property investors will be looking for credible investment opportunities to take advantage of this growth,” Maharajah said.

On Albania’s Adriatic coastline, Lalzit Bay Resort & Spa is currently being

developed by CSS Property Partners LP, a subsidiary of Charles Street Securities LLP (CSS LLP), a London based investment company.

“Albania is rapidly coming to prominence among international developers and investors as the new European property and holiday hotspot, and an excellent investment opportunity,” the developer said.

In fact, it seems that during 2011, the tourism industry of emerging European economies in general has performed well. According to Marcus Svedberg, a leading independent asset manager specialising in emerging markets, East Capital, emerging European economies have had around 150 million tourists last year, spending almost USD 100 billion. In the light of the weakening Euro, it seems both holiday makers and property investors are looking at emerging European markets as an alternative to the Eurozone he said.

According to the international property portal TheMoveChannel.com, enquiries for Albania and other emerging European nations of Poland, Czech Republic, Russia, Turkey, Hungary, Romania, Bulgaria, Croatia and Latvia increased by 10% in the first quarter of 2012 compared to the last quarter of 2011.

“Investors are looking towards emerging European nations as a safe haven with investors seeking to take advantage of cheap borrowing costs thanks to the European Central Bank’s new lows in deposit interest rates,” Maharajah said.

“With rising tourism, where travel has been especially strong through Eastern Europe with occupancy rates increasing by 7.5% in early 2012 according to the European Travel Commission, property investors should look no further than the attractive emerging markets in Europe right now,” he further commented.

Further data from TheMoveChannel.com has also shown that the number of enquiries for Eastern European property increased by an impressive 203% last year. As well as this, Eastern Europe’s share of the total number of enquiries on TheMoveChannel.com database has grown by 11% this year compared to the whole of 2011.

“Tourism and investment in emerging European markets particularly within Eastern nations has grown considerably. Albania for instance has experienced a surge in tourism levels founded on not only new regional transport infrastructure and economic improvements but a greater awareness about what Albania has to offer in terms of beaches and history,” Maharajah concluded l

Lalzit Bay Resort & Spa


AMERICAS NEWS

Amtrak recently released a masterplan, developed with global architectural firm HOK and global consulting firm Parsons

Brinckerhoff, to revitalise Washington Union Station. The plan envisions a vibrant intermodal center with increased capacity and renewed commercial activity. It was developed in collaboration with developer Akridge and several regional transportation agencies.

Designed by Daniel Burnham, Union Station opened in 1907 as one of the world’s preeminent passenger rail facilities. A national landmark, the station provides the first impression of the city for many visitors and is one of the country’s busiest multimodal transportation hubs. It currently is operating beyond capacity, serving 100,000 passenger trips per day on Amtrak and commuter trains, Metrorail and buses.

The Amtrak masterplan revitalises the historic station, triples passenger capacity, doubles the number of trains the station can handle and

AMTRAk ANNOUNCES PLANS TO TRANSFORM WASHINGTON’S UNION STATION INTO ICONIC TRANSPORTATION HUb

Job growth in the high-tech sector is fueling strong rental rate growth and declining vacancies in tech-oriented office markets across the

U.S., according to a report entitled ‘Tech-Twenty Office Markets,’ released by CBRE Global Research and Consulting last month.

Between 2009 and mid-2012, high-tech service jobs in the U.S. grew by 9.9%, while non-farm jobs grew by 1.7%. The strong job growth in the tech sector was most impactful in the San Francisco, New York City and Silicon Valley office markets. More far reaching, were the impacts felt in the top 20 tech-oriented office submarkets across the U.S., where 15 experienced increased rental rates over the past two years. Rental growth was strongest in Silicon Valley’s Mountain View submarket, with 83% growth, followed by San Francisco’s SOMA submarket, at 59%; Boston’s East Cambridge submarket, at 28%; and New York City’s Midtown South, at 24%.

“The strengths of these tech-centric office submarkets, with strong rental rate growth and declining vacancies, are major factors supporting

the overall office market recovery,” said Colin Yasukochi, CBRE’s director of research and analysis.

“With the high-tech economy growing nearly six times faster than the national average, we expect that these submarkets will continue to outperform, helping to counterbalance tepid job growth in other sectors and the uncertain economic environment.”

The report also highlighted that over the past two years, vacancy rates have fallen in 18 submarkets, including double-digit declines in the SOMA (San Francisco), Hillsboro (Portland), Redwood City (San Francisco), Northwest (Austin), Southvalley (Salt Lake City) and Lake Union (Seattle) submarkets.

High-tech growth cycle is still in early stages with further growth and business cycles ahead. While economic worry has surfaced within high-tech, both consumers and venture capitalists have responded by focusing spending and funding on key high-tech areas that should fuel further growth, the report concluded l

STRONG jOb GROWTH FUELING U.S. HIGH-TECH OFFICE MARkETS

improves the passenger experience. The plan positions Union Station as an integral part of Amtrak’s Northeast Corridor investment plan by upgrading it to accommodate additional level of tracks, platforms and concourses below the existing track level. These changes will support increasing commuter and intercity rail service with room for future expansion of high-performance, high-speed rail.

At the heart of the plan is a new train shed that will welcome passengers to the nation’s capital. HOK’s design brings natural light into the station and creates better connections to Amtrak, commuter rail, transit and other transportation services. The design integrates new passenger concourses with significant retail and passenger amenities and a series of new street entrances. A planted, vegetated roof retains rainwater and tempers the interior environment.

“We wanted to design a train shed that supports movement and a vegetated roof visible from the street. The undulating green rooftops of the entrance recall the individual tracks below and dispel the impression that the north entrance is a back door,” said Bill Hellmuth, HOK’s DC-based president and design leader for the project. “The overall design underscores the inherent sustainability of mass transit.”

Based on the masterplan’s framework for phased construction over 15 to 20 years, the estimated cost for the station reconstruction and terminal capacity expansion ranges from USD 6.5 to USD 7.5 billion in 2012 dollars. It is estimated to generate a total of USD 14.3 billion (USD 2012) in regional economic benefit through direct construction expenditures and other related economic impact.

“We have a once-in-a-generation opportunity to secure the long-range transportation and economic future of the Washington region and the Northeast mega-region by equipping Union Station for its second century of outstanding service to the traveling public,” said Wayne Striker, a principal in HOK’s New York office. “By creating station and commercial development that is integrated with the surrounding neighborhoods and well-connected to the multimodal regional transportation system, Union Station will become an even greater regional destination.”

