Cityscape 2015

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JAN/FEB 2015

CITYSCAPE MALAYSIA SPECIAL EDITION

Investment: Opportunities in Malaysia

Architecture:The art of global practice Benoy

Interview: Faith H. Consolo, the U.S. Queen of Retail

GLOBAL

INVESTMENT

OUTLOOK 2015An expert guide into this years

investment trends & hotspots

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Aqaba Special Economic Zonewishes you a rewarding 2015

+962 32 091000 [email protected]

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Events Calendar

6 - 8 December 2015KUWAIT

KuwaitKuwait International Fairgrounds

Kuwait City, Kuwait

11 - 13 May 2015QatarDoha Exhibition Centre

Doha, Qatar

5 - 7 April 2015JeddahJeddah Center for Forums and Events

Jeddah, KSA

16 - 19 September 2015EgyptCairo International Convention

& Exhibition Centre, Cairo, Egypt

21 - 23 April 2015Abu DhabiAbu Dhabi National Exhibition Centre

Abu Dhabi, UAE

4 - 6 February 2015MalaysiaKuala Lumpur Convention Centre

Kuala Lumpur, Malaysia

DubaiDubai World Trade Centre

Dubai, UAE

8 - 10 September 2015

12 - 14 June 2015KoreaSongdo Convensia, Incheon, Korea

RiyadhRiyadh International Convention

& Exhibition Centre, Riyadh, KSA

23 - 25 November 2015

25 - 26 May 2016

Other Cityscape Portfolio Event:

New YorkJavits Center, New York, USA

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7 EDIORS LEER

8LAES NEWS8 MIDDLE EAS NEWS

30 ASIA PACIFIC NEWS

38 EUROPE NEWS

46 AMERICAS NEWS

17AFRICA FOCUS17 BOSWANA| Africas most

transparent real estate market

21COVER SORY21 GLOBAL INVESMEN

OULOOK 2015 |An insight into

global investment trends & hotspots

27 MENA INVESMEN

OULOOK |Focus on the MiddleEast & North Africa region

30 ASIA PACIFICINSIGH32 MALAYSIA| Southeast

Asias investment hotspot

35 BANGKOK | Solid real

estate growth for 2015

38EUROPEINSIGH40 EUROPE | Investment

market trends Q4 2014

43 FRANCE| Investor

interest holds steady

46AMERICASINSIGH48 PERSONALIY| Faith H.

Consolo, U.S. Queen of Retail

52 UNIED SAES | Art guarantees

real estate development

56REGULARFEAURES56 ARCHIECURE| Te

art of Benoy

60 SUSAINABILIY| Wood

revolutionises construction

64 REAIL| Changing consumer

behaviour & its implications

for the retail industry

68INDUSRY PAGES68 LEGAL COMMENARY70 MOVERS & SHAKERS

71 CIYSCAPE EVENS

72 PROJEC OF HE MONH

CON ENS

32

21

17

48

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EDIORS LEER

Welcome to this special edition

of Cityscape Malaysia, the

latest event in the Cityscape

portfolio, which recently launched at theKuala Lumpur Convention Centre.

Malaysia is not only tipped as

Southeast Asias real estate investment

hotspot but its capital is also the second

most livable city in the region, according

to a 2013 EUI ranking of 140 cities.

Stable economic growth in the country

is supporting development across the

majority of asset classes and bodes well

for further market growth in the future.

Cityscape Malaysia will put theMalaysian real estate market into inter-

national focus, aid foreign and domestic investment and is an expression of our

commitment to supporting growth in emerging real estate markets worldwide.

In this publication we also look at new opportunities in global real estate

markets. Whilst many markets are showing posit ive growth following the 08/09

crisis, there still remains a great deal of geopolitical and economic uncertainty

in others. However, it seems this is no major concern for global investors who

continue to pump capital in a wide range of markets, particularly the U.S. and

Europes safe haven markets.

Our cover story looks back at last years investment trends and analyses

the prospects for investors in global markets in 2015, with a separate analysisdedicated to MENA markets.

Turning to Europe, we take a look at Frances real estate climate and find that

despite a suffering economy, investor interest holds steady, particularly in Paris

commercial market as well as in well-known second home destinations such as

Cte d'Azur and the Alps.

Across the Atlantic in the Americas, we speak to Faith H. Consolo, one of the

U.S. most successful retail real estate professionals, about the allure of working in

such a fast paced and versatile industry. Also in the United States, we explore the

show floor of Art Basel Miami and investigate how art and real estate development

are often linked closely together, with interesting results.

Last but not least, with the topic of sustainable construction becoming evermore important, we have dedicated a feature to building with wood. Whilst this

is nothing new in principle, the construction of tall buildings using wood as a

structural base on the other hand is quite novel a New Zealand professor

explains how it works.

Enjoy the read.

Anna AminEditor

Jan/Feb 2015 ICIYSCAPE I7

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MIDDLE EAS NEWS

Cairo residentialsector strengthens

in the last quarterof 2014he Cairo real estate market showed

signs of strengthening in the residential

market and stability in the commercial

sector due to new projects in the second

of half of 2014. Tis according to JLLs Cairo

Real Estate Market Overview report.

Cairos office landscape expansion will

increase the total stock across Greater

Cairo and rents will be stable across all the

commercial locations, said Ayman Sami,Head of Egypt Office at JLL. Developers are

now able to progress with stalled projects,

and the high level of delays witnessed in

recent years is therefore likely to decline. As

confidence returns, the Ministry of ourism

continues to promote a number of mega

investments across the country, 2015

could see major new hospitality projects

announced in Cairo.

he report also revealed that Cairo's

office performance remained relatively

unchanged over the last quarter of 2014,

with rents stable across all the commercial

locations monitored by JLL. he major

completion in Q4 was a further 14,000 sqmin Mivida (New Cairo). An additional 52,000

sqm is expected to be delivered in 2015, of

which 31,000 sqm are due for delivery in Q1.

Cairo's residential market continues

to recover with improved sales figures.

Apartment and villa sale prices increased

during 2014. Over the past quarter, the

strongest growth has been recorded in villa

prices in October (up 9%) and apartment

rents in New Cairo (up 7%). Te positive

political and economic outlook is expectedto drive investments in the residential

sector, particularly in prime property, thus

strengthening the market further in 2015.

Te Cairo retail market remained stable

in Q4 2014, with average prime retail

rents static at between USD 720 USD

1,416 sqm and average line store rents

unchanged at USD 1,170 sqm. Demand

has been relatively active over the quarter,

particularly from the food and beverage

segment.

Te governments announcement to

investigate the possible introduction

of a tram service across Muscat isthe first sign of a long awaited public

transportation infrastructure plan, with

the citys real estate landscape directly

expected to benefit in the long term.

Property consultant Cluttons

believes that through transportation

the government is adding long term

premiums to residential values and

commercial rents.

he proposed tram network is

certainly a step in the right direction. Acity as large and linear as Muscat would

benefit tremendously from public

transport. While the tram network

will go some way in addressing theclear need for improved transport

systems, authorities should ensure

that both its route and integration

into the citys urban fabric are care-

fully considered, said Faisal Durrani,

International Research and Business

Development Manager at Cluttons.

He added that the city had evolved

to a point where public transport was

the obvious missing piece in Muscats

landscape.

8 I CIYSCAPEI Jan/Feb 2015

Matthew Wright, Head of

Consultancy and Industrialfor Cluttons in Oman

Muscat real estate landscape to benefitfrom potential tram service

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MIDDLE EASNEWS

DWC breaksground for execu-

tive terminalDubai World Central, the worlds firstpurpose-built aerotropolis, will build the

Executive erminal which will cater exclu-

sively to business aviation.

he 6,000 sqm Executive erminal is

sited at DWCs Aviation District and is

scheduled to be completed in Q4 of 2015.

Te facility will host Jet Aviation, XJet and

Jetex as key fixed-based operators.

DWC is partnering with industry leaders

to build a complete ecosystem for a world-class aerotropolis, and the Executive

erminal is a step in the right direction, said

Rashed Bu Qaraa, Chief Operating Officer,

Dubai Aviation City Corporation. Providing

integrated access to both land side and

air side, DWCs Aviation District enables

the seamless functioning of fixed- based

operations and is therefore ideally placed

to host a project of this magnitude.

