GLOBAL PROPERTY MARKET CONFERENCE SPOTLIGHT ON LONDON
Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Balance of Responses, SA IN LONDON, EVERYONE IS CONFIDENT INDEX- SERIES AVERAGE = 100 130 120 110 100 90 80 70 40 30 20 10 0-10 -20-30 -40-50 -60 60-70 Source: DG ECFIN Economic Sentiment Index Services Confidence Indicator (RHS)
AS EMPLOYMENT IS SET TO GROW LONDON EMPLOYMENT LEVELS (000s) FORECASTS 1400 700 600 500 400 Per annum growth 2003-2008 0.81% 1023 Per annum growth 2008-2013 2.01% 1094 328 Per annum growth 2013-2018 3.28% 1285 417 1200 1000 800 191 89 300 200 228 174 224 206 600 400 32 100 200 0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Media & technology Financial & insurance Professional Services Total Services (RHS) Source: OEF (Inner London) 000s jobs projected to be added in the next 5 years
TENANTS LOOK FOR MORE SPACE ACTIVE DEMAND-BY SECTOR Q3 2014 Q3 2013 Q3 2014 Q3 2013 29 % 25% 12% 27% 29% 14% 10% 12% 9% 9% 9% 6% 9.2 m sq ft up since Q3 2013 (9.0 m sq ft)
OR MOVE BACK INTO TOWN
WHICH ON THE FRINGE PUSHES 2009 RENTS Prime rental figures relate to new, high specification units of a standard size commensurate with demand in each location and reflect the market at the top end. KEY (psf) Less than 50.00 50.00 74.00 75.00-99.00 100.00 plus KENSINGTON 37.50 psf HAMMERSMITH 31.50 psf PADDINGTON 45.00 psf KNIGHTSBRIDGE 55.00 psf EUSTON & MARYLEBONE 42.50 psf NORTH OF OXFORD STREET 57.50 psf MAYFAIR & ST JAMES S 75.00 psf VICTORIA 52.50 psf KING S CROSS 35.00 psf CLERKENWELL & BLOOMSBURY SHOREDITCH 42.50 psf 32.50 psf SOHO & COVENT GARDEN 47.50 psf MIDTOWN 42.50 psf CITY CORE 44.00 psf SOUTHBANK 37.50 psf OUTER CORE 35.00 psf ALDGATE & WHITECHAPEL 35.00 psf CANARY WHARF 35.00 psf DOCKLANDS 20.00 psf *Central London Prime Office Rents as at December 2009
TO NEW LEVELS IN 2014 Prime rental figures relate to new, high specification units of a standard size commensurate with demand in each location and reflect the market at the top end. KEY (psf) Less than 50.00 50.00 74.00 75.00-99.00 100.00 plus KENSINGTON 55.00 psf HAMMERSMITH 49.50 psf PADDINGTON 57.50 psf KNIGHTSBRIDGE 85.00 psf EUSTON & MARYLEBONE 67.50 psf NORTH OF OXFORD STREET 90.00 psf MAYFAIR & ST JAMES S 115.00 psf VICTORIA 75.00 psf KING S CROSS 67.50 psf CLERKENWELL & BLOOMSBURY SHOREDITCH 60.00 psf 52.50 psf SOHO & COVENT GARDEN 80.00 psf MIDTOWN 57.50 psf CITY CORE 60.00 psf SOUTHBANK 50.00 psf OUTER CORE 49.00 psf STRATFORD 35.00 psf ALDGATE & WHITECHAPEL 44.00 psf CANARY WHARF 36.50 psf DOCKLANDS 23.00 psf *Central London Prime Office Rents as at September 2014
BUT SUPPLY IS CONSTRAINED, SO MORE GROWTH EXPECTED CENTRAL LONDON DEVELOPMENT PIPELINE (sq ft) 8,000,000 FORECASTS 7,000,000 10 year average : 3.5 million sq ft x1.8 avg x1.8 avg x2.0 avg 6,000,000 5,000,000 4,000,000 x1.1 avg 3,000,000 2,000,000 x0.7 avg 1,000,000-2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Completed Under Construction Proposed - Definite Proposed - Likely Prelet Required UO/ Prelet