HOK is providing master planning, programming, architecture, cost modeling, stakeholder consensus building and project management services for the station reconstruction and expansion project l


BRAZIL

LATIN AMERICA’S SUPERPOWERA rapidly growing middle class coupled with an immense housing supply deficit and incredible growth in house prices present unique conditions for overseas investors looking to capitalise on the boom of South America’s largest economy.

South America’s largest country is one of the world’s fastest growing major economies and some experts even predict Brazil to become

the world’s 4th major economy by 2050. Foreign direct investment into the county is increasing. It is also expected that the economy will benefit strongly from hosting two of the world’s largest sporting events: the 2014 FIFA World Cup and the 2016 Olympic Games.

With regards to real estate, Brazil is increasingly getting into the radar of foreign investors who seek to capitalise on the country’s booming

economy, land and housing market. Currently, there is a massive housing supply deficit of both primary and secondary homes. Additionally, foreign investors can own freehold land and property with full title deeds.

Compared to other destinations, Brazil is still relatively untapped in terms of real estate potential and yet it offers promising opportunities.

Dean Thomas, Managing Director of DLT International, owners and developers of the Palm Springs Natal project in north east Brazil, commented:


“Over the last five years, Brazil has become one of the hottest property investment destinations in the world. It has a booming economy which in 2011 overtook the UK as the world’s 6th largest economy and the effect is that foreign investors are seeing substantial returns from their investment.”

Ray Withers, Director of international real estate agent Property Frontiers, added: “Whilst the rest of the developed world has suffered during the recession, Brazil has shone brightly as a safe haven for many investors due to the strength of its economy. Things are really changing in this BRIC nation with the aspirations of millions of Brazilians rising fast.”

“Traditionally Brazil is not recognised as having a large population of rich investors but times are certainly changing and according to Forbes magazine the country has been creating 19 millionaires every day since 2007. There has also been a huge rise in the middle class in Brazil and with the new affluence of society the pressure on house prices has been significant with prices increasing by over 20% per annum,” Thomas further commented.

According to the Q1 2012 Knight Frank Global House Price Index which

monitors and compares the performance of mainstream residential markets across the world, Brazil has recorded the strongest annual growth worldwide, with 23.5 per cent.

“The surprise from the recent Knight Frank Global Index was that the annual increase in house prices in Brazil was more than double that of India and nearly three times that of Russia. We think that the main reason for this is that there seems to be nothing to stop the growth of the Brazilian property market. There is an 8 million housing shortage in Brazil and at the same time a huge increase every year of the middle class meaning there are simply not enough available houses in the country. The mortgage market in Brazil is also in its infancy representing around 5% of GDP in the country and if this finance market develops the prices will increase even further,” Thomas said.

Sustained economic prosperity over recent years has also altered Brazil’s society profile, changing rapidly from the traditional pyramid shape to a diamond shape with a huge number of people rising to the middle class. Increased access to finance means more Brazilians are in the position to buy a home; great news for the country’s property market.

“Over the last five years, Brazil has become one of the hottest property investment destinations in the world”

BRAZIL


With a population of 1.3 million and growing, Natal is one such destination where demand for housing from the middle classes is not being met. Here, DLT International’s Palm Springs Project is aimed at filling a substantial gap in the property market.

Palm Springs Natal is an exclusive beachside condominium development of 453 fully serviced freehold land plots set within 100 acres. 70 per cent of land plots so far have been bought by middle and upper class Brazilian nationals.

“Before purchasing Palm Springs Natal we looked at over 100 large property developments in Brazil to try and find the most attractive investment for our clients. We decided to base our development on the beach in Natal because of two main reasons. Firstly Natal is called ‘The City of Sun’ with over 300 days of sunshine per year, making it the perfect tourist destination. Secondly, Natal and the north east of Brazil is one of the fastest growing regions in Brazil and offers investors some of the best options for capital growth,” Thomas said.

Recently, Brazil has its eyes firmly set especially on investors from the GCC region. In June this year, Abu Dhabi’s national carrier Etihad Airways, announced new direct flights from the Emirate to Sao Paulo.

Further to this, the Dubai Department of Tourism and Commerce Marketing is said to be planning to open an office in Sao Paulo and Emirates Airline has added Rio de Janeiro to its Brazilian destinations.

Thomas explains that having been in business in Brazil for over six years, he has seen interest from the Middle East rise steadily.

“Over the last year investment from the GCC region has increased significantly and Brazil is working to make sure that this investment continues. In April 2012 Itaú Unibanco, one of Latin America’s largest

banks, took a delegation to Qatar and the UAE in April 2012 and along with the former President of Brazil, Fernando Henrique Cardoso, discussed how the nations could enhance relations and the benefits of investing in Brazil. It was therefore no surprise that two months later Etihad airlines announced a substantial increase in flights to Brazil as many investors from the GCC region are more aware of the fantastic opportunities that Brazil offers,” he said.

Last but not least, hosting the 2014 FIFA World Cup and the 2016 Olympics is expected to significantly boost Brazil’s economy while transforming the country’s real estate and infrastructure environment.

“An example of the impact of these sporting events can be seen in Natal, where the construction of a new world cup stadium and a new international airport are transforming the real estate landscape significantly. At the world cup stadium there are over 1,100 construction workers building 24/7 to build the stadium and create a lasting legacy for the city. The new airport in Natal will also be one of the largest in the world and is expected to take over 40 million passengers a year and make Natal one of the most visited areas in Brazil. There will be a 10 mile tax free zone around this new airport where significant property development is expected,” Thomas commented.

With prices continuing to rise in Brazil and the country’s economy booming, concerns have been raised that there might be a bubble prone to crash. However, real estate experts do not believe that the property market will burst due to the underlying fundamentals of the Brazilian society.

Doug Frye, global CEO of Colliers International, said: “The high price of the property in Brazil is healthy and well founded, and is based simply on supply and demand” l

BRAZIL

Palm Springs Natal

42 I CITYSCAPE I AUGUST 2012

SPECIAL FOCUS

AUSTRALIAForeign investment in Australia’s property markets has continued to increase on the back of the country’s stable economy, fuelled by a boom in the mining and resource sector. With strengthening cultural ties between the UAE and Australia, the land down under presents attractive investment opportunities to GCC investors.


SPECIAL FOCUS

Foreign investment in Australia’s property markets has continued to increase during the first half of 2012, the latest research from Colliers International shows.

