The Magazine Cityscape June 2013

Volume 7• Issue 2 • JuNe 2013

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For more information on the exclusive Resort with the restoration project of the historic Grand Man-sion at its heart, luxury Villas and branded Serviced Residences visit us at the Akdag stand T30,Cityscape Qatar, May 27 – 29.

Discover the Gem of Istanbul on the Princes' Islands

The Grand Mansion 1872

Opening Summer 2014

www.princespalace.com

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Agaoglu Istanbul Ilan ing-arp yeni 420x297.pdf 1 30.04.2013 16:04

LATEST NEWS8 REGIONAL NEWS26 ASIA PACIFIC NEWS42 EUROPE NEWS54 AMERICAS NEWS

8 MIDDLE EAST INSIGHT

14 QATAR | A tiny country with big plans18 DuBAI | Is the bubble coming back?22 TURKEY | The rising star

26 ASIA PACIFIC INSIGHT

28 THAIlAND | Luxury property in high demand32 AusTRAlIA | Green stars for green buildings

36 COVER STORYsTuDeNT HousINg | A new global asset class

42 EUROPE INSIGHT

44 geRmANY | Investors’ favourite48 RussIA | Opportunities amidst challenges42 VIlNIus | A profile of Lithuania’s capital

54 AMERICAS INSIGHT

56 BRAZIl | It’s not all about games

60 REGULAR FEATURES

60 ARCHITeCTuRe | Qatar’s first Passivhaus/S Cube Chalet, Kuwait64 susTAINABIlITY | Effectively reducing building energy consumption68 ReTAIl | The changing face of the UAE retail scene

71 INDUSTRY PAGES71 INDusTRY CommeNT | Why ME investors eye London prime property72 A DAY IN THe lIFe oF… an architect73 moVeRs & sHAKeRs

74 CITYSCAPE EVENTS

CoNTeNTs

18

28

48 60

Project Director | Simon ColeeDitor | Anna AminDeSiGN | Aurélie MoinierADvertiSiNG | Adam Fox

Although every effort is made to ensure the accuracy of information contained in this magazine is correct, Cityscape cannot be held responsible for any errors or inaccuracies contained within the publication. All information contained in the magazine is under copyright to Cityscape and cannot be reproduced or transmitted in any form without first obtaining written permission from the publisher.

PArtNerShiP eNquirieS Simon Cole Tel. +971 (0) 4407 2640 Email : [email protected] eNquirieS Adam Fox Tel. +971 (0) 4408 2801 Email : [email protected] eNquirieS Anna Amin Tel. +971 (0) 4408 2898 Email : [email protected] AGeNcY LUCKY YOU! design® www.luckyyou-design.comcitYScAPe PuBliShiNG Informa Exhibitions, P.O. Box 28943, Dubai, UAEPuBliSheD BY Nicholas Publishing International FZ LLC

Most parents would agree that a good education is an essential part of providing a secure future

for their children. Those who could af-ford to send their young adults to study overseas have always done so, seeking quality education at some of the best universities around the globe. Nothing new here, the only difference is that over the past decade, the number of international students studying overseas has drasti-cally increased.

Why? In our cover story we take a look at some of the reasons for the increase in student mobility, but more importantly, at the implications this has for the student housing sector. Strong demand for student housing has also meant that universities across the globe were unprepared to react to the rise in enrolments – a perfect opportunity for the private sector to step in and develop purpose-built accommodation which suits students’ needs.

Consequently, the student housing sec-tor has begun to attract increasing levels of interest from investors and has emerged as a mainstream investment category. Our report analyses the factors which make student property a particularly attractive asset class and puts the spotlight on the world’s most interesting markets.

Turning to our region, the state of the Dubai real estate market has once again become the talk of the town. Is the market

heating up? Are the pre-crash conditions returning? Opinions on this are divided which is why we decided to take a closer look at the present circumstances and have asked the experts to give us their take on the market.

Further to the east in Asia, Thailand is currently on the radar of international investors, particularly the island of Phuket. As tourist arrivals to the country are in-creasing and more affluent travellers make their way to Phuket, luxury property is in high demand.

In other global regions, Russia is an inter-esting example of an emerging economy with huge potential for property invest-ment; if one can rise up to the inherent challenges the world’s largest country presents. Russia has a highly dynamic retail market and offers lucrative opportunities for investors willing to take up the challenge of doing business in a complex environ-ment, experts say.

Looking back at the first quarter of the year, it has been a very busy period for Cityscape. With three major events having passed – Cityscape Jeddah, Cityscape Egypt and Cityscape Abu Dhabi – we are pleased to say that each one of them has been a great success. We’re now looking forward to Cityscape Qatar, which will open its doors for the second time since it’s inception in 2012 from 27 – 29 May at the Doha Exhibition Centre, providing an excellent platform for fostering growth in Qatar’s booming real estate market.

We hope you enjoy the read.

Anna AminEditor

CITYSCAPE

EDITOR’S LETTER

10 I CITYsCAPe I June 2013

MIDDLE EAST NEWS


SHARJAH’S REAL ESTATE MARkET PROVES RESILIENT

In the first quarter of this year, Sharjah has maintained a strong economic recovery period demonstrated by the expansion of various markets and industry sectors and a focus on diversification, Cluttons’ Q1 2013 Sharjah market report says. The emirate’s real estate market has always proved resilient and highly popular with investors and Cluttons notes healthy performance across the residential, office, commercial, hospitality and industrial sectors over the past 12 months.

The residential sector is witnessing a steady rise in average rents as demand outstrips supply for the first time since the global crisis. Since October 2012, apartments in popular areas such as Al Majaz, Al Nahda and Qassimiya have witnessed an average rental increase of 10 to 15%. In other desirable areas, villas

have seen a similar 15% increase due to strong growth in demand and a lack of quality stock. However, these increases are applicable only to new lettings as the three-year, no-increase protection law still exists in Sharjah.

The office market has remained un-changed since October 2012, with average rents in the main business districts holding between AED 50 to 80 per square foot. Landlords of a number of the more promi-nent office towers are now offering flexible lease agreements, which has helped attract tenants and increase occupancy rates.

The industrial market is the most stable real estate sector and accounts for ap-proximately one fifth of the emirate’s GDP. The government recently has begun re-zoning parts of the industrial area close to the city centre as commercial land. As a result, it is expected that industrial tenants will move further out of the city towards areas such as Sajaa.

Finally, Sharjah’s hospitality sector has also shown signs of continued growth, with a 9% year-on-year rise in guest numbers at hospitality establishments within Sharjah.

Muriya Tourism Development, a joint venture between Orascom Development Holdings (70%), and Omran (30%), the tourism development arm of the Omani Government, has recently completed the core of its latest property develop-ment, the Marina Town in Jebel Sifah.

Jebel Sifah is located 45 minutes from Muscat, adjacent to the fishing village of Sifah. The project is spread on a narrow 5 kilometre coastal strip and set against the backdrop of the Hajjar Mountains.

At the centre of the development is the Marina Town, which sits amidst hectares of manicured gardens and an

18-hole Peter Harradine designed Golf Course and includes several luxury re-sorts. Activities available at the resort and in the surrounding area include golf, tennis, snorkelling, scuba diving, jet skiing, hiking, mountain biking, diving, game fishing and sailing as well as boat trips to the nearby islands.

Property ownership at Jebel Sifah is on a freehold basis and upon completion of their purchase, owners are granted Omani residency together with the fi-nancial benefits that flow from residing in Oman, including zero income, capital gains, inheritance and property tax.

