Download - MIPIM Asia 2011 Wrap-up
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Wrap Up
MIPIM Asia 2011
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Remembering: MIPIM Asia 2009
• Growing sense of optimism– Asia weathered the storm– Capital is flowing in
• Chief concerns:– US double dip recession– Housing bubble in China
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Remembering: MIPIM Asia 2010
• Strong sense of optimism• China is leading the way• Great diversity of opportunities• Chief concerns– Housing bubble in China– Limited availability of quality assets
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2010 optimism was justified
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Better Same Worse
How is your business activity this quarter compared to same quarter last year?
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Optimism in the data
Company Still Buying? Company Still Buying? Company Still Buying?Unibail- Rodamco Blackstone Morgan Stanley Morgan Stanley Tishman Speyer National Pension Service (NPS)Avestus Capital Partners - Lehman Brothers Holdings Inc- Prudential Goldman Sachs** - Morgan Stanley Mitsubishi Estate IVG Immobilien GE Capital - CapitaLand Limited Metrovacesa - Goldman Sachs Wheelock & Co Aviva PLC Beacon Capital Partners Sino Land Company Limited -Aberdeen Property Investors Broadway Partners - LaSalle Investment ManagementPirelli & C. Real Estate SpA - Brookfield Asset Management Macquarie Glob Prop Advs (MGPA)Pearl Group - Prudential RE Investors China Vanke Co Ltd Electra Ltd - BlackRock DB RREEF ING Group Centro Properties Group - Tokyo Tatemono Co Ltd RREEF TIAA- CREF GIC RE (Govt of Singapore) Prudential PLC Lightstone Group Nan Fung Group Propinvest Group - CalSTRS Kerry Properties Limited SEB Group Chetrit Group China Overseas Land & Invt LtdLehman Brothers Holdings Inc- CalPERS K Wah International GE Capital - Simon Property Group Sun Hung Kai Properties LimitedImmofinanz JP Morgan Hong Leong Group Evans Randall Dubai World - Tokyu Land Corporation
Europe United States AsiaPac
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Looking forward: mixed picture
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More Optimistic Same Less Optimistic
What is your perspective on your real estate market compared to last year?
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2011: Focus on China, cautious optimism
• China in the driver seat• Nuances across– Investment horizons: short and long term– Property types– Investment structures– Chinese provinces– Asia Pacific markets
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China: Strong fundamentals
• Scale and performance of the economy• Favorable long term trends– Continued urbanization– Unavoidable export sector– Strengthening domestic demand
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China: Mixed short-term perspective
• Global economic crisis– China – US – European Union
• Global tensions– Currency exchange rates – Terms of trade– Current account imbalances
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China: Mixed short-term perspective
• Government’s ability to engineer – Continued growth
– Availability of debt to the small-medium businesses– Demography
– A soft landing• Chinese regional disparities
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China: Real estate perspective
• Maturing real estate market– Sustainability– Exit strategies, insurance companies– Greater quantity of investment opportunities
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China: Real estate perspective
• In the hands of the policymakers– Supply – competition– Availability of credit– Investment performance
• Critical to foreign investors: The local partnerThe regulations
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Latest Regulatory Changes which Have an Impact on Real Estate Market
Increase land supply for low-income housing, no less than 70% of the total land supply for residential purposes
Crack down land stocking and land speculation
Formulate detailed planning and construction conditions for each plot of land before tendering of land
1. Land Supply
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Latest Regulatory Changes which Have an Impact on Real Estate Market
Shorten the payment term for Land Grant Contract; and increase the deposit for land bidding
Reform the Land Bidding System
Strengthen control for land supply in second and third tier cities by central government
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Latest Regulatory Changes which Have an Impact on Real Estate Market
2. Financing Policy
Lower risks associated with real estate development loan - No loan for delay in development
- No loan for land premium - Under-construction will be used as collateral Increase down payment and interest rate for housing loan
Monitor risks associated with real estate investment trust plan
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Latest Regulatory Changes which Have an Impact on Real Estate Market
3. Expand Purchase Limit to More Cities
cities that have experienced a significant increase in the purchase price and transaction volume of newly constructed
residential properties;
cities in close proximity to major cities that have already implemented restrictive regulations.