According to Colliers, H1 of 2012 has seen AUD 4.06 billion (USD 4.3 billion) worth of foreign investment in Australian property, up from AUD 3.8 billion (USD 4.02 billion) during the first six months of 2011.

Australia’s economic stability, expressed through strong GPD growth (4.3 per cent annually) and a low unemployment rate of 5.2 per cent compared to the 8.1 per cent in the UK and US and 11.1 per cent across the Eurozone (Australian Bureau of Statistics), are the major reasons for the country’s attraction to foreign investors.

James Quigley, National Director of Capital Markets at Colliers International, commented:

“On a risk adjusted basis, Australia remains at the top of the list for many global investors. Foreign investment in Australia’s property markets has continued to increase due to the comparative strength of the Australian economy combined with our transparent market with strong rule of law. The ongoing economic uncertainty in Europe and the US has motivated global investors to re-redirect funds that would normally be bound for these markets.”

Foreign buyers made up 40 per cent of all commercial property transactions in Australia in H1 2012 while Asian investors accounted for 66 per cent of all offshore capital inflows during that time, Colliers research shows.

In the first half of 2012, capital from Europe made up 9 per cent of offshore inflows into Australia while investors from the North American region have made up 24 per cent of offshore capital during that period.

Australia attractive to GCC investorsExperts also believe that investment from the Arab world will increase in the near

future. According to property investment company IP Global, the land down under provides strong prospects especially for GCC investors, stating that there has never been a better time to invest in certain areas of the country.

Despite a general picture of low consumer confidence, IP Global says the prosperity and economic activity in the Australian mining sector is creating a two-tiered economy, where certain geographical locations are out-performing the national average and continue to post strong returns. According to the firm, key mining towns in the country have witnessed an approximate annual growth of 22 per cent over the last 10 years as a result of demand from the resource sector, offering strong property investment opportunities.

Rob Pearce, IP Global Middle Eastern Director, commented: “The urbanisation and industrialisation of China, India and other developing Asian economies are driving the world’s largest commodities boom in history. The total value of Australian commodity exports is expected to more than double over the next 20 years to USD 480 billion. Today the mining industry represents 19 per cent of Australia’s GDP (approximately USD 314 billion), just USD 46 billion less than the UAE’s total GDP for 2011.”

Tim Murphy, CEO of IP Global added: “There are significant investment opportunities in


Australia at the moment. China alone intends to build 37 cities over the next ten years, each at least the size of Perth and three larger than Sydney. This will all require Australian iron ore (for steel), LNG (for electricity) and other commodities. China’s continued growth, backed by their large USD foreign exchange reserve, will further influence the high demand, low supply real estate ratio that Australia’s mining towns are experiencing.”

Recent efforts of the UAE to liberalise its trade policies with many countries coupled with strengthening relations between the UAE and Australia are also expected to fuel investment appetite from the GCC region into Australia.

“With the strengthening trade ties between Australia and the UAE we feel that investment from the GCC region will increase. Several of these groups are already significant investors into Australia both directly and via global Investment Managers. Examples include Abu Dhabi Investment Authority (ADIA) and Abu Dhabi Investment Company (ADIC),” Quigley said, adding that to date, Arab investors have primarily sought office investments.

In the light of Australia’s favourable economic conditions, Quigley said that offshore investors were looking for opportunities across all asset classes and return profiles, and that Colliers expects both direct and indirect foreign capital investment in Australia’s property markets to increase over the course of the remainder of the year.

Office sector most sought afterAccording to the firm, the office market continued to be the favoured

property sector for foreign buyers during the first half of 2012, accounting for 51 per cent of all offshore acquisitions within Australia.

As main beneficiaries of the growth in the mining sector, Perth and Brisbane CBD (Central Business District) are experiencing a surge in demand from mining related office users, Colliers says. Here, net effective rents for Grade A properties jumped by 24 per cent over the 12 months to mid-year and the vacancy rate started to decline dramatically, the Colliers House View for 2012 observed.

“Queensland and Western Australia are receiving increased interest from offshore investors as they become familiar with the strength of the local economies off the back of the resources and mining boom. More broadly, our economy has continued to strengthen from the resources and mining boom which has helped increase demand for high quality logistics properties in key city locations close to transport infrastructure such as Eastern Creek in Sydney and Altona in Melbourne,” Quigley said.

Colliers also expects that the Brisbane and Perth industrial markets will feature a solid take-up of space by mining and resource industrial service and product providers over the coming years.

Investing in mining townsLooking at property investment in the residential market in relation to the

mining boom, placing capital in Australia’s key mining towns can be highly lucrative but is not without risks, experts say.

Richard Sheppard, Managing Director of inSynergy property solutions in Sydney commented:

“The current economic upside associated with the mining sector is undeniable and is clearly the strongest performing sector of the economy. There is little doubt that the associated investment will have strong upwards pressure on property in many mining regions that are blessed with resource wealth for many years to come.”

In order to minimise risks, Sheppard suggests focusing on long term gains.

“For long-term capital gains, the two main factors to look for are long-term operation of the majority of the mines in the area and other economic drivers such as different industries or attributes that will support sound demand for the long term,” he said.

Further to this, some experts warn that it is better to invest in regional centres close to mining towns which are not directly dependent on the mining itself, in order to avoid risk in case the ‘mining bubble bursts.’

While broadly sharing this view, Quigley adds: “There has been considerable work undertaken in recent years by major Australian property groups such as Mirvac and Lend Lease in seeking the right capital structure for residential investment in mining towns. In simple terms, the payback period for these investments needs to be much shorter reflecting the expected life of the mines providing the opportunity.”

Positive outlook for 2013 and beyondLooking ahead for global capital investment in Australia, Colliers says

that the strength and stability of the Australian economy is forecast to see foreign capital continue to focus on Australian property markets into 2013. In addition to this, a lack of construction activity and ongoing stable tenant demand is expected to see vacancy rates tighten across the majority of property sectors, leading to rental growth across most sectors which in turn will further provide another positive driver for foreign property investment in Australia.

“In the future, we feel the office market will continue to be the favoured property sector due to secure long term leases combined with good prospects of medium term rental growth in most markets. Once offshore investors are familiar with our property markets we see them diversify their portfolios in other asset classes across Australian capital markets,” Quigley concluded l

SPECIAL FOCUS

James Quigley, National Director of Capital Markets, Colliers International


ARCHITECTURE

DNA Barcelona Architects is a studio of architecture, planning, landscape and interior design with projects around the world,

primarily located in Spain, North and Central Africa, the Middle East, South Asia and Central America. In the Middle East, DNA Barcelona Architects are involved in numerous prestigious projects including the Lusail development in Qatar, Dubai Waterfront, Dubai Palm Jebel Ali and The World Norway Island development as well as ADEC in Abu Dhabi.