JEbEL SIFAH IS OMAN’S NEW FULLY-INTEGRATED RESORT TOWN

Investment optIons

1, 2, and 3 bedroom apartments available from 120 sqm; prices start at $328,000

4 categories of villas ranging from 266 – 487 sqm on plots of land starting from 1000 sqm; prices start at $700,000

AbU DHAbI RANkS NUMbER 10 IN GLObAL SHOPPING CENTRE DEVELOPMENT

Abu Dhabi has more than 0.8 million square metres of new retail space under development, placing the UAE capital amongst the leading cities globally for shopping centre development. Across the world, an unprecedented 32 million square metres of shopping centre space is currently under construction, representing a 15% increase year-on-year (28m sqm in 2012), according to the latest research from global property advisor CbRE.

Commenting on the Abu Dhabi market, Mat Green, Head of Research UAE, CbRE Middle East, said : “After a period of significant undersupply, where many of the major malls have been running at close to 100%

occupancy, we are now entering into a new growth period for retail stock.”

“Over the next four years around 0.8 million square metres of new mall space across nine schemes will be delivered to the market, helping to

establish Abu Dhabi as a new destina-tion for retail in the Middle East.”

“During this period we will see a dramatic transformation of the retail landscape, both in terms of supply and quality. We are also expecting an

influx of new retail brands, some of which will be open-ing their first stores in the region. Overall, we see this is an exciting time for retail in the capital,” Green continued.

According to CbRE, the rapid growth of new shopping centre development in emerging as opposed to mature markets is attributed to a growing middle class, the urbanisation of large cities and consumer demand for better quality retail.

Shopping centre development in emerging marketS

Abu Dhabi ranks Nr. 10 in global shopping centre development

China is home to more than half of all the global space under construction (16.8 million sqm)

Other markets experiencing substantial expansion include Istanbul, Moscow, St Petersburg, New Delhi, Kiev, Hanoi and Kuala Lumpur

Source : CBRE

MIDDLE EASTNEWS

June 2013 I CITYsCAPe I 13

SELECTIVE GROWTH IN CAIRO RESIDENTIAL AND RETAIL MARkETS IN Q1 2013

Despite ongoing political and economic challenges facing the Cairo real estate market, selective growth can be seen in some residential and retails sectors in the city, says Jones Lang LaSalle’s Q1 2013 Cairo Real Estate Overview report.

Commenting on the report, Ayman Sami, Head of Egypt Office at Jones Lang LaSalle said :

“Although we are continuing to experi-ence ongoing challenges facing the Cairo

and wider Egyptian real estate market we are seeing selective demand and new developments in both the residential and retail sectors within this market. The office sector has also seen a number of leasing transactions in the first quarter and the residential and retail sectors have wit-nessed a number of new project launch-es and the start of several new projects including the ‘Mall of Egypt’ which will be the largest mall in the country.”

Craig Plumb, Head of Research at Jones Lang LaSalle, MENA, further commented :

“Egypt’s strong long-term fundamentals and the relative lack of modern real estate remain major attractions for both oc-cupiers and real estate investors. Despite the current state of state of flux, many investors and occupiers are taking a long term view and remain committed due to the enormous potential and future possibilities offered by the Cairo market.”

MIDDLE EAST NEWS


TASWEEk SIGNS MoU WITH bEYTTüRk TO INTRODUCE TOP TURkISH DEVELOPMENTS TO ME MARkETS

TASWEEk Real Estate Development and Marketing has signed a Memorandum of Understanding (MoU) with beyttürk Inc., a group of companies with a mission of enhancing commercial relations between Turkey and GCC countries.

The agreement which was signed by beyttürk Chairman, Muhammet Ugurcan barman, and Masood Al Awar, CEO of TAS-WEEk, during Cityscape Abu Dhabi 2013, will allow Tasweek to market strategic real estate projects under beyttürk’s wings to the MENA region, acquire investment assets, and engage in joint venture development. beyttürk, on the other hand, will constantly feed marketing and investment opportunities to its new partner and provide the necessary support to facilitate business. The com-pany has been involved in various housing

projects and began its particular focus on promoting local developments to Gulf States in 2008 in line with the vision of Turkish Prime Minister RecepTayyip Erdoğan. It has been marketing a number of projects formed in cooperation Gulf companies through its subsidiary, khaleejTurk Property.

The initial focus of TASWEEk under the partnership is the promotion of beyttürk’s ‘Dreamland’ project, a picturesque 44-unit, 26,000 sqm villa complex arising in the northwestern city of Yalova. Located at the Termal district, an area famous for its hot springs, Dreamland is strategically located just an hour away from Turkey’s three largest cities – Istanbul, bursa and Izmir.

“Turkey’s growing reputation as a real estate haven has been partly driven by the arrival of global players who have made the market more competitive and exposed to interna-tional buyers. Given its specific focus on the Gulf as a property partner, Turkey is a high-potential market we intend to fully explore through our alliance with beyttürk,” said Masood Al Awar.

TASWEEk exhibited unique real estate products from beyttürk and its other global partners comprising its extensive USD 250 million portfolio during Cityscape Abu Dhabi 2013.

All residential developments in Dubai, especially those with quality buildings or those in prime areas, have continued where they ended 2012 with a strong Q1 2013 performance, says the Asteco Q1 2013 Dubai real estate report.

Apartment sales prices grew on av-erage by 12% in the three months to the end of March 2013 with year-on-year growth standing at 27%. In comparison, although average villa sales prices only climbed 5% in Q1 2013, growth over the

past 12 months averaged 24%.The performance of rental rates

was also impressive, average apart-ment and villa rents grew by 3 and 4% compared to Q4 2012, but still managed to climb 19 and 21% respectively over the past 12 months.

Office rental rates in Dubai Invest-ments Park rose 13% to AED 485 per square metre, while JLT and Tecom rose 20 and 25% respectively to command AED 654 to AED 800 per square metre compared to the same period last year.

MOUNTING DEMAND PUSHES DUbAI REAL ESTATE PRICES UP FURTHER

Dubai in Q1 2013 Apartment sales prices

rise 12% in the first 3 months of this year

Villa & apartment rentals up 4 and 3% compared to Q4 2012

Office rental rates up between 13 and 25% in selected areas

Source : Asteco

ISTANbUL STRENGTHENS ITS TOURIST APPEAL ON büYükADA

The island of büyükada is the largest of the nine so-called Princes' Islands in the Sea of Marmara, near Istanbul, with an area of about 5.4 square kilometres. Today, the island has about 7,000 inhabitants, is a popular summer house vacation and hosts daily visitors from Istanbul, especially during summer time.

büyükada has a rich cultural heritage and a long tradition of royal retreats and noble hospitality. During the byzantine and Ottoman period, princes and other royalty were exiled on the islands giving them their present name. Princess Fahreln-issa Zeid was born on büyükada and Leon Trotsky lived there for four years. During the nineteenth century, the island became a popular resort for Istanbul's

wealthy. Several cultural heritage sites such as the Ayia Yorgi Church and Monastery and the Hamidiye Mosque, built by Abdul Hamid II., various Otto-man mansions and Victorian cottages are still preserved.

Today, it is a Natural Conservation Area, where no motorised vehicles are allowed. Just a 20 minute boat ride from Istanbul, the peaceful island is best explored by foot, by riding a bicycle or in a traditional horse carriage.

Due to its unique and charming appeal, the island attracts luxury hospitality developers such as Akdağ Tourism & Construction, which is currently developing the exclusive Princes' Palace Resort & Spa on büyükada.

On the back of increasing tourist arrivals to Turkey, and to Istanbul in particular, the country’s hospitality market is experiencing exponential growth and is said to offer lucra-tive investment opportunities over the coming years.

Princes' Palace resort & sPaOpening in spring 2014, Princes' Palace Resort & Spa is currently being developed by Akdağ Tourism & Construction.Located on Büyükada, the project is an exclusive, internationally branded luxury resort, encompassing a historic grand mansion, villas, serviced residences, a hotel and beach club.Facilities include private sea access and Yacht Pier, seawater pools and sea hammams, a landscaped park, a helideck and horse carriage.

