Cushman Wakefield Investment Atlas Summary 2013 FINAL

international investment atlas summary
A Cushman & Wakefield Research Publication
2013
International Investment Atlas Summary 2013
Introduction
This report has been prepared by Cushman & Wakefield to provide an introduction to the worlds key commercial real estate investment markets in 2012 and an indication of activity in 2013.
The report provides an overview of global activity together with market by market profiles for 51 countries. It covers the main areas of activity, showing the size and status of each and giving a flavour for the real estate sectors and a brief view on where each is heading. The information used is an initial estimate made in February 2013 and hence may be subject to change. With particular reference to investment volumes, where the data was sourced from RCA for EMEA and the Americas (ex USA), the data is at 13 February and for Asia Pacific and the USA as at 19February. The report summary refers to capital flows incorporating all sectors, including multifamily residential and development sites given their importance in key global markets. The individual country pages indicate volumes excluding multifamily residential. All investment volumes are quoted pertaining to deals of US$5 mn and above. In addition the report contains summary global yield, investment volume and lease term tables. The final section of the report provides a range of contact points for Cushman & Wakefield Research and Capital Markets globally.
Istanbul Turkey
For more information please see our dedicated Investment Atlas website www.investmentatlas.cushwake.com
1
Global investment activity

GLOBAL SUMMARY
The global property investment market saw a modest 6% rise in activity over the course of 2012, with volumes up to US$929 bn. Thisestimate includes revisions made by RCA to their published year-end numbers, prior to which the global estimate was US$907 bn, excluding development sites in mature markets. However, the lasting impression of this year will not be one of steady growth but rather ofan exceptionally busy year-end masking three quarters ofquite stagnant levels of performance, in what for most markets wasa difficult year. Increased seasonality has in fact been a growing feature of the global market for some time with 2012 seeing the third 4th quarter spike in a row nonetheless there is still every reason to view these figures more positively and believe that a modest recovery is starting to get under way. China and the USA were two key engines of this strong finish the former benefiting from a record high in land right sales and the latter seeing a rush of activity to beat year-end capital gains tax hikes. However, growth was far from limited to these two global heavyweights and a range of other markets in all regions saw a final quarter rally. What is more, a true change in market confidence and indeed momentum seems to have been confirmed in the early months of 2013 as major global risk factors are seen to be receding albeit not yet disappearing. Figure 1 Global Property Investment Volumes
(all sectors)
400 Quarterly Investment Volumes (US$ bn) 350 300 250 200 150 100 50 0 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12 7.8% 7.6% 7.4% 7.2% 7.0% 8.2% All-sector average prime yield 8.0% Rio de Janeiro Brazil
The market to date has remained selective and focused on core. By region, North America and developing Asia drove the overall global rise, with mature European and Asian markets largely flat and emerging markets in Europe, the Middle East, Africa and Latin America all down. By country, the USA and Mexico were the biggest gainers in the Americas; in Asia, Malaysia, Vietnam, Australia and New Zealand enjoyed the strongest expansion; and in Europe, Finland, Norway, Switzerland and Ireland saw the highest growth rates. Additionally, the more marginal increases in big markets like China, Germany and Hong Kong were also clearly instrumental in delivering growth at the global level.
Finance shortages are less a handicap to the market than they were, albeit they are also not yet sufficiently reversed to actually encourage activity in some areas, most notably Europe. Uncertainty due to new regulations such as Solvency II has not helped the banks of course, many of which are still seeking to cut their real estate exposure, but a steady flow of new players are entering the market, such as funds and insurance companies and there have also been renewed CMBS raisings in the USA. Stock shortages remain a more noted barrier to activity although some improvement is being seen thanks to bank restructuring and deleveraging which is still led by the US and the UK but with a growing contribution from other markets. This is now producing further opportunities, albeit still of a very much controlled flow of product and not a flood, at least with respect to real estate loans or assets of any quality. In addition, developers have also been a major source of stock as have corporates, although less so than in 2011 and less than might have been expected. In fact, some companies are putting capital back into their real estate as they look for safe ways to use their cash pile.
The global property investment market saw a modest 6% rise in activity driven by a strong final quarter
Investment Volume 2
Yield (ex mulitfamily)
Source: Cushman & Wakefield, RCA, KTI and Property Data (Deals over US$5 mn including land)
Overall, investment demand remains more robust than supply, with cross border players key to this interest. These and other core investors have in general stayed focused on a small number of the largest and most liquid markets. Indeed, with plenty still to worry about economically and politically in many areas, investors stayed very alert to danger throughout 2012. However, by the year-end we were seeing the first signs that some were ready to increase their risk tolerance, a trend initiated by US investors. An increasing number of opportunistic buyers are also now getting busier looking at the assets being offloaded by banks. According to RCA, 13% of all deals came from distressed property, up from 8% in the previous two years. However, while the dominant trends of 2013 to date include a talk of recovery, increased confidence and moving up the risk curve, there is a possibility of overhyping secondary markets too early or at least oversimplifying what makes a property or location secondary and underestimating risk as a result. As ever, following what tenants want will be the key to successful investment. To date this recovery, and the improving economic confidence behind it, have more resonance with the investment than the occupier market.
New York USA
REGIONAL TRENDS
In most aspects of market performance, the Americas are leading and EMEA is lagging behind, with Asia somewhere in between. The Americas saw stronger investment activity, a bigger contraction in yields and more positive rental growth. Asia was more stable, with a good start to 2012 partly offset by falls later in the year, while EMEA clearly bore the brunt of the market slowdown. The Americas share of global trading rose to 32% from 2011s 28%, while EMEA slipped to 21% (from 24%). Asia remained the largest global trading block, accounting for 47% of market activity, down from 48% in 2011. Interestingly, this investment landscape remains a domestically driven picture. Among cross border players, Europe is the biggest target market, attracting 51% of capital, up from 45% in 2011. By contrast Asia speaks for 31% of cross border investment and the Americas 18% - down from 20% in 2011. Meanwhile, occupier markets were clearly a lot more cautious in 2012, resulting in slower demand and rental falls in some areas. However, the overall low supply levels have been key in supporting all regions; indeed, while rents did reverse in some areas later in 2012, growth for the year was broadly positive. Retail tended to be the best performing sector and the Americas the best performing region in all sectors, typically led by South America ahead of the USA and Canada.
FIGURE 2 TRENDS IN THE GLOBAL MARKET IN 2012

(rent and yield excluding multifamily)
Change in Investment (%pa) 25% 20% 15% 10% 5% 0% -5% -10%
Americas EMEA APAC
Prime Yield Change (bp) 15% 10% 5% 0% -5% -10% -15% -20% -25%
Americas Europe APAC
Prime ERV Growth (%pa) 9% 8% 7% 6% 5% 4% 3% 2% 1% 0%

Americas Europe APAC
Prime yields are under pressure to fall, even though prime rents in many markets are some way from delivering any growth, and in second-tier areas rents and occupancy have further to fall. Indeed, occupancy generally was down last year although as with investment, a number of global markets had a better end to the year than had been expected. Signs of better global economic sentiment are in many ways most relevant to occupier trends, however, because of their potential to restart corporate investment. Although many tenants remain cost conscious, more are ready to think about re-examining their space needs. As a result, even though net expansion will remain low in the months ahead, more global leasing activity is likely, and this will be the primary indication that a sustained investment market recovery has begun.
FIGURE 3 CROSS BORDER INVESTMENT BY REGION (2012)

North America APAC Latin America EMEA
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Investment share in 2012
Domestic
Source: Cushman & Wakefield, RCA, KTI and Property Data (Deals over US$5 mn)
Cross border 3
GLOBAL INVESTMENT ACTIVITY

Prime yields similarly had a varied story to tell over the year. Although initially still under downward pressure in some areas in early 2012, they began to rise as global tensions increased and then quickly stabilised by the year end, with some even starting to compress in some areas such as parts of the US and UK markets. These yield pressures could well mount on trophy assets in early 2013 but as noted interest is also starting to develop in secondary markets. As a result, the yield gap at least for better quality secondary space should soon stabilise. Global capital flows have been dominating the market, most notably from North American funds but with a very diverse base including rising Far and Middle Eastern interest as well as more European purchasers. However, at the global level, the market share of foreign players actually slipped slightly, from 16.7% to 16.3% as domestic players were slightly more active. Indeed, as noted, the story of foreign investor dominance is more a European story than an Asian or American one. While cross border investment rose 17% to 39% of the market in EMEA, in Asia and the Americas it dropped (by 9.1% and 4.7% respectively) and accounted for only around 10% of trading. This however underplays the role of foreign capital, as much is being deployed by local REITs and funds and thus may not be seen locally as foreign. What is more, big international funds as well as international family offices and high-net-worth individuals are a crucial area of growth in future demand, attracted by the stable and typically growing income profile of the property sector. To date the move of global pension funds has been led by Canadian and Far Eastern money but Australian funds are becoming more important as pension allocations there are raised further. An increasing number of Far Eastern and Central Asian pension and Sovereign Wealth Fund (SWF) players will also be looking to go global, and more Chinese funds will also add to the weight of market capital in the short-term. Family offices and high-net-worth individuals are also crucial to global demand and represent a very diverse group coming from all corners of the globe. Most adopt a safety first approach as long term players, favouring high-quality trophy assets in gateway cities across a broadening lot size range. While Europe will remain a key target for all of these groups, other mature global markets such as Australia and the USA are seeing increased demand. Interest in prominent emerging markets is also growing, notably among SWFs, and particularly where these markets can offer improving levels of transparency. As in mature markets, joint ventures are an increasingly popular entry route to help alleviate risk and ensure an alignment of interest with local partners. Big equity players are at an advantage in closing such JV deals due tothe demands of partners and lenders for well capitalised and qualified sponsors. However, as noted, while still challenging, finance markets are somewhat easier than they have been for some time, with marked improvements in the USA and signs of better times ahead elsewhere. Borrowing above US$100 mn can still be difficult, but more banks are now willing to lend on larger lots if the deal is right.
Auckland New Zealand
SECTOR TRENDS
Sector trends were broadly stable last year, with multifamily the main area to see some gains, rising most notably in the Americas but also acquiring market share in EMEA as well. Offices remain larger as an investment sector, at 24% versus 15% for retail and 12.5% for multifamily, although development sites is the biggest sector overall, accounting for 38.8% of investment last year. Office demand has been solid despite a weaker occupational market in some areas. The sector is increasingly viewed on a global scale as buyers look towards gateway cities and consider the positive supply fundamentals. Retail investment demand has also been generally good but activity has been held back by stock shortages in many areas. The sector is seeing healthy tenant interest in Asia if somewhat more subdued in line with economic trends, while US markets are bottoming out. In general, Europe remains a weaker market with plenty of restructuring to come, but cross border, luxury and flagship demand in top pitches and cities is strong while emerging markets Russia and Turkey are set to perform well. Industrial warehousing markets are holding up in most areas, at least in terms of demand for modern space as supply chains are adapted and retail growth in areas such as Asia generates new demand.
London United Kingdom
Figure 4 Sector Share of Global Trading