Services at the Executive erminal willbe supported by a USD 80 million VIP

Completion Centre, scheduled for comple-

tion by Falcon Aviation by the end of 2015.

he DWC Aviation district is a 6.7 sq

km master planned district within the

aerotropolis, and adjacent to Al Maktoum

International Airport. It offers aviation

infrastructure as part of Dubais strategic

vision for the aviation sector. Beyond its

aviation focus, the district will also offer

well-defined zones for sectors such ashospitality, education, research and devel-

opment, and mixed-used development.

DWC, a strategic government initiative,

is a 145 sq km purpose-built aerotropolis

with the Al Maktoum International Airport

as its core.

Positive outlook forDubai real estate in 2015

In its annual UAE market view of

2014 -2015, property consultant

Knight Frank reflects on the last 12

months of 2014 and looks ahead to

what 2015 has to offer.

Te analysis reveals that property

prices in Dubai last year con-

tinued their recovery, albeit ata slower annual growth rate.

Cooling measures brought in

by the UAEs Central Bank,

such as the reduction of the

LV ceiling for mortgages for

both foreigners and locals,

and a doubling in the transfer

fee to 4%, led to a reduction

in residential transactional

activity.

he prime segment, transactionvolumes were 14% lower year-on-year

in Q3. Tis applied downward pressure

on prices, which fell by 0.2% quarter-

on-quarter the first decline in almost

three years.

Weve seen a reduction in non-GCC

demand for prime housing stock

that is properties priced at AED 10

million and above, said James Lewis,Partner at Knight Frank discussing

the residential sector. hats not

to say that foreign nationals are not

still purchasing properties in Dubai,

just that many of them are opting for

apartments and villas which are priced

in the mid-range bracket, where prices

saw an annual increase of

around 12.5% in Q3.Lewis added that while

residential prices have broadly

fallen qu arter-on-quarter

across both the mainstream

and prime housing segments

there were certain pockets

such as Jumeirah Village,

Dubai Sports City and Dubai

Silicon Oasis that have been

relatively insulated partly down to

the fact that prices have risen off arelatively low base.


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MIDDLE EAS NEWS

Abu Dhabi rentsrise as office mar-

ket remains flatAverage residential rents continued toincrease during Q4 2014, but at a slower

pace than at the start of the year with

average market rents increasing by around

3% quarter-on-quarter, and roughly 17%

from the same period last year, according

to the Q4 2104 Abu Dhabi MarketView by

global real estate consultancy firm CBRE.

Te delivery of new supply in recent

months has increased competition for

tenancies, resulting in a more cautiousapproach by some landlords who have

become more realistic with their rental

requests, said Mat Green, Head of

Research & Consultancy UAE, CBRE

Middle East.

According to the CBRE report, the quarter

also witnessed an increase in interest

from end-users looking to purchase their

own homes, driven by imminent lease

expirations or planned relocations due to

the rising rental costs.Residential properties situated on the

outskirts of the city have continued to gain

popularity, principally due to affordability

reasons. With sustained rental growth

in central city locations, housing unitssituated in areas such as Khalifa City A & B,

Mohammed bin Zayed City and Mussafah

have become viable alternatives for price-

conscious residents.

According to the report, the villa market

continues to display more stable signs with

limited available lease options and strong

tenant loyalty resulting in limited volatility.

Te Abu Dhabi office market, according

to the CBRE report, remained largely

stable during the quarter with minimalmovement in either supply or demand

levels recorded. No major new office supply

was completed during the final quarter,

leaving stock unchanged at around 3.66

million sqm, providing a further cushion

for maintaining steady rents and vacancy

rates. Prime office rental values remained

fixed at around AED1,850/sqm/year,

reflecting a 3.0% change from the same

period during 2013. Average office rents

also remained flat at AED1,150/sqm/year.

Sustainability key in construction of Mall of Egypt

With the construction plan well

underway, Mall of Egypt is projected

to open to the public in 2016. he

development plan of the EGP4.9

billion project includes applyingcutting-edge construction tech-

niques as well as incorporating

international best practices in

sustainability.

Mall of Egypt is working with

local partners to help develop,

i m p l e m e n t a n d e v e n t u a l l y

maintain the integrated sus-

tainability strategy for the mall.

he strategy focuses on estab -

lishing an environmental datamanagement system in order

to effectively measure and monitor

efficiency in managing energy, water

and waste. his data collection will

ultimately help Mall of Egypt better

understand resource efficiency

in construction, and serve as a

reference for future p lans.Ibrahim Al-Zu'bi, Head of

Sustainability, Majid Al Futtaim

Properties said that it was their

duty to hold sustainability as a

core philosophy. he develop-

ment of our localised environ-

mental sustainability plan is a

ground breaking step toward

the widespread adoption of

sustainabili ty across the region,

he said.


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MIDDLE EASNEWS

Real estate valuesclimb 28% in fiveyears in DubaiMarina

A new wave of transport, retail and

leisure facilities at Dubai Marina is continu-

ing to drive buyer demand at the popular

beachside location, where prices have

risen by 28%, to AED 1,670 psf in the past

five years, according to Cluttons.

With the Dubai tram now fully operational

and Te Beach Mall offering a convenient

mix of retail, dining and entertainment just

a few minutes stroll away; residential unitsat JBR are proving a popular choice for both

domestic buyers in search of a home and,

international buyers looking for turnkey

investments.

According to Cluttons these latest

additions to the waterfront location will

continue to drive the value of real estate

in JBR, with residential developments like

Shams 1 proving popular with investors as

they look to add prime real estate, with

attractive rental yields, to their portfolios.Across Dubai average residential values

stand at AED 1,493 psf, considerably

lower than other premium locations within

Dubai Marina.

According to Cluttons Faisal Durrani

prices have continued to hold or rise in the

well-established areas like Dubai Marina

an JBR due to completed infrastructure

and community facilities. his appeals

to owner occupiers who are seeking

beachside living and international inves-tors that can achieve rental yields in the

region of 6% to 8%. With this rate of return

its not surprising that Dubai featured

second among nine global investment

locations in our most recent International

Private Capital Survey.

JLL, the world's leading real estate

investment and advisory firm,

released its second annual City

Momentum Index (CMI), ranking

global cities on real estate and

socio-economic factors. he Index

provides a new view into what

makes cities dynamic, sustainablefor future opportunities and tracks

the speed of change of a city's

economic base and its commercial

real estate market.

he CMI goes beyond traditional

static economic rankings by delving

into the underlying drivers that keep

cities competitive and dynamic, as

well as identifying signals for change

that will impact their future.

Dubai remains in t he op 20 globalcities in terms of dynamism and

pace of change, although its rank

has dropped as g rowth in residential

real estate prices moderates to more

sustainable levels, said Craig Plumb,

Head of Research, JLL MENA.Dubai remains in the op 20, even

though it has dropped its rank due

to stabilising real estate prices.

Momentum is expected to continue

with activity bolstered by major

project spending relating to Dubai

hosting the World Expo 2020.

echnology-rich cities dominate

the CMI. Several of the world's mos ttech-rich cities maintained a posi-

tion in the top 20, including London

(1), San Jose (2), Boston (7) and San

Francisco (9). Newcomers to the

top 20, thanks to the technology

sector, include Sydney (11), Dublin

(14), Melbourn e (15), Bangalore (12)

and Nairobi (15).

Sub-Saharan Africa makes its

debut in the op 20, represented

by Nairobi.


Dubai remains the major globalmarket in the ME

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MIDDLE EAS NEWS

Riyadh retail sec-tor shows growth

in Q4Property consultant JLL has released itslatest report on the Riyadh market revealing

trends in the office, residential, retail and

hotel sectors in Saudi Arabias largest city.

In the last quarter of 2014, we have wit-

nessed the introduction of new mortgage

regulations requiring a 30% down payment

on all home financings; this has restricted

growth levels in the residential market,

said Jamil Ghaznawi, National Director and

Country Head of JLL KSA. While in theoffice sector, new supply has constrained

performance and increased vacancies.

Confidence in the retail markets remains

strong as reflected in the announcement

of various new shopping centres, positively

effecting rental growth figures.

He added that supply increases in the

hotel sector showing that occupancy rates

were improving and average daily rates

remain under downward pressure.

Te Saudi real estate market is heavily

dependent on government spending

and while the more prudent approach is

unlikely to have an immediate impact onthe market in 2015, it certainly makes the

end of a period of rapid increase in spending,

which could constrain the growth of the real

estate market in the longer term, he said.

