worldclasscities 2011 Savilles

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I N S I GH T S| World Cities Review |

AUTUMN 2011

HONG KONGLONDONMOSCOWMUMBAINEW YORKPARISSINGAPORESHANGHAISYDNEYTOKYOWORLD

CLASSThe 10 cities

shaping global

real estate


2/20

LONDONPOPULATION 7.5M

AREA607 MILESCOST OF BUYING

RANKING 2CAPITAL VALUE GROWTH

DEC 05-DEC 10 27%DEC 10-JUL 11 4%

ILLUSTRATIONSADAMPOINTER

Welcome to Savills World Class index.

Following the success of our Four Global

Cities Review in the Spring, we are nowreporting on 10 cities that all compete for

real estate investment on the world stage.

ese form our rst World Class index of

residential real estate price movementsfrom

2005. ere are many cities on this planet

that claim global status. Some rank top in

terms of lifestyle, quality of life, places to do

business,tax havens,citiesof culture.Twentysix of the worlds cities are megacities, with

populations of over 10 million people.

Although some of Savills World Class

cities are megacities and most rank highly

on the plethora of global measures, their

- 02 -SAVILLS.COM

NEW YORK CITYPOPULATION 8.3MAREA 469 MILESCOST OF BUYING


DEC 05-DEC 10 10%DEC 10-JUL 11 -2%

PARISPOPULATION 6.6M



DEC 05-DEC 10 35%DEC 10-JUL 11 10%

7

5

2

EMPIRE

STATE

BUILDING

EIFFEL

TOWER

BIG

BEN

ST BASILS

CATHEDRAL

GATEWAY

OF INDIA

ORIENTAL

PEARL

TOWER

MARINA

BAY SANDS

SYDNEYOPERA

HOUSE

BANK

OF CHINA

ASAKUSA

KANNON

TEMPLE

KE Y

1 10COST OF BUYINGRANKING


3/20

MOSCOWPOPULATION 10.5M



DEC 05-DEC 10 84%DEC 10-JUL 11 6%

HONG KONGPOPULATION 7.1M


RANKING1

CAPITAL VALUE GROWTH

DEC 05-DEC 10 79%DEC 10-JUL 11 11%

WORLD CITIES REVIEW

key qualication is an active and growing

worldwide market in residential real estate.

Our cities all have sizeable non-domesticsales and lettings markets and growing

interest in them from overseas investors and

occupants.ey are cities that often feature

as relocation and expansion targets on the

lists of international companies.

- 03 -SAVILLS.COM

SHANGHAIPOPULATION 22.5M



DEC 05-DEC 10 136%DEC 10-JUL 11 3%

TOKYOPOPULATION 13.0M



DEC 05-DEC 10 49%DEC 10-JUL 11 -3%

SYDNEYPOPULATION 4.6M



DEC 05-DEC10 21%DEC 10-JUL 11 5%

MUMBAIPOPULATION 20.5M

AREA 239 MILESCOST OF BUYING

RANKING10CAPITAL VALUE GROWTH

DEC05-DEC 10 138%DEC10-JUL 11 7%

10

9

SINGAPOREPOPULATION 3.9MAREA273 MILESCOST OF BUYING


DEC 05-DEC 10 92%DEC 10-JUL 11 16%

4

6

3

1

8


4/20

- 04 -SAVILLS.COM

There is a diculty in measuring

residential real estate acrosscontinents because the way

people live and what they expect diers

greatly so too does the size and style of

their homes. Even the way the size of the

home is measured diers from country to

country. (We have standardised all

measurements here to GIA: Gross

Internal Area).

is, in itself gives some interesting

results: a CEO in Sydney, Australia, might

expect to occupy a large house totalling

over 10,000 sq ft for example, but the

same executive in Moscow would morelikely nd themselves in an apartment of

HOW THE TOP 10 WORLD PLAYERS COMPARETHE PERFORMANCE AND FUTURE PROSPECTS OF OUR WORLD CLASS CITIES

2 1

1000

0

2000

4000

6000

8000

10000

12000

1500

2000

2500

3000

S YDNE Y

NEW YORK

SHANGHAI

LONDON

SINGAPORE

PARIS

MU MB A I

HONGKONG

TOKYO

MOSCOW

600

900

1200

1500

just 1,800 sq ft (although the Moscow

executive would also likely have a largedachaor villa, in the nearby countryside

for the weekends). We have also measured

any second homes that people are likely to

occupy as well.

e international stereotypes of

residential accommodation in dierent

locations are not always accurate. Parisian

dwellings are among the smallest while

Shanghai residents enjoy some of the

biggest, for example.

Savills World Class index overcomes

the dierences between buildings by

measuring the cost of housing an identicalgroup of people in dierent countries.