MIDDLE EASTNEWS


RAS AL kHAIMAH TO GIVE NEW bOOST TO REGIONAL TOURISM

Last month, Ras Al khaimah Tourism Development Authority (Ras Al khaimah TDA) has appointed Four Communications Group to build the emirate’s profile as the GCC’s premier affordable luxury destination for leisure and adventure travel.

The Ras Al khaimah TDA was established in May 2011 to develop and promote the emirate’s tourism potential on a local, regional and international level. Its key strategic targets include increasing Ras

Al khaimah’s number of annual visitors to 1.2 million by 2013; increasing the total number of hotel and resort rooms from 3,000 in 2012 to 10,000 by 2016; and driving the travel and tourism sector’s GDP contribution up from 2% in 2011 to 9% over the coming four years.

Four Communications will support these goals through an ongoing public relations programme to promote Ras Al khaimah tourism within the GCC, with a particular focus on the UAE and Saudi Arabia. Vic-tor Louis, Chief Operating Officer Ras Al khaimah Tourism Development Authority, said : “2013 is shaping up to be a landmark year for Ras Al khaimah TDA, as we move closer towards achieving our strategic goals of 1.2million visitors and 10,000 hotel and resort rooms.”

The AqAbA SpeciAl economic Zone AuThoriTyThe vision of transforming Aqaba into a world-class business and logistics hub has become a reality

• King Hussein International Airport

• Road and Railway Networks

AqAbA Development CorporAtion (ADC)

the trAnsport network

• The New Port of Aqaba

AqAbA NAtioNAl ReAl estAte PRojects co. (ANRePco)

Established in July,2006 as a private shareholding company Governed by a Board of Directors, and owned by (NREC) 70% and (ADC) 30%.

ANREPCO was founded to serve present and future needs of investors and businesses in real estate, warehousing, cold stores, developed land, commercial and, light & medium industrial facilities in Aqaba.

ANREPCO responsible for developing "ADC Warehousing & Industries Park" Located (12km) south east of Aqaba city center, (6km) from Aqaba Containers Port, and just near the Trucks Road that connects Aqaba city with neighboring Saudi Arabia to the south, and Amman city to the north. Total area of the project is (1.5) million square meters of developed land equipped with necessary infrastructure networks. The Project is developed as a "Gated Business Park", with many supporting services for business located within. Facilities and areas will include :

Modern and qualified warehousing unitswith flexible areas for storage activities.

Developed and serviced plots of landfor industrial and storage activities.

Developed Stander Factory Buildings (SFBs)for light & medium industries with flexible areas

Developed and serviced plots of land for open storage.

Reserved areas for cold storage with flexible areas

Reserved areas for commercial activities(offices and retail stores).

Reserved areas for services and maintenance

AqAbA InternAtIonAl IndustrIAl estAte

ADVERTORIAL

The prognosis for the industrial market for the next few months is optimistic. Rising demand for modern warehouse space results in the decrease of vacant space level in certain markets which may increase rental rates.

MIDDLE EASTSTORY


A TINY COUNTRY WITH BIG PLANSAs it prepares to host the 2022 soccer World Cup, Qatar has several large scale infrastructure

and real estate projects under development which are set to offer long-lasting benefits to the local real estate market. However, as investors turn their eyes to the tiny Gulf state,

the pressure mounts on Qatar to keep up with its ambitious plans as proposed.

MIDDLE EAST MARkET INSIGHT

With an expected economic expansion of 5.2% (IMF World Economic Outlook April 2013), Qatar is likely to have the highest growth

rate among GCC countries in 2013. This is on the back of a multi-billion dollar infrastructure investment plan that implements the National Development Strategy 2011-2016. According to the Qatar National bank, infra-structure spending is expected to reach about $30 billion per annum for the years 2013-2015. between now and 2022, Standard Chartered expect almost $115 billion of government expenditure on infrastructure projects and the FIFA Cup, a spokesman of the global bank said.

Some of Qatar’s major infrastructure projects include the Hamad International Airport ($17.5 billion), the New Doha Port ($7.4 billion) and the Qatar Highway Programme ($8.1 billion). Hamad International Airport will feature two of the longest runways in the world and will be able to handle 50 million passengers after it has

completed its ultimate stage of development.The New Doha Port will be built at Mesaieed, with its

first phase scheduled to be completed prior to 2022 while the Qatar Highway Programme will consist of 280 km of dual four-lane roads with a 12 km Lusail Expressway connecting Doha to Lusail City. The country is also building a 7.5 km highway linking Doha and Dukhan.

On the real estate front, Lusail City ($45 billion), one of the Gulf’s largest real estate developments, is cur-rently under development and will be able to house up to 200,000 people. In addition to residential and commercial areas, the development will also contain hotels and golf courses. Its most iconic feature will however be the 80,000-seat Lusail Stadium, where the championship match of the World Cup soccer tournament will be played. Qatar is also set to build nine stadiums and renovate three existing facilities before 2022.

Msheireb ($6.4 billion) is another ambitious real


The real estate market has never been more favourable to investors than it is today. On the residential side, the increase in population, due to recruitment of personnel from outside of Qatar by new and expanding businesses, continues to drive demand for residential accommodation.

outlets since its launch in 2009; the firm expects growth to continue leading to 2022 as investor interest in the Qatari market heightens.

“Added to these factors, the expected climb in tourism activities leading to 2022 will have a tremendous impact on the hospitality real estate market. All this bodes well for investors interested in exploring opportunities in the Qatari market,” the Qatar expert said.

MONEY IS NOT THE ISSUEAs one would imagine while looking at the current develop-

ment plans, cost is not a major concern for Qatar. In 2012, the Gulf state retained its ranking as the word’s richest country, with its per capita income soaring to an incredible $106,000, the Institute for International Finance (IIF) has reported. Qatar Investment Authority (QIA), with assets over $115 billion, was ranked 12th among sovereign wealth funds in the word.

but how is the country coping with the delivery of all the planned mega projects?

Initially scheduled to begin operations last year, Qatar keeps postponing the opening of its new international airport. Design changes have led to major delays in building the new airport, which is now estimated to cost $3 billion more than originally anticipated.

From a logistical point of view, the new seaport for example, whose first phase is due to be completed in 2016, will have to ensure to be able to handle the influx of all the building materials needed for construction in Qatar. The availability of skilled labour provides another challenge, experts say.

Rod Stewart, Qatar Managing Director for Atkins,

estate project that will restore 750,000 square metres of downtown Doha, with residential/retail areas and hotels, built in a style reminiscent of traditional Qatari architecture.

THE REAL ESTATE SECTOR bENEFITS

A strong economy, general prepara-tions for the World Cup and the ongoing development in line with Qatar’s 2030 Vision are impacting positively on the Gulf state’s real estate market.

“Qatar’s strong economic performance, driven by high energy prices, and the government’s investments as well as preparations for FIFA 2022 have been recently driving real estate demand in the country. This applies to all real estate sectors : residential, commercial and retail,” a real estate expert in Qatar said.

“The levels of oversupply in Doha’s office market that we’ve seen in 2011 are quickly eroding due to increased demand. This demand is primarily being driven by large government and financial institu-tions, but is also the result of strong activi-ties in the construction and engineering sector – which is greatly attributed to 2022 World Cup related activities,” the expert further commented.

The present conditions are said to offer attractive opportunities for investors, particularly in the real estate sector.

“The real estate market has never been more favourable to investors than it is today. On the residential side, the increase in population, due to recruitment of personnel from outside of Qatar by newand expanding businesses, con-tinues to drive demand for residential accommodation,” the expert explained.

A major real estate development in Qatar is The Pearl-Qatar, a mixed-used Island project developed by United De-velopment Company (UDC). According to a UDC spokesperson, ‘The Pearl-Qatar’ has been experiencing a steady increase in residents and number of retail

MIDDLE EASTMARkET INSIGHT

commented :“Most commentators would agree

that the biggest challenge ahead of us in Qatar is logistical - bringing the required quantity and quality of resources to the market – by which I mean not only the vast amounts of plant, labour and materials, but also access to the number of skilled people with the knowhow to deliver major, complex projects.”