According to the report the retail sector

saw no new completions over the last

quarter, as only smaller retail centres were

delivered. Rents have slightly increased in

regional and community shopping centres

whereas super regional malls saw no

increase. Vacancy levels in major malls haveslightly decreased (-1%) during this quarter.

Delays in the KAFD and ICC projects have

resulted in their retail components being

pushed back into 2015 and beyond.

In the residential sector property values

in Riyadh have increased over the past year,

while the last quarter saw more subdued

growth. No new hotels were delivered

to the hospitality sector during the last

quarter of 2014.

Select Group, one of Dubais largest

private real es tate developers, has

awarded an AED 1 billion contract forthe first two phases of its flagship

Marina Gate development in Dubai

Marina. Te contract has been awarded

to ALEC.

Select Group launched Marina

Gate II in October. Te two projects

comprise 881 residential apartments,

19 penthouses and 18 duplex Marina

villas, in addition to 100,000 sq.ft of

retail space.

Te residences at Marina Gate arevalued at over AED 4 billion and have

a built up area in excess of 3.8 million

square feet. Te project is scheduled

for completion by 2018.Awarding a contract of this quantum

early on is not only a reflection of

our confidence in Dubais real estate

market, but is a culmination of our

detailed financial and technical planning

work over the last two years, which has

been reinforced by the strong investor

appetite for this project, said Rahail

Aslam, CEO of Select Group.


AED 1 Billion contract forMarina Gate Development

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urkey has undergone a profound

economic transformation over the past

decade and its economic fundamentals

are quite solid. urkey is the 17th

largest economy in the world and the

6th largest economy in Europe, with a

GDP of approximately USD 822 billion

in 2013. he demand drivers of the

urkish real estate sector are a favorablegeographical location, population growth

and demographic advantage, increase

in income per capita, extensive urban

renewal and development, large capacity

in the construction sector and ease of

doing business.

Construction is one of the key

sectors in urkey, and is also one of

the main drivers of private and public

investments. oday, operations of urkish

contractors span four continents andover 70 countries, complying with all

financial, managerial and technological

instruments of international contracting

standards. Te international Engineering

News-Record (ENR) weekly ranked the

urkish construction and contracting

sector amongst the top three worldwide,

behind only the U.S. and China. 42 urkish

contractor companies made ENRs op

250 International Contractors list in 2014.

he construction sector grew by5.2 percent in the first quarter of 2014,

faster than urkey's GDP, thanks to mega

projects, including the third bridge on

the Bosphorus and the third airport in

Istanbul. With more than USD 21 billion,

the construction sector had a share

of around 20 percent alone in urkey's

overall exports in the first 9 months of

2014 which stood at around USD 118,225

billion. Te sharp changes in urkeys realestate sector during the past ten years

are one of the largest contributors to

the development in the construction

sector. 19.5 percent of urkeys total GDP

represents the construction and real

estate sectors, which mean there is vast

investment potential in these sectors.

On the investment side, urkey

attracted approximately USD 10,047

billion FDI in the first ten months of 2014,

out of which USD 3.509 billion were netreal estate purchases. In this period,

sales of real estate to foreigners began

to increase following the enactment of

the reciprocity law as well as the current

situation, which, on the back of strategic

plans and future projects in the pipeline,

bears huge potential for investors in

urkeys real estate sector. Gulf countries

are also grabbing their share in the urkish

real estate market, the sixth in the "top-10

hottest real estate markets around theworld in December 2013. Furthermore,

development and the setting of new

targets continue with urban renewal and

mega projects, including Marmaray, Kanal

Istanbul, third Bosphorus bridge and the

third Istanbul airport.

Kanal Istanbul, one of the mega

projects, is an artificial sea-level waterway

between the Black Sea and Sea of

Marmara and will cost USD 10 billion. Te

canal will be 25 meters in depth and 145

to 150 meters wide.It is no wonder urkey has been named

the Country of Honor for some of the

worlds most prestigious real estate

shows in 2013. Te Emerging rends in

Real Estate Europe 2013 report, prepared

jointly by PricewaterhouseCoopers (PwC)

and the Urban Land Institute (ULI), ranks

Istanbul as the most attractive real estate

market with regard to development

prospects based on the citys exciting

real estate potential.Strategically situated at the crossroads

of Europe, the CIS, Middle East and Asia,

and home to almost 72,000,000 people,

urkey has easy access to 1.5 billion

consumers. he country is a major

energy corridor and serves as a terminal

connecting Europe, Central Asia and the

Middle East. With its favorable location,

existing potential, mega projects and

ambitious targets for 2023, urkey

offers great opportunities for investors,combining a large construction sector

with growing commercial and industrial

output.

URKISH REAL ESAE AND HECONSRUCION SECOR

www.invest.gov.tr

ADVERTORIAL

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MIDDLE EAS NEWS

Egypt hospitalityto witness rising

popularityIn its latest MENA Hotel Market Forecast,Colliers International revealed that there are

significant opportunities for the hospitality

market in Cairo and Sharm El Sheikh. Te

report discusses the rising popularity of

Sharm El Sheikh with European visitors

and socio-political stability in Cairo as key

drivers of growth.

Colliers International has conducted

valuations of 32-35,000 keys and asset

management of 7,800 keys in the region,which has provided us with a unique insight

into what lies ahead for this dynamic

sector, said Filippo Sona, Director, Head

of Hotels at Colliers International.

he forecast for January highlights

the re-emergence of Egypt as a regional

powerhouse in the hospitality sector,

with an anticipated 35% and 97% growth

in RevPAR in Cairo and Sharm El Sheikh

respectively. On the other hand, theemirate of Fujairah and Sheikh Zayed

Road in Dubai are the two submarkets that

are anticipated to feel most pressure on

RevPAR in the coming months.

Whereas growth in the top two markets

of Sharm El Sheikh and Cairo is driven by

demand factors, the amount of supply

scheduled to come online is the key factor

shaping the outlook for Fujairah and Sheikh

Zayed Road, Dubai, concluded Sona.

Te forecast is the first of its kind for theindustry in the region and provides three

month rolling and year-end hotel per-

formance forecasts for key performance

indicators in cluding: hotel occupancy,

Average Daily Rate (ADR) and Revenue per

Available Room (RevPAR).

Dubai Investmentseyes expansion

Dubai Investments PJSC, the

leading investment company lis ted

on the Dubai Financial Market, has

announced expansion plans across

its diversified portfolio, which includes

two new acquisitions worth AED 400

million.

he new acquisition inthe financial and real estate

sectors to be finalised soon,

are expected to reinforce

Dubai Investments robust

growth across its 40-plus

subsidiaries and joint ven-

tures, amidst surging trends

and escalating investor confidence.

he expansion plans come close

on the heels of a successful 2014

for Dubai Investments, which sawits operations across real estate,

glass and construction materials

manufacturing businesses achieving

strong year-on-year growth.

Te new real estate company will

be a great addiction to our portfolio,

and contribute to our growth amidst

the current upswing in the sector, said

Khalid Bin Kalban, Managing Director

and CEO of Dubai Investments PJSC.

Te real estate industry has alwaysbeen a key driving force for UAEs

economy and the unprecedented

demand in the sector benefited DI

immensely, given our wide presence

across the entire spectrum of the

industry, he added.

During 2014, DI unveiled a number of

real estate projects - includ-

ing the Midriff Hills project, amixed-use residential, com-

mercial and retail develop-

ment in Dubai, as also the AED

400 million Fujairah Business

Centre project, being devel-

oped by its subsidiary Al aif

Investment.

Over 67% of DI's asset base is in the

real estate sector, worth over AED 8.2

billion. DI has one of the largest land

banks across the UAE.


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MIDDLE EASNEWS

JLL reveals 2015top trends for UAE

real estateGlobal property consultant JLL haveoutlined key trends affecting the UAE real

estate market this year in its 2015 op rends

for UAE Real Estate.

Te report outlines eight crucial trends

that will affect the Emirates in 2015.

2015 will see the Dubai residential bubble

deflate. he overall macro-economic

environment for 2015 remains relatively

comfortable. In some ways this cooling

off sentiment is a positive, in that it hasaffectively reduced the pressure on asset

prices that was emerging in 2013 and the

first half of 2014.