SAVILLS EXECUTIVEUNIT (SEU)

By comparing a group of real people, ourcost comparison of residential real estate

has a real world relocation story at its

heart.We take a typical executive unit, a

group of people that might start up or

expand a global business in any country,

and then compare the residential

accommodation that they would be likely

to inhabit in each of the world cities.

e people who make up Savills

Executive Unit (SEU) include one middle

aged ex-pat CEO, one senior ex-pat

director,a locally employed director and

four locally-employed administrative sta.ey each live in dierent types of

CEO PROPERTY SIZE RANK

AVERAGE SQ FT GIA* PER CEO HOUSEHOLD

RATIO OF SIZE OF THE CEO PROPERTY COMPARED

TO THE AVERAGE NON-CEO PROPERTY

SEU PROPERTY SIZE RANK

AVERAGE SQ FT GIA* PER SEU HOUSEHOLD

NON-CEO PROPERTY SIZE RANK

AVERAGE SQ FT GIA* PER NON-CEO HOUSEHOLD

ALL IN THE NUMBERSCOMPARING WORLDWIDE PROPERTY SIZES

6710849351210987654321

1 6 2 5 3 8 7 4 9 10

8

3 4 6 3 2

2 6 3 6

*GIA(GROSSINTERNALAREA)

SYDNEY

SHANGHAI

SINGAPORE

MUMBAI

TOKYO

NEWYO

RK

LONDON

PARIS

HONGKON

G

MOSCOW

SYDNEY

SYDNEY

SHANGHAI

SHANGHAI

SINGAPORE

SINGAPORE

MUMBAI

MUMBAI

TOKYO

TOKYO

NEW

YORK

NEW

YORK

LONDON

LONDON

PARIS

PARIS

HONGKONG

HONGKONG

MOSCOW

MOSCOW

WORLD CITIES REVIEW


5/20

WORLD CITIES REVIEW

- 05-SAVILLS.COM

By comparing the accommodation costs of SavillsExecutive Unit we can truly compare the cost of residential

real estate across some very different global cities

MIDDLEAGED

EX-PATCE O

LOCALLY EMPLOYED ADMIN STAFF

SENIOREX-PAT

DIRECTOR

LOCALLYEMPLOYEDDIRECTOR

SAVILLS EXECUTIVE UNIT(SEU) CONSISTS OF...

household, some with children, some withpartners and some without and eachmember of the group chooses dierenttypes of locations and dierent types of

property in which to live.It is by comparing the accommodation

costs of these people that we can trulycompare the cost of residential real estateacross some very dierent global cities.

WORLD CLASS

PRICEMOVEMENTS

e value of all properties, owned by theSEU, in all cities, rose by 77% on averagebetween December 2005 and June 2011.Growth in the last six months was 6% andthe index is expected to continue rising tothe end of this year at a more subdued rate.

VALUERANKINGS

After ve years of very high price growthHong Kong is now signicantly moreexpensive than the other 10 cities

Hong Kong is characterised by limitedland supply for expansion and pricegrowth that has been fuelled by overseascash (particularly from mainland China).It has seen government measures, whichhave started to cool the lower end of the

market but we still expect to see growth in

the remainder of 2011.e cities of London, Tokyo and Paris

cost very similar amounts, near to theWorld Class average, while Sydney andNew York look good value in the oldworld, rivalling Shanghai and Moscow incost terms. At the other end of the scale,Mumbai costs 43% less than the averageof all 10 cities to house the whole SEU but it is growing very fast fromthis low base.

ere have been big dierences in the

performance of individual cities: Mumbaigrew by 154% over the last ve and a halfyears, while New York is up only 7% overthe whole period.ere was no uniformpattern to price movements some citieslike London, Hong Kong and Mumbaisaw a 2007 peak, followed by a 2009trough and subsequent value rebound.Other cities have seen no trough,either,like Shanghai and Singapore growingsubstantially with only a minor slowdownin 2009, or, like Paris and Sydney, seeingmodest growth and a shallow trough on

an upward-sloping plateau.

OLDWORLD

VERSUS NEWWORLD

e biggest dierence in performancecan be seen between what might be calledthe old economies of Tokyo, London,Paris, Sydney and New York (which grewon average by 32% since 2005) and thenew, or emerging, economies of Shanghai,Singapore, Hong Kong,Moscow andMumbai which grew, on average, by 123%

over the same period.It becomes apparent that the debt-induced crisis of 2008 was suered mostby the old world cities and not newworld ones. e biggest old worldvaluerebounds have been experienced in thosecities that are most open to new world

investment, most notably London,

Sydney and Paris.Hong Kong is the most expensive city

in which to buy all the properties to housethe SEU. It is followed by London, withTokyo, Singapore and Paris close behind.