“This will sometimes mean going be-yond having people based in Qatar, to being able to package work efficiently to tap into global skills based in other locations. In reality, we need a combination of the two things : expertise in Qatar and the ability to effectively and efficiently manage work flow around international organisations.”

LONG LASTING bENEFITSDespite challenges with regards to

the delivery of some of Qatar’s large scale projects in time and on budget, experts believe the World Cup will have a positive long-lasting impact on the country’s real estate market on the whole.

“For the next 10 years, the real estate market is set to benefit from cur-rently planned spending related in general to World Cup preparations. Con-tinued economic growth would be the primary result, which means more expatriates will make Doha their home and it also means more purchasing power for both the people of Qatar and expats alike,” the real estate expert said.

“This naturally translates into increased activities in the real estate, retail and

MIDDLE EAST MARkET INSIGHT


hospitality sectors. Finally, new investments related to the Cup can help set the stage for further growth in the future. This will bode well for Qatar’s plans to boost its tourism and become a pole of attraction in the region, leading to further development in residential and commercial real estate projects,” the expert added.

WORLD CLASS CITY DOHAAtkins’ Rod Stewart shares this positive view, saying that

the legacy of the World Cup is a key factor in the planning and development process, as it was with the London 2012 Games, for which Atkins was the official engineering design services provider.

“The fact that the World Cup is a milestone along the way to the National 2030 Vision is testament to the fact that the government has a very well thought out strategy, which will transform Doha into a truly world class, sustainable city with a fully integrated transport system, high quality real estate, a vibrant public realm and dynamic social infrastructure. For Qatar’s citizens it will improve standards of living, while putting Doha in the top tier of global destinations,” Stewart concluded.

Images : The Pearl Qatar, UDC

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MIDDLE EASTSTORY


IS THE BUBBLE COMING BACK?Confidence is returning to the Dubai real estate market. Mounting demand has pushed prices

up further in the first quarter of 2013 and several new mega real estate projects have been announced over the past few months. Although at first sight it seems that the pre-crash

conditions have returned, experts say the Dubai market has moved on and matured.

MIDDLE EAST IN-DEPTH

For the first time since mid 2008, all sectors of the Dubai real estate market are positioned in the recovery stage of their market cycle, says the

Jones Lang LaSalle Q1 2013 Dubai market overview. The residential market in particular has maintained its strong performance of 2012, with villas and apartments showing similar increases in sale and rental prices in the first quarter of 2013.

According to Asteco, apartment sales prices grew on average by 12% in the three months to the end of March 2013 with y-o-y growth standing at 27%. Although aver-age villa sales prices only climbed 5% in Q1 2013, growth over the past 12 months averaged 24%, the firm says. The performance of rental rates was also impressive : average apartment and villa rents grew by 3% and 4% compared to Q4 2012, but still managed to climb 19% and 21% respectively over the past 12 months, Asteco says.

“The overall outlook is positive with demand and rates

expected to continue to grow. However, this will also mean that some tenants and buyers will be priced out of certain buildings or communities,” commented John Stevens, Managing Director of Asteco Property Management.

“Prices are not only being driven by tenants relocating, Dubai is also attracting new tenants and those expatriates here are still tending to take a longer-term view of living in Dubai,” Stevens added.

“In terms of supply and demand, Dubai is still benefiting from the Arab Spring and the Euro crisis, which was brought into sharper focus recently with the Cypriot banking crisis. Good quality stock is gradually being re-duced while the length of time that advertised units stay on the market now is also shortening,” he further added.

RETURN OF CONFIDENCEIn addition to the improved performance of selected real

estate projects in 2012 and 2013, according to Jones Lang


into two camps, Craig Plumb explains.“High net-worth individuals and private companies from

the ME remain major investors in Dubai and have increased the level of investment over the past 12 months.

On the other hand, there remains little or no interest in the Dubai market from more institutional investors from Europe or the US. These investors attach a higher risk profile to Dubai than local investors and are therefore willing to pay lower prices,” he says.

In an effort to increase confidence, Dubai recently proposed a draft investor protection law. Experts however are unsure about the potential impact of the law, especially with regards to attracting overseas investment.

“Passing the proposed investor protection law would be a great start, but would not itself be sufficient to attract major institutional investors,” Plumb explained.

“Improvements to the transparency of the market (releasing more data on transaction levels and prices) would be far more beneficial,” he added.

UNSUSTAINAbLE GROWTH?Dubai’s positive market performance, the announcement of

new mega real estate projects and the improvement in investor confidence have sparked talks over the potential emergence of another ’bubble.’

The recently proposed mortgage cap by the UAE Central bank is an example of this concern.

“At first sight, it appears that many of the conditions that led to the unsustainable growth in real estate prices in 2006/2007 have returned. These include strong demand from cash rich

LaSalle, various factors contribute to the return of confidence in the Dubai market, such as economic expansion (especially in trade, tourism and transport), growing population and employment, Dubai’s status as ’safe haven’ and regional hub as well as positive investor sentiment towards Dubai.

With investor confidence on the rise, a number of large scale projects have been announced recently. The most ambitious of these is the Mohammad bin Rashid City (MbRC), including the world’s biggest shopping mall, around 100 hotels, a public park and a Universal Studios theme park, which is supposed to be developed over a decade, JLL says. Dubai is also one of 5 shortlisted cities for the Expo 2020, which would act as a major boost to the real estate market south of the city and could draw as many as 25 million visitors to the emirate.

INVESTMENT - DUbAI SCORES OVER OTHER MARkETS

JLL’s latest Middle East Investor Senti-ment Survey (published in November 2012) shows that Middle Eastern investors prefer Dubai as an investment destination in the MENA region, with sentiment towards the emirate having improved significantly over the past year.

“The well-developed infrastructure, improved transparency and high quality of life have all contributed to putting the Dubai real estate market back on track. The other area where Dubai scores over other markets in the MENA region is its higher stock of completed, investment grade properties. While there remains a general shortage of such opportunities to satisfy the level of investor demand, the emirate offers a greater range of com-pleted and income producing products than other markets in the region, most of which remain at earlier stages of their development cycle,” the survey says.

However, international investor confi-dence towards Dubai remains polarised

MIDDLE EASTIN-DEPTH

In our view, the Dubai market has however moved on and matured. This provides hope that the excesses of the last speculative boom can be replaced by a period of slower but more sustained growth in demand and prices.

clauses into their sale and leasing agreements that require minimum holding periods or further periodic payments (in order to discourage the rapid on sale or flipping of units), the analyst points out.

“While we remain hopeful that these factors could help the market avoid the excesses of the last speculative boom, the extent to which this will be achieved clearly remains to be seen. It would be a real shame if the lessons from the previous period of unsustainable growth are not heeded.

“Dubai being Dubai, the new projects being launched are as ambitious as ever. We are however seeing signs of a more mature and considered approach, which is only going to benefit the long term health and credibility of the real estate sector. The key to the success of individual projects and the future performance of the overall market will be the adoption of a realistic phasing strategy in line with market demand,” Plumb concluded.

overseas buyers, attractive credit terms (in the form extended payment plans for off plan projects) and discussion about instant profits for those lucky enough to secure units in selected projects that can then be quickly on sold,” Plumb commented.

“In our view, the Dubai market has however moved on and matured. This provides hope that the excesses of the last speculative boom can be replaced by a period of slower but more sustained growth in demand and prices. This would be in line with the experience of other overseas markets where the amplitude of subsequent market cycles reduces as markets mature,” Plumb further commented.

JLL believe that the exuberance of the previous cycle can be prevented, allow-ing the Dubai market to shift up a gear without becoming overheated. Plumb names three reasons for this : limitations on the availability of finance, high levels of new supply entering some sectors of the market and improvements to the legal and regulatory framework, providing more protection to investors.