Te hospitality market will face increasing

challenges in 2015. Te immediate trigger for

the slowdown in activity is the strength of

the USD, which has made Dubai relatively

expensive for those coming from non-dollar

dominated economies. With the value of the

ruble falling so significantly over the past six

months, the number of Russian tourists to

the UAE fell by 8% in October, with a much

more pronounced fall expected in 2015.

Office rentals will remain stable. However,

vacancy rates will remain significant despitea continued gradual improvement in the

strata title market. he office market is

becoming more similar to developed

markets overseas.

JLL expects that varied sources of funding

will be the dominator in 2015, with equity

being the preferred funding approach.

2015 will see a significant but not exces-

sive level of new supply entering the market,

with 25,000 residential units, 1.2 million sqm

of office space, 267,000 sqm of retail spaceand 4,700 hotel keys.

In Abu Dhabi, a new rental cap is likely to

be implemented, marking an improvement

in transparency.

JLL predicts that the recent reduction in oil

prices could lead to some delays in projects,

thereby easing pressure on construction

costs. In addition, quality road access and

public transport will have greater influence

on rents and values in 2015.

Dubai real estate investments haveexceeded AED 109 billion in 2014

he Dubai Land Department

has announced that the sum of

real estate investment transac-

tions for 2014 exceeded AED 109

billion, through 41,715 investors.Dubai is the ideal investment

location in the Middle East, and it

is also competi ng with top invest-

ment cities in Asia and Europe.

he report clearly shows the

sustainable g rowth of t he upcom-

ing years towards the launch of

Expo2020, said HE Sultan Butti

Bin Merjen, Director General of

DLD.

he DLD investment report,which tracks the department's

real estate transaction activi-

ties over the course of the year,

revealed that citizens of the GCC

states contributed AED 32 billion

from 7,186 investors in 2014.Emirati investment formed the

lion's share of this figure with

total transactions of AED 22.771

billion amounting from 4,452

transactions, while citizens of

Saudi Arabia came in at second

place after making transactions

worth AED 5.207 billion amount-

ing from 1,745 transactions. hey

were followed by Kuwaiti, Qatari

and Bahraini nationals.


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The fastest growing economy among the OECD members withan average annual growth rate of 5.2% (OECD 2012-2017)

One of the fastest growing economies in the world and the fastestgrowing economy in Europe with an average annual real GDPgrowth rate of 5,1% over the past decade (2004-2013)

More than 37,500 foreign companies have already invested in Turkey.How about you?

16th largest economy in the world with over $1,1 trillionGDP at PPP (IMF 2013)

A population of 76,6 million with half under the age of 30,4

Access to Europe, Caucasus, Central Asia, the Middle East andNorth Africa

Highly competitive investment incentives as well as exclusiveR&D support

Around 610,000 university graduates per year

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BUSINESSCONFIDENCE

ON THE RISE INBOTSWANA

ECONOMIC OVERVIEW

Botswanas economy is anchored byits mining and agriculture sectors. Te

mining industry accumulates the major-

ity of resource-based income, primarily

from diamonds and, to a lesser extent,

copper. Te agricultural sector provides

the most employment for the populace.

Economic growth ha s been steady over

the past few years, and Botswana is now

established as a middle-income country.

Speaking to Cityscape magazine,

Keith Jefferis, Managing Director ofEconsult Botswana, an economic and

development consultancy firm, said

the countrys economy grew by 5.8% in

Strategically located in the heart

of S outhern Africa, Botswanahas consistently been one of the

worlds best p erforming economies.

According to experts its success can be

attributed to high quality mineral and

agricultural resources, tourism, political

stability and good governance.

In a recent report by property consult-

ant Cushman and Wakefield, Botswana

emerged number one among 42 emerg-

ing and frontier property markets around

the world. Te report, which assessesrisk and opportunity, identified Botswana

as the most efficient and transparent

developing commercial real estate market.

2013, driven by strong growth in diamond

mining. Besides mining, other fastgrowing sectors were mostly in services

such as trade, hotels and restaurants,

finance and business services.

Looking ahead, diamond mining

which is the largest sector of the

economy is expected to continue

growing but more slowly, as production

reaches a plateau. Tere is potential for

the expansion of other mining activities,

such as copper, nickel, coal and uranium,

but all of this depends on favourablemovements in commodity prices and

stronger global economic growth, said

Jefferis.


MIDDLEEAST STORY BOSWANA AFRICA FOCUS

As one of Africas most stable economies, Botswana has been identified by experts as the

most efficient and transparent developing commercial real estate market in the world.

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INDUSRIAL MARKEAccording to a report by ProAfrica

Property the principal industrial areas

of Botswana are located along the main

railway line, primarily in Broadhurst,

Gaborone West and in area Phase 4 and

with the increasing development of themining industry, demand for industrial

premises is expected to increase.

Additionally, major infrastructure

improvements, such as new roads and

expanded railways, will help to keep the

industrial market active over the next

few years.

A lack of product, both to buy and

lease, is frustrating both occupiers

and investors. he principal locations

in Gaborone remain in strong demandwith a relatively diverse occupier base,

whereas demand in most other towns

is heavily driven by the fortunes of the

local mines, said Green.

For Garrun of MSCI Real Estate the

top performing sector for 2013 was the

industrial sector, which outperformed as

a result of superior income return and a

solid capital growth of 13.5%.

Tis is a very superior income returnin terms of industrial. In most countries

the manufacturing sector drives the

industrial sector, but in Gaborone there

is not much manufacturing so its driven

at the moment by a lack of available

development. It is not a growth market

but an insular, well managed market,

said Garrun.

OULOOK

According to Cushman and WakefieldsEmerging Market Risks report, as eco-

nomic growth stabilises in Botswana this

will help improve business confidence.

With Botswana being one of Africas

most stable countries, the outlook is

positive. However, activity will focus

primarily on prime space, with the

proliferation of secondary space likely

to remain largely vacant, said the report.


FACTS

Population: 2,155,784

Capital City: Gaborone Official Language: English

Currency: Pula (BWP)

GDP (USD) billion

(2013): 17,624

GDP (USD) per capita (2013): 9,398

Ease of Doing Business

(2013): 56 of 185

Principal Industries: Diamond

mining, minerals, agriculture and

livestock, tourism, textiles,

construction and manufacturing

TYPICAL RENTS

Offices: Grade A USD 198 sqm/yr

Grade B: USD 120 sqm/yr

Industrial: High Bay Warehouse

USD 60 sqm/yr

Factory USD 48 sqm/yr

Source: ProAfrica Property Services

MIDDLEEAST STORY BOSWANA AFRICA FOCUS

With Botswana

being one of Africas

most stable countries,

the outlook ispositive.

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What does 2015 hold for global

real estate investors?

Tis is the question we ask

ourselves at the start of the year, while

looking back at the trends that shapedreal estate markets in 2014. Overall,

despite geopolitical and economic uncer-

tainty, the global real estate investment

landscape remains very active.

Looking back at global investment

trends that took shape over the course

of last year, Bruno Berretta, Senior

Research Analyst, EMEA, Colliers

International said that the U.S. and

Europe in particular have attracted

a great deal of attention from globalinvestors in 2014, which is expected to

continue in 2015.

Europe in particular remains the

region with the highest penetration of

global capital (31% vs. less than 10%

in North America and Asia Pacific in

Q1-Q3 2014 Source: RCA). his is

partly driven by the favourable property

cycle in Europe. Te safe haven markets

of London, Paris and Germany have

continued to capture a high proportionof that capital, but we have also seen

more investors looking to capitalise on

the recovery in Europes periphery,

Berretta commented.

Looking at North America, the Colliers

analyst said that the U.S. has seen a r ise

in volumes and interest, driven by thestrength of the economy and liquidity

of the market, despite tax issues such

as FIRPA, which have deterred some

overseas investors (an issue which

the government is said to be looking at

addressing).

Richard Barkham, Global Chief

Economist at CBRE, pointed out that

2014 has seen an enormous interest in

the U.S. commercial real estate market

as investors increasingly bought intothe idea that the U.S. was the main

growth story in the global economy.

CBRE observed that overseas capit al

moved beyond the traditional gateway

markets into the better second tier

cities. We expect interest in third tier

markets in the U.S. to strengthen over

2015. Tere is a rumour in the market

place that FIRPA (the withholding tax)

may be repealed for certain categories

or real estate in the U.S. Te legislativeissues are complex and unpredictable,

but alongside good growth and low

GLOBALINVESTMENT

OUTLOOK 2015Our cover story looks

back at last years

investment trends and

analyses the prospects

for investors in global realestate markets in 2015.