0

50

100

150

200

250

SYDNEY

SHANGHAI

SINGAPORE

MUMBAIT

OKYO

NEW

YORKL

ONDON

PARIS

HONG

KONG

MOSCOW

GLOBAL NEW WORLD OLD WORLD

TOTAL INDEX MOVEMENTS

RELATIVE COSTOF BUYING

(AVERAGE = 100)

MUMBAI

SHANGHAI

SINGAPORE

HONK KONG

MOSCOW

PARIS

TOKYO

LONDON

SYDNEY

NEW YORK

154%

143%

123%

98%

94%

49%

44%

32%

27%

7%

PRICE GROWTHDEC 05 - JUN 11

100

150

200

250

JUN06

JUN07

JUN08

JUN09

JUN10

DE C05

DE C06

DE C07

DE C08

DE C09

DE C10

JUN11


6/20

- 06 -SAVILLS.COM

WORLD CITIES REVIEW

The total annual cost of renting all

the accommodation needed by theSEU for one year averages

257,000 across all 10 cities, ranging from

366,000 in London to 115,000 in

Mumbai. For any relocating or expanding

business, these are sums worth noting in

addition to ofce costs; they will impact on

any rental allowances and relocation

allowances for ex-pat staand will

probably have an impact on the pay

demands of local statoo.

London and Paris have the highest

rental levels of the 10 World Class cities

and these are fuelled by domestic, as well ascorporate,demand as would-be purchasers

are pushed into the rental sector due to

credit restrictions. Hong Kong,Tokyo and

New York are also high priced rental cities

and, in common with all of the topfve, are

driven by ex-pat/corporate demand at the

top levels.

WORLDCLASSRENT

MOVEMENTS

Rents have moved,on average, across all

cities at a slower pace than capital values,

suppressing yields.Tere is an old world/

new worlddierence in the growth of

rents but it is not as pronounced as with

capital values.Tis highlights that strong

capital-growth-motivated investment is

driving capital values in the new world,

meaning that yields are moving much

faster in these cities. In consequence, it

might be said that there is a stronger case

for rental-return-motivated investment in

the cities of the old world.

THE RENTAL DIVIDENDEXPANDING OR RELOCATING? ACCURATE RENTAL COST RANKINGS ARE KEY

RENTAL YIELDAVERAGE

3.65.1LONDON AVERAGE MUMBAI

115,000

366,000

TOTAL ANNUAL COST OF SEU RENTAL ACCOMMODATION

257,000

THE RELATIVE COST OF RENTING

AVERAGE = 100

0

30

60

90

120

150

SYDNEY

SHANGHAI

SINGAPORE

MUMBAI

TOKYO

NEW

YORK

LONDON

PARIS

HONGKONG

MOSCOW

GLOBAL NEW WORLD OLD WORLD

COST OF RENTAL GROWTH INDEX

100

110

120

130

140

150

DE C05

JUN06

DE C06

DE C07

JUN07

JUN08

DE C08

JUN09

DE C09

DE C10

JUN10

JUN11

OL D WORL D NEW WORL D


7/20

- 07 -SAVILLS.COM

WORLD CITIES REVIEW

1,370

Hong Kongs rise since 1997 to

become a key global nancialcentre,if not the key nancial

centre in the region,has been meteoric.

Occupier demand and buyer condence

in the citys residential real estate has

been equal to it so price growth has also

been spectacular, despite experiencing a

temporary knock by the global banking

crisis of 2008.

While genuine occupier demand,

evidenced by rental increases, is strong,

demand for the purchase of trophy

assets is stronger. ere is huge demand

for investment properties from theChinese mainland, coupled with

restricted supply.

Cash-rich buyers therefore continue

to buoy prime markets. Despite

attempts to introduce cooling measures,

strong interest in traditional areas,

means that luxury prices in Mid-

Levels, Southside and e Peak

continued to outperform other markets.

Overwhelming demand for property at

the very top of the market

is setting global records.

e extreme scarcity of

prime houses on e Peak is

perhaps an exaggerated

caricature of the

fundamental problem

aecting all World Class

cities; there are simply just

not enough of the most

desirable properties to go

round.

Rents have not kept

pace with this capital

growth in Hong Kong soyields have come in

even though

leasing supply is

limited.

Hong Kongsextreme scarcityof prime housesis an exaggerated

caricature ofthe problemaffecting all

World Classcities

HONG KONGDEMAND AT THE TOP OF THE HONG KONGMARKET IS SETTING RECORDS

AVERAGE

COSTRANKING

SEU RENTAL COST INRELATION TO THE WORLD

CLASS AVERAGEAVERAGE

RENTAL YIELD

TOTAL SQ FT PER S Q FT

+24%

79% 11%

3.1%

3.1%

AVERAGE

SAVILLS EXCUTIVEUNIT (S EU)

SEU CAPITAL COST INRELATION TO THE WORLD

CLASS AVERAGE

1.610

DEC 2005 -DEC 2010

DEC 2010 -JUN 2011

SEU RENTAL

SEU RENTAL

SEU CAPITAL 1COST RANKING

AVERAGE CAPITALGROWTH

SEU AVERAGE...