Founded by leading architect Aryanour Djalali in 2000, the firm today consists of a creative and multidisciplinary team of more than 30 professionals. According to Djalali, DNA translates ideas into projects with a sense to make them real; every project is unique with its own personality, its own soul and its own DNA.

Djalali is a man with great enthusiasm and a strong vision of what he wants to achieve. “My work is the marriage of perseverance, imagination and hard work. One of my favourite phrases is ‘the future belongs to those who believe in the beauty of their dreams.’ Architecture allows me to cross the boundary into industrial design and corporate image design, it also allows me to translate my ideas at different scales and take on challenges that were previously deemed impossible,” the architect said.

“Our team has been creating projects for 12 years now with a lot of success and we continue to make huge strides in our progress in our pursuit of perfection. Moreover, step by step, our designs have gradually started opening to a wider audience, with projects located all over the world,” Djalali added.

Global cities represented through architectural iconsDuring the course of history, buildings and monuments have been

erected and have marked the evolution of several generations. According

A REAL vISIONBorn from a vision to create unique architectural designs in an effort to counter the homogenisation of urban landscapes caused through globalisation, DNA Barcelona Architects specialise in creating iconic buildings that become a reference in the skyline of their respective cities.


to DNA, over time these ‘architectural icons’ have become urban nodes which, in some cases, have come to mark the identity of entire cities: the Eiffel Tower in Paris, Sydney’s Opera House or New York’s Empire State Building for example.

Djalali says that over recent years, the processes of globalisation have revived an impulse to represent global cities through unique architectural designs that encourage urban life and the flow of tourism.

“Globalisation has never been as strong as it is in our world today. Cultures, languages, styles and trends are merging on all levels at lightning speed. Globalisation is transforming the world such that it is becoming a more homogeneous place and as a result, some places are starting to lose their distinct identity,” he said.

Within this context, DNA specialises in creating iconic buildings and projects that become a reference in the skyline of their respective cities. Djalali believes it is important for a building to establish its unique identity as it allows the building to personalise itself in our globalised world.

Inspired by natureDNA’s proposals are the merger between the organic forms of nature,

rigorous studies of the urban context and the vital inclusion of different social and cultural realities within their own environment and design concepts.

The firm says it has focused much of its line of work in the study of different forms of nature with the intention of using them as metaphors and inspiration for their projects. Ocean waves, desert dunes, exotic flowers, rock formations, among many others, have served as inspiration and reference for conceptualising and developing various projects.

The powerful lines and structures of these forms of nature have allowed not only for interesting formal results, but in many cases, for clear applications in topographically difficult terrain adjustments and bold functional responses in different areas, DNA explained.

Recently, the firm has designed two innovative projects in the MENA

region, both inspired by the concepts mentioned above: The Hammamet development in Tunisia and the Grand Plaza Hotel in Algeria.

Hammamet, TunisiaThe development will be a touristic complex with hotel and residences, a

leisure park and beach area and covers a built-up area of nearly 346,000 square metres.

“The Hammamet development is a new lifestyle residence which is brought into life with its characteristic organic forms as well as imposing and creative volumes. The iconic architectural language and the luxurious amenities offered by the complex are what define the project,” Djalali said.

Similar to the Grand Plaza Hotel, Hammamet resembles an imposing ship anchored in the sea. The curved shape of the ‘deck,’ used for leisure activities, gives a solid basis for the tower which houses the more private areas such as the hotel and residence part.

DNA aims to position its Tunisian project on the world map and establish its identity as a new landmark on the global architectural map.

Grand Plaza Hotel, Chéraga, AlgeriaDNA says the Grand Plaza Hotel has been specifically designed for the

city of Chéraga to perfectly fit its environment. With a Mediterranean climate, very pleasant temperatures, and a location of about 150 meters above sea level, Chéraga creates a perfect environment for the hotel, the firm said.

“The Grand Plaza Hotel’s design fits into its environment thanks to its ship-shaped design. Chéraga is a coastal city and the sea - apart from being a visual delight to the eyes - is a symbol for adventure and tranquility to the human psyche. The breathtaking views of the sea from the higher levels of the building have been taken in consideration throughout the entire design process. Moreover, the area where the project is sited is called ‘Le Grand Vent,’ which means ‘the big wind.’ This has inspired the design of

“As an architect, I have the tools to help cherish the values that are held with high regard in Middle Eastern cultures”

ARCHITECTURE


the building’s ship-like shape, as though the building is a ship sailing on the sea. On a poetic and symbolic level, it is a futuristic boat navigating into the sea of future,” Djalali said.

Fusing organic forms of nature with the specificities of its urban context, the Grand Plaza Hotel is designed so that each space is able to create different sensations to the users.

The Middle East, a region of unique cultural heritage When asked what makes the Middle East an interesting and attractive

region for innovative architectural developments, Djalali commented:“The Middle East is a region with a strong and distinct cultural heritage,

where cultural and other values are very intense and important in everyday life as well as in society. I believe that these values need to be treasured, preserved and cherished in a world where many values in our society are slowly declining and disintegrating on many levels. As an architect, I have the tools to help cherish the values that are held with high regard in Middle Eastern cultures. This may be another reason for the need to design singular and iconic buildings in that area: to bring the world´s gaze and attention to this region of unique cultural heritage and values.”

Architecture in the 21st centuryAs architectural styles have changed and evolved over centuries, each

historic era bears its own distinctive characteristics when it comes to design. For Djalali, the excitement of contemporary architecture lies in its

conceptual freedom.“The 21st century is marked by total conceptual freedom in the design

field. It is eclectic as different elements can complement each other with no pre-conceived ideas as to whether these elements are compatible. This is how forms such as of the Hammamet Resort or the Grand Plaza are possible in their respective surroundings. Initially they may not seem compatible, and yet, when the designs are placed into the site, both projects fit in perfectly with their environment, become part of the landscape and merge seamlessly into the urban fabric,” the architect said.

Commenting on the future of architecture in the 21st century, Djalali believes the challenge the industry faces has less to do with the continuous delivery of original designs, but rather with a responsibility towards our environment.