50% 45% % of total new investment 40% 35% 30% 25% 20% 15% 10% 5% 0%
Offices Retail Industrial Multifamily Hospitality Development Sites
Cushman & Wakefield advised the US Department of State on the sale of their existing London Embassy building and the acquisition of a site to construct a new embassy. We are now retained as Development Managers for the new Embassy building in the Nine Elms Opportunity Area of London.
Low supply is also a boost in a number of regions such as Europe, while in parts of North America new construction is starting in response to demand. As a result, a wide range of US markets around major cities could perform well this year. The multifamily sector was strong in 2012, led by the USA where sales exceeded that in the office sector. China had a stable year, at least for high end unit sales, while some other parts of Asia notably Hong Kong and Singapore were hit by policy measures aimed at slowing the market. Much of Europe was also subdued, held back by fragile demand and weak prices, but many locations in Germany as well as London witnessed robust conditions.
Hotel investment demand is good, with volumes boosted by activity in the Americas where finance availability is improved and opportunities exist via asset or loan purchases. Asia and Europe where held back by stock and finance shortages.
Retail investment demand has also been generally good but activity has been held back by stock shortages in many areas
2008
2009
2010
2011
2012
Source: Cushman & Wakefield, RCA, KTI and Property Data

Figure 5 Top 20 Investment Targets
US$ bn pa 0 China USA UK Germany Japan Hong Kong Australia Canada France Singapore Sweden Taiwan Norway South Korea Russia Denmark Switzerland Netherlands Poland India 50 100 150 200 250 300 350
Investment Targets
The top countries for investment were little changed from last year: eight of the top 20 are now in Asia, compared with 10 in Europe and two in the Americas. China remained the largest global investment market overall thanks to the surge in land sales seen in late 2012. Nevertheless, the US began to close the gap, with investment rising to 88% of the Chinese level compared with 75% in 2011. Similarly Germany is closing in on the UK in third place, rising from 66% of UK investment levels in 2011 to 81% last year. Concerning investment by city, New York remained the number one target last year, attracting US$41.3 bn into real estate, a 14.4% increase on 2011. London remained firmly in second place, up 8%, while Los Angeles, Tokyo and San Francisco rounded out the top five. Among cross-border investors, however, London is very much top, with Paris second, New York third, Tokyo fourth and Sydney fifth. By sector, New York is the top global market for multifamily and hotels, while London is first for offices, Hong Kong for retail, LA for industrial and Shanghai for development land. The concentration of investment in the top cities once again increased slightly in 2012 as investors remained focused on the biggest and the best markets. In total, 43.7% of all investment was targeted at the top 50 cities, up marginally from 43% in 2011. Whats more, the targeted cities were largely unchanged over the year, with 45 of the top 50 remaining the same. Three of the new names on the top 50 list are US cities, indicating that US players have started to spread their net more widely in search of opportunities. Overall, 25 of the top 50 cities are North American, up from 22 in 2011; 12 are in Asia, up from 11 in 2011; and finally, the EMEA quota dropped from 17 to 13, with stressed European targets such as Madrid and Milan dropping out.
Figure 6 Top 20 CITY Investment Targets

(excluding development sites, by greater city area)
US$ bn pa 0 New York London Los Angeles Tokyo San Francisco Hong Kong Paris Washington Chicago Seattle Houston Dallas Singapore Boston Berlin Miami Sydney Toronto Atlanta Seoul 5 10 15 20 25 30 35 40 45
New York remained the number one target last year, attracting US$41.3 bn into real estate, a 14.4% increase. Among cross-border investors, however, London isvery much top, with Paris second, NewYork third
2011 6
2012
2011
2012
Source: Cushman & Wakefield and RCA (Deals over US$5 mn)
ASIA PACIFIC
Overall investment in the Asia-Pacific region came to US$437.6 bn in 2012, an increase of 3.7% over 2011. Foreign investment accounted for 10.9% of the total, compared with 12.4% in 2011. Development sites represented the majority of investment at 72.7%, with offices the most invested sector for completed stock at 11.5% of the total. However retail, hospitality and development sites all saw investment rise last year while offices, industrial and multifamily all experienced falls. Courtesy of its dominance in the land sales sector, China is the key regional market, accounting for 69.5% of 2012 Asian activity. Japan is the second largest market at 7.9% of the total. Although Asia Pacifics regional economy may have outperformed others, momentum slowed in the second half of the year. Additionally, risk aversion among investors was heightened on theback of persisting global uncertainty, and combined with tighter policies aimed largely at the residential market, this held back investment for much of the year. However as in other areas, the market ended the year on a high, withvolumes up in a range of locations including China, Hong Kong, Indonesia, India and Australia.
Weaker activity in previous months did not have much impact on yields, with rental stability in core markets generally helping to support capital pricing. Although there were contractions in rental values in some locations such as Singapores office sector primarily due to a retrenchment of global banks the overall trend proved quite robust. The market in 2012 was nonetheless increasingly diverse by location and sector, with retail generally stronger than offices. Further, there were signs of a rebalancing in economic activity towards domestic demand over investment and export-led growth, suggesting that this trend may continue so long as labour market strength supports consumer confidence. International retailer demand is increasing, favouring key Chinese cities, most notably Beijing as well as Shanghai, but also regional capitals in emerging countries, such as Kuala Lumpur and Jakarta. Office markets did weaken more by the year-end as slower economic growth hit occupier demand. Nevertheless, confidence is anticipated to return as the economy starts to find its feet, and rents should bottom out in the months ahead on the back of tighter supply markets helping to stimulate growth. Strong demand from IT the sector, including other IT-enabled services (ITeS), as well as business process outsourcing (BPO) will benefit markets in India and the Philippines in particular, while good logistics demand is expected in a range of areas.
Figure 7 APAC Property Investment Volumes
160 Quarterly investment volumes (US$ bn) 140 120 100 80 60 40 20 0 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12
7.0% 6.9% 6.8% 6.7% 6.6% 6.5% 6.4% 6.3% 6.2% 6.1% 6.0% All-sector average prime yield
Investment Volume
Yield (ex multifamily)
Beijing China
As in many areas, while debt markets have been impacted by regulatory changes, they have nonetheless grown more competitive, with margins edging down and LTVs stable at circa 50-60% on non-development stock. Indeed, while this is a less debt reliant region overall, gaps left in the market left by the withdrawal of some European lenders were quickly filled by regional players Risks will of course remain, including some areas witnessing territorial disputes, but a relaxed monetary environment will continue to boost Asian property markets in 2013. Yields are close to record lows in certain locations, but further compression may be seen given that spreads to bonds are still at a relative historic high. However, moderate growth is expected to be the new norm for both the economy and the real estate market.
Overall investment in the Asia-Pacific region cameto US$437.6 bn in 2012, an increase of 3.7% over 2011

EMEA
The EMEA region had a strong end to 2012, with volumes rising 30.7% to US$59.8 bn in Q4 over Q3, but despite this, annual totals were relatively flat, falling 0.3% in euro terms to 150.5 bn but falling 5.5% in US$ to US$196 bn. Trends were however far from uniform across the region, with core Western markets up but peripheral andsome Eastern markets down. Furthermore, while domestic investment fell 15.8%, international buying rose 16.7% to US$76.8 bn, with investment from outside Europe particularly strong, led by major sovereign wealth and pension funds attracted to low risk markets offering relatively high real yields. Of the main sectors, offices had the best year, increasing 4.8% and winning market share from retail and industrial. Multifamily also performed well, with volumes rising 29.7% to give the sector an 11.7% market share, driven by increased activity in Germany followed by the UK. The hotels sector lost market share but has seen strong foreign demand for top quality product with Middle East buyers the most active among overseas players, focusing on London, Paris, Amsterdam and the top German cities. Occupational markets generally grew more cautious last year although prime rent levels largely held firm due to supply constraints and they carried on rising in some areas notably core high streets. Figure 8 EMEA Property Investment Volumes The first half of this year will remain weak but somewhat improved, with growth picking up slowly in the second half but with peripheral markets still lagging behind. Last year the real fear that the euro zone may break up and the unknown consequences of this led to a lack of activity but the ECB's actions in committing to unlimited bond purchasing calmed the markets nerves, opening the way to the improvement in activity seen in the final quarter. Of course this is only the start of a solution at best with difficult decisions ahead on joint policy and in the need for fiscal transfers between north and south. However at least it is a start in the right direction which has been welcomed by the markets. Challenges in the short term will come from elections as well as the social pressures of high unemployment and hence it is clear that policies to deliver growth not just stability will be looked for. Hence while we have entered the year with better confidence and momentum, the macro backdrop will keep people focused on core assets and generally on north and west Europe. Bad debt is being tackled perhaps more rapidly than some expected with loan and real estate owned (REO) sales totalling 21.7 bn in 2012, a significant increase on the 8.8 bn traded in 2011, with a tendency still toward larger portfolios but a wider range of transaction sizes emerging which will benefit market liquidity. Progress is not uniform market by market, with 90% of last years deals concentrated on justfour countries UK, Ireland, Germany and Spain. To date this isnotenough to satisfy some would-be buyers but an acceleration in offerings and activity is likely over the next two years and Cushman & Wakefield forecast at least 25 bn being traded this year. The quality of what is offered may deteriorate however with many of the better assets already traded but the breadth of product should increase, with Iberia likely to be much busier for example with Spains bad bank, SAREB, not the answer to the countries problems on its own but certainly a sign of more action to come. Lending availability is still tighter than elsewhere but it is improving, led by the UK and helped by ECB action. While regulatory pressures are forcing the banks to clear up bad debt problems, it is also deterring some from new lending, particularly outside their domestic market. More banks are nonetheless open to new lending than previously, albeit at increased margins and typically on prime stock, and new sources of funding are steadily moving forward.
Istanbul Turkey
120 Quarterly investment volumes (US$ bn) 100 80 60 40 20 0 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q112
7.6% 7.4% 7.2% 7.0% 6.8% 6.6% 6.4% 6.2% 6.0% All-sector average prime yield
Core markets have been and will remain most in demand, focusing on retail in major German cities as well as London and Paris, plus offices in cities like Munich and London. But while prime yields are still attractive on an absolute and relative basis for some, there is also increasing recognition that parts of secondary or second tier markets may be of interest. Indeed, opportunistic players are circling lower and lower, although debt is a preferred entry route for some at present. In the Middle East and Africa, confidence improved in some areas despite obvious setbacks elsewhere, partly in areas like UAE which benefit due to relative stability as well as increased tourism, but also in areas like Egypt as investors consider longer term reconstruction and growth.
Investment Volume 8
LATIN AMERICA
Global woes were clearly impacting on sentiment and activity in Latin America last year, with volumes down 51% to US$5.4 bn, driven by weaker foreign and domestic demand. Foreign buying fell slightly less than domestic activity however (46% vs 53%), resulting in a slight rise in foreign buyers market share to 27.9% from 25.2% in 2011. Geographically, Mexico was the only major exception to this, with volumes rising 80% to their highest since the market peak in 2007. Across the region, offices also bucked the trend, witnessing 52% growth and taking a 39% market share compared to just 12.5% last year. Retail was down 52% but its market share was at least stable at around 31% (considerably ahead of the previous five years average, underlining investors long-term interest in this segment). Logistics and multifamily both lost ground to offices while hospitality saw its market share climb to 15% (from 7.8% in 2011) even though the actual volume invested declined. Mexicos growth story in 2012 was helped by a firming economy as well as high regional yields and a better availability of affordable finance, but also by increased domestic pension fund demand as they enter the real estate market. Labour market and education reforms will be a further boost to economic and market performance in the future. Figure 9 Latin America Property Investment Volumes
5 Quarterly investment volumes (US$ bn) 4 3 2 11.1% 10.9% 10.7% 10.5% 10.3% 10.1% 9.9% 9.7% 0 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q112 9.5% All-sector average prime yield
Brazil meanwhile was relatively quiet over the year as a whole but did end 2012 on a stronger note and macro economics are supportive of the market, with retailer like for like store sales rising strongly and vacancy rates generally low. While the region has slowed in response to global and some local concerns, it has not collapsed in the way it might have done in previous cycles, with volume picking up by the year-end. What is more the macro stability of most of these markets is much improved and it is their links to the international economy, in terms of US and global resource demand in particular, which has dictated much of the easing in demand last year but which will also help underpin a more robust picture in the year to come alongside reviving domestic consumption. This will feed into an expanding property investment market led by a growing stock of modern stock due to new development as well as greater public and institutional demand and more foreign interest. The main cities of Mexico and Brazil are seeing demand for new high quality space in all sectors and development is increasing as a result, with new office completions rising in most major cities but vacancy still often trending down. Foreign investment is also boosting construction in the industrial and logistics sector, particularly in Mexico. With consumer confidence remaining quite robust, the retail sector remains very active across the region, with incoming and growing domestic retailers faced with a shortage of modern supply despite high levels of new shopping centre development in many areas. In the residential sector, population growth, urbanisation, increased wealth and access to mortgage finance (albeit down on previous years) will continue to boost demand for housing while public policies in most countries will also promote more activity, particularly for low-income housing.
Salvador Brazil
Mexico saw volumes rising 80% to their highest since the market peak in 2007
Investment Volume
Yield (ex multifamily) 9