LONDON

3

HONG KONG

1,090SQ FT

HONG KONG

KEY FACTS

CHINA

+107%


8/20

- 08 -SAVILLS.COM

WORLD CITIES REVIEW

Although no

longer themost expensive

bricks and mortar in the

world, London property

is still highly valued.

e purchase of a

London house or at is

viewed by many global

players as a safe store of

wealth. Showing lower

growth but also much

less volatility than many

of its new world

counterparts, thereappears to be some

foundation for this view

of London.

Across the citys

prime areas,

international buyers

constitute 40% of the

market by value. Even

in the suburbs, Greater London is a

cosmopolitan city.

As an established global city and major

nancial centre, London attracts

businesses and residents from every part

of the world as well as a strong investor

market, currently buoyed by sterlings

weak exchange rate.

Demand for rental property is strong,

and is fuelling rent rises. Both corporate

demand (which has been growing with

economic recovery) in the upper tiers of

the rental sector and domestic demand

from would-be purchasers, unable to

obtain credit, has been encouraging rent

rises.is is a common story in the

debt-reliant western world.A steady inow of overseas equity

(which we estimated last year to total

3.7 billion) has fuelled price rises in the

London market and seen it substantially

outperform the rest of the UK. e value

of the executive unit accommodation is

near its former peak but we do expect that

growth will ease over the next year or so.

LONDON A LONDON PROPERTY IS STILL VIEWED BY MANY AS SAFE STORE OF WEALTH

AVERAGE

London

attracts residentsand businessesfrom every part

of the world,plus the weakexchange ratebuoys a strong

investor market

COSTRANKING



RENTAL YIELD


+42%

27% 4%

740

5.1%

AVERAGE


S EU CAPITAL COS T INRELATION TO THE WORLD

CLASS AVERAGE

+27%

1.610

DEC 2005 -DEC 2010

DEC 2010 -JUN 2011

SEU RENTAL



SEU AVERAGE...

LONDON

1

1,160S Q FT

LONDON

KEY FACTS

UK


9/20

- 09 -SAVILLS.COM

WORLD CITIES REVIEW

Tokyo residential real estate is

perhaps one of the most dierent

of the World City markets in that

it is land that is valued, not the building.

Tokyos dwellings are similar to a new carin that the value will depreciate almost as

soon as it is built. Housing is assumed to

have a limited lifespan and generally

replaced after 20 to 40 years.

After a decade-long housing slump,

steady price appreciation was seen from the

mid-2000s until the nancial crisis of

2008, which saw prices fall back again.

Values picked up in late 2009, but the

recent earthquake cooled demand,

particularly in the luxury market,although

the mid-market is said to be stable.

Although rents have also declined since

the mid-1990s, property prices have fallen

faster, pushing out yields.is should

provide a buying opportunity for Japans

Real Estate Investment Trusts ( JREITs).

ey were particularly big investors

between 2005 and 2007, until the onset of

the nancial crisis. eir renewed interest

in high rental income could cause yields to

harden again.

e types of properties rented are very

dierent to the types of those for sale.

Rental properties are purpose-built, locatedin and around the central business districts,

targeted at employees of those areas, and

command the higher prices. For purchase,

inhabitants are more likely to choose

detached houses in the suburbs. Admin

sta will still live in the city centre, but in

very small apartments or commute from

cheaper accommodation in one of many

sleeper cities.

TOKYOVALUING LAND OVER BUILDINGS MAKESTOKYO A UNIQUE MARKET

-3%

AVERAGE

COSTRANKING



RENTAL YIELD


+23%

49%

830

4.2%

AVERAGE



CLASS AVERAGE

+12%

1.610

DEC 2005 -DEC 2010

DEC 2010 -JUN 2011

SEU RENTAL



SEU AVERAGE...

LONDON

4

TOKYO

KEY FACTS

TOKYO

1,330S Q FT

JAPAN

Although

Tokyos rentshave alsodeclined since

the mid-1990s,property prices

have fallenfaster, pushing

out yields


10/20

- 10 -SAVILLS.COM

WORLD CI TIES REVIEW

The rises have

been fuelled by astrong economy,increasing

internationalpurchasers,

restricted supplyand extremely

limited stock

SINGAPORETHE CITY WITH THE WORLDS HIGHESTCONCENTRATION OF MILLIONAIRES

With annualised growth in

residential prices currentlyrunning at 16%,Singapore is a

new world market writ large. Property

prices have boomed since the economy

rebounded in 2009.e average price rise of

properties in the executive unit was 123%

between Dec 05 and Jun 11.

e city states open door policy

towards top end foreign economic

contributors, who traditionally gravitate

towards prime districts, means rental

demand is high. Investor demand is also

strong because Singapore has the highest

concentration of millionaire households

in the world (16% with $1 million plus),

and their capacity to buy residential

property is obviously high.