“While not all the 45,000 residen-tial units scheduled for completion in 2013/2014 will actually be delivered in this timeframe, there remain significant levels of new sup-ply which will provide investors with choice of completed units and dampen the pressure for price increases for off plan units,” he said.

Furthermore, although the new ’investor protection law’ has not yet been formally approved, there are tighter controls on the level of down payments that developers can claim from purchasers prior to commencing construction, Plumb explains. Now, some developers insert

Dubai market facts Q1 2013 Prime office rental rates

are recovering Increase in residential

sale and rental prices Widening gap between primary

and secondary shopping malls Strong performance for hotel

sector with 88% occupancy rates

Source : JLL Dubai Real Estate Market Overview Q1 2013

MIDDLE EAST IN-DEPTH


NEW HORIZONS, uNlImITeD

oPPoRTuNITIes

COMING SOON To A CITYsCAPe eVeNT

NeAR YouT.

RERA NoWE SPEAk YouR lANguAge


MIDDLE EASTSTORY


THE RISING STARThe Turkish real estate market is transforming rapidly. Last year, the country at

the crossroads between Europe and Asia has secured its first investment-grade credit rating. As tourist arrivals are increasing, international hotel groups are expanding

in the country, reaping the benefits of strong market fundamentals coupled with a pleasant Mediterranean climate and renowned Turkish hospitality.

MIDDLE EAST SECTOR SPOTLIGHT

Despite the economic slowdown in 2012, the Turkish economy still presents a stronger economic outlook compared to other European countries.

Unemployment in the country is also declining as a result of the economic growth observed over the past few years, the Colliers International Turkey Real Estate Review H1 2013 stated.

According to data published by the Turkey Statistics Institute, in November 2012 the unemployment rate was 9.4%.

“With the expectation of a recovery in the global markets, Turkey’s economic growth for 2013 is forecasted between 4% - 4.5%. In 2013, the unemployment rate is expected to go down to 8.9% as an impact of the continued GDP growth,” Colliers said.

In 2010 and 2011, Turkey had experienced a remarkable GDP growth of 9.0% and 8.5% respectively.

INVESTMENTIn May last year, in an effort to further boost Turkey’s

thriving real estate market and to encourage increased foreign investment in the country’s residential property, the Turkish Government passed a new law concerning foreigners buying properties in Turkey.

The law put an end to reciprocity and increased the amount of land foreigners can purchase in Turkey from 2.5 hectares to 30 hectares. Colliers says that in 2013, a sales boost from Middle Eastern buyers is expected as a result of the change on the reciprocity law. A boost in domestic demand is also targeted through achieving low financing costs and mortgage loan rates, the firm added.

Since enactment of the bill, the Turkish real estate sector has witnessed an increase in foreign property acquisitions, says Vedat Aşci, Chairman of the board of Directors, Astaş Holding, a major luxury real estate developer in the country.


Since May last year, foreigners have purchased around 19,000 properties in Turkey. In May alone, foreign real estate acquisitions in Turkey reached USD 1.1 billion, four times the total amount than in 2011.

Islamic cultures with Western traditions, and is renowned for its gracious and generous hospitality,” he further commented.

TOURIST DESTINATION TURkEYAşci says that due to the above mentioned assets of Turkey,

international hotel groups are currently pushing forward to acquire more market shares in Turkey and to satisfy the increasing demand for hotels and holiday accommodations.

“In the last ten years, leading luxury real estate developers and international hotel groups entered the Turkish market. Due to their strong and growing economy as well as favour-able demographics and upward trending consumer spending, Istanbul and bodrum in particular provide great prospects. Here, property prices are rising rapidly on the back of an increased quality of life,” Aşci commented.

Currently the government is pursuing an eager plan to position Turkey as a major global tourist destination. In order to celebrate the 100th anniversary of the Turkish Republic, a goal has been set to reach 50 million tourist arrivals by 2023, generating USD 50 billion of revenue.

Istanbul has also applied to host the 2020 Olympics, which would act as a further catalyst to bring more tourists to Turkey on the whole.

According to statistics published by the Ministry of Tourism, Turkey recorded a total of 31,782,832 incoming visitors in 2012, out of which 32.4% visited Antalya and 29.5% visited Istanbul. While the number of incoming visitors to Turkey increased by 1% compared to previous year on the whole, the number of visitors to Istanbul has increased by 16.5% in 2012. According to the distribution by nationalities, the major share of incoming

“Since May last year, foreigners have purchased around 19,000 properties in Turkey. In May alone, foreign real estate acquisitions in Turkey reached USD 1.1 billion, four times the total amount than in 2011,” he commented.

To further boost investment, the Turk-ish Government is developing a scheme to ease visa and residence permit restric-tions for overseas real estate buyers.

Turkey also secured its first invest-ment-grade credit rating by Fitch Ratings late last year, signifying the country’s international economic respectability.

According to Jones Lang LaSalle, this resulted in record levels of stock index and bond prices and offered a substantial boost to the government, which has long coveted an elevation to investment grade. The firm says that it is expected that this will be further strengthened by possible upgrading by other rating agencies.

“As the positive perception on Turkey’s stability for investments grows, more international capital is expected to flow in real estate in Turkey. We believe that the real estate sector in Turkey will continue its positive trend in 2013,” Colliers added.

POINTS OF ATTRACTIONReforms to property laws, years of solid

economic growth and political stability, a positive outlook alongside a young popu-lation all have contributed to Turkey’s real estate boom, explains Aşci. On top of that, several advantageous factors contribute to the fact that Turkey is emerging as an extremely attractive destination for international real estate investment.

“Turkey’s location at the crossroads of Europe and Asia makes it a country of significant geostrategic importance while its growing economy and diplomatic initia-tives have led to the country’s recognition as a regional power,” Aşci said.

“In addition to this, Turkey’s coastal areas offer a temperate, pleasant climate with hot, dry summers and mild to cool winters. Turkey also has a very diverse culture that blends various elements of

MIDDLE EASTSECTOR SPOTLIGHT

continental Europe, CIS and the Middle East. With the recent amendments to the property law, the developer witnessed increasing investment particularly from the Middle East.

“Investing in Turkish real estate is a valuable option for those who are seeking a good overseas investment opportunity. It will not only give people the ownership of a beautiful property, but also an investment that will yield greater returns in the future,” Aşci concluded.

tourists came from Germany (16%) and the Russian Federation (11%).

bODRUM - TURkEY’S HIGH-END TOURIST DESTINATION

Often referred to as the ’St. Tropez of Turkey’, bodrum is emerging as Turkey’s number one high-end tourist destination, attracting discerning travellers from all over the world.

Catering to the very top-end of the market, Astaş Holding and Mandarin Oriental Hotel Group have recently an-nounced their collaboration to develop the highly exclusive The Residences at Man-darin Oriental, bodrum. Set on 600,000 square metres of mostly rehabilitated land, the development will consist of 98 villas and 116 residences ranging from and will have a 2 kilometre coastline with three private bays.

“Mandarin Oriental, bodrum and The Residences at Mandarin Oriental, bodrum will set a benchmark for other inter-national brands as the most luxurious resort and residence project in Europe and the Mediterranean region. Our goal is to support bodrum in its mission to become the leading resort destination of Europe’s south coast, where people can relax, entertain and revitalise in a luxurious environment,” Aşci commented.

The project is expected to be completed in 2013 with a targeted opening date of the first half of 2014. Prices for villas start at USD 3 million, while apartments are available starting from USD 1.2 million. It will be the first property in Turkey to be managed and branded by Mandarin Oriental Hotel Group.