“Sustainable design is still not as evident as it should be from many points of view. I believe that, as architects, we also have the responsibility to try and be ‘greener,’ to make a difference in the environment and in the world we live in,” he concluded l

“Sustainable design is still not as evident as it should be from many points of view. I believe that, as architects, we also have the responsibility to try and be ‘greener,’ to make a difference in the environment and in the world we live in”

ARCHITECTURE


SUSTAINABILITY

Masdar City is a low-carbon, low-waste sustainable urban development launched in 2006 as one of the projects under

Masdar—Abu Dhabi’s multifaceted renewable energy company wholly owned by Mubadala, the strategic investment company of the Abu Dhabi government.

“The rationale for the Masdar initiative was to establish a multifaceted approach to research, development and commercialisation of technologies in the emerging renewable energy and clean technology sector. As a subsidiary of Mubadala, Masdar also supports the Abu Dhabi government’s economic and energy diversification plans,” Masdar said.

The USD 19 billion project was launched by Abu Dhabi’s leadership as part of its 2030 vision, with the goal to increase the non-oil share of the economy from 40 per cent to 60 per cent.

Masdar Chairman Ahmed Ali Al Sayegh commented: “As a major hydrocarbon exporter, Abu Dhabi has always been a global energy player; through Masdar, the Emirate not only demonstrates responsibility as an oil and gas producer, but also extends its energy leadership into the vitally important field of renewable energy.”

Masdar operates through five integrated units, including an independent, research-driven university and seeks to become a leader in making renewable energy a real, viable business in Abu Dhabi.

Designers & ArchitectsThe Masdar City masterplan and the Masdar Institute design

were developed by renowned international architecture firm Foster + Partners. Infrastructure for the city has been designed by UK Engineering firm Mott MacDonald. The public realm Landscape Strategy was developed by EDAW; lighting by Spiers & Major Associates (SAMA), and wayfinding by Endpoint Gulf, in collaboration with Citi ID.

The Siemens Middle East Headquarters Building was designed by Sheppard Robson International, in collaboration with AECOM.

Many other local and international firms have contributed to the design and planning of the city and many new ones will be invited to contribute in the future, Masdar says.

Masdar CityAccording to Masdar, “Masdar City tests and pushes the

boundaries of energy efficient building technologies, urban design and sustainable construction materials, helping Abu Dhabi retain its leadership in the energy sector by offering like-minded partners a test bed for sustainable innovation in the cleantech cluster at Masdar City.”

Situated 17 kilometres from downtown Abu Dhabi, Masdar City is a high-density, pedestrian-friendly development where current and future renewable energy and clean technologies are showcased, marketed, researched, developed, tested and implemented.

The city will integrate the full range of renewable energy and

MASDAR CITY Abu Dhabi’s vision to create one of the world’s most sustainable cities in the heart of the UAE.

Image Credit: Nigel Young Foster + Partners


SUSTAINABILITY

sustainability technologies, across a living and working community. As with most dynamic technology clusters, the city has a top-notch research university that is a source for innovation, technologies, R&D and highly skilled graduates.

Leading multinational companies in the cleantech sector, as well as small- and medium-sized enterprises and entrepreneurial start-ups will locate R&D labs, marketing offices and headquarters in the city. The International Renewable Energy Agency (IRENA) will base its headquarters in the city, while GE will build its first Ecomagination Centre at Masdar City.

Phase 1 of Masdar City is expected to be complete by 2018. By then, the city is expected to have 7,000 residents and 15,000 commuters. At full-build out expected in 2025-30, the city will host 40,000 residents and 50,000 commuters.

At the moment, Masdar is providing residence only for the use of the Masdar Institute. The first non-university residential buildings will be completed as part of Phase 1 by 2015.

“While building Masdar City, the relationship between various pillars of sustainability– economic, environmental and societal–have been studied in detail and efforts have been put in to optimise the balance. Building the city in phases allows Masdar City to incorporate cutting-edge technologies into each new phase,” Masdar commented.

“Masdar City is being built as a city of the future through a model from which the world can learn. As a greenfield sustainable development and open technology platform, we aspire to be a role model for other cities. Masdar has combined higher education, R&D, early-stage venture capital, large-scale renewable development and carbon reduction strategies as a unified approach to sustainability. This comprehensive, holistic approach gives it an edge over other sustainable mixed-use developments,” Masdar further commented.

Masdar InstituteThe Masdar Institute, developed in cooperation with the

Massachusetts Institute of Technology, is an independent, research-driven graduate institute already operating in Masdar City, and its students are the city’s first residents.

Focused on the science and engineering of advanced alternative energy, environmental technologies and sustainability, the Masdar Institute will be at the heart of the home-grown research and development community at Masdar City and will eventually host 600 to 800 Master’s and PhD students and 200 faculty.

The graduate programmes integrate education, research and scholarly activities to prepare graduate students to be innovators, creative scientists, researchers and critical thinkers in the areas of technology development, systems integration and policy. Masdar Institute partners with industry and government to foster a diversified knowledge-based economy in Abu Dhabi and the UAE.

As a crucial source of research and development, the institute is fundamental to Masdar’s core objectives of developing Abu Dhabi’s knowledge economy and “finding solutions to humanity’s toughest challenges.” The university aims to become one of the world’s leading academic institutions in its field.

During the 2010-2011 academic year, Masdar Institute had 153 students from 32 countries. It expects to have 600 students in five years.

Siemens HeadquartersIn October last year, Siemens broke ground for its Regional

Headquarters at Masdar City, which will occupy 18,000 square metres and are designed to accommodate nearly 2,000 Siemens staff.Image Credit: Nigel Young Foster + Partners




SUSTAINABILITY

“The urban sustainability standards for Masdar City and Siemens are well aligned. All Siemens buildings meet sustainable standards, with its headquarters, now under construction, targeted to be LEED Platinum certified and have 3 Pearls according to the Estidama Pearl Rating System,” Masdar said.

Developed by the U.S. Green Building Council, LEED (Leadership in Energy and Environmental Design) consists of a suite of rating systems for the design, construction and operation of high performance green buildings, homes and neighbourhoods. Similarly to LEED, the Pearl Rating System is Abu Dhabi’s green building rating system and has various levels of certification, ranging from one to five pearls.

“In Masdar City, we are already experiencing 50% less energy consumption and 55% reduction in the building’s external heat gain, in comparison to standard residential buildings in Abu Dhabi. Our low flow water saving fixtures have decreased potable water use by up to 54%,” Masdar said.

“As a sustainable city we will continue to support clean technology companies and the companies doing business in the renewable energy industry,” Masdar further commented.