As foreigners without Permanent

Residency status are generally only

permitted to purchase private apartments

and condominiums, the weight of foreign

money in this segment of the Singapore

residential market has also buoyed both

prices and rentals.

e rises have been fuelled by a strong

economy, ever increasing internationalpurchasers from a booming Asia region,

coupled with tightly restricted land

supply and, at the very top of the market,

extremely limited stock.

is looks set to remain unalleviated

in the foreseeable future as new land for

development is limited and price growth

in the luxury homes market is likely to

be sustained.

AVERAGE

COSTRANKING



RENTAL YIELD


-2%

92% 16%

590

4.1%

AVERAGE



CLASS AVERAGE

+10%

1.610

DEC 2005 -DEC 2010

DEC 2010 -JUN 2011

SEU RENTAL



SEU AVERAGE...

6

1,610S Q FT SINGAPORE

SINGAPORE

KEY FACTS


11/20

- 11 -SAVILLS.COM

WORLD CITIES REVIEW

As an international, cultural

centre, Paris rivals London andis currently seeing almost as

much overseas investor activity. It is

nevertheless a very dierent real estate

market with a small and constrained

prime centre made up almost exclusively

of apartments. Residential stock in

prime central Paris is largely historic,

with very few new developments and

very few houses.

ere is strong international demand

at the top end of the Paris market, and

increasing investment from BRIC

economies, particularly while the Euroremains weak. Against this, prices are

driving upwards on the back of the

shortage of new supply.

Upward price movement continued

into 2011, with sustained strong demand

and few available properties. Positive

growth in transaction volumes and prices

in 2011 has been largely in the rare new

apartment segment.

Price growth across the whole Ile de

France region is being

led by central Paris, in

much the same way as

central London is

leading growth in

Greater London and

the Home Counties.

Also similar to

many World Class

cities, Paris with its

historic fabric and

bounded by the inner

suburbs has very

constrained land

supply and expansionpotential. Like many

old world cities it

will rely on the

regeneration of old

industrial and

deprived areas to

create new 21st

century living

quarters.

There

is stronginternationaldemand at thetop end of the

Paris market andinvestmentfrom BRIC

economies

PARISUPWARD PRICE MOVEMENT CONTINUED IN 2011 WITH STRONG DEMAND

AVERAGE

COSTR ANKING

SEU R ENTAL COST IN

R ELATION TO THE WOR LD

CLASS AVER AGEAVERAGE

R ENTAL YIELD

TOTAL SQ FT PER SQ F T

+41%

35% 10%

740

4.6%

AVERAGE


SEU CAPITAL COST INR ELATION TO THE WOR LD

CLASS AVER AGE

+10%

1.610

DEC 2005 -DEC 2010

DEC 2010 -JUN 2011

SEU RENTAL



SEU AVERAGE...

LONDON

2

PARIS1,120S Q FT

PARIS

KEY FACTS

FRANCE


12/20

WORLD CITIES REVIEW

Shanghais metro population is the

largest in China,described as theshowpieceof the booming economy

of mainland China. Rapid re-development

began in 1990s,and Shanghai is now a

national nancial centre and aspires to be an

international nancial centre by 2020.

Shanghai ranks fth in the latest edition of

the Global Financial Centres Index.

e rapid economic growth has fuelled a

substantial rise in the housing market. A

number of government measures, including

property taxes,have since been applied to

cool the market and these appear to have

had an eect this year, particularly on thetop end of the market,where investor

activity is concentrated.

Shanghai, like most other rst and

second-tier cities in China, has announced

that it plans to keep annual residential price

growth from exceeding annual growth in

the municipalitys GDP and disposable

income.is equates to roughly 8%.

Although low in relation to recent growth,

there is a large social housing programme

underway, which will lower the average

price (so Shanghai will

hit the target) and values

are not likely to fall

o a cli.

Although prices have

risen steeply, rents have

not moved much (until

recently) and yields are

consequently very low.

Controls to cool prices

can have the side eect

of stimulating rental

growth so, although

Shanghais rents have notmoved much yet, the

prospects for growth are

good. Demand is

growing from a cooling

sales market and

corporate activity,

including expats,plus

inward migration and

investment.

Controls to

cool prices canhave the sideeffect of

stimulatingrental growth so

the prospectsfor growth

look good

SHANGHAIRAPID ECONOMIC GROWTH HAS FUELLEDGROWTH IN THE HOUSING MARKET

AVERAGE

COSTR ANKING

SEU R ENTAL COST IN

R ELATION TO THE WOR LD

CLASS AVER AGEAVERAGE

R ENTAL YIELD

TOTAL SQ F T P E R S Q F T

-53%

136% 3%

400

2.2%

AVERAGE


SEU CAPITAL COST INR ELATION TO THE WOR LD

CLASS AVER AGE

-21%

1.610

DEC 2005 -DEC 2010

DEC 2010 -JUN 2011

SEU RENTAL



SEU AVERAGE...