As emerging markets

increasingly move onto

investors radars, the

last part of our report

focuses specifically

on opportunities in

the MENA region.

COVER SORYGLOBAL INVESMEN OULOOK 2015


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interest rates it keeps investors focussed

on U.S. real estate. It is possible that therise in the value of the dollar will lead to

a marginal re-pricing of trophy assets in

U.S. gateway cities, Barkham explained.

According to the CBRE expert, despite

increasingly negative stories about the

state of the economy, investors were

also interested in EMEA real estate. Te

gap between yields and bond rates in

the region is an obvious incentive to

investors. Going forward the decline in

the value of the euro, an effective fall inthe value of Eurozone real estate, should

stimulate further investor interest.

CBRE noticed that investor inter-

est was concentrated in the robust

economies of the UK and Germany

with increasing focus on the recovery

markets of Spain, Ireland, Netherlands

and Portugal. Europe, where govern-

ment spending tends to be a higher

share of GDP than in Asia or the U.S.

and land use planning more restrictive,often provides attractive assets despite

low overall growth in the economy,Barkham said.

Asia Pacific has also seen an increase

in capital invested in real estate, according

to Barkham. According to CBRE, strong

activity was recorded in Japan, stimulated

by Abenomics and the decline in the

value of the Yen; in South Korea due to

the dynamism of its economy; and in

Australia stimulated to a weaker currency

and reviving growth.

Colliers Berretta added that in someAsian markets, volumes have suffered

because of the impact of cooling-off

measures and liquidity issues, but 2015

is expected to see an increase in activity.

COMMERCIAL SECOR

FAVOUREDIn which asset classes are investors

likely to place their money in 2015?

On a global level, despite economic

uncertainty, a large amount of capital has

been chasing commercial real estate in

2014 a trend which is likely to continue

throughout 2015, experts say.

In Europe, and globally, were seeing

unprecedented levels of capital chasing

real estate investments. In some markets

this means that investment volumes havereturned to, if not exceeded, pre-crisis

2014 has seen an

enormous interest in

the U.S. commercial

real estate market.


COVER SORY GLOBAL INVESMEN OULOOK 2015

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levels, commented Colliers Bruno Berretta.

For 2015, Colliers expect healthy levels

of activity to continue, as a result of a

combination of ultra-low interest rates

in the U.S. and Europe, record fundraising

levels within the private equity industry,

regulatory changes (e.g. relaxation ofregulation in China allowing insurance

companies to invest in real estate abroad)

and the appeal of real estate as an alterna-

tive and higher-yielding asset class to

diversify investment portfolios.

For example, Berretta said the Japanese

Government Pension Investment Fund is

understood to be looking to invest in real

estate for the first time in search for higher

returns in response to ageing population

and the growing burden of public sector

pensions.

Barkham from CBRE also expects

investment in real estate to continue toincrease, as long as the major economic

blocks avoid recession. With interest rates

likely to stay low, the search for yield is very

definitely still on. If China and the Eurozone

post weaker growth than expected, there

could be a fall in sentiment that would

damage investment volumes. his is

possible, but we dont at this stage expect

it to happen. If only one region, say China

or the Eurozone, posts weaker growth

then, oddly, it is quite good for investmentflows. Interest rates will not move up so

sharply and investors will either shift their

allocations to the growth regions or move

into the recessionary in bargain hunting

mode, Barkham explained.

MAURE VS. EMERGINGMARKES

When it comes to emerging markets,

experts commonly say that a smart

investment is a careful balancing act

between risk and opportunity.

As economic growth in many mature

markets is still slow, emerging marketsare said to present some of the most

significant opportunities for investors

and occupiers. Does this mean more

global investors will turn to emerging

markets in 2015, and, are todays inves-

tors willing to take on a higher risk?

Colliers Berretta thinks yes. In 2014,

weve clearly seen investors moving

up the risk curve, and the international

search for yields will continue to drive

investors also in 2015.Globally, the lack of stock, weight of

capital and pricing will continue to prompt

many investors to consider assets/loca-

tions with higher risk profile, in developed

but also emerging economies, he said.

According to the Colliers International

Global Investor Se ntiment report 2015,

emerging economies will continue to

attract real estate investment 28%

and 24% of respondents from the U.S.

With interest rates

likely to stay low, the

search for yield is very

definitely still on.

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and Western Europe (ex. UK) had plansto invest in Asia i n the next 12 months at

the time this survey was carried out,

Berretta said.

In the occupier arena, there is con-

tinuing interest from multinationals

looking to expand their operations,

and new entrants. One of the external

risks to emerging markets lies in the

widely anticipated change in the U.S.

monetary policy with a first increase

in U.S. base rates expected by the middleof 2015. As was the case in the past,

this has the potential to divert some

investment flows from riskier markets

to more secure, liquid (and slightly

better remunerated) assets in the U.S.,

Berretta explained.

CBREs Barkham added that while

todays investors are willing to look at

emerging markets to gain out-pe rfor-

mance, the entry price needs to be right.

One problem with emerging marketsover the last seven years, China being

a case in point, is that they have been

from professional services, information

and communications sector. Japan is

attracting interest also thanks to therecent depreciation of the Japanese

yen, effectively giving overseas buyers

a discount. Real estate in India is also

getting popular since there are a lot

of pro-business initiatives by the new

government such as the introduction of

Real Estate Investment rusts (REIs) by

2015, Berretta said.

According to CBREs Barkham, now

could be a smart time to place capital in

emerging markets with maybe a five orseven year hold period. He advises to

watch India for growth, China for pric ing,

very expensive, he said. However,emerging markets are now at a turning

point. Chinas growth, which had driven

a good deal of emerging market activity,

has slowed sharply and commodity

prices have fallen. Simultaneously this

creates some doubts about future

economic growth but it also weakens

pricing, Barkham explained.

EMERGING MARKE

OPPORUNIIESSo, where do the opportunities inemerging markets lie?

Colliers Berretta tips China, Hong

Kong, Singapore and Japan as the

hottest emerging markets, even if Japan

technically doesnt qualify as emerg-

ing economy. China presents more

opportunities than challenges amid the

current economic slowdown. Hong Kong

continues to benefit from resilient private

consumption levels and the increasingnumber of inbound visitors. In Singapore,

we see growing demand from occupiers



Offices in China are

interesting, perhaps

not for 2015 only, but

beyond.

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shopping centres as attractive while

in Singapore, prime offices in CBD

locations and decentralised shoppingmalls are assets to watch. Finally, in

Japan, prime offices in Greater okyo

and other metropolitan areas such as

Osaka and Nagoya are promising this

year, said Berretta.

GLOBAL CHALLENGESIn response to the question of what

constitute the major challenges global

real estate markets will face in 2015,

CBREs Richard Barkham commented:here are three things that desta-

bilise real estate markets, and send

investors packing: falling GDP (reces-

sion), interest rates above their long

run trend and too much construction.

With a bit of luck and some more policy

stimulus in China and the Eurozone,

these are not issues for 2015. We think

that interest rates in the U.S., which is

ahead of the pack, will not peak until

2018. he fall in oil prices is a majorboost to the economies of the OECD.

In due course, say 2016, we will have

to take a close look at the supply side

in the U.S. as construction seems to be

picking up the re.Colliers Berretta added that although

the state of the European economy

GDP growth and the threat of deflation

- will be closely monitored, even another

recession is unlikely to dent volumes and

investor appetite significantly, and core

markets with stronger fundamentals

will be relatively insulated anyway.

Global and regional investors will also

keep an eye on economi c developments

in China, particularly the risks of a bur stof the property bubble and the sharp

rise of credit (and defaults) and the

impact on the wider banking system

and property.

Investors will also remain mindful

of geopolitical instability, particularly in

Eastern Europe and the Middle East. Tis

could lead to further displacement of

capital. Te Russia/Ukraine situation may

induce growth in capital flows from these

countries into other CEE and EMEA-widelocations.

Berretta added that the lack of suitable

product, particularly at the prime end of

the market, is set to slow volumes growth

in some markets, saying that investorswith greater risk tolerance will have less

difficulties getting around this problem

and increasing their real estate exposure.