NORTH AMERICA
Thanks to the strongest year-end quarter since 2007, North American volumes rose 23% last year to hit US$290.4 bn, 31% of the global market compared with 27% in 2011. Canada enjoyed a very a strong year in 2012 and is expected to see another in 2013. Indeed, a combination of strong investment demand, low borrowing costs and very robust market fundamentals resulted in record-low vacancy in both the office and residential sectors, as well as historic lows for industrial availability and record sales turnovers in the retail market. Foreign investment represented less than 5% of the market last year, however, and despite obvious attractions for international capital, the highly competitive nature of the market means it is relatively closed to foreign capital unless partnered with a very credible local player.
New York USA
Quarterly investment volumes (US$ bn)
140 120 100 80 60 40 20 0 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12
7.5%
7.0%
As bidding for best in class assets became ever more competitive early last year and yields hardened to pre-recession lows in some cases, investors began moving up the risk curve. Thus, while capital markets remain focused on quality, there has been a slow drift away from blue chip gateway cities towards top assets with durable near-term cash flows in secondary locations, supported by the more plentiful supply of financing and the return of the CMBS market. The improvement in the market has, however, become increasingly unequal, with for example shopping malls and industrial picking up as improvements in earlier recovery sectors namely multifamily and offices slowed down. It was also unequal across the year, with tenant demand rising in early 2012 but faltering later in the year as uncertainty mounted. Credit availability is considerably improved, helped by receding delinquencies. Life insurance companies are very active in providing new debt, as are some US banks. A rising CMBS market is also buoying availability, with a 50% increase in originations last year. Corporate raising has also been popular for the REITs given the low level of interest rates. Looking towards 2013, slow growth is forecast with fiscal cliff cutbacks deterring stronger activity until the second half of the year. Consumer spending and overall expansion should then accelerate into 2014, given improving private sector job growth. Against this backdrop, real estate investors are becoming more aggressive, with stronger debt and equity flowing into the sector in 2013 as the US registers better growth and pricing than other mature Western markets. However, financing remains challenging for mega transactions over US$500 mn.
6.5%
6.0%
Investment Volume
Multifamily is the sector in highest demand, resulting in increasing construction activity. Office investors are widening their target markets to consider prime assets in an expanding list of secondary markets. On the other hand, the retail and industrial markets are experiencing cap rate compression, and thus industrial yields for these remain above those in other sectors. With yields flattening in the multifamily and prime office sectors while compressing in secondary markets, the prime-secondary spread has peaked and will narrow in the months ahead. The principal buyers in 2013 will be REITs, institutional and foreign investors, particularly from Canada, the Middle East and Asia. REITs and institutions will also be represented on the sell-side as they rebalance their portfolios. Owners who bought at peak values with impending debt maturities will be looking for recapitalizations. Market fundamentals are strongest for multifamily and prime office in gateway markets, followed by prime retail and industrial in California. Secondary office markets remain oversupplied. Particular hotspots include technology sector submarkets in San Francisco, New York and Boston, as well as the commodity-driven markets in Houston and Denver. However, these markets are so heterogeneous that any averages are masking very divergent performances between the have and have not markets, with the latter trading at historically high spreads to the primary markets.
10
All-sector average prime yield
In the USA, RCAs latest estimate is that volumes rose to US$250 bn excluding development sites. Although the multifamily market remained particularly strong, the retail market managed to outperform other sectors through healthy investment demand and activity levels in certain key segments. Top gateway cities have been in high demand, all helped by the burgeoning tourist market benefiting from the weaker dollar. As the US office markets continue to be driven by technology, healthcare and energy sectors, those reliant on finance or government sectors are increasingly seeing more restrained demand.
Figure 10 North America Property Investment Volumes

180 160 8.0%
Vancouver Canada
The importance of logistics is increasing in a virtual world but
also changing due to technology, infrastructure adjustments and social pressures. Smart manufacturing and robots will also lead to long-term shifts in manufacturing and logistics concerning the scale and location of facilities, as well as their design and role and thus value in the business cycle. particular as Solvency II, Basel III and the EUs Alternative Investment fund management directive impact on the level and style of market demand. At the same time, mobile working and e-tailing are having a more significant affect on retail and office working styles, while energy costs are the primary drivers of sustainability issues for now, although resource shortages including water are long-term threats. stock is not fit for purpose in a changing world, which poses threats as well as redevelopment and repositioning opportunities. Equally the role of property in delivering value is also changing note the increased importance of retail property as part of the marketing and brand, for example. advancements will increasingly drive business change, generating winning companies and sectors but also new ways in which property is used and occupied.
Structural drivers will be crucial for investment and finance in
MACRO POSITION
While the outlook remains uncertain, the chances of a disorderly euro zone default appear to have faded, and consequently a muddle through now seems more likely. Global risks remain of course, including the US fiscal cliff, emerging market demand and uncertainty in the Middle East. Moreover, it is clear that recession risks will continue in some markets with occasional scares and political tension. However, while the economic recovery may remain ponderous, it does at least look set to have more momentum and thus should throw off more confidence to corporates and investors. As a result, so long as business decision making does restart, this low growth environment will not necessarily penalise tenanted property; rather, its yield premium to bonds will remain attractive, and it will offer some upside as and when economic growth does strengthen. When the market does normalise of course, bond rates will increase, and this will impact on property, albeit perhaps not immediately given the buffer in property yields relative to bonds. What is more, stimulus measures (relaxed monetary policy and QE) will continue to boost demand and confidence, as well as impact on investment and development in some areas. Possibly the two key themes for the coming year will therefore be increased macro stabilisation together with abundant liquidity. However, perhaps the deciding theme for the year overall will be an improvement in the business cycle, which should be more marked by year end.
A number of other possible macro trends may also be worth following: Currency wars look likely to continue at a low level, but also an increasing focus may emerge on new currency areas, higher yielding currencies or ones more likely to retain value over time such as the Chinese Renminbi, Singapore Dollar, Korean Won or Mexican Peso. expansion, accessing stock, increasing market power or cutting costs. This will lead to asset opportunities as well as occupational portfolio restructuring. More capital raisings are also likely as REITs and other companies take advantage of market conditions to raise capital.
Specifically within the property sector, much of the property
Further merger and acquisition activity is likely as a route to
Finally, it is worth noting that technological change and
TABLE 1 INVESTMENT VOLUMES (Including development sites and multifamily, assets over US$5 mn)
Volumes in 2012 2013 Outlook 2012 US$ bn Change on 2011 % of 2007 peak 2013 US$ bn Change on 2012
Europe West Europe Central & East Middle East Latin America North America Developing Asia Mature Asia Pacific Global
179.0 15.1 1.1 5.4 290.4 314.5 123.1 929.3
-0.2% -21.6% -65.2% -51.4% 22.9% 5.9% -1.3% 6.0%
51% 56% 19% 54% 51% 264% 79% 75%
186.2 16.4 1.3 6.2 341.2 361.7 147.7 1,060.7
4% 9% 25% 15% 18% 15% 20% 14%
Source: Cushman & Wakefield, RCA RCA data relates to all deals over US$5 mn, as of 19 Feb 2013 for US and Asian data and 13 Feb 2013 for all other markets
11