9

SHANGHAI

1,620S Q FT

- 12 -SAVILLS.COM

SHANGHAI

KEY FACTS

CHINA


13/20

- 13 -SAVILLS.COM

WORLD CITIES REVIEW

New York at least is a part of the

Americas that can now call itselfold world. New Yorks

residential real estate displays all the

characteristics shown by the other

debt-reliant North Atlantic economies,

which suered from the nancial crisis of

2008. New York has shown the least

growth of any of the World Class of

10 still standing at its 2005 level. As a

stable, high quality, established and

cosmopolitan world nancial and cultural

centre,New York is looking exceptionally

good value at present.

New York, as a global city, hasoutperformed the national average over the

same period. Once again, the global city

characteristics of constrained space, little

new development and burgeoning global

demand has saved NY from the fate of

continued falls but, although international

purchasers are a growing presence, they are

not on the scale of some cities such as

London.e Big Apple is a rental town,

and largely an American one, although the

Venezuelans, French,

Germans and Chinese

are all present in the

market and, at the

super-high end,

Russian buyers.

Overseas buyers are

often looking for

good student

accommodation for

their ospring.

With the economy

still struggling and no

impact from bonuses

on Wall Street thisyear, prospects for

growth are still weak

but lengthened yields

and longer term

prospects oer some

incentives.

The BigApple is a

rental town,and it is largely

an Americanone

NEW YORKTHE BIG APPLE HAS SHOWN THE LEAST GROWTHOF ANY OF T HE T OP 10

AVERAGE

COSTRANKING



RENTAL YIELD


+21%

10%-2%

520

6.2%

AVERAGE



CLASS AVERAGE

-31%

1.610

DEC 2005 -DEC 2010

DEC 2010 -JUN 2011

SEU RENTAL



SEU AVERAGE...

LONDON

5

1,230S Q FT

NEW YORK

KEY FACTS

NORTH AMERICA

NEW YORK


14/20

- 14 -SAVILLS.COM

WORLD CITIES REVIEW

Sydney has long had a high prole on

the global stage but might be

described as only recently bursting

forth into the World Class when it comes

to residential real estate. It is a stable and

high-quality old world investment choice

with a well established luxury housing

market within an emerging New Worldregion that is booming, although domestic

aordability pressures coupled with global

economic uncertainty has put pressure on

prices in recent months.

Our analysis of the executive unit

housing would seem to illustrate that

recent stagnation is conned to the very

top and bottom of the market, varying

suburb by suburb. Following fears that

overseas buyers were contributing to a

housing bubble, restrictions were placed

on the purchase of homes by foreigners,

which have had some impact on

transactions.

e average growth rates shown

therefore disguise some extremes around

the average, while an underlying housing

shortage remains. e citys undersupply

of accommodation and high in-migration

plus restrictions on new development

(due to zoning and geography) are likely

to keep prices the highest of any

Australian city.

It would appear that Sydney is

beginning to display many of the commoncharacteristics of the World Class city

constrained land supply, increasing

pressure from overseas investors and high

demand for prime accommodation but

it is unusual in oering very spacious

living accommodation in relation to other

world cities.

Sydneysundersupply ofaccommodation,

high in-migration andrestrictions on

new developmentare likely to keep

prices high

SYDNEY A STABLE INVESTMENT CHOICE WITH ANESTABLISHED HOUSING MARKET

380

AVERAGE

COSTRANKING



RENTAL YIELD


+23%

21% 5%

4.7%

AVERAGE


CLASS AVERAGE

-33%

1.610

DEC 2005 -DEC 2010

DEC 2010 -JUN 2011

SEU RENTAL




SEU AVERAGE...

LONDON

7

SYDNEY

2,590S Q FT

SYDNEY

KEY FACTS

AUSTRALIA


15/20

- 15 -SAVILLS.COM

WORLD CITIES REVIEW

Moscows prime markets are

much more reliant on

domestic buyers and are farless cosmopolitan than London or Paris.

Consequently, the performance of the

Russian domestic economy is tightly

interwoven with the performance of its

residential property.e markets were hit

badly in 2008 and 2009 by economic

recession as global demand for Russias

energy resources plummeted and the

domestic economy faltered. Investment in

Moscows residential real estate has

closely followed the money being made in

the national economy, primarily in raw

commodities such as oil.

As a market driven by domestic buyers,

Moscows residential real estate market

reects the volatility of a fast growing

emerging market but has also shown the

growth to match.

Moscow was the fastest growing of the

10 world cities between 2005 and 2008.

Since global commodity prices have

rallied, there has been renewed vigour in

the market and prices are rising again,

albeit not at the same rate as pre 2007.

Moscow currently stands fth in terms ofgrowth levels over the whole period, just

below Hong Kong.

Like all of the World Class cities under

study, Moscows residential supply

struggles to keep pace with demand.