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Latest Regulatory Changes which Have an Impact on Real Estate Market
4. Encourage Low-income Housing
increase land supply for low-income housing; 70% of the land marked for residential properties will be used for low-income housing;
increase investment by central and local government; all revenue from housing public fund and 10% of land premium will be invested in low-income housing;
Increase credit support for low-income housing by banks;
Reduce and exempt taxes and fees in connection with the building, selling and operating of the low-income housing.
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Latest Regulatory Changes which Have an Impact on Real Estate Market
MOC delegates its power to approve any foreign investment below US$ 300 million falling into encouraged categories to the local government, as well as the foreign investment below US$50 million falling into the restricted categories.
MOC Filing applies to all foreign investment in real estate.
5. Foreign Investment in Real Estate
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Beyond China?
0%10%20%30%40%50%60%70%80%90%
China Australia/NZ Japan
Where are the best opportunities for real estate investment in Asia-Pacific?
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Beyond China?
• Australia – New Zealand• Japan • Taiwan• Hong Kong, Singapore• India, Russia• Indonesia• Thailand, Malaysia, Vietnam, Philippines,…
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Global Office Property Clock Q3 2011
Mexico City
Rental GrowthSlowing
RentsFalling
Rental Growth
Accelerating
RentsBottoming Out Abu Dhabi
Dubai, Seoul, Detroit
MadridAmsterdam, Brussels, Los AngelesRome, Tokyo, ChicagoFrankfurt, Johannesburg, Atlanta
Berlin, Sydney
Milan, Washington DC, TorontoMumbai, Dallas, Dehli
New York
StockholmSan Francisco
Paris, Beijing, São Paulo
London West EndLondon City
Moscow, Zurich
ShanghaiSingapore
Hong Kong
The Jones Lang LaSalle Property ClocksSM
AmericasAsia-PacificEMEA
Note
• This diagram illustrates where Jones Lang LaSalle estimate each prime office market is within its individual rental cycle at end of September 2011
• Markets can move around the clock at different speeds and directions
• The diagram is a convenient method of comparing the relative position of markets in their rental cycle
• Their position is not necessarily representative of investment or development market prospects.
• Their position refers to Prime Face Rental Values
Source: Jones Lang LaSalle IP, October 2011
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Asia Pacific real estate markets in 2012
Strong Asian economic
fundamentals
Sustained tenant demand
Capital values stable
Federal cheap lending rates
are not showing signs of increase
Borrowing costs might rise
Undersupply of investable
stock
Risk and uncertainty
Source: Jones Lang LaSalle Capital Markets Research
Negative real interest
rates
Volatile Dollar, Pound and Euro
Appreciating Asian
currencies
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Real estate markets in the global cycle
Expansion Downturn
RepairRecovery Latin America
USJapan
Advanced Europe
Europe, Middle East,
AfricaEmerging
Asia
Households
Banking Sector
Valuation
Credit conditions
Asset quality
Corporate fundamentals
Phases of the Credit Cycle
Source: Jones Lang LaSalle Capital Markets Research
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China: Why go elsewhere? (2010 GDP at PPP)
Guangdong 1,152 South Korea 1,466
Jiansu 1,037 Indonesia 1,033
Shandong 999 Australia 884
Zhejiang 690 Taiwan 824
Henan 581 Thailand 589
Hebei 512 Malaysia 417
Liaoning 463 Philippines 369
Sichuan 428 Hong Kong 327
Shanghai 428 Singapore 293
Hunan 403 Vietnam 277
Hubei 401 New Zealand
119
Source: China NBS Statistical Data and IMF
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The rise of the discerning investor
• Within China– Performing local governments
– Strong balance sheets– Strong small and medium enterprise
– Growing service sectors• Within the Asia-Pacific region– Secure/efficient business environment– Trade flows with China– Local Chinese communities
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The discerning governments?
Emerging marketsImperative to act• Improve the legal/business environment• Improve the physical infrastructure
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The discerning governments?
China• First stage of growth: economic adjustment
• Transfer of resources across sectors• Infrastructure investment
Easy to manage and plan
• Sustainable growth: growth in productivity• About R&D• About Innovation
Tough for government to pick winners
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The discerning governments?
ChinaThe key question for the future:Pace of reforms toward freer markets to unleash innovation in SME
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In the end…
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More Optimistic Same Less Optimistic
How has MIPIM Asia changed your outlook?
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And outstanding award-winning projects
Marina Bay Financial Center
Singapore
Shanghai Shimao Wonderland Intercontinental