AND FOR CAPITAL, LONDON IS SURGING Private Equity Funds Pension Funds Insurance Funds Sovereign Wealth Fund London London London London Paris Copenhagen Paris Dubai Amsterdam Stockholm Munich Paris Munich Paris Manchester Frankfurt Prague Frankfurt Frankfurt Hamburg Manchester Brussels Dublin Moscow Berlin Gothenburg Zurich Aberdeen Geneva Madrid Hamburg Milan $0 $2 $4 $6 Year to June 14, $bn $0.0 $0.5 $1.0 $1.5 $2.0 Year to June 14, $bn Berlin Rome Helsinki Barcelona Stockholm Warsaw Brussels Milan Birmingham Munich Frankfurt Nice Reading Oslo Prague Amsterdam $0 $1 $2 $3 $4 $0 $2 $4 $6 $8 Year to June 14, $bn Year to June 14, $bn
Million WITH A COCKTAIL OF GLOBAL EQUITY INVESTMENT VOLUMES 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 Unknown Oceania South America Africa Middle East Asia North America Europe UK 2,000 0 2009 2010 2011 2012 2013 2014 YTD
PUSHING YIELDS TO 10 YEAR LOWS. HIGH V LOW YIELD SPREAD HIGH V LOW 10.00% 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 10 Year spread Current Yield
Prime yield BUT IT S THE SAME ELSEWHERE. HIGHS VS. LOWS OFFICE YIELD SPREAD 14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 10 YR SPREAD Sep-14
Q4 1973 Q4 1974 Q4 1975 Q4 1976 Q4 1977 Q4 1978 Q4 1979 Q4 1980 Q4 1981 Q4 1982 Q4 1983 Q4 1984 Q4 1985 Q4 1986 Q4 1987 Q4 1988 Q4 1989 Q4 1990 Q4 1991 Q4 1992 Q4 1993 Q4 1994 Q4 1995 Q4 1996 Q4 1997 Q4 1998 Q4 1999 Q4 2000 Q4 2001 Q4 2002 Q4 2003 Q4 2004 Q4 2005 Q4 2006 Q4 2007 Q4 2008 Q4 2009 Q4 2010 Q4 2011 Q4 2012 Q4 2013 Average House Prices HOUSE PRICES ARE RISING JUST UK AVERAGE RESIDENTIAL HOUSE PRICES 450000 400000 350000 300000 250000 200000 150000 100000 50000 0 LONDON UK
Dec-91 Sep-92 Jun-93 Mar-94 Dec-94 Sep-95 Jun-96 Mar-97 Dec-97 Sep-98 Jun-99 Mar-00 Dec-00 Sep-01 Jun-02 Mar-03 Dec-03 Sep-04 Jun-05 Mar-06 Dec-06 Sep-07 Jun-08 Mar-09 Dec-09 Sep-10 Jun-11 Mar-12 Dec-12 Sep-13 Jun-14 Prime Rent ITZA Prime Yield AND LUXURY RETAIL IS FLOURISHING 1400.00 PRIME RETAIL RENTS & YIELDS 7.00% 1200.00 6.00% 1000.00 5.00% 800.00 4.00% 600.00 3.00% 400.00 200.00 Rent Yield 2.00% 1.00% 0.00 0.00%
AS LONDON GROWS THE NEW LONDON Birmingham Berks/Herts HS2 Crossrai l Brent Cross White City Kings Cross Stratford Reading /Thame s Valley Crossrai l Earls Court West End - Midtown City Southbank Canary Wharf Battersea Nine Elms Croydon Ebbsfleet
IS A WINNING CITY Global Business Hub Technology Hubs Tourism Appeal Innovation Cities Top City Office Markets Ranking of scale and services C&W Composite based on various studies C&W Number of tourist arrivals - Euromonitor 2014 Global Index By 2thinknow C&W Ranking 1 London London Hong Kong San Francisco New York 2 New York San Francisco Singapore New York Singapore 3 Tokyo Tel Aviv Bangkok London London 4 Shanghai New York London Boston Hong Kong 5 San Francisco Stockholm Macau Paris Paris 6 Seoul Berlin Kuala Lumpur Vienna Tokyo 7 Beijing Singapore Shenzhen Munich Boston 8 Toronto Bangalore New York Amsterdam Chicago 9 Hong Kong Boston Antalya Copenhagen San Francisco 10 Paris Seoul Paris Seattle Washington 11 Chicago Toronto Istanbul Toronto Zurich 12 Singapore Beijing Rome Seoul Stockholm
BUT HAS IT PEAKED?
GLOBAL PROPERTY MARKET CONFERENCE SPOTLIGHT ON LONDON