Dr. Roland Busch, member Siemens AG’s managing board, said: “Being a green infrastructure pioneer, Siemens is keen to further intensify the collaboration with Masdar and other stakeholders to develop and showcase cutting edge technologies in Masdar City”.

“Financial viability plays a major role for firms when thinking about ‘going green’ or not,” said Chris Wan, Manager of City Design at Masdar City, adding that Siemens looked at several other non-green buildings in Abu Dhabi before making the decision to establish itself in Masdar City.

Retail in Masdar CityAs part of its community, Masdar City will include a number of retailers.

Some of those already operating include Caribou Coffee, health insurance provider Daman, telecom provider Etisalat, Sumo Sushi & Bento, express delivery company Aramex and National Bank of Abu Dhabi.

According to Masdar, “Masdar City offers a creative and entrepreneurial atmosphere where businesses can thrive and innovation can flourish.”

As a special economic zone, setting up business in Masdar City offers several benefits to retailers:

100% foreign ownership, quick and easy set-up with a one-stop shop for registration, government relations and fast-track visa processing, zero percent import tariffs, zero percent taxes on companies and individuals, no restrictions on capital movements, profits or quotas, no currency restrictions, hiring of expatriate staff and the opportunity to maximise corporate social responsibility objectives, Masdar says.

ChallengesHowever, designing and building a sustainable project of the scope of

Masdar City in this part of the world is not without challenges. According to Masdar, some of the challenges it faces include the lack of a regulatory framework, a low level of awareness about the importance of energy efficiency and methods for energy conservation and renewable energy in developing nations, and a growing energy demand (mostly based on domestic fossil fuels) due to growing economies and increasing population.

In addition to this, there is a need for a new and evolving clean technology industry supporting environmental awareness and an urgency for companies and governments on the global scale to develop and update their knowhow and policies, Masdar says.

“The Masdar initiative has already generated awareness in the region. While rising energy demand may encourage the use of more fossil-fuel based energy, sustainability provides governments and private sectors with an alternative route that preserves natural resources for the earth’s sustainable future,” Masdar concluded l

Image Credit: Foster + Partners




RETAIL

Global EconomyGlobal markets are bifurcated into two general categories, mature

markets like Europe and North America and emerging markets like China, India and Brazil. Year-over-year GDP growth has slowed in all markets, but less so in the emerging ones. Sovereign fiscal debt and deficits have weighed heavily on all global economies, constraining growth and undermining the momentum of the nascent economic recovery. GDP growth forecasts for 2013 tell the tale, with mature economies facing an average modest growth rate of 2.1% and emerging countries expected to slow to a still healthy rate of 6.3% (see chart below).

Private consumption in mature markets as a share of GDP is on average about 65%, much higher than in emerging markets like China (22%) and India (41%). These markets represent trillions of dollars of untapped private spending; presenting a tremendous opportunity for growth. Additionally, per-capita income in emerging markets is expected to increase significantly between 2010 and 2020. India’s per-capita income is projected to expand by a staggering 200% and China’s by 125%. Comparatively, per-capita income in the UK and United States is projected to grow about 20% over the same period (see chart 2). Economic growth and the expansion of a middle class will drive private spending growth in emerging markets.

A GLObAL PERSPECTIvE ON RETAIL REvIvALA recent study by global real estate solutions provider Cushman & Wakefield reveals how the business of retail has changed in the light of economic, social and technological changes. While the world is becoming a borderless global marketplace, mature retail and gateway cities of North America and Europe serve as the foundation while emerging markets including China, India and Brazil are the primary drivers of growth and are affecting the retail revival currently underway.

EU US Japan China Brazil UK India

Untapped Opportunity 0 0.0215 0.07 3.37 0.02 0.16 0.39

Current Private ConsumpFon 12.9 9.6 3.7 1.7 1.5 1.4 0.65

0

2

4

6

8

10

12

14

Trill

ions

Private Spending Untapped Opportunity by Market

0 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09

EU Japan Canada US

Mature Overall

UK Central & Eastern Europe

Russia ASEAN

LaGn America and Caribbean Emerging Overall

India China

Y-‐o-‐Y 2012-‐2013 GDP Forecast

6.3%Average 2013 GDP growth forecast for emerging markets

2.1%Average 2013 GDP growth forecast for mature markets

Retailing TrendsMirroring the performance of retail in mature and emerging markets,

retail sales growth over the last year was also bifurcated, creating a ‘barbell of prosperity’ with high performing retailers servicing two ends of the demand spectrum. Luxury retailers like LVMH and Nordstrom as well as discount retailers like Costco and Target are showing strong revenue growth and outperforming their more ‘middle-market’ peers. To enter the next phase of recovery, there needs to be growth in the middle of the barbell, which has been lean or negative. This trend is likely to gain traction

Chart 2


RETAIL

as consumer confidence improves and middle-market retailers like GAP enter emerging markets with expanding population bases and growing economies.

John Strachan, Global Head of Retail at Cushman & Wakefield, commented: “The so called ‘barbell’ has become particularly evident in western markets – notably the US – where luxury and discount ends are thriving but the middle market is squeezed. It is up to retailers to respond and many succeed e.g. H&M, Inditex etc.”

In general, consumer confidence is considerably lower in Europe than in the Americas and Asia. This negative sentiment is attributed to the unsettled economic climate and also to the greater number of mature economies in Europe, which are experiencing low population and slow income growth. Asia, on the other hand, with its fast growing economies, has a much higher rate of consumer confidence. In addition, between 2010 and 2020, it is projected that 1.3 billion more people in the world will have disposable incomes of greater than USD 5,000, which will introduce an entirely new population base that will contribute significantly to consumer spending. Nearly 66.5% of those new consumers will live in India and China.

What does this mean to their respective retail markets?“Most global brands are strongly focused on China and particularly the

cities that offer a choice of organised retail destinations i.e. Hong Kong, Shanghai and Beijing. India, with the largest and still growing middle class consumer market must also be one of the most important growth areas for international brands but it is still more difficult to enter,” said Strachan.

The massive developing middle class in emerging markets often does not have easy access to stores that carry the products seen on TV and the Internet. Shopping online opens the door to the world of products regardless of where consumers live. This fact, and the lack of landline infrastructure, is driving the strong growth of e-commerce in markets like India where it is projected to grow 57.3% between 2011 and 2016. By comparison, online shopping in the United States is expected to grow by only 11.2% during the same period.