OUTLOOK
Fuelled by increased allocations to property by institutions and high-net-worth individuals/families, as well as increased stock coming to the market, investment volumes are likely to pick-up further in 2013. C&W are forecasting a 14% increase to yet again reach above US$1 tn for the first time since 2007, led by North America and Asian markets. Moreover, there is a growing consensus that we are past the worst for the risk cycle and that 2013 risks are weighted towards the earlier part of the year. This may be wishful thinking, but if true, it will support a more marked pick-up in confidence and thus activity later this year. In terms of values, a demand for liquidity as well as low interest rates and risk will maintain investor interest for secure income-producing assets. As a result, prime yields could fall in the most sought-after core markets. Secondary yields for the best will peak, but increased supply from investors taking profits to recycle, terminating funds and of course banks will be integral to the markets prospects in 2013, generating activity but also pushing down secondary asset pricing. On the occupier side, demand will remain cautious but should steadily improve for modern space. Cost control and consolidation will be central to decision making although activity and interest in expansion strategies will grow, such as international retailers aggressively targeting expansion into certain emerging markets. Thus while the rental recovery has been deferred and secondary has further to fall, Grade A rents should see selective increases in 2013 due to falling supply. TABLE 2 Value Changes in the Global Market
Relative to 2011 Change in Yields (bp) 2012 2013 Relative to last peak Relative to 2012 Relative to 2011 Relative to 2012 Change in Face rents
The USA should be a favoured market in 2013 despite ongoing political and fiscal uncertainties. Occupational demand may still only be in the foothills of a recovery, but an improving economy and debt market, low vacancy and high liquidity auger well for investment demand and market performance. As a result, a 15-20% increase in investment activity is forecast, alongside modest cap rate contraction, both led by the best second-tier markets and a steady normalisation in occupational markets and hence some rental growth. While yields are likely to flatten out for already low cap rate markets, there will be further compression in the higher cap rate markets, such as suburban offices and industrial areas, as debt availability is boosted by an upturn in CMBS issuance. Canada also looks set for stronger activity in 2013 based on capital raised and unspent institutional allocations. Supply shortages and solid demand will generate further rental growth, driven by offices at least until development completions increase in 2014, while pent up demand for quality assets is likely to force further yield compression. Latin America has high levels of capital raised in 2012 to feed into direct property this year. As a result, and a roughly 15% rise in volumes is forecast, with Mexico perhaps the star performer. Brazil will however see plenty of the spotlight, with its secondary markets, industrial and event-driven infrastructure (the port region in Rio and Olympic and Soccer World Cup linked areas) providing most growth. Performance in the region will largely come from increasing occupancy and new development following recent rental increases that have left some markets looking expensive. Rental expansion is
therefore expected to slow to around 5%, but yield compression will add to capital performance. In Asia Pacific, improved macroeconomic conditions with sustainable growth across the region will boost activity and performance. Export performance will grow, helped by infrastructure investment, policy alignment and fiscal and monetary stimulus, and this will aid both employment and consumption growth. This will benefit market values in general, with yields compressing and modest rental growth. Yield spreads will draw more capital into the market, particularly in cities such as Sydney, Tokyo and Kuala Lumpur where the spread is higher. However while modest compression is forecast in some areas this year, notably retail, yields will also be vulnerable once bond yields start to rise given the income sensitivity of many Asian buyers. Investment demand will increase as faith grows in Chinas soft landing, but demand will also broaden. Indeed, other markets such as Australia and Japan will increasingly become targets for overseas investors, while markets such as India and Indonesia are likely to be on the rise. Long-term trends such as urbanisation and the increasing middle class will add to demand to access a range of sectors including residential, especially in Chinese cities as well as higher growth markets as Indonesia and Vietnam. European market trends will be yet more polarised: the world will not end but European property markets will be bouncing along the bottom for some time. The second half of the year will be an improvement, however, as a slow increase in activity occurs on the back of business and investor need or their ability to act on decisions. Availability will rise as occupiers downsize, consolidate and look to save costs, shedding weaker space and pushing up secondary voids. However, while secondary rents will remain weak, prime values should either be stable or be moderately up due to better tenant demand and limited supply in many areas. At the same time, European prime yields will come under modest downward pressure as buying demand remains focused on the best. Interest in secondary markets is likely to steadily grow, although with finance still limited for this market, yields are likely to remain elevated. European investment activity is likely to remain subdued in the short term by the lack of quality product and affordable financing. However, signs indicate that, with more stock released by the banks combined with public sector and corporate owners, this should be a source of greater activity in 2013, with a modest rise of 5% currently forecast.
Europe West Europe Central & East Middle East Latin America North America Developing Asia Mature Asia Pacific Global
9 13 -3 -16 -27 -8 -5 -6
100 57 86 50 14 -75 -12 23
-10 -5 -5 -50 -15 -15 -20 -15
1.2% 2.2% 0.5% 11.2% 4.3% 6.9% 4.0% 4.7%
1.0% 0.0% 1.5% 5.0% 5.0% 6.0% 2.0% 4.5%
Source: Cushman & Wakefield Note: Middle East rental growth and yields for offices only. Other regions are all-sector excluding multifamily. Rental levels referred to are face rents.
12
INVESTMENT STRATEGY
The property market is being forced to reinvent itself, particularly in more mature markets, and while largely profitable and frequently with cash piles to spend, businesses are focusing ever more on the bottom line and property has to be part of that, contributing to a firms drive for efficiency, productivity gains and cost savings. In many cases this translates into a desire to occupy less space but frequently also a desire to occupy different space. As a result, even with slower net growth in most global regions, there is demand for new modern space in the most business friendly and sustainable locations. This is both a threat and an opportunity for property investors as well as developers depending on the sort of stock they hold and the intensity of their management. The office market may see similar trends to last year in terms of steady if selective growth and a more stable performance from high-growth markets. Banks may continue to hand back space in many areas, but confidence should still be improving as the year progresses. However, while the office cycle is promising in many areas, investors must be alert to falling aggregate demand due to new working practices, rising competitions, a search for greater productivity and changing technology. Increased corporate exploitation of social media will accelerate these changes in the medium term. Figure 11 Global PROPERTY Investment by Region
1400 Annual investment volumes (US$ bn) 1200 1000 800 600 400 200 0 2007 2008 2009 2010 2011 2012 2013
We will see a very polarised landscape in terms of risk and performance, distinguished by country, city and sector but not necessarily as many may expect. Indeed, views on risk and what is secondary are likely to change as investor yield demand grows and as cost-sensitive occupier interest increases. The performance outlook is perhaps most positive for North America but it is also good in a range of emerging markets. Retail for example may be most promising in the USA and Germany as well as China and Brazil. Offices look set to deliver better performance in parts of the US, UK and Japan but also in parts of China such as Shenzhen and Guangzhou, India (New Delhi and Mumbai), Russia and Turkey. Looking at areas of opportunity by region and country, US markets will be key beneficiaries of the firming business cycle and improved risk appetite as well as easy monetary policy, favouring commercial as well as multifamily. The USA should therefore be a strong target for investment in the near term, although investors may have to get used to moving up the risk curve or paying higher prices, possibly through buying vacancies, looking at development or moving further into secondary markets. Such a move along the risk curve may be slow to emerge in the retail market, where the possibility of tax increases could hit trading, and uncertainty will keep investors focused on the best space for now. In the second half of the year, however, assuming fiscal conditions are clearer, a move towards second tier and mid-market assets may be seen, following the more entrepreneurial and opportunistic players who are already looking at this space. Industrial and warehousing markets are attracting capital thanks to their typically higher yields but they also offer growth potential when proximate to key ports, airports, gateway cities as global trade levels improve. It is also a sector which in the right areas and configuration can benefit from the growth in ecommerce. Medium-to-long-term economic drivers remain favourable for the multifamily market, although the upside is in most cases fully priced and short-term headwinds to jobs growth are also less favourable. As a result, investors need to be keenly aware of construction activity and focus on markets with least supply threat. In Canada, development will remain an attractive route into the market in 2013, with a focus on under supplied office, multifamily and logistics markets as well as on expanding regional shopping centres and converting older industrial space, typically to retail.
Boston USA
Foreign demand in Latin America may be slower to pick-up than in Asian emerging markets but will steadily take hold. Brazil, Mexico and Chile will remain the key focus of interest for investors although interest in other markets is growing, with Colombia the current favourite for many and Peru an upcoming target. Argentina should continue to disappoint and will remain a non-real estate target in the year. Elsewhere, Central America as a whole is too small, but Panama should present a few opportunities, and the Caribbean should see a small surge in hospitality as the US economy picks up. In the Asian markets there are clear opportunities in all sectors. In the office market, global banks will follow the regional banks in their expansion plans which will fuel office demand in the major gateway markets of Tokyo, Shanghai, Hong Kong, Singapore and Sydney. This sector will demonstrate positive steady growth rather than the spikes seen previously in markets such as Hong Kong and Singapore.
APAC
EMEA
North America
Latin America
Source: Cushman & Wakefield, RCA, KTI and Property Data
13

Opportunities will also increase in emerging markets offering both yield and future growth. Overall for the medium term, we favour Shanghai, Melbourne, Tokyo, Perth and Beijing among core markets and Adelaide, Shenzhen, New Delhi, Jakarta and Manila among emerging cities. In the retail market meanwhile, with strong growth predicted for the region this year and a recovery in China, good retail turnover growth is predicted together with a continued movement of major designer labels from the developed world to Asia. Kuala Lumpur, Bangkok, Beijing and Jakarta are favoured for retail although a defensive strategy would also favour established markets such as Hong Kong and Singapore as well as key Australian cities perhaps by the year end. In the major hubs of Tokyo, Osaka, Shanghai, Hong Kong and Singapore, logistics will be the hottest sector in the region. The land for this sector is tightly controlled, current average vacancy sits at a low 2% and with an uptick in economic activity and demand, strong performance is likely. Changing retail consumption patterns that demand greater inventory storage closer to major markets will have a multiplier effect and generate strong growth for the major hubs in the medium term and give further impetus to hub and spoke development in emerging markets. In Europe, less euro stress and stress in other macro areas will give way to more focus on fundamental market drivers, differences between countries and their policies and between cities and their appeal to occupiers. Divergence will therefore be if anything an accelerating theme for the year, most notably between core and periphery and strategies must adjust to that including a scenario where core markets start to overheat. Economic fragility will keep investors focused on the security of the cash flows from property and this will ensure Northern and Western European cities remain busy with a heavy focus on cities and sectors where modern supply is most constrained- not so much due to hopes of growth but just for improved income security. Nonetheless, with development at historic low levels in many areas and existing stock often failing to match tenant needs, rents are at least well under pinned and potential strategies to rework, reposition and redevelop will be attractive as investors accept a higher level of risk. Despite recent improvements meanwhile, the funding gap left by the lack of traditional lenders in the market will continue to present opportunities for investment via senior or mezzanine debt, focused on core markets and top tier borrowers. For low risk investors, prime offices in markets such as London and Munich or prime retail in London, Paris, Berlin, Munich or Stockholm should be favoured. In other sectors, logistics looks attractive in those areas where e-tailing is boosting and changing demand. For those ready to move up the risk curve meanwhile we favour better quality secondary and development in core markets firstly, followed by prime property in top cities in second tier countries
Oslo Norway
14
Milan Italy
15
global investment volumes

millions Above US$5 million equivalent, excludes apartments
Country 2011 2012 Annual change 2013 Trend
millions Above US$5 million equivalent, excludes apartments