Measures are being put in place to boost

housing delivery in an attempt to improve

price stability but how successful they will

be remains to be seen.

MOSCOWTHE FASTEST GROWING OF THE WORLDCITIES BETWEEN 2005-2008

AVERAGE

COSTRANKING



RENTAL YIELD


-29%

84% 6%

470

5.6%

AVERAGE



CLASS AVERAGE

-38%

1.610

DEC 2005 -DEC 2010

DEC 2010 -JUN 2011

SEU RENTAL



SEU AVERAGE...

LONDON

8

MOSCOW1,050

S Q FT

MOSCOW

KEY FACTS

Driven bydomestic buyers,

Moscowsresidential real

estate reflects thevolatility of afast growing,

emergingmarket

RUSSIA


16/20

- 16 -SAVILLS.COM

WORLD CITIES REVIEW

M

umbai is the newest addition

to the league of World Class

cities and is perhaps feeling

uneasy in its role. Like all of the newworld economies in this report it has seen

high levels of (volatile) price growth,

albeit o a low base, and currently stands

the highest performing residential real

estate market since 2005.

ere is a widespread sense that the

extraordinary house price growth seen in

recent years,despite the 2008 downward

correction, is unsustainable.

As is the way when cities come on to

the world stage and adjust from being

national capital to World Class cities,

house prices in Mumbai have become

unaordable for many ordinary people.

e pressures of growth and demand

impinge on Mumbai in much the same

way as they do on Hong Kong and

Singapore.Mumbai is physically

constrained by being on a peninsula

where signicant infrastructure

investment is required for the city to

expand.ere is widespread feeling in the

city that Mumbais housing market is a

bubble waiting to burst,but whether this

is the case, or whether it is entering a newglobal league of internationally priced

cities, remains to be seen.

is basic pressure on space has pushed

up the cost of accommodation for

everyone.Mumbai has seen spectacular

growth in rents, up 69% over ve years,

but capital values grew 138% over the

same period, suppressing yields.

There is a

widespreadfeeling in thecity that

Mumbaishousing market

is in a bubblewaiting to

burst

MUMBAITHE NEWEST ADDITION TO THE LEAGUE OFWORLD CLASS CITIES

AVERAGE

COSTRANKING



RENTAL YIELD


-55%

138% 7%

320

3.1%

AVERAGE


CLASS AVERAGE

-43%

1.610

DEC 2005 -DEC 2010

DEC 2010 -JUN 2011

SEU RENTAL




SEU AVERAGE...

LONDON

10

MUMBAI1,450

S Q FT

MUMBAI

KEY FACTS

INDIA


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- 17 -SAVILLS.COM

SEU

AVERAGE

SEU

AVERAGE

SEU

AVERAGE

SEU

AVERAGE

SEU

AVERAGE

SEU

AVERAGE

SEU

AVERAGE

SEU

AVERAGE

SEU

AVERAGE

SEU

AVERAGE

WORLD CITIES REVIEW

World Class cities not only attract

international business peoplebut are also the haunt of the

super-wealthy. Global billionaires who can

make any country their home, and often

have several dierent residences across the

globe,are important inward investors in

residential real estate.

It is interesting that, in the cities where

average dwelling sizes are among the smallest

(e.g.Paris andTokyo) billionaires will occupy

amongst the largest spaces of any city.ey

are buying what is most rare.

In Moscow, where the billionaires city

dwelling is a relatively modest 4,600 sq ft,this is compensated by an enormous 21,500

sq ft mansion in the nearby countryside.

VALUERANKING

In Hong Kong, the rarest commodity on the

island is houses one Peak,and Southside.

Although they rank among the smallest

World Class billionaire properties (at around

5,200 sq ft),each of those square feet is the

most expensive in the world.Tokyo is the

next most expensive, due to exceptionally

high land values in central Tokyo,although it

is not a market known for international

billionaires (most would be Japanese).

Billionaires properties tell a dierent story

to the executive unit.e ultra prime,

billionairesmarkets in all cities out-performed

during the boom of 2007 and have also

out-performed the SEU in the six months to

June 2011.is reects the rate at which new

billionaires have been created across theglobe

and the rate at which they have invested in

global real estate in both emerged new

worldcities and in established old worldones

like London, Paris and New York.

PROSPECTSFOR

FUTUREINVESTMENT

ese established western markets have

seen steady growth but not the same volatility

as cities in the new world,making them

attractive safe havensfor billionaireswealth.

We anticipate that Sydney, for example,has

this potential in the Pacic region.