Changing Retail StrategiesTo both capture new customers and retain those they have many retailers

are faced with changing their strategies and operating models. Bricks-

and-mortar retailers, for example, are embracing the high-technology shopper by combining the in-store experience with the convenience of online and mobile shopping. Across the board, retailers are experimenting with new technology and formats by developing joint online and physical store marketing campaigns with omni-channel retailing, and increasing excitement with pop-up stores and social media.

In the face of slow economic recovery and increased competition from online shopping, retailers are evolving their physical store formats to survive. Some see the role of physical space shifting from a transaction model to an experiential one. In many cases, retailers are shrinking real estate footprints to improve operating efficiencies, and also using the smaller formats to enter urban markets.

Going forward, retailers will be challenged to stay current with new technology, incorporating it into their own formats, and creating new and interesting shopping experiences for customers.

Retail InvestmentRetail investment has recovered since reaching the bottom of the trough

in 2009.Globally, the Americas remains the most attractive retail investment region,

with a 37% increase in dollars invested in retail properties and a 53% increase in the number of properties sold year-over-year in 2011. Investment volume growth in Europe was much slower in 2011, increasing only 14%, and at the same time the number of properties traded declined by 26%.

Global cross border activity where an investor from one region purchases property in another region increased 25% year-over-year in 2011 to USD 134 billion for all property types. While spread across all continents, the highest share of buyers was in EMEA with 53% (USD 72 billion) followed by APAC with 33% (USD 44 billion). The Americas were only 14% of the total volume. The Americas, however, saw the greatest percentage increase in cross border investment volume with investment activity up USD 9 billion (87%) from 2010 to 2011. Retail investment continues to focus on ‘gateway cities’ like Hong

Kong, London, New York City and Tokyo. In emerging markets, cities such as Sao Paulo, Beijing and Moscow are of strong interest to luxury retailers looking to capitalise on the spending habits of the growing number of upper income earners.

The reason for the increase in cross border activity is market saturation, as Strachan explains:

“Established western brands have saturated their own markets – and in many cases are having to rationalise in their home markets – but look internationally for their growth. The focus is on major new markets like China, India and Brazil, and more generally on global cities.”

A number of North American and Asian cities have already recovered and are experiencing rapid price appreciation and cap rate compression. Although select cities may still be seeing price appreciation, Europe is at the bottom of the recovery valley, and it may remain there for a while. South America, meanwhile, is experiencing rapid expansion in primary markets and is working its way up the slope with a gradual recovery in property values in secondary locations.

The rapidly changing dynamics in the global economy encourage divergent cross-border strategies that coincide with emerging markets. In developing regions like South America and Asia, it appears the markets will continue to expand with additional investment of both domestic and cross border capital.

Commenting on the nature of the world’s future most attractive cities for retail investors, Strachan said:

“There is a clear emergence of true global cities around the world which are the focus for the international brands flagship operations. These will be the places where the growing number of international brands will want representation and I see no let up in that demand for the foreseeable future.” l

1.3 billionBetween 2010 and 2020, it is projected that 1.3 billion more people in the world will have disposable incomes of greater than USD 5,000


INDUSTRY INSIGHT

How would you describe your role?In my new role as Associate Director, I have now accepted the added

responsibility for broader sales strategy for both rental and leasing departments for Asteco’s comprehensive real estate portfolio.

On a day to day basis I address sales team issues, direct the team strategy, meet with landlords in our existing portfolio as well as develop new business potential.

Could you give us a rundown of what is a typical day for you?Naturally I try to plan my days in advance, although having said that, my

agency job demands that at times, I should be available at a moments notice.

The first half of my mornings are usually spent replying to my emails, making follow up calls and confirming my appointments for rest of the day. In terms of meetings, on a typical day I would conduct anywhere between four to five, usually with different internal departments and or clients regarding various issues.

On most days I am in the office at 8 am and by 9 am the first meeting would commence, it’s usually a communications meeting with the leasing and sales teams to confirm our sales targets for the day and review our weekly and monthly progress.

Asteco lease and manage a wide portfolio of projects, each with its own site office which I need to visit daily to ensure I am fully aware of all the project updates and issues, which if need be, can be addressed in a timely manor while im on site

After my morning meetings have finished, I take half an hour to organise my next set of appointments and circulate important information to relevant staff members. This ensures a consistent flow of information throughout the company and means any time-sensitive issues can be addressed.

Straight after my lunch break I try to set time aside for developing potential new business, review any updates of rents and projects and sometimes conduct site visits of portfolio properties which are still in the construction phase.

By 4pm it’s time for me to touch base with the staff and see if the daily goals have been met as well as any other significant contract wins or announcements that have been made during the work day.

Finally I would spend the last hour of my day ensuring no enquiry or request is left outstanding and create an action plan for the following day.

What do you enjoy most in your job?Meeting new people and working on new projects. It gives me great

satisfaction and pride when I am involved with a project from its inception, and remain part of the process all the way through to the moment it is completed and handed over to the tenants or end users.

What are the main skills your role requires?In my opinion there are a few essential traits someone in this role must

A DAY IN THE LIFE OF... A PROPERTY ExPERT

have. Firstly they need to be a people’s person. Secondly they must have vast market knowledge and make sure they are aware of everything that is happening in the market at all times. And last but by no means least they need to be able to solve a problem in a timely and professional manner.

A person should also be goal oriented, positive, determined and focused.

What would you describe as the major challenges in your role, particularly in this part of the world as opposed to elsewhere?

The condition of the market and how it can fluctuate so dramatically can be a challenge at times. Also, in most cases there is a mismatch between someone who is selling a property and someone buying, as you can imagine this can cause some issues.

One more challenge is the reluctance to share information throughout the marketplace. Sometimes it can be very difficult to source accurate information from landlords or developers making it difficult for our research department to get an accurate picture of what is really happening in the market.

If you weren’t a property expert, what would you be?The thought of a life outside of property management is madness!

Although when I was younger I was very interested in studying law l

vineet kumarAssociate DirectorAgency at Asteco Property Management


myCityscapeMaximise your success at Cityscape Global 2012 with our integrated networking platform and mobile application myCityscape. This unique benefit for registered visitors, conference speakers, delegates and exhibitors helps you connect and interact with like-minded industry professionals during, and after the event.

Cityscape Global Exhibition Cityscape Global allows exhibitors to showcase their projects to a prestigious audience and build relationships with new clients. This year, a special pavilion will be dedicated to Turkey as the ‘Country of Honor 2012.’