Argentina 223 89 -60.2% , Australia 14,619 19,097 30.6% , Austria 1,064 820 -22.9% m Bahrain 0 0 n/a m Belgium 1,995 2,017 1.1% , Brazil 5,350 1,918 -64.2% m Bulgaria 198 73 -63.3% m Canada 13,091 15,267 16.6% m Channel Islands 42 33 -20.6% , Chile 952 297 -68.7% m China 205,196 235,378 14.7% . Colombia 69 0 n/a m Croatia 322 47 -85.5% , Czech Republic 2,234 547 -75.5% m Denmark 4,521 5,430 20.1% , Ecuador 0 0 n/a m Estonia 291 102 -64.9% m Finland 1,770 2,000 13.0% , France 16,542 14,923 -9.8% , Germany 23,500 25,430 8.2% m Greece 190 100 -47.4% , Hong Kong 16,450 20,829 26.6% , Hungary 726 154 -78.9% m India 2,929 2,575 -12.1% m Indonesia 521 525 0.8% m Ireland 159 590 271.5% m Israel 537 255 -52.5% m Italy 4,423 2,485 -43.8% , Japan 22,097 23,080 4.4% m Latvia 25 0 n/a m Lithuania 24 20 -17.0% m
Source: Cushman & Wakefield, Property Data, KTI and RCA Annual change figures have been calculated based on the total values and not rounded values
Luxembourg 367 542 47.6% , Malaysia 1,676 2,343 39.8% , Mexico 850 1,702 100.2% m Netherlands 3,279 2,981 -9.1% m New Zealand 1,545 1,730 12.0% m Norway 4,083 6,485 58.8% . Oman 0 37 n/a , Peru 120 4 -96.5% m Philippines 35 557 1,493.3% , Poland 2,563 2,817 9.9% m Portugal 169 108 -36.1% , Republic of Korea 8,301 6,387 -23.0% . Romania 328 276 -15.8% m Russia 5,538 5,790 4.5% , Saudia Arabia 49 62 27.9% , Serbia 69 7 -90.3% , Singapore 14,038 12,147 -13.5% m Slovakia 383 17 -95.7% , Slovenia 0 0 n/a , South Africa 4,106 858 -79.1% m Spain 1,635 1,721 5.3% m Sweden 9,780 9,914 1.4% , Switzerland 2,165 4,800 121.7% , Taiwan 6,171 7,744 25.5% , Thailand 795 1,040 30.8% m Turkey 716 837 16.9% m Ukraine 378 396 4.6% , United Arab Emirates 772 449 -41.8% m United Kingdom 38,583 43,648 13.1% m USA 113,941 144,535 26.0% m Vietnam 164 233 42.5% m
16
US$ millions Above US$5 million, excludes apartments

US$ millions Above US$5 million, excludes apartments

Argentina 315 117 -62.7% , Australia 20,629 24,584 19.2% , Austria 1,381 1,081 -21.7% m Bahrain 0 0 n/a m Belgium 2,590 2,659 2.6% , Brazil 7,452 2,470 -66.9% m Bulgaria 257 96 -62.7% m Canada 18,381 19,658 6.9% m Channel Islands 54 44 -19.3% , Chile 1,335 388 -71.0% m China 286,350 302,222 5.5% . Colombia 96 0 n/a m Croatia 447 60 -86.5% , Czech Republic 2,900 721 -75.2% m Denmark 5,870 7,159 22.0% , Ecuador 0 0 n/a m Estonia 413 132 -68.0% m Finland 2,298 2,637 14.8% , France 21,475 19,674 -8.4% , Germany 30,508 33,527 9.9% m Greece 247 132 -46.5% , Hong Kong 23,234 26,801 15.4% , Hungary 942 202 -78.5% m India 4,121 3,316 -19.5% m Indonesia 714 677 -5.3% m Ireland 206 778 277.3% m Israel 761 330 -56.6% m Italy 5,742 3,276 -43.0% , Japan 30,919 29,809 -3.6% m Latvia 34 0 n/a m Lithuania 32 26 -20.9% m
Source: Cushman & Wakefield, Property Data, KTI and RCA Annual change figures have been calculated based on the total values and not rounded values
Luxembourg 477 714 49.8% , Malaysia 2,335 2,989 28.0% , Mexico 1,210 2,169 79.3% m Netherlands 4,257 3,930 -7.7% m New Zealand 2,006 2,281 13.7% m Norway 5,301 8,550 61.3% . Oman 0 46 n/a , Peru 166 6 -96.6% m Philippines 49 702 1,318.9% , Poland 3,328 3,715 11.6% m Portugal 219 142 -35.1% , Republic of Korea 11,688 8,191 -29.9% . Romania 425 363 -14.5% m Russia 7,190 7,634 6.2% , Saudia Arabia 67 79 19.2% , Serbia 94 9 -90.5% , Singapore 19,628 15,608 -20.5% m Slovakia 498 22 -95.6% , Slovenia 0 0 n/a , South Africa 5,785 1,111 -80.8% m Spain 2,122 2,269 6.9% m Sweden 12,696 13,070 2.9% , Switzerland 2,811 6,328 125.2% , Taiwan 8,669 9,887 14.0% , Thailand 1,121 1,352 20.6% m Turkey 930 1,104 18.7% m Ukraine 521 497 -4.7% , United Arab Emirates 1,074 587 -45.3% m United Kingdom 50,088 57,546 14.9% m USA 160,049 186,045 16.2% m Vietnam 233 302 29.6% m
17
GLOBAL YIELDS
Global Yields
Country Offices Shops Industrial Trend
Global Yields
Country Offices Shops Industrial Trend
Argentina 9.00% Australia 6.50% Austria 5.20% Bahrain 11.00% Belgium 6.35% Brazil 9.00% Bulgaria 9.50% Canada 6.00% Channel Islands 6.00% Chile 8.50% China 5.55% Colombia 11.00% Croatia 8.00% Czech Republic 6.25% Denmark 5.00% Ecuador 11.75% Estonia 8.00% Finland 5.50% France 4.25% Germany 4.55% Greece 9.80% Hong Kong 3.00% Hungary 7.25% India 10.00% Indonesia 9.00% Ireland 7.65% Israel 7.50% Italy 5.50% Japan 4.30% Latvia 8.00%
9.00% 5.50% 4.25% 11.00% 4.50% 7.50%* 9.00% 5.75% 6.50% 7.50% 4.50% 14.00%* 7.75% 6.00%* 5.00% 15.65% 8.25% 5.00% 4.00% 4.00% 8.10% 2.30% 7.00%* 13.50% 10.00% 6.85% 7.25% 6.50%* 4.50% 8.00%
12.00% 8.35% 7.50% 11.00% 7.50% 12.00% 11.75% 6.50% 7.50% 9.50% 7.00% 13.00% 9.50% 8.25% 7.50% 12.45% 9.50% 7.50% 7.25% 6.50% 13.50% 3.10% 9.00% 12.00% 9.50% 9.00% 7.75% 8.25% 6.00% 9.25%
. , , , . . . . , . . , , , , . , . . . m , , . . ! , m . .
Lithuania 7.25% Luxembourg 6.00% Malaysia 6.00% Mexico 11.50% Netherlands 6.25% New Zealand 7.50% Norway 5.25% Peru 12.00% Philippines 7.00% Poland 6.25% Portugal 7.75% Republic of Korea 5.60% Romania 8.50% Russia 8.75% Serbia 10.50% Singapore 3.85% Slovakia 7.25% Slovenia 8.00% South Africa 8.75% Spain 6.00% Sweden 4.50% Switzerland 3.75% Taiwan 2.25% Thailand 7.00% Turkey 7.50% Ukraine 15.00% United Arab Emirates 7.75% United Kingdom 4.00% USA 5.63% Vietnam 11.50%
8.00% 5.00% 5.00%* 11.00%* 4.70% 6.00% 5.25% 20.00%* 3.20% 6.00%* 7.00% 7.00%* 8.50%* 9.50%* 10.50% 5.35% 7.25%* 6.75% 7.25%* 4.85% 4.75% 3.80% 2.00% 9.00%* 7.10%* 16.00% 3.00% 6.31% 11.50%*
8.50% 8.50% 7.75% 11.80% 7.60% 7.50% 6.50% 12.00% 3.60% 7.50% 9.75% 9.50% 11.50% 13.00% 6.70% 8.75% 9.50% 9.75% 8.25% 6.50% 5.50% 2.50% 8.50% 9.00% 16.00% 11.00% 5.75% 6.90% 10.00%
. , , . m , , . . , m , , m m , , m , , , . , , . , . . ! ,
* Shopping Centres Note: Yields marked in red are calculated on a net basis to include transfer costs, tax and legal fees. Source: Cushman & Wakefield
18
STANDARD GLOBAL LEASE TERMS

The following is a summary of typical lease structures for commercial property. It should be noted that in many instances, certain aspects of lease terms will be open to negotiation and these therefore represent only the standard terms currently being seen across different sectors of the market. Summary of Standard Global Lease Terms
Length years COUNTRY Off/Ind Retail Tenant Breaks Security of Tenure/Right to renew Indexation or Review
Argentina Australia Austria Bahrain
3 510 510/57 15
3 5 510 15
Yes, after 6 months Only by negotiation None other than by negotiation
None None other than by negotiation
Not possible by law Annual increment to open market value or agreed fixed increase Indexed to a government-issued monthly index. Sometimes a 3.0%5.0% step before an increase comes into effect No indexation or rent review process is place. At the time of lease renewal a10% increase is permissible by law, dependent on tenant agreement and current market rate Annual indexation to Health Index (an adjusted consumer priceindex) Annual inflation adjustment plus 3 yearly review Rents are indexed to EU HCPI or the euro zone HCPI index. Indexation toBulgarian CPI is rare Right to renew typically at market rates. Sometimes a renewal may specify at a rate not to exceed a set dollar amount Index linked 3 yearly rent reviews. Prime stock linked to market rental value and secondary stock to the cost of living Indexation to CPI Not typical. New lease usually negotiated prior to lease end
No automatic right to renew. However, many old office leases stillexist where the tenant has a perpetual right to renew Tenant break options are typically negotiable but usually No automatic right to renew, but the law is not entirely clear only after the first year onthis 3 yearly, with 6 months notice period By negotiation Break options after the third year with 6 months notice Not common, but where they do occur, are usually attheend of year 5 or 7 with a financial penalty None except in the case of 21 or 24 year leaseswith atenant break at 15 By negotiation Rare but negotiable and compensation is payable Retail only normally the right to renew for a further three terms of 9 years Yes on leases over 5 years None other than by negotiation Usually the right to renew for an additional 5 years. Retail usually has two 5 year options No security of tenure in Jersey or Guernsey andrenewal is by negotiation Automatic renewal for the same period of time None other than by negotiation
Belgium Brazil Bulgaria Canada
9 35 35
9+ 35 5 510 915 35 2-15 years, dependent on sector/tenant 35 5+5, with some shopping centres at 10 35
Office: 510 Ind: 3/5/10 Channel Islands 915/9 Chile China 35 35
Colombia Croatia
35 3+2/5
By negotiation. After the third year against a penalty fee of the annual rent + service charges Negotiable, but must be clearly stated in the lease
Automatic right to renew for the same period of time None other than by negotiation, although tenant only extension options common in the retail sector Not automatic but may be included in the lease by negotiation
Annual indexation to IPC +2 Annual indexation to euro zone CPI
Czech Rep
35/3510
Annual indexation to the relevant inflation index: euro zone or EU27 HICP for euro denominated leases or Czech Statistical Office CPI for CZK leases Annual CPI indexation or to a fixed percentage Contracts indexed to the local consumer price index (INEC) Annually at a percentage normally defined in the lease but typically between 3.0%8.0% Rents are typically tied to the euro, but indexed to local inflation. Reviews are not common practice Indexed annually or biannually to the cost of living (FIN elinkustannusindeksi)
Denmark Ecuador Egypt Estonia Finland
25 3 35 35/310 15/712
25 5 35 510 15
Negotiable 90 days notice and two months rent defined as guarantee at the beginning of the lease None other than by negotiation None, only for leases of an unspecified term, where at least 3 months notice is required None, unless stipulated in the lease
Yes. As a general rule, leases are constantly rolling until notice isserved Defined as a clause in every contract. Same period as original contract No security of tenure and renewal only be negotiation Not automatic by law, but a common practice onthe market The tenant enjoys security of tenure
19