Lastly, Berretta pointed out that the

normalisation of the monetary policy in

the U.S., and later on in the UK, is likely to

have some effect on investors behav-

iours and pricing. Tere is a risk that the

first interest rate rise for years may lead

to overreaction from businesses and

investors as they consider the broaderimplications of the removal of economic

stimulus. While pricing of prime assets is

likely to hold better due to the weight of

capital, values for secondary properties

could come under pressure, especially if

the economy is not supportive enough.

A faster than expected rise in bond yields

could also reduce the attraction of risk-

adjusted returns on real estate, but overall

we believe that the more liquid commercial

property markets should weather well agradual increase in interest rates, the

Colliers expert concluded.



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MENA REAL ESAEMAKES FOR ARACIVEOPPORUNIIES

Teres no doubt that the MENA region

is one of the most vigorous, interesting

and diverse regions in the world in terms

of its real estate offering.

According to Nick Maclean, Managing

Director of CBRE Middle East, Dubai

and the Middle East are on the radar of

international investors who are looking

for greater diversity; the MENA region

has emerged on their shortlist. What

we are seeing is that investors are lookingat Dubai as their entry point into the

Middle East. Te last three years have

seen a fundamental shift for investors

and the Middle East has been given

consideration, particularly from investors

in the Far East; Singapore, Hong Kong

and Malaysia.

Faisal Durrani, International Research

and Business Development Manager

from property consultant Cluttons,

who specialise in the GCC, agrees. TeMENA region is an interesting, diverse

and dynamic region in terms of its real

estate offering, particularly countries in

the Gulf and obviously markets such as

Dubai are well-known globally and offer

investors a range of asset classes with

yields not found in more established

markets like London.

Durrani added that what differentiates

the MENA region from the rest of the

world is that governments make a con-certed effort to drive economic growth

thereby creating jobs and demand for

real estate.

However, JLLs Senior Research

Analyst Dana Salbak says that more

money is flowing out from the region

than flowing in, attributing it to the lack

of quality investment grade stock avail-

able for purchase and the relatively high

risk associated with the region in the

minds of overseas investors.

Te lack of quality stock relates not

only to the physical quality of assets, butalso the limited number of developers

that build commercial assets for sale

with most of the high quality office and

retail assets being held as long term

investments by their developers or

current local owners, says Salbak.

WHERE O INVES?According to the Head of Cluttons

Oman, Phili p Paul, Oman is very investor

friendly with good infrastructure as wellas a strong legal and banking sector to

support its inward investment.

Paul notes that while Oman is a smaller

market compared to the UAE, there is a

lot of momentum in the oil and gas sector

and significant government expenditure

and freehold residential incentives.

For JLL, the UAE and Saudi Arabia

continue to attract the majority of global

capital flow.

he UAEs political and economicstability and market transparency make

it a safe haven for a large chunk of capital

With aggressivegovernment initiatives

at the forefront of

economic growth,

the region has prime

investment opportunities

that will continue well

into 2015 and beyond.

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inflows. Saudi Arabias economic and

demographic fundamentals make it an

attractive destination for investments,says Salbak.

In addition, the potential opening of the

Saudi stock market to foreign investors

signals a shift in attitude towards more

transparent practices and is likely to

increase interest in the real estate sector.

CBREs Maclean agrees that the UAE

(Abu Dhabi and Dubai) is one of the

countries offering the most potential,

but notes that investors should keep a

firm eye on Bahrain.Bahrain gives access to Saudi Arabia

very easily across the causeway. Its

home to a lot of expats, particularly in the

oil and gas sector and defence sector. We

are seeing more adventurous funds from

the UK into this market at the moment,

added Maclean.

MAJOR DEVELOPMENSCluttons Durrani tips ilal City in

Sharjah as one of the UAEs noteworthydevelopments. ilal City is a mixed-

use neighbourhood, currently under

development 10km away from Sharjah

International Airport, for 65,000 residents.

In addition, Durrani mentions Al Maktoum

International Airport and the upcomingCultural District on Saadiyat Island, Abu

Dhabi, as other major developments in

the region.

For Sharjah there is a pent up demand

for both residential and office stock, both

of which remain in exceptionally short

supply which has helped to push office

and residential rents up by about 20 30%

over the last 12-18 months, says Durrani.

Outside the UAE Durrani notes Bahrains

China-themed mall, along the lines ofDubais Dragon Mart, as one of the

upcoming developments to watch out

for. Te wholesale and discount-oriented

mall is targeting between one million and

two million visitors a year.

Looking ahead, CBREs Maclean com-

mented that the movements of large

corporate occupiers will determine major

developments in the MENA region. He

explained that geographical locations

where occupiers such as internationalbanks and major global corporations

operate from will drive investment and

development.

PROMISING ASSECLASSES

he UAEs residential sector hasundoubtedly led investor preferences,

according to JLLs Salbak. However the

sector has experienced a levelling-off

during the summer months, which

could prompt investors to switch out of

the residential sector into other asset

classes, such as hospitality real estate

given increasing tourist numbers.

In Saudi Arabia, the residential sector

is viewed positively, fuelled by large

infrastructure projects around theKingdom and a favourable mortgage

law. Also, as the Kingdom pushes ahead

with its diversification strategy and its

Te last three

years have seen afundamental shift for

investors and the Middle

East has been given

consideration.

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continued focus on the expansion of

the manufacturing sector, we see the

industrial sector emerge as a preferred

asset class, says Salbak.

According to CBREs Maclean, the mostpopular asset class across the region is

the office sector.

Te office sector has generally lagged

behind but we are now seeing strong

growth from international occupiers and

therefore development has started again

and we are confident that we will see

strong office growth over the next four

to five years. It is a very interesting time

to enter the office market, says Maclean.

According to Cluttons Durrani, inves-tors should keep an eye on the industrial

sector in the UAE, particularly around the

new airport.

Given the fact that Dubai World

Central [Al Maktoum International

Airport] will have a dedicated stop on

Etihad Rail just south of Jebel Ali Port it

will create a logistical and transport hub.

his is also being replicated in Oman on

the northern coast of Soha Port. Its

similar in Bahrain where most of theindustrial estates are doing exceptionally

well offering a gateway to the central

Gulf, says Durrani.

INVESOR CONCERNSFor JLLs Salbak, externally the unstable

political situation in neighbouring coun-

tries might still deter some investors from

looking at investment opportunities in theMENA region in general. On an internal

level, the lack of transparency in some

markets may put off some investors.

CBREs Maclean believes that the key

weakness in the regional real estate

market is lack of liquidity which is not

a result of lower inbound capital, but a

consequence of the availability of assets.

EMERGING HOSPOS

For 2015, JLLs Salbak foresees the UAEand Saudi Arabia to continue to account

for the majority of global capital inflows.

Egypt is also re-emerging on investors

radars, driven by the more stable poli tical

environment and the return to more

robust levels of economic growth.

According to CBREs Maclean, the UAE

will continue its lead but urkey and Egypt

will emerge as att ractive investment

opportunities.

Egypt which has been off the radarfor the past few years is much more

interesting to Gulf investors as we see

political stability returning. Teres also

a lot of state money going in and a lot

of trading family money which will be

reinvested over the next few years,

he says.

According to Cluttons Durrani, the

entire MENA region will emerge as a

hotspot in 2015 due to strong economiesand aggressive government initiatives

from all MENA countries to drive eco-

nomic diversification.

Te entire MENA

region will emerge as

a hotspot in 2015 due

to strong economies

and aggressive

government

initiatives from all

MENA countries

to drive economicdiversification.

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Positive outlookfor Vietnam

he Vietnamese economic outlookremains positive largely due to the

countrys ongoing macroeconomic stability

and the continued strong performance of

the foreign-invested manufacturing export

sector. Tis is according to CBREs 2014

quarterly report.

he government has taken some

important measures in recent years to

improve business conditions, which is

expected to bear fruit from 2015. he

performance of property sectors has seenimprovements, especially in the residential

sector. Stalled building projects have

restarted and construction progress has

accelerated thanks to cheaper and more

readily available funding. In 2014, the real

estate market ranked second in terms of

total FDI into Vietnam, accounting for 12.6%

of the total, says CBRE.