THE INTERNATIONAL SUPER-WEALTHYTHE WORLD CLASS BILLIONAIRE HOMES MARKET IS PERFORMING WELL

PA RIS LONDON MOSCOW NEW YOR K

HONG KONG TOKYO

S HANGHA I S INGAPORE MUMB A I SYDNEY

49% 23% 38% 3% 110% 2% 26% 0%

83% 10% 11%-2%

32% 3% 144% 16% 138% 7% 21% 40%

CAPITAL GROWTH OFBILLIONAIRE PROPERTY

DEC 0 5 - DEC 10

DEC 10 - JUL 11

BILLIONAIRE VS

EXECUTIVE UNIT

BILLIONAIRES

SE U

PER SQ FT FOR

BILLIONAIRE PROPERTY

AVERAGE PROPERTY SIZE SEU SIZE RATIO

COMPARED TO BILLIONAIRE

7 x

x

x

x

x

x

x

x

x

x

12

8

10

7

5

5

3

5

4

S YDNE Y

TOKYO

SINGAPORE

PARIS

LONDON

MU MB A I

NEW YORK

S HA NGHA I

HONG KONG

MOSCOW

19,380 SQ FT

16,010 SQ FT

12,300 SQ FT

10,760 SQ FT

7,860 SQ FT

6,790 SQ FT

6,500 SQ FT

5,380 SQ FT

5,200 SQ FT

4,630 SQ FT

It is likely that the World Class billionaire

homes market will continue to out-performother markets for as long as the boom in

global commodities and other markets

continues and helps create new billionaires.

ere are already signs that a wall of money

from this sector is waiting to get out of

China so currency export restrictions are a

key indicator for investors to watch there.

Continuing political upheaval,war and

civil unrest in various other parts of the

world,will ensure that there is continued

demand from the international elite for safe

havens in World Class cities. Unfortunately,

this demand is assured for the foreseeablefuture.We increasingly expect that some of

this demand will nd its way tonew world

cities as well as the oldin future.

6,700

5,190

3,270

3,090

2,520

2,270

1,320

1,000

710

590

HONG KONG

TOKYO

PARIS

LONDON

MOSCOW

NEW YORK

SHANGHAI

SINGAPORE

MU MB A I

SYDNEY

GLOBAL BILLIONAIRES

DEC05

JUN07

DEC08

JUN10

JUN06

DEC07

JUN09

DEC10

DEC06

JUN08

DEC09

JUN11

100

150

200


18/20

- 18 -SAVILLS.COM

WORLD CI TIES REVIEW

WHEN THE CITY IS NOT ENOUGH...IN SOME CITIES LEISURE PROPERTIES ARE AN ESSENTIAL PART OF THE DEAL

0

Big cities have many attractions and

may be the sole place of residencefor half of the worlds population

but many wealthy city enclaves are still

empty at weekends.

e tradition of spending the weekend

in the countryside is well-established in

many old world cities like New York,

Paris, London and Moscow. It is likely

that the CEO in our executive unit, who

occupies a small apartment in Paris or

Moscow during the week, would have a

second home in the country.

ose in Asian city states like Hong

Kong and Singapore are more likely totravel to neighbouring countries such as

ailand, Malaysia and Indonesia to

enjoy their second homes.

For the Global Billionaire, meanwhile,

a leisure home forms an integral part of

overall accommodation needs. We have

measured the leisure accommodation of

both the CEO and global billionaire

households in our World Class leisure

properties index.

is index is an eclectic mix of ai

resort villas, Russian dachas, Englishcountry houses and French Riviera

estates. Nevertheless, these residential

properties can be seen as an important

component of World Class city life.

UNDERPERFORMANCE

Leisure property has not seen the same

level of performance as the main city

residences. e leisure index increased

by only 33% between December 2005

and June 2011, compared to 77% in the

city index over the same period. is

reects the singularity of the World Class

city and the way its residential markets

have little to do with the domesticeconomy. Second homes nestled in a

citys hinterland are more prone to the

condition of the domestic, and even the

rural economy, rather than the wealth

being generated in the city state.

It is not surprising then that World

Class leisure property experienced the

greatest growth during the global

economic boom period in the years up

to the end of 2007 but, as domestic

economies suered more in the global

recession of 2008, leisure properties fell

more averaging -12% compared to -6%in the city. Leisure property is a

discretionary purchase and was one of

the rst luxuries to go in the downturn.

Some of the countries of South East

Asia where leisure properties are situated

have not seen the same levels of value

growth, hence the World Class leisure

index has not received the same boost as

the cities index. It has yet to return to its

2007 peak.

Leisure propertyis a discretionarypurchase and was

one of the firstluxuries to go inthe downturn

DE C05

JUN06

DE C06

JUN07

DE C07

JUN08

DE C08

JUN09

DE C09

JUN10

DE C10

JUN11

INDEX

HOME FROM HOMETHE GLOBAL LEISURE VALUES INDEX

120

140

160

180

CITY PROPERTY LEISURE PROPERTY


19/20

- 19 -savills.com

world cities review

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Residential markets inour World Class Citieshave more in common

with each other than themainstream markets of the

countries in which theyoperate

worldclasscities 2011 Savilles

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