Summary of Standard Global Lease Terms
France
9+/9
1012
Option every third year (except when a fixed term has been agreed)
The tenant has the right to renew for an extra term of 9 years
Germany
510/310
5+5
Negotiable for office and industrail. Unusual for retail oronly with payment of penalty After the first year with 3 months notice and paying 1month penalty as compensation None other than by negotiation After the third year against a penalty fee of the annual rent + service charges Negotiable, typically with a 3 to 6 month notice period. For retail, the landlord is locked in for 9 years. However, the tenant can exit after 23 years (negotiable) by giving 36 months notice By negotiation, subject to landlord approval. In most cases, the tenant is granted the right to sublease or pay for the remainder of the lease By negotiation, but generally after every five years
Right to renew for an extra term. Applicable for retail only ifoptions to extend (e.g 5+5) were agreed in the contract The tenant has the right to extend for a further 4 years None other than by negotiation. Options for renewal are typical however None other than by negotiation, although tenant only extension options are common in the retail sector None other than by negotiation, with an option for renewal. Office mostly with the tenant for 9 years
Rents are indexed to the cost of construction index, published by the INSEE. The index is published quarterly but applied annually. New retail leases for shopping centres and retail parks are increasingly linked to the ILC index (Indice des Loyers Commerciaux). Industrial and office properties can also be indexed to the ILAT index Generally rents are indexed to the official consumer price index ("Verbraucherpreisindex") an automatic adjustment on a given date or whenever the changes occur Annual indexation to consumer price index or CPI plus 1percentage point By negotiation but usually at lease renewal or every 3 years onlonger leases Annual indexation to HICP. Alternatively, office rents may beindexed to Eurostats MUICP Fixed rental increase of 15.0%18.0% every 3 years
Greece Hong Kong Hungary India
12 2,3 or 6 years 35 3+3+3 years
12 23 510 3+3+3 years (varies by region) 5
Indonesia
3/12
Negotiable. Tenants do not have the automatic right to renew
No indexation. Review usually after lease term
Ireland
510
10
Tenant can renew for between 5 and 20 years after five years ofcontinuous occupation 3-6 months for offices/retail, 6-12 months for industrial Standard Lease: With a 6+6 year lease in respect of non retail premises, the tenant does not have a statutory right to renew at the end of the second period. With retail premises, tenants have certain rights at lease expiry, and if the lease is not renewed, compensation is likely to be due from the landlord (as a multiple ofthe rent previously payable) Business Lease: A tenant operating under a business leases does not have any statutory right to renewal, or compensation if the landlord decides not to renew the contract
Israel Italy
10/25 Standard Lease: most typically 6+6 yrs (but it may also be for other prescribed combinations e.g. for 9+6 years, orfor 9+9 years, or for a longer fixed period)
10 1) Standard Lease: see comment for Off/Ind
5+5+5
Pre February 2010: 5 yearly to market rental value but upwards only. Post February 2010: Same, but legislation prohibits the upwards only clause in all new leases. Limited cases of indexation Indexation to local CPI at each rent payment, typically quarterly Annual indexation to ISTAT (cost of living index) Standard Lease: Subject to negotiation: 75% of ISTAT or 100% ifthe lease is longer than 6 years Business Lease: Subject to negotiation: 75% of ISTAT or 100% ifthe lease is longer than 6 years
Japan
25
Standard Lease: The 6+6 year regime (contemplated by the Civil Code) effectively enables the tenant to restrict the term to 6 years, or automatically extend the term forthe second period. A rolling break during the second term of the lease can be put into negotiations to the 2) Business tenants advantage only (for which a notice period of 12 Lease: usually for5 to 7 years. months is often required). Break option (rolling or not) issubject to negotiation Retail: occupiers benefit from the 'right of first refusal' option for the purchase of the walls and of the automatic renewal of the contract Business Lease: break option is subject to negotiation Standard termination provision with 6 months advance 510 10(luxury brands written notice for standard lease structures. No early termination rights for fixed-term lease structures shops) 1-5 (HS) 5-10 (SC) Typically none. Only applicable for leases of an unspecified term, where at least 3 - 6 months notice is required but with minimal term of 1 year
Indefinite for standard lease structures. None under fixed-term lease structure No automatic right to renew, but common practice in the market
Mutual agreement is sought for standard lease structures, which can be any time, but usually at the end of lease term. No review ispossible for fixed-term lease structures Rents are indexed to either local inflation or euro CPI, or capped at a pre-agreed fixed rate
Latvia
15
20

Lithuania Luxembourg Malaysia
25 369 3+3
2-5 (HS) 5 (SC) 912 3+3
None, unless the ownership changes during the lease contract Rare but negotiable, earliest after 3 years Break options are not commonplace. A notice of 36 months must be served by the tenant orlandlord in order to terminate the lease Normally negotiable, but subject to penalties For all sectors negotiable
Automatics right to renew for another term No automatic right to renew at lease expiration First renewal is the tenant's option, subject to rent review. Further terms of renewal must be negotiated separately with the landlord, unless there is a prior agreement None, other than by negotiation Retail: The tenant has security of tenure as the lease automatically renews at expiry, bearing in mind the notice period. The exception tothis is if the landlord wishes to occupy, tear down or redevelop thebuilding. These conditions are rather strict and in reality the landlords options of terminating the lease are limited Office and industrial: Negotiable The right to renew is negotiable and common in commercial andlarger industrial leases Statutory right to renew
Mexico Netherlands
310 510
10 5+5
Rents are indexed to local inflation or more rarely to euro CPI, or capped at fixed rates (varies by sector) Annual indexation to CPI which is triggered by a set increase inthe index Rents are not indexed although upon lease renewal are typically reviewed to market rents whereby the tenant pays a proportionate share of any increases Annual increases to US CPI. However, some contracts are negotiated in Mexican pesos Annual indexation to CPI
New Zealand
912
36
Rare but can be negotiated
Norway Oman
310/515 35
310 35
Negotiable Tenant break options are only allowed if provision has been madein the lease contract and subject to a penalty
Usually 3 years review to market rent (upwards only). In addition rents are adjusted annually through a 'ratchet' clause based on afixed increase or CPI related increase Annual indexation to CPI No indexation process in place. While the law is somewhat unclear the rent can only be increased after 3 years and the tenant has security of tenure for 5 years Annual inflation adjustment to US CPI or 3.00% as a maximum Leases are not indexed. Any escalations to the rent must be specifically stipulated in the contract
Peru Philippines
310 35
Poland
510/35
Portugal
Rep of Korea Romania
3+2 35
Yes, the lease will be automatically renewed for the exact termwith the same terms and conditions unless otherwise agreed in writing 310 By negotiation By negotiation although depends on contract clauses early termination possibilities exist 35 Break clauses must be stipulated in the lease. In the absence The current tenant is normally granted the right torenew. Tenants are required, 90 days prior to lease expiry, to submit of an agreed break clause the tenant will be required to aletter expressing interest in renewing the lease payapenalty which is usually equivalent to the remaining proportion of the lease No automatic right to renew 35 (10 for large The current market conditions give preference to long size operators) term leases with no automatic extensions. Termination options are not a standard but if exist the corresponding penalty applies.In open-ended leases there is typically a36 month notice period Old leases: The tenant has automatic security of tenure 5 Old leases: No break option New leases: Freely negotiated between parties New leases: Freely negotiated between parties usually180 days notice for both parties SC: No break options in unit shops. For anchors there is a break option after 5 or 6 years of contract. In high street retail, break options are not common 2+2 Negotiable Negotiable 315 No break options Negotiable
Annual indexation to euro zone CPI
New lease: Freely negotiated between parties, usually increased annually according to inflation (yearly published by the government). Old lease: Since the 90s, increased annually according to inflation(yearly published by the government) Shopping Centres: Usually increased annually according to inflation (based 100% of CPI published by INE) Annual review to market value plus CPI Annual indexation to Euro CPI
21