Aşci says to date, 50% of the project has already been sold, attracting buyers from Turkey,

The Residences aT MandaRin ORienTal, BOdRuM

Location | Bodrum, Turkey Operator | Mandarin Oriental Hotel Group Developer | Astaş Holding Site | 600,000 sqm, 2 km coastline Residences | 98 villas (560-760 sqm),

116 apartments (2-,3- and 4-bedrooms) Facilities | Top-notch Mandarin Oriental

services, golf courses, spa & fitness centre, tennis, pools, trekking paths, three private beach bays, in-residence catering/private chefs, helipad

Opening date | H1, 2014

MIDDLE EAST SECTOR SPOTLIGHT


Image : The Residences at Mandarin Oriental, Bodrum

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bROADWAY MALYAN’S WINNING MASTERPLAN SET TO TRANS-FORM kUALA LUMPUR

1MDb (1Malaysia Development berhad) has appointed a global team to partner with local planners to create a game-changing masterplan for bandar Malaysia, Malaysia. The team is led by global architecture, urbanism and design practice broadway Malyan, supported by world-class design and engineering teams from Arup and Sinclair knight Merz, in collaboration with local planner Arah Rancang Malaysia.

The winning team was selected from a total of six finalists based on concept proposals which perfectly capture the essence of 1MDb’s vision and commitment for a mixed-use development that will help transform kuala Lumpur into one of the world’s best global cities.

1MDb Real Estate Sdn bhd Chief Ex-ecutive Officer Dato’ Azmar Talib said :

“broadway Malyan and Arah Rancang Malaysia’s concept masterplan provides a strong foundation for the next stage, which is to further develop bandar Malaysia to become the benchmark for sustainability and liveability in the region, in line with the national vision of making kuala Lumpur the world’s top 20 most liveable cities by 2020.

The 196-hectare bandar Malaysia is envisioned to be one of the most desirable environments to live, learn, work and play in the Asian region. The strategic real estate development project aims to combine a vibrant mixed-use community with a commercial district to foster creativity and innovation. It will be an international desti-nation for culture and the arts showcasing Malaysia’s diverse culture.

Dato’ Azmar said : “bandar Malaysia will be an inclusive, public transit-oriented city that is designed as a walkable community through a series of safe, secure and pleas-ant pedestrian and cycling networks, set against a backdrop of well-articulated open spaces and greenery. As part of 1MDb’s commitment towards providing affordable housing, bandar Malaysia aims to be the yardstick for sustainable and affordable urban housing within Malaysia.”

ASIA PACIFIC NEWS

In 2013, real estate prices in the region are predicted to stay in the upward trend not just because of the rising prices of commodities but also the growth expectations in the region and the underlying demand from end-users, occupiers and investors, says the Col-liers Asia Real Estate Forecast for 2013.

Looking at the prospective GDP growth in the region, China is going to be the key driver which is predicted to generate a significant positive spill-over to the rest of countries in Asia.

Economic growth of China in 2013 is predicted to be strong, mainly because of massive investment into a number of infrastructure projects, Colliers say.

Meanwhile, the prevailing relaxed monetary policy is going to sustain in 2013 given the rate of price inflation has been staying at low level. Comparing 2013 to 2012, the only difference is that the growth rate of real estate prices is expected to taper off slightly from 5 - 9% per year in 2012 to 2 -5% per year in 2013.

ASIAN REAL ESTATE PRICES FOR 2013 REMAIN POSITIVE

AsiA reAl estAte forecAst 2013

Offices | Driven by cost-savings and the continued flight to quality

Industrial | Intra-regional demand spilling over from China

Source : Colliers International

WITH GOLD PRICES SINkING, WHAT IS THE FUTURE OF INDIA’S RESIDENTIAL REAL ESTATE?

With gold prices currently on the descent, many investors are asking themselves if residential real estate prices will follow, says Anuj Puri, Chairman & Country Head, Jones Lang LaSalle India. The performance of residential real estate as an asset class is doubtlessly dependent on the macro-economic factors that also dictate the per-formance of other asset classes, including gold. Nevertheless, the correlation between gold and real estate prices is not as distinct

as one may at first assume, Puri believes.“In the short term, residential real estate

prices in different cities will either remain steady see minor upward or downward fluctuations. In the long term, they will rise again. The fundamentals of the India real estate story are extremely strong. Even in this turbulent economic environment, India remains the cynosure of interest by global MNCs and investors who see the limitless potential of a young, grow-ing economy, a wealth of highly trained workforces across the manufacturing, IT/ITeS and services industries. All this translates into assured job creation, and therefore demand on the residential real estate market,” Puri commented.

However, he also said that Indian resi-dential real estate is not the best route for short-term investors and that people need to stay invested for the mid-to-long term in order to garner the best possible returns.

ASIA PACIFICNEWS


bRISbANE INDUSTRIAL LEASING ACTIVITY HITS 10 YEAR HIGH

Industrial leasing activity in brisbane is at a 10 year high, with the total volume of leasing transactions jumping 40% to 598,385 sqm for the 12 months to March 2013, according to the latest research from Savills.

The marked increase from the previous 12 month period puts current leasing levels in the brisbane industrial market at 19.5% higher than the five year average.

Helen Swanson, Savills QLD Associ-ate Director of Research, said all major industrial precincts across brisbane recorded an increase in the total area leased over the last year, with the Southside leading the way with 45% of total leasing activity.

She said leasing demand was gener-ated from a diverse range of tenants, with the transport and logistics sector

accounting for 31%, closely followed by engineering with 29% and the re-mainder spread across a variety of sectors. However, Ms Swanson said the significant overall increase in in-dustrial leasing activity during the last

year was not solely attributable to major pre-commitments but was also the result of stronger leasing demand from smaller-to-medium-sized businesses.

She said bottom line pressures were an important driver in the market, with many companies focused on more efficient use and consolidation or disposal of property. This had seen more companies that were traditionally owner-occupiers become tenants in order to efficiently maximise cashflow to support their businesses.

“Cash flow is king at the moment and many companies, especially smaller businesses, prefer the cost advantages associated with leasing over purchasing. Given current economic conditions, many small businesses don’t have the surplus equity or confidence to commit to long term ownership,” Ms Swanson said.

BrisBane industrial market

Volume of leasing transactions up 40% y-o-y

Leasing demand generated from a diverse range of tenants

Shortage of prime warehouse and office space

Rising vacancy for secondary industrial buildings

Source : Savills Australia


PHUKET LUXURY PROPERTY IN HIGH DEMAND

As tourist arrivals to Thailand are increasing, more and more overseas buyers have their eyes set on the popular Southeast Asian holiday destination. Renowned as

’the pearl of the Andaman’, Phuket’s luxury residential market is currently attracting particular interest from overseas buyers as investment potential is said to be high.

According to the Tourism Authority of Thailand (TAT), Thailand received over 22 million tourists in 2012 and intends to reach 24.5 million this

year. The island of Phuket has emerged as a particularly popular holiday destination in the region. In 2012, Phuket International Airport (PIA) received an estimated 9.4 million travellers, having exceeded its original handling capacity of 6.5 million passengers per year.

To cater to the increasing demand, Emirates Airlines launched a direct service to Phuket a few months ago, making the island its second Thai destination in addition to bangkok. Strong demand on the Dubai-Phuket service has even prompted the airline to consider increasing the route’s capacity with a second daily flight.

In order to be able to cope with the influx of tourists, the Airports Authority of Thailand has announced a THb 5.7 billion expansion of the PIA. The expanded airport will

see the addition of an international passenger terminal, boosting its capacity to 12.5 million travellers a year.

With an increase of 13% in international arrivals to Phuket from 2011, the island by far outstrips other popular locations such as koh Samui, Chang Mai and Pattaya.

“For many years Phuket has been the number one holiday destination in Southeast Asia and far outstrips its nearest rival of bali as well as Thailand’s other resort destinations,” says Andrew Hunter, Managing Director of Hunter Sotheby’s International Realty, Phuket.

“Phuket is more appealing because it is large and diverse enough to cater to many tastes and holiday wishes. There are busy centres like Patong, yet you can escape from the masses and find yourself on an almost deserted beach in a small restaurant, like stepping back in time.”