Investor Round Tables The Investor Round Tables offer an exclusive opportunity for senior level industry executives to discuss key issues affecting real estate investment. Sessions last for one and a half hours and attendance is by invitation only.

ConferencesThis year, Cityscape Global will host three different conferences, providing insightful presentations and strategic debate: the Global Real Estate Summit, Retail City Conference and the World Architecture Congress.

Cityscape Awards for Emerging MarketsCelebrating excellence in real estate development and architecture, the 2012 Cityscape Awards for Emerging Markets reward design visionaries and forward-thinking leaders in the international development arena. The Awards will be followed by a Cocktail Party, taking place right after the official ceremony.

EVENT PREVIEW

If you would like to participate in any of these events, please contact the Cityscape Global team on [email protected] or visit www.cityscapeglobal.com to pre-register your visit today.

Cityscape Global 2012Dubai International Convention and Exhibition Centre, 2 - 4 October 2012

Now in its eleventh year, Cityscape Global will once again bring together key industry professionals in the region’s largest and most influential international real estate event.

For more than a decade, Cityscape Global has been the annual meeting point and industry barometer for key real estate investors, developers, regional and city investment promotion authorities, architects, designers and other real estate professionals to drive growth in real estate investment and development


World Architecture Congress 2 - 4 October 2012, Dubai International Convention and Exhibition Centre

Despite challenging market conditions, shifting economies and repeated financial crises, architects are proving adamant in their will to overcome these challenges. Iconic projects and award-winning work is being presented everywhere by architects who know how to survive and thrive in a difficult economy.

The eighth edition of the World Architecture Congress will examine and overcome the current challenges in the field of architecture, determine new standards in international best practice and provide applicable strategies to venture into emerging markets and design sectors, allowing you to carve new, profitable approaches for moving forward in a constantly shifting environment.

Arq. Ricardo RondonPrincipal and Senior Vice President, HKS, Mexico

Ricardo Rondon manages HKS Mexico City office, which overlooks all of Latin America. With 19 years of international experience, Ricardo is versed in all phases of architecture including planning, design and documentation as well as business development. He has been actively involved in projects with multinational Latin American companies such as Grupo Modelo, CIE, Pellas Group and AMResorts.

Conference topicsDuring the ‘Emerging Markets Panel Session,’ Ricardo will talk about how the internal market is growing in countries like Mexico, Brazil and Colombia, analyse the influence of Europe and United States in the region, highlight what sectors provide the biggest opportunities, speak about sustainable design in the region and touch upon the challenges the markets face.

CONFERENCE PREVIEW

Cityscape Global Conferences Your conference overview with a snapshot from our international expert speaker panel

Global Real Estate Summit2 - 4 October 2012, Dubai International Convention and Exhibition Centre

The global real estate scene is witnessing volatile changes amidst an ever-shifting international economy. The real estate investment and development landscape has changed, upsetting traditional investment locations and giving rise to new emerging markets that offer viable profitable returns.

The Global Real Estate Summit will tackle the major challenges facing the regional and international investor and developer, and answer the biggest questions facing your business. Our expert international speaker panel of over 50 leading industry specialists will discuss, debate and find solutions to all your urgent challenges.

Panos LoupasisSenior Development Director, Middle East & Africa, Wyndham Hotel Group, UAE

Panos came to the Middle East in 2003 as Revenue Manager for the Novotel and Ibis World Trade Centre in Dubai before moving into the field of business development with Holiday Inn Express where his contribution was instrumental for the introduction of the brand in the GCC region. His role at Wyndham Hotel Group is to drive growth in the Middle East and Africa by focusing on new markets and the introduction of new brands under both management and franchise contracts.

Conference topicsIn the sector analysis session on Dubai’s hospitality sector, Panos will speak about franchising versus management contracts, developing the right product (size, positioning, definition) vis-à-vis a selected location, give advice on the steps that are necessary to develop a hotel and analyse Dubai’s demand and supply (SWOT).

Retail City Conference2 - 3 October 2012, Dubai International Convention and Exhibition Centre

As the retail sector in the MENA region is expected to reach over USD 1 trillion by 2014 according to research, mall developers are closing in on this lucrative market by developing several shopping malls across the region and retailers are eyeing expansion opportunities with new stores in their pipeline.

Now in its fifth year, the Retail City conference brings together hundreds of the most active and influential leaders of Middle Eastern and international retail real estate to examine the current dynamics of the region’s market, source new business and discuss strategies for capitalising on the lucrative emerging opportunities.

Humaid Zayed AlnuaimiHead of Leasing, Retailcorp Malls, UAE

Humaid has been working in the shopping mall industry for the past 5 years with an exceptional amount of knowledge in retail leasing in Dubai. Currently the head of leasing in Ibn Battuta Mall, Humaid has introduced more than 30 new brands to the mall and has fully leased the new Community Mall retail development of Nakheel. In addition, he has maintained an excellent relationship with retailers around the country, a key point in becoming successful in the shopping mall industry.

Conference topicsIn the panel on ‘Improving the landlord and tenant relationship,’ Humaid will speak about mutual responsibilities, the importance of maintaining a good “working” relationship between the retailer and the landlord, identify elements that foster a good relationship between the retailer and the landlord andspeak about the landlord and the retailer beyond their contractual relationship.


IN THE NEXT EDITION

DECEMBER EDITORIAL HIGHLIGHTS

Special Focus: South Africa

South African business has become increasingly integrated into the international community and foreign investment into the area has grown substantially over the past few years as a result. In recent times, the real estate industry has also witnessed a revival and the market presents favourable investment opportunities.

Jordan

With a young demographic and the country’s ongoing strategy to push comprehensive economic reform, the Kingdom is placing itself closer on the international investment radar while several large scale real estate developments are underway.

Philippines

Mid this year, foreign investment into the Philippines was the highest in almost two years. In July, credit rating firm Standard & Poor’s raised the country’s credit rating from two notches to just one notch below investment grade, citing improving macroeconomic fundamentals. With such positive news, international real estate investors have their eyes set on the southeast Asian islands.

Poland

2012 has seen strong investor interest in Poland so far, especially in the retail sector. Supported by higher GDP growth than in most European countries, rising employment and increasing retail sales, investment sentiment is expected to remain highly positive.

A Middle East perspective on global real estate

Cityscape Magazine December 2012The Cityscape December magazine will provide a review of this year’s best performing global real estate markets and feature a global real estate investment outlook for 2013. In addition to our coverage of some of the world’s most attractive real estate markets, enjoy our regular features on architecture, retail and sustainability.