Russia
5/13
35
Saudi Arabia Serbia Singapore Slovakia Slovenia South Africa Spain
3-5 3 5 23 3 510 110 3 5 3 5/5+
3-5 3 5 23 510
Office: Possible after 1 year but more commonly 3 years, whereby the deposit is retained by the landlord. Notice period is 69 months. When there is an option to review the rent after the third year, the contract can be terminated from both sides Retail: Break options are not common and if presupposed there are strict penalties for pre-term break Breaks are possible by negotiation Subject to negotiation
Yes if stated in the lease
Annual indexation to USA/EU CPI or fixed increase (variable by sector)
Generally leases are renewable for one further term, but this is subject to negotiation and not guaranteed No automatic right to renew
Review to either market, or a fixed percentage increase of either 5 or 10%. Annually to CPI By negotiation, typically at lease end or after 3 years for leases longer than 3 years Annually indexed to euro zone or EU 27 HICP Not all leases are indexed. For those that are, indexation varies but is typically either Slovenian or Austrian CPI Reviews at lease expiration, typically to market value Annual indexation to IPC
Only by negotiation but not common. Tenant has to seek None other than by negotiation replacement for remaining lease Only by negotiation None. No automatic right to renew after lease expiry No automatic right to renew Lease renewal negotiations are held 36 months before lease expiration None, but further terms can be negotiated
510 (SC & RW) Not customary. By negotiation and with landlord 5 (HS) agreement 3 5 None other than by negotiation 5+ (SC) 10 15 (HS) Offices: Negotiable Logistics: Break option at the end of year 3 SC: Break option at the end of year 5 HS: Break option at the end of year 5 or 10, with 6 months notice May occur in leases over 3 years, although in most cases contains a penalty fee Negotiable Negotiable. Usually tenants can exercise the breakoption Normally not available unless tenant is going bankrupt
Sweden
3 5
3 5
Switzerland Taiwan Thailand
5 3 5 3
5 3 5 3
Commercial leases are automatically renewed at the end of the leaseterm (usually for 3 or 5 years at a time) if neither landlord nortenant serves notice No security of tenure, but options are often put in the lease No statutory right to renew Upon negotiation
Indexed annually to the consumer price index (CPI)
Annual indexation to Swiss CPI is typical Rent increases run between 2%3% or at the CPI equivalent starting from the3rd year of leasing term Negotiable and typically between 5.0% - 15.0% of existing gross rent. Depends on whether applied annually (increasingly seen) or a one-off increase often seen on 3-year lease terms Annual indexation to CPI (local currency contract) or fixed step rents through the lease term (foreign currency contract) By negotiation No indexation process in place. Leases will typically have an annual increment uplift after an initial fixed term. This is often 5%each year until the end of the lease 5 yearly to open market value (upward only) Fixed increments at 3 and 5 years or indexation to CPI Typically at lease end to open market rental value
Turkey Ukraine United Arab Emirates United Kingdom USA Vietnam 22
35/510 3 5 15
35 (HS) 5 (SC) 3 5 15
For leases between 35 years break option available afteryear 1 or year 3 on a 5 year lease Break clauses may be allowed, but are subject to negotitaion Negotiable, but with a penalty fee payable by the tenant
No security of tenure, although leases are often renewed with anew rent Security of tenure is not automatic but can be agreed in negotiation. An option to extend is often put into the lease No automatic right to renew, and conditions will be dependent onthe terms of the lease Yes, if lease is within the Security of Tenure provisions of the Landlord & Tenant Act 1954 Part II (as amended) None other than by negotiation No security of tenure
510 15 510 3
1525 10 3
Negotiable, after the first rent review at the earliest Negotiable Negotiable
rESEARCH SERVICES
Our Research Services
The Research Group provides a strategic advisory and supporting role to our clients. Consultancy projects are undertaken on a local and international basis, providing in-depth advice and analysis, detailed market appraisals and location and investment strategies. Typical projects include: site-specific location analysis, ranking and targeting for occupation or investment supply/competition analysis of future development activity and existing market research and demand analysis by retail/industry sector rental analysis, forecasts & investment and portfolio strategy reliable and comparable data and market intelligence: we This report has been prepared by Cushman & Wakefield and its alliance partners globally. The information was collected and edited by the European Research Group from the Cushman & Wakefield network, with particular thanks to the following offices: Austria Inter-Pool Bahrain Cluttons LLP Bulgaria Forton International Channel Islands Buckley & Company Chile Contempora Servicios Imobilirios Colombia Fonnegra Gerlein Denmark RED Property Advisers Estonia Ober-Haus Real Estate Advisers Finland Tuloskiinteistt Oy Greece Proprius SA Ireland Lisney Israel Inter Israel Real Estate Consultants Latvia Ober-Haus Real Estate Advisers Lithuania Ober-Haus Real Estate Advisers Malaysia YY Property Solutions New Zealand Bayleys Realty Group Norway Malling & Co Peru Commercial Real Estate Services Slovenia Slovenia Invest South Africa ProAfrica Property Services Switzerland SPG Intercity Taiwan REPro International Thailand Nexus Property Consultants United Arab Emirates Cluttons LLP For industry-leading intelligence to support your real estate and business decisions, go to the Cushman & Wakefield Knowledge Center at cushmanwakefield.com/knowledge For further information contact:
Joanna Tano Director European Research Group joanna.tano@eur.cushwake.com +44 20 7152 5944
Erin Can Research Analyst European Research Group erin.can@eur.cushwake.com +44 20 7152 5206
regularly track over 65 countries, including multiple data points, across the world. As part of this consultancy service line we can provide this timeseries data on the retail, office and industrial property sectors.
global contacts
For more information on this service line contact Joanna Tano (joanna.tano@eur.cushwake.com)
The Report
This report has been prepared using data collected through our own research as well as information available to us from public and other external sources. The transaction information used relates to non-confidential reported market deals, excluding indirect investment and future commitments. In reference to investment volumes, while the report summary considers all sectors including multifamily residential, the country pages and global volume tables exclude multifamily residential deals. All investment volumes are quoted pertaining to deals of US$5 mn and above. In respect of all external information, the sources are believed to be reliable and have been used in good faith. However, Cushman & Wakefield cannot accept responsibility for their accuracy and completeness, nor for any undisclosed matters that would affect the conclusions we have drawn. Certain of the assumptions and definitions used in this research work are given within the body of the text. Information on any other matters can be obtained from the European Research Group of Cushman & Wakefield.
David Hutchings Head of European Research Group EMEA david.hutchings@eur.cushwake.com +44 20 7152 5029
Maria Sicola Executive Managing Director The Americas maria.sicola@cushwake.com +1 415 773 3542
Sources
Macro economic data Oxford Economics, Economist Intelligence Unit, Consensus Economics and the Financial Times On each country page: The GDP per capita data is on a purchasing power parity (PPP) basis The interest rates are year-end base rates Currency conversion rates are December month end spot rates Transactional data Alongside Cushman & Wakefield information, data has been used from Property Data, KTI and Real Capital Analytics Sigrid Zialcita Managing Director Asia Pacific sigrid.zialcita@ap.cushwake.com +65 6232 0875 23
CAPITAL MARKETs CONTACTS

Capital Markets provides property owners, investors and developers comprehensive advisory and transaction services for investment sales and acquisitions, debt and equity financing and real estate investment banking. These services typically are provided to private and institutional owners and investors, as well as to corporate owners and occupiers. Our objective is to help clients maximise the value of their real estate. We assist them in extracting value through the application of sophisticated financial strategies, funding mechanisms and global access to capital through our highly experienced worldwide team of professionals and their extensive relationships. Our efforts include but are not limited to investment sales and purchases, loan sales, joint ventures, sale-leasebacks, traditional mortgages, private placements, securities underwriting, mezzanine financing, loan syndication and other financing vehicles.
For further information on our services contact:
capital markets
Global/The Americas
Greg Vorwaller Executive Vice President Global Head of Capital Markets greg.vorwaller@cushwake.com +1 312 470 1855
The Americas
Janice Stanton Senior Managing Director Capital Markets janice.stanton@cushwake.com +1 212 841 5025
Asia Pacific
John Stinson Head of Capital Markets Asia Pacific john.stinson@ap.cushwake.com +65 6232 0878
emea
Michael Rhydderch Head of Capital Markets EMEA michael.rhydderch@eur.cushwake.com +44 20 7152 5060
investment banking
The Americas
Steven Kohn President, Cushman & Wakefield Sonnenblick Goldman, LLC steven.kohn@cushwake.com +1 212 841 9216
Asia Pacific
Bernhard Karas Director Capital Markets Asia Pacific bernhard.karas@ap.cushwake.com +852 2956 7096
emea
Michael Lindsay Head of Corporate Finance EMEA michael.lindsay@eur.cushwake.com +44 20 7152 5008
or visit www.cushmanwakefield.com
24
CAPITAL MARKETs CONTACTS