ASIA PACIFIC SECTOR SPOTLIGHT

Image : Nai Thon Beach, Phuket, Hunter Sotheby's

Given the current rate of growth, airport expansion plans and an increase in affluent Asian travellers with greater spending power, Phuket is poised to retain its position as one of Asia’s most popular tourist and investment destinations.

metropolitan areas like New York, London and Hong kong, and are now buying lifestyle ahead of investment,” Hunter says.

Some agents on the island say that capital gains for luxury condominiums are as high as 10% anticipated return if bought off plan and sold on completion.Hunter however suggests more moderate estimates.

“I do know owners of luxury property who are generating circa 8% gross, probably 5% net after management, brokerage, fees and taxes, but these are rare items. Most owners use the properties themselves through the peak period, Christmas, New Year, Chinese New Year, Easter and so this waters down their rental potential. However, it is safe to say that a holiday home in Phuket can afford you not only a beautiful lifestyle retreat, but also one that pays for itself and generates some cash on the side and there is a lot to be said for that. If tourist numbers continue to grow, which they are forecast to, the property yields should remain very healthy,” he says.

Some 5-star resort properties with owner usage on the island provide a 6% return per annum, Hunter says. Sotheby’s currently have the 3-bedroom banyan Tree Presidential Villa for sale at USD 3.88 million, which offers 60 days owner usage and pays a net income of USD 214,500 per annum until June 2019.

but it’s not just Phuket’s high-end residential market that’s benefitting from the increase in tourism to the island. According to Jones Lang LaSalle’s latest Thailand hotel

“However, the more developed infra-structure and communications system is what really sets Phuket apart. There is an international airport with direct flights to the region, the Middle East, India, Australia and Europe. In addition, the roads are better developed as is the general amenity and provision of services, ranging from good quality restaurants, 8 international standard golf courses to 3 marinas and generalentertainment,” Hunter further says.

THE PRIME PROPERTY MARkET IS bOOMING

As a result of Phuket’s growing popu-larity among affluent tourists, the island is set to see a rise in demand from overseas buyers. Currently, the emphasis is on wealth rather than the mass market and investors focus on luxury condominium beach properties in particular.

“The typical buyer of luxury property in Phuket is a regional expat or a local of one of the key financial and commercial hubs, in particular Hong kong, Singapore, Dubai, beijing and Shanghai. Over 50% of the buyers are regional expats, many of whom work in the financial services industry, or support that industry in legal and accounting services,” Hunter explains.

He adds that in the past, many buyers came from Europe, however with the rise of the Thai baht versus the british Pound and the Euro, investments from Europe have decreased. Instead, with recently launched direct flights from India, China and Dubai, Sotheby’s is witnessing more buying interest from locals from these areas. “Many of these individuals have already invested in property in the world’s

ASIA PACIFICSECTOR SPOTLIGHT


investment report, Phuket has emerged as the country’s strongest hotel market. As at year-to-date December 2012, Phuket recorded occupancy of 72.4% along with an Average Daily Rate (ADR) of THb 3,902 (USD 133) which resulted in Revenue per Available Room (RevPAR) of THb 2,824 (USD 96), above other markets in Thailand, with the exception of bangkok’s five-star hotel market. As at y-t-d December 2012, Phuket’s RevPAR was 10.1% above the same period last year (Jones Lang LaSalle Thailand Hotel Investment Market, January 2013).

bRIGHT PROSPECTSThe future is looking positive for the

island’s tourism related real estate market.“Despite the significant growth in

hotel supply, with 2,756 additional rooms anticipated by 2015, the increase in visitor arrivals has provided demand and the outlook remains positive. Given the current rate of growth, airport expansion plans and an increase in affluent Asian travellers with greater spending power, Phuket is poised to retain its position as one of Asia’s most popular tourist and investment destinations,” the JLL report says.

However, with increased popularity also comes more responsibility.

“As the island is becoming more popular, this puts pressure on the infra-structure. both the local and national government must be very careful to con-tinue to invest in the island and to manage the tourist industry,” Hunter concludes.


ASIA PACIFIC SECTOR SPOTLIGHT

It is safe to say that a holiday home in Phuket can afford you not only a beautiful lifestyle retreat, but also one that pays for itself and generates some cash on the side [...]. If tourist numbers continue to grow, which they are forecast to, the property yields should remain very healthy.

Image : Private Pool Villa, Hunter Sotheby's, Phuket


IN AUSTRALIA, GREEN STARS SHINE THE BRIGHTEST

Having been actively promoting and implementing sustainable real estate practices for over a decade now, Australia has emerged as a global leader in sustainable real estate. In just 10 years,

the country’s Green Building Council has driven a substantial reduction in the environmental impact of buildings, while achieving cost savings and improving the industry’s skill level in general.

Later this year, Dubai is set to introduce its first mandatory green building rules, highlighting the increasing importance sustainability gains in the

global real estate sector.

AUSTRALIA'S GREEN HISTORYIn Australia, green building practices form an important

part of real estate development since more than a decade now, making the land down under a global leader in green building. Robin Mellon, Executive Director of Advocacy and business Services of the Green building Council of Australia (GbCA), explains how the industry has evolved in the continent :

“In Australia, the green building movement only gained momentum after the Sydney Olympics in 2000 received worldwide recognition as the ‘Green Games’.

With venues and facilities that established new

benchmarks in design excellence and best practice sustainability, Australia’s property and construction industry demonstrated that green buildings were achiev-able,” he commented.

“but at the time, the industry had few metrics or agreed methodologies to measure green building, and few assessment tools or benchmarks of best practice. There was no organised approach to knowledge-sharing or collaboration. Nor was there any way for the industry to promote or profit from green building leadership,” Mellon added.

Then, in 2002, the GbCA was formed, following the footsteps of other green building councils in the Uk and US. A year later, the GbCA launched Australia’s first holistic environmental rating system for buildings, Green Star.

ASIA PACIFIC GREEN bUILDING

Image : Australian Institute of Management, Katitjin Centre, WA

However, we know there is much to learn from other countries, and we are impressed and inspired by the many exciting projects coming out of the UAE;[…] and we are keen to collaborate with like-minded organisations in the Middle East to drive innovation in both our markets.

Today, the GbCA has 60 employees in five different locations and more than 700 member organisations across the breadth of the construction and property industry while having also trained more than 40,000 people in the industry (1,400 of whom are currently Green Star Accredited Professionals).

GREEN bUILDINGS AS PROFITAbLE INVESTMENT

Australian ‘green’ office buildings continue to deliver enhanced investment returns, recent data shows. According to The Property Council/IPD Australian Green Property Index, released in March, Green Star rated office assets showed an annual total return of 10.6% for 2012. In line with previous results, green office buildings continued to outperform the total office property sector, comprised of rated and non-rated assets, which reported an annual return of 9.7%, the Index says. Over the last 2 years to December 2012, A-grade office buildings with a Green Star rating delivered an annual return of 11.2% versus a 10.1% return for All A-grade office buildings (see figure 1).

James McGregor, Energy Systems Manager, Division of Energy Technology at the Commonwealth Scientific and Industrial Research Organisation (CSIRO) commented :

“The benefits of improved indoor environmental qual-ity, reduced operating costs due to lower energy and water consumption, and the ability to credibly evaluate and compare the performance of green buildings has led to improved marketability of green buildings and this is being reflected in the returns being achieved by green buildings.”

McGregor recently spoke at the Dubai Green building Seminar, organised by Austrade as part of the Australia Unlimited 2013 campaign, which was aimed at strengthening mutual ties in the green building, investment and education sectors between Australia and the UAE.

THE GREEN STAR RATING SYSTEM

“Today, Green Star is certainly ascend-ant. While a 5 Star Green Star rating (representing ‘Australian Excellence’) might have seemed unachievable in 2003, today we have nearly 570 Green Star certified projects around Australia, and a further 500 registered to achieve Green Star certification,” Mellon commented.