Decreasing interest rates, improving

market confidence and favourable changes

in Housing Law have supported therecovery of the residential market in 2014.

he last quarter of the year witnessed

some significant developments beginning

construction and launching to the market.

hese included Vinhomes Central Park

(1,100 units launched in Q4 out of a totalstock of 10,000 units) in Binh Tanh District,

Masteri Tao Dien (1,449 units launched

in Q4 out of a total stock of 3,012 units)

in District 2 and Scenic Valley (Block D2

and E1, 270 units) in District 7. Te review

quarter recorded 6,760 units launched,

increasing by 117.8% q-o-q and 150.2%

y-o-y. Progress in Q4 sent the total

number of launches in 2014 to 14,807

units, 3.2 times higher than in 2013.

Te high-end segment showed a notableturnaround in the review quarter with a

high absorption rate, especially at newly

launched projects. Scenic Valley recorded

100% sales on the launching date while

the sales rate at Masteri Tao Dien quickly

reached approximately 85% out of 1,449

units within two months. Tanks to a good

sales rate at recently launched projects, the

sales rate of the high-end segment in 2014

reached approximately 60%.

ASIA PACIFIC NEWS

Australia continues to experience a

period of ongoing - albeit sub-trend -

economic expansion, according to theAustralia Market Outlook 2015 from

property consultant CBRE.

he mix of domestic growth is

changing and the transition form

isnt necessarily smooth such that

the overall outlook for the economy

remains finely balanced. Generally we

expect more favourable revenue condi-

tions for retail and industrial occupiers,

and combined with contained supply

(in most markets) should provide somesupport for rent growth, says CBRE.

Office occupier revenue growth,

however, will be low relative to past

cyclical upswings. hese trends arereflected in the rent growth expecta-

tions which are for modest improve-

ment in the industrial and retail sectors

while office rents remain flat restrained

by higher supply.

For investment markets, we expect

required returns, the lowering of which

has been the key driver of yield com-

pression in 2014, to stabilise and that

yield compression will be determined

increasingly by rent growth prospects,adds CBRE.

Australia market outlook 2015


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MALAYSIA CAPTURES

INVESTOR ATTENTION

One year on from the introduction of hard-hitting government cooling measures to

curb speculation, the real estate market is moving on all compass points.

he second most livable city in Southeast Asia

according to the Economist Intelligence Unit

(EIU) 2013 Liveability Ranking of 140 cities, Kuala

Lumpur has traditionally been the hub for Malaysias real

estate scene, but a couple of other destinations are nowstealing the march on the countrys capital.

Stable economic growth is supporting development

across the majority of asset classes, and the country

recorded a 9.6% increase in the construction sector in

Q3 2014, with the residential segment accounting for

18.6% growth.

However, the last 12 months have been somewhat

subdued, due to the impact of 12 months of cooling

measures effected by the government in late 2013

in order to curb the dramatic speculative spiralling of

property prices.Tis is being exacerbated by last years Bank Negara

Malaysia (BNM) rulings, which has also seen banks

adopt a more cautious stance when it comes to lending,

with a tightening of available financing and higher

rejection rate preventing local buyers from getting on

the property ladder.

A newly mandated government requirement forcing

developers to register the name of buyers of morethan four houses at one time with the Urban Wellbeing,

Housing and Local Government Ministry, is also part of

the strategy to encourage long term market stabili ty.

In April 2015, the new goods and services tax (GS) will

also be implemented. Add to that the fact that overseas

investors are locked into a minimum property purchase

price of MYR 1 million [USD 287,000] (doubled from the

original MYR 500,000 in the 2014 budget) and many

experts would say that a flatline year is on the cards.

But while fewer transactions are being concluded,

as per National Property Information Centre data, inspecific in-demand districts and locations where prime

units are flourishing, transaction values are on the up.

In both the residential and commercial sectors,

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Te short answer is that our prices

are much more affordable compared to

other cities like Singapore, Jakarta, or

Ho Chi Minh.

impressive list of home-grown residential developers who have

since expanded their portfolio overseas.

CBRES Te Edge Malaysia Property Excellence Awards for 2014

saw familiar names such as Sunway, SP Setia and UEM Sunrise

dominate the top 10, along with Sime Darby Property, Garmuda,

ropicana Corp, IGB Corp, Eastern & Oriental, Mah Sing Group

and IOI Properties.

FOCUS ON OFFICE SPACEAs well as activity in the residential sector, which has a strong

focus on high-end units, Malaysia and Kuala Lumpur specifically is also looking at opportunities in the office market.

With the growth in office supply for the capital stacked at

6.1 million square feet with an additional 4.17 million square feet

pegged for 2015, theres a lot of desk space set to come on-stream.

Says Wong: Demand for office space is expected to be sup-

ported in particular by the Economic ransformation Programme

(EP), provided that more jobs are created; as well as by the usual

key players such as oil and gas firms and the financial sector, both

of which are the largest office occupiers in Kuala Lumpur.

Te leasing market is still primarily a tenants market, due to

new completions constantly being poured into existing stock.Due to this, we see a 3% rental growth due to inflation, although

there will be a 6% increase on paper when the GS comes into

effect on 1st April 2015.

Te appeal of Grade A space is another factor driving devel-

opment. New builds continue to be in demand, particularly

MSC-status buildings with green accreditations. Buildings with

such qualifications usually meet minimum Grade A standards. We

are also seeing more MNCs looking to relocate to green buildings

as part of their global CSR initiatives, remarks Wong.

Malaysias retail sector had a slow year in 2014 but, nonetheless,

a total of 12 new malls added their floorspace to the local shoppingscene in 2014, and international retailers are still eyeing brand

Malaysia continues to be an attractive

proposition, as Amy Wong, Executive

Vice President, CB Richard Ellis, Malaysia

explains: he short answer is thatour prices are much more affordable

compared to other cities like Singapore,

Jakarta, or Ho Chi Minh. We also have a

fairly regulated environment, so were

not as haphazard to transact in, which

makes the transaction process easier

to manage.

KUALA LUMPURAND BEYOND

Te sixth largest country in SoutheastAsia, its not just Kuala Lumpur that is

capturing investor attention. Greater

Kuala Lumpur has traditionally always

been an investment hotspot in Malaysia,

being the capital city and a hub for

finance, oil and gas and other economic

activities, but we are also seeing

increased interest in Iskandar Malaysia,

which benefits not only from large areas

of greenfield development, but also

from its geographic position borderingSingapore, says Wong.

Penang also has its fair share of inter-

est, being a key location for MNCs such

as SanDisk, Seagate, Hewlett Packard,

as well as Singapores investment arm

emasek Holdings, she adds.

And despite the market softening of

the last 12 months, domestic demand

is still an important factor. In terms of

residential properties it is still primar-

ily a local market, with our young andgrowing population driving the demand

for housing, notes Wong.

For office and retail space, at the

moment, most of the buyers and sellers

are from the local pool of major investors,

firms and funds. However, we see the

un Razak Exchange project inducing a

change as it is drawing increased interest

from international investors into the local

market, she says.

Te country also has a well-estab-lished line-up of credible developers.

Says Wong: Malaysia has a rather

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expansion opportunities in the country,

as Wong explains: Tere continues to

be a steady influx of new-to-market

retailers coming into Malaysia, although

generally, 2014 was a relatively slow year

for retail . Leasing rates have held, as there

were no major rent reviews this year.

Malls are, and will continue to be, the

main weekend hangout destination forMalaysians.


ASIA PACIFIC MALAYSIA

Malaysia has a

rather impressive list of

home-grown residential

developers who have since

expanded their portfolio

overseas.

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BANGKOK BOOMING

Stability and certainty under the new regime has given a strongboost to the real estate sector of Tailand.

If the first half of 2014 was a period of political unrest

and uncertainty in Tailand, the year's second half

saw the return of stability under the new military

regime. After a period of gradual consolidation and

revival at the grassroots over the past six months, theTai economy - and the country's real estate sector - is

poised to take-off in the New Year. Te GDP growth is

one of the prime indicators of economic health; while

it was just 1 percent in 2014, the Bank of Tailand's

forecast for this year is a robust 3-4 percent, with the

prediction of a simultaneous and solid surge across all

economic indicators, including the real estate sector.

HE GREEN SHOOSAfter the significantly slower pace of growth last year

due to weaker domestic demand, higher household debtthat decreased consumer purchasing power and the

resultant dampening of economic growth, Tailand is

poised to catch up on all indices this year. Driven by the

business-friendly and investment-oriented policies of

the determined new regime, the Tai kingdom is already

in the midst of an uptrend.