The Americas
ARGENTINA
Herman Faigenbaum Managing Director herman.faigenbaum@sa.cushwake.com +54 11 5555 1111 Carlos Pellegrini 1141 6th floor C1009ABX Buenos Aires Argentina
ASIA PACIFIC
MEXICO
Ander Legorreta Head of Capital Markets, Mexico ander.legorreta@cushwake.com +52 55 8525 8027 Paseo de los Tamarindos 60-B, 2nd floor Col. Bosques de las Lomas Mxico, D.F. 05120 SAN FRANCISCO Steve Weilbach Senior Managing Director, Capital Markets steve.weilbach@cushwake.com +1 415 773 3510 One Maritime Plaza Suite 900 San Francisco, CA 94111 USA LOS ANGELES Curtis Magleby Senior Managing Director, Capital Markets curtis.magleby@cushwake.com +1 213 955 6467 601 S. Figueroa Street 47th Floor Los Angeles, CA 90017 USA For all other Americas enquiries contact: Greg Vorwaller Executive Vice President, Global Head of Capital Markets greg.vorwaller@cushwake.com +1 312 470 1855
AUSTRALIA
Tony Dixon Director, Investment Sales tony.dixon@ap.cushwake.com +61 2 9229 6853 Level 18, 175 Pitt Street Sydney NSW 2000 Australia
INDONESIA
Handa Sulaiman Executive Director handa.sulaiman@ap.cushwake.com +62 21 2550 9570 Indonesia Stock Exchange Building Tower 2 15/F, JI. Jend. Sudirman Kav.52-53 Jakarta 12190 Indonesia
VIETNAM
Ho Chi Minh City Chris Brown Associate Director chris.brown@ap.cushwake.com +84 8629 14707 2/F, 52 Dong Du, District 1 Ho Chi Minh City Vietnam For all other APAC enquiries contact: John Stinson Managing Director, Capital Markets Asia Pacific john.stinson@ap.cushwake.com +65 6232 0878
BRAZIL
Marcelo C. Santos Vice President Capital Markets & V&A Marcelo.santos@sa.cushwake.com +55 11 3014-5201 Fernanda Rosalem Director of Capital Markets fernanda.rosalem@sa.cushwake.com +55 11 550 15494 Edificio Berrini 500 Praa Prof. Jos Lannes 40 4th floor 04571-100 So Paulo Brazil
UNITED STATES
New York Fred Harmeyer Senior Managing Director fred.harmeyer@cushwake.com +1 212 841 7513 Steven Kohn President, Equity, Debt & Structured Finance steven.kohn@cushwake.com +1 212 841 9216 Michael Rotchford Executive Vice President, Investment Banking michael.rotchford@cushwake.com +1 212 841 7616 Alex Ray Managing Director Global Capital Advisory alex.ray@cushwake.com +1 212 841 5067 1290 Avenue of the Americas New York NY 10104-6178 USA
CHINA
Jack Ye Director jack.ye@ap.cushwake.com +86 21 2320 0808 Units 2606-2609, The Headquarters Building 168 Xi Zang Zhong Lu Shanghai 200001 China
JAPAN
Yoshiyuki Tanaka Executive Director yoshiyuki.tanaka@ap.cushwake.com +81 33596 7060 Sanno Park Tower 13F 2-11-1 Nagatacho, Chiyoda-ku Tokyo 100-6113 Japan
HONG KONG
Kent Fong Senior Director kent.fong@ap.cushwake.com +852 2956 7081 9/F St George's Building, 2 Ice House Street Hong Kong
REPUBLIC OF KOREA
Shawna Yang Associate Director shawna.yang@ap.cushwake.com +82 2 3708 8831 5/F Korea Computer Building 21, Sogong-dong Seoul Republic of Korea
CANADA
Pierre Bergevin President & CEO Canada pierre.bergevin@ca.cushwake.com +1 416 359 2372 33 Yonge Street, Suite 1000 Toronto, Ontario MSE 1S9 Canada
INDIA
Manish Aggarwal Director manish.aggarwal@ap.cushwake.com +91 124 469 5555 14th Floor, Tower C Building 8, DLF Cyber City Gurgaon 122002 India
SINGAPORE
Priyaranjan Kumar Regional Director, Capital Markets Asia Pacific Priyaranjan.Kumar@ap.cushwake.com +65 8339 5335 3 Church Street #09-03, Samsung Hub Singapore 049483
CHILE
Maclean Oliveira Executive Manager Transactions SA maclean.oliveira@sa.cushwake.com +55 11 5501 5463 Praa Professor Jos Lannes, 40 4th floor 04571-100 -So Paulo Brazil
25
EMEA
BELGIUM
Maxime Xantippe Partner, Head of Capital Markets maxime.xantippe@eur.cushwake.com +32 2 514 4000 Avenue des Arts, 56 Kunstlaan 56 1000 Brussels Belgium BERLIN Hanns-Joachim Fredrich Partner, Capital Markets hannsjoachim.fredrich@ eur.cushwake.com +49 30 20 21 4 46 20 Jgerstrae 41 10117 Berlin Germany HAMBURG Dr. Michael Thiele Partner michael.thiele@eur.cushwake.com +49 40 300 88 11 10 Hermannstrae 22 20095 Hamburg Germany MUNICH Thomas Mller Partner, Capital Markets thomas.mueller@eur.cushwake.com +49 89 242 14 33 33 Maximilianstrae 40 80539 Munich Germany
ITALY
Milan Stephen Screene Partner, Head of Capital Markets stephen.screene@eur.cushwake.com +39 02 63 7991 Via F. Turati 16/18 20121 Milan Italy Rome Carlo Vanini Partner, Capital Markets carlo.vanini@eur.cushwake.com +39 06 4200791 Via Vittorio Veneto 54b 00187 Rome Italy
PORTUGAL
Luis Antunes Partner, Head of Capital Markets luis.antunes@eur.cushwake.com +351 21 322 4753 Avenida da Liberdade 131 2nd Floor 1250-140 Lisbon Portugal
SPAIN
Barcelona Reno Cardiff Partner, Capital Markets reno.cardiff@eur.cushwake.com +34 93 488 18 81 Passeig de Grcia 56-7C 08007 Barcelona Spain Madrid Rupert Lea Partner, Retail Capital Markets rupert.lea@eur.cushwake.com +34 91 781 38 37 Paloma Relinque Partner, Business Space Capital Markets paloma.relinque@eur.cushwake.com +34 91 781 38 43 Edificio Beatriz Jos Ortega y Gasset, 29-6a Plta 28006 Madrid Spain
UNITED KINGDOM
David Erwin CEO, Capital Markets UK david.erwin@eur.cushwake.com +44 20 7152 5016 Andrew Thomas Partner, London Capital Markets andrew.thomas@eur.cushwake.com +44 20 7152 5181 PJ Thibault Partner, Business Space Capital Markets pj.thibault@eur.cushwake.com +44 20 7152 5022 43-45 Portman Square London, W1A 3BG England For all other EMEA enquiries contact: Michael Rhydderch Partner, Head of EMEA Capital Markets michael.rhydderch@eur.cushwake.com +44 207 152 5060 Jan-Willem Bastijn Partner, EMEA Capital Markets janwillem.bastijn@eur.cushwake.com +31 20 8002081 Michael Rodda Partner, Head of Retail, EMEA Capital Markets michael.rodda@eur.cushwake.com +44 20 7152 5661 Nick Jones Partner, Head of Industrial, EMEA Capital Markets nick.jones@eur.cushwake.com +44 20 7152 5226
CZECH REPUBLIC
James Chapman Partner, Head of Capital Markets james.chapman@eur.cushwake.com +420 234 603 210 Na Prikope 1 110 00 Prague 1 Czech Republic
ROMANIA
Charles Henry Partner, Head of Capital Markets charles.henry@eur.cushwake.com +40 744 333 094 Opera Center II 2nd Dr. Nicolae Staicovici Street 4th Floor Bucharest, Sector 5 Romania
FRANCE
Thierry Juteau Partner, Head of Capital Markets thierry.juteau@eur.cushwake.com +33 1 53 76 95 51 11-13 Ave de Friedland Paris 75008 France
THE NETHERLANDS
Mathijs Flierman Partner, Director Capital Markets mathijs.flierman@eur.cushwake.com +31 20 800 2089 Atrium, 3e verdieping/3rd Floor Strawinskylaan 3125 1077 ZX Amsterdam Netherlands
RUSSIA
Tom Cashel Partner, Head of Capital Markets tom.cashel@eur.cushwake.com +7 495 799 9875 Ducat Place ||| BC, 6th Floor Gasheka Street, 6 125047 Moscow Russia
SWEDEN
Magnus Lange Managing Partner magnus.lange@eur.cushwake.com +46 85 456 7714 Sergels Torg 12 SE-111 57 Stockholm Sweden
GERMANY
Frankfurt Frank Nickel Partner, CEO Germany frank.nickel@eur.cushwake.com +49 69 506073 111 Westhafenplatz 6 60327 Frankfurt am Main Germany
HUNGARY
Charles Taylor Partner, Head of Capital Markets charles.taylor@eur.cushwake.com +36 1 268 1288 Dek Palota Dek Ferenc utca 15 Budapest 1052 Hungary
POLAND
Wojciech Pisz Partner, Retail Capital Markets wojciech.pisz@eur.cushwake.com +48 22 8202059 Soren Rodian Olsen Partner, Business Space Capital Markets soren.olsen@eur.cushwake.com +48 228202144 Metropolitan Plac Pilsudskiego 1 00-078 Warsaw Poland
SLOVAKIA
James Chapman Partner, Head of Capital Markets james.chapman@eur.cushwake.com +420 234 603 210 Pribinova 10 811 09 Bratislava Slovak Republic
TURKEY
Togrul Gonden Managing Partner togrul.gonden@eur.cushwake.com +90 212 334 78 00 Inn Cad. Devres Han No. 50 2/A Gmssuyu 34437 Beyoglu Istanbul Turkiye
26
THE FULL REPORT

The full report from which this summary is taken provides an introduction to the worlds key investment markets for real estate. A total of 51 locations are reviewed with market by market profiles as outlined below.
Sample Country Profiles
Markets covered
Argentina Australia Austria Bahrain Belgium Brazil Bulgaria Canada Channel Islands Chile China Colombia Croatia Czech Republic Denmark Finland France Germany Greece Hong Kong Hungary India Ireland Israel Italy Japan Luxembourg Mexico Netherlands New Zealand Norway Peru Poland Portugal Republic of Korea Romania Russia Serbia Singapore Slovakia Slovenia South Africa Spain Sweden Switzerland Turkey Ukraine United Arab Emirates United Kingdom USA Vietnam
The full report is available exclusively to Cushman & Wakefield clients. For more information about obtaining a printed copy, please contact michelle.mejia@eur.cushwake.com
27
Cushman & Wakefield is the worlds largest privately-held commercial real estate services firm. The company advises and represents clients on all aspects of property occupancy and investment, and has established a preeminent position in the worlds major markets, as evidenced by its frequent involvement in many of the most significant property leases, sales and assignments. Founded in 1917, it has 253 offices in 60 countries and more than 14,000 employees. It offers a complete range of services for all property types, including leasing, sales and acquisitions, equity, debt and structured finance, corporate finance and investment banking, corporate services, property management, facilities management, project management, consulting and appraisal. The firm has more than $4 bn in assets under management globally. A recognized leader in local and global real estate research, the firm publishes its market information and studies online at www.cushmanwakefield.com/knowledge. This report has been prepared solely for information purposes. It does not purport to be a complete description of the markets or developments contained in this material. The information on which this report is based has been obtained from sources we believe to be reliable, but we have not independently verified such information and we do not guarantee that the information is accurate or complete. 2013 Cushman & Wakefield, Inc. All rights reserved. Cushman & Wakefield, LLP 43-45 Portman Square London W1A 3BG www.cushmanwakefield.com
28
www.cushmanwakefield.com
2013 Cushman & Wakefield All rights reserved

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international investment atlas summary

A Cushman & Wakefield Research Publication

International Investment Atlas Summary 2013

International Investment Atlas Summary 2013

Global investment activity

Yield (ex mulitfamily)

International Investment Atlas Summary 2013

New York USA

FIGURE 2 TRENDS IN THE GLOBAL MARKET IN 2012

Prime ERV Growth (%pa) 9% 8% 7% 6% 5% 4% 3% 2% 1% 0%

FIGURE 3 CROSS BORDER INVESTMENT BY REGION (2012)

Investment share in 2012

International Investment Atlas Summary 2013

GLOBAL INVESTMENT ACTIVITY

Auckland New Zealand

International Investment Atlas Summary 2013

London United Kingdom

Figure 4 Sector Share of Global Trading

Source: Cushman & Wakefield, RCA, KTI and Property Data

International Investment Atlas Summary 2013

GLOBAL INVESTMENT ACTIVITY

Figure 6 Top 20 CITY Investment Targets

International Investment Atlas Summary 2013

Figure 7 APAC Property Investment Volumes

160 Quarterly investment volumes (US$ bn) 140 120 100 80 60 40 20 0 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12

Yield (ex multifamily)

International Investment Atlas Summary 2013

GLOBAL INVESTMENT ACTIVITY

120 Quarterly investment volumes (US$ bn) 100 80 60 40 20 0 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q112

Yield (ex multifamily)

International Investment Atlas Summary 2013

Yield (ex multifamily) 9

International Investment Atlas Summary 2013

GLOBAL INVESTMENT ACTIVITY

Quarterly investment volumes (US$ bn)

140 120 100 80 60 40 20 0 Q1 07 Q1 08 Q1 09 Q1 10 Q1 11 Q1 12

Yield (ex multifamily)

All-sector average prime yield

Figure 10 North America Property Investment Volumes

International Investment Atlas Summary 2013

The importance of logistics is increasing in a virtual world but 

Structural drivers will be crucial for investment and finance in 

Specifically within the property sector, much of the property 

Further merger and acquisition activity is likely as a route to 

Finally, it is worth noting that technological change and 

179.0 15.1 1.1 5.4 290.4 314.5 123.1 929.3

-0.2% -21.6% -65.2% -51.4% 22.9% 5.9% -1.3% 6.0%

51% 56% 19% 54% 51% 264% 79% 75%

186.2 16.4 1.3 6.2 341.2 361.7 147.7 1,060.7

4% 9% 25% 15% 18% 15% 20% 14%

International Investment Atlas Summary 2013

GLOBAL INVESTMENT ACTIVITY

100 57 86 50 14 -75 -12 23

-10 -5 -5 -50 -15 -15 -20 -15

1.2% 2.2% 0.5% 11.2% 4.3% 6.9% 4.0% 4.7%

1.0% 0.0% 1.5% 5.0% 5.0% 6.0% 2.0% 4.5%

International Investment Atlas Summary 2013

Source: Cushman & Wakefield, RCA, KTI and Property Data

International Investment Atlas Summary 2013

GLOBAL INVESTMENT ACTIVITY

International Investment Atlas Summary 2013

International Investment Atlas Summary 2013

global investment volumes

The importance of logistics is increasing in a virtual world but

Structural drivers will be crucial for investment and finance in

Specifically within the property sector, much of the property

Further merger and acquisition activity is likely as a route to

Finally, it is worth noting that technological change and