For instance, in the realty sector alone, there havebeen a series of joint venture partnerships over the past

few months, that have brought in investments of billions

of Tai Bahts (HB). "Cash-rich companies from China

and Japan are forming JVs with Tai listed companies

to develop properties in hailand and the proceeds

from such projects are shared on pro-rata basis, as

required in a joint venture structure," says Aliwassa

Pathnadabutr, Managing Director, CBRE Tailand, adding

that one key reason for the recent rise in JV activit ies is

the simultaneous trend of Tai developers hitting debt

covenants with their primary lenders, and opening upof new opportunities for foreign investors.

"Te foreign entities have access to local asset-backed


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Tere is limited future supply of office

space in downtown Bangkok and this

means that there is an opportunity that

demand will outstrip supply.

outward but along the mass transit lines,"

says CBRE's Pathnadabutr, adding that the

RatchadapisekRama IX area is an example of

a new preferred area by property developers

and investors.

In terms of prices, even a relatively subdued

year 2014 saw rates increase by as much as8 percent, especially for condominiums in the

city fringe area - from HB 124,078 [USD 3,770]

per sqm to HB 133,944 [USD 4,060] per sqm.

"Te projects located on the city fringes, with

easy connectivity to the CBD area, have been

able to achieve good selling prices, with some

even at par with those in the CBD area," says

Risinee Sarikaputra, Di rector - Research &

Consultancy, Knight Frank Chartered Tailand,

adding that the majority of new developments

in the peripheral area are located in the north-ern part of Bangkok along the MR Purple Line

of ao Poon-Klong Bang Pai, followed by the

area on the southern part of Bangkok along

the MR Dark Blue Line 2, from Hua Lumphong to Lak Song.

SPEAKING OFFICIALLYFrom a long-term investment perspective, the office

segment is also sai d to continue to provide attractive yields.

he yield of prime offices ranges between 5 - 7 percent

before tax. On one hand, the vacancy rate of the Bangkok

office market is now below 10 percent for the first time in 20years and on the other hand, 120,000 square metres of office

securities (ABS) in the form of REIs and

Property Funds (PF) that are listed on the

Stock Exchange of Tailand (SE)," says

Pathnadabutr, adding that the ABS givesinvestors exposure to di fferent types of

asset classes depending on the funds.

Te average dividend yield was at 5.6

percent in third quarter of 2014, and is

only expected to go up in the months

to come.

With the political situation stabilised,

different stimulus measures recently

launched by the interim government are

expected to show impact on Tailands

macro economy in 2015. "Te countrysreform roadmap is

expected to allow for

more clarity in policy

and for the direction

hailands economy is

headed," says Suphin

Mechuchep, Managing

Director, JLL hailand,

adding that this should

help improve business

sentiment and con-sumer confidence, and

consequently boost

demand in Bangkoks

different propert y

sectors in 2015.

FOLLOWHE MASSMOVEMEN

In terms of prime

property in hailand,while capital Bangkok's

CBD areas of Sukhumvit,

Silom-Sat horn and

Central Lumpini continue to be the most

preferred locations for Grade A office,

retail and residential properties - in the

past few years, the action has moved

to extended areas along the mass

transit lines. With land prices in CBD

too steep, developers are moving to

second-tier locations which are outsidethe CBD areas and yet easily acces-

sible. "Te prime areas have extended


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space was taken up across Bangkok in

the first three quarters of 2014, whichis close to the average annual take-up

rate for the past 10 years. "here is

limited future supply of office space in

downtown Bangkok and this means that

there is an opportunity that demand will

outstrip supply, which would increase

rental rates," says CBRE's Pathnadabutr.

he highest office occupancy rate

has been witnessed in the Grade A CBD

category, at 93.2%, followed by Grade B

CBD and Grade B non-CBD segments,at 91.3% and 89.3% respectively. "A

rise of average rental rates was shown

in Grade A non-CBD space, increasing by

3.1% year-on-year, from just HB 625 to

HB 644 in 2014," says Knight Frank's

Sarikaputra. According to Sarikaputra,

the highest asking rate was at Park

Venture, which commanded HB 1,100

[USD 33.5] per square metre, followed by

Exchange ower at HB 1,000 [USD 30.3]

per square metre. "With limited supply,we expect vacancies to fall sharply and

rents to rise to record levels in the near

future," predicts Sarikaputra.

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EMEA investmentvolumes expected

to surge in 2015Over three quarters of propertyinvestors in EMEA plan to increase real

estate weightings in the region in 2015

according to the benchmark 2015 Global

Investor Sentiment survey from Colliers

International.

Te survey found that the investment

strategy of 78% of EMEA-based investors

was to grow their portfolios in the region in

the next 12 months, up from 61% last year;

a sentiment matched by 67% of investorsglobally.

European institutions in particular have

now started to show signs that they are

back and very competitive in core markets

where Asian and North American capital

has dominated over the past few years,

expanding in both their home countries and

across borders in 2015, said Richard Divall,

Head of Cross Border Capital Markets,

EMEA at Colliers International.

Looking at overseas capital enteringthe region, whilst London is the gateway

to Europe, there are signs of this changing,

with Asian capital now focusing not just

on London, but tier one cities in Europe

including Munich, Frankfurt, Paris, Madridand Rome, said Divall.

According to the report EMEA investors

will look at London as well as Germanys

Big Six cities, with Berlin appealing to

many investors as well as Paris and Madrid.

Whilst some perceptions about invest-

ment conditions in Europe are less positive

due to political uncertainty, particularly as

a result of recent developments in Ukraine

and Russia, the impact on real estate

investment is localised.Whilst some perceptions about invest-

ment conditions in Europe are less positive,

the impact on real estate investment is

localised, with high investment volumes

in Poland and the Czech Republic (both set

to at least match 2013 volumes.) ier two

markets such as Hungary, Romania and

Serbia are also set to out-perform 2013

investment levels. Colliers prognosis is for

an even better year in 2015.

EUROPE NEWS

In a new report entitled Destination

Europe 2015, JLL names Bucharest

as the 30th preferred city by interna-tional retailers. Te report analyses

the expansion and presence of 250

international retailers across 57 key

retail markets.

While London leads the pack for

international retailers, other major

global and mature European cities

with similar appeal including Paris,

Milan, Rome and German cities have

benefited from retailers growth.

Destination Europe 2015 studyplaces Bucharest on the 30th place

among the most attractive cities in

terms of the interest of international

retailers for expansion outside theirhome country. It is considered a city

with high growth potential and is ahead

of cities in the region such as Bratislava,

Zagreb, Belgrade and Ankara and at

very short distance behind Budapest,

said Carmen Ravon, JLL Romania.

As regards to luxury brands, Romania

occupies an honourable place 25 in

terms of their interest to have stores in

Romania, added Carmen Ravon.

Bucharest ranks 30th amongst citiespreferred by international retailers


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Manchester at-tracts UAEs real

estate investorsHigher demand for quality housingand new buildings is rapidly driving

Manchesters profile as an attractive

investment destination among interna-

tional property investors.

With too many buyers eyeing the limited

number of housing, the city is witnessing a

real estate boom of sorts, according to HMG

Properties, a leading international player

which has a presence in the UAE. Already,

investors from GCC countries are lining upto snap up attractive property options in

Manchester, it added.

A House Price Index conducted earlier

this year by Nationwide, the UKs second

biggest mortgage company, showed that

home prices in Manchester rocketed by 21%

last year the fastest than anywhere else

in the country in comparison to London

which grew only 14.9% and Brighton which

reported 12% growth. Te index showed

that the average price for a house in the

Manchester stood at around 209,000(approximately AED1.2 million).

Raed Bourjass, CEO of HMG Properties,

said: Over the past decades, Manchester

has emerged as the second-most impor-

tant city in the United Kingdom in terms

of economic importance and financial

activities, after London. In fact, a growing

number of British expatriates living in the

GCC region and international investors are

keen to add Manchester to their investment

portfolio.Tis month, HMG Properties launched

Commuters House in Manchester, a

prime residential property. Te new project

consists of 196 luxury apartments with a

mix of one-, two- and three-bedroom units

that overlook the northern quarter of the

city and the urban skyline of Manchester.

EUROPENEWS

London remains worlds mostexpensive office market

Londons West End remained the

worlds highest-priced office market

but Asia continued to dominate

the worlds most expensive office

locations, accounting for three of

the top five

Cityscape 2015

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