As Australia’s only holistic, national, independent rating system for buildings and communities, a Green Star rating provides independent verification that a building or community project is sustain-able, Mellon explains.

“Green Star rating tools are available for a range of building types - from offices to factories, from schools to shopping centres, and from hospitals to hotels. We have rating tools that assess the sustain-ability of base buildings at the design or construction phase (known as ‘Design’ and ‘As built’ ratings),” Mellon said.

In the office sector, Green Star-rated buildings currently account for 20 percent of the CDb market, rising to one in four buildings in Adelaide and one in three in brisbane. There are also more than 120 education facilities either certified or registered to achieve Green Star certifica-tion, Mellon says.

RATE, EDUCATE AND ADVOCATE

The GbCA plays an important role in driving sustainability forward in Australia. It does this through rating of buildings and communities with Green Start rating tools, through educating organisations and individuals on sustainable building practices and through working with local, state and federal governments to develop policies and programs which support this thriving industry, Mellon explains.

“In just 10 years, the GbCA has driven a substantial reduction in the environmental impact of buildings, while achieving cost savings, improving occupant health and productivity and up-skilling the industry.”

ASIA PACIFICGREEN bUILDING


ToTAl INVesTmeNTs PeR ReAl esTATe seCToR, Q1 2013

buildings at a rate of about 1%). The challenge therefore is in developing strategies to transform Australia’s existing building stock.”

“The existing buildings in Australia provide a significant opportunity for substantial energy and water savings. The transformation of the existing building stock will require the development of new knowledge in building adaptation and will require proactive involvement of the facilities management sector to identify and implement sustainable opportunities,” McGregor added.

The expert also identifies challenges for Australia’s green building sector that relate to the understanding and evaluation of the environmental impact of building materials. He says that while to date, most of the emphasis has been on improving the operational aspects of buildings such as energy and water consumption, attention should also be given to embodied carbon reduction in construction projects from 2013 and beyond.

THE FUTURE When compared to other nations around the world,

Australia has clearly emerged as a leader in sustainable building practices.

“However, we know there is much to learn from other countries, and we are impressed and inspired by the

CHALLENGES – THEN AND NOW

“One of the major challenges in the early days was to demonstrate the busi-ness case for green building. We published ‘The Dollars and Sense of Green building’ in 2006 to demonstrate the opportunities of green building – from marketing ben-efits to return on investment, and from reputational equity to productivity. At the time of publication, we had less than 10 buildings certified and 44 registered. There was certainly a cost premium associated with Green Star,” Mellon commented.

However Mellon says this perception has changed over time, and today, there is a general understanding in Australia that green buildings are affordable and achievable, costing no more to build than non-green buildings.

Commenting one more recent chal-lenges, McGregor said : “Currently much of the focus of Australia’s green building sector is directed towards the design of high performance new buildings. How-ever, the current Australian building stock is increasing by about 1% annually (by the addition of new buildings at a rate of about 2% and the demolition of existing


ASIA PACIFIC GREEN bUILDING

Capital returns (lhs)

Cap rates (rhs)

Income returns (lhs)

Total returns (lhs)

A- Grade Office A- Grade OfficeA- Grade Green Star

A- Grade Green Star

InveSTmenT ReTuRnS CAPITALISATIOn RATeS

7.1 %0 %

7.2 %2 %

7.3 %4 %

7.4 %6 %

7.5 %8 %

7.6 %10 %

7.7 %12 %

10.1 % 7.6 %

7.5 %

11.2 %

Image : IPD

many exciting projects coming out of the UAE; […]and we are keen to collaborate with like-minded organisations in the Middle East to drive innovation in both our markets,” Mellon concluded.

AUSTRALIAN GREEN bUILDING IN A GLObAL PERSPECTIVE

When compared to other nations around the world, Australia has clearly emerged as a leader in sustainable building practices.

“Australia was one of the world’s earliest adopters of green building practices - and that leadership is evident today, as we have one of the most influential green building councils of the 96 around the world. The GbCA’s international reputation has helped Australian companies to position themselves as leaders in the global green building market,” Mellon said.

One indicator for this is the Dow Jones Sustainability Index which evaluates performance of the largest 2,500 companies listed on the Dow Jones. The GPT Group (one of Australia’s major property management and development companies) was announced the world’s most sustainable real estate company in the 2012/2013 Index while in

previous years, Australian companies Lend Lease, Investa and Stockland have all topped the list, the expert added.

“However, we know there is much to learn from other countries, and we are impressed and inspired by the many exciting projects coming out of the UAE. Australia’s geography and remote location make international connections a priority for sparking innovation and we are keen to collaborate with like-minded organisations in the Middle East to drive innovation in both our markets,” Mellon concluded.

ASIA PACIFICGREEN bUILDING


Image : GPT Group

Due to its solid rental growth rate, relative resilience to economic fluctua-tions, strong demand drivers and continuous imbalance of supply and demand, student property attracts strong investor appetite and is no

longer regarded as a niche sector, but has emerged as an asset class in its own right. In our special report, we look at some of the world’s hottest markets.


seem to be the key drivers of student mobility, JLL say. With English being the international business language, it is no surprise that study destinations where English is the language of instruction (US, Uk, Australia and Canada) are dominant student destinations.

ESTAbLISHMENT OF STUDENT HOUSING AS AN ASSET CLASS

The rise in the number of mobile students across the globe has spurred the need for quality student housing. Given that universities in English-speaking countries have been the dominant receivers of international students, it is not surprising that they are also the global leaders in the provision of student housing, JLL say. Purpose-built student housing started in the US and the Uk in the early 1990s, both of which are developed student hous-ing markets. However, the sector is only in early stages of development in Australia and immature elsewhere, JLL say.

Turning to the core of our report, let’s take a look at what makes student housing a particularly attractive investment opportunity compared to other commercial property classes.

According to JLL, the student housing sector’s appealing attributes include steady income and solid rental growth, less cyclic performance, constant supply and demand imbalance, high occupancy, strong demand drivers, low-risk profile and short-term lease structure.

Daniel baum, Surveyor, Student Housing at Jones Lang LaSalle London, commented :

“The student accommodation sector’s ability to perform well in recent years is particularly attrac-tive to investors. While retail, office and industrial properties are struggling to deliver positive returns, the safety of university leases and high demand for relatively low supply of rooms has resulted in

prices remaining stable at worst, growing in many cases.”baum added that while yields from commercial real estate typically suffer during

an economic downturn, student numbers tend to be resilient or even increase when the economy and job market are weak. With student property, owners also benefit from annually rising rents that are uncommon in all other property sectors, he said.

The number of students travelling overseas to attend university has been rising steadily in recent decades, and this trend is set to continue, global real estate consultancy knight Frank believe. Just as the world’s economies have become more globalised, with the relaxation of trade bar-riers, education has also become a global commodity, with students now seeking out the best educational institutions across the globe.

As a result of this, tertiary enrolments have expanded significantly worldwide in the past decade. According to Jones Lang LaSalle’s 2012 Student Housing Report, global tertiary enrolments rose from 98 million in 2000 to 165 million in 2011, marking an increase of 68%.

“This growth occurred on the back of the establishment of inter-regional relationships, internationalisation of higher education and labour markets as well as universities’ strategies to counteract decreases in government funding by expanding their markets internationally,” the JLL report says.

Another factor that lies behind the rise in student mobil-ity is the expansion of the new ‘middle class’ in emerging economies, meaning that there is a growing pool of potential overseas students, knight Frank add.

It is forecasted that the number of international students could more than double again by 2025 (OECD).

ASIA IS THE kEY SOURCING REGIONThe majority of students pursuing their degrees overseas

come from Asia. In 2009, over half (52%) of international students in OECD destinations (which capture the bulk of global demand) came from Asia, followed by Europe (23%), Africa (12%), South America (7%), North America (4%) and Oceania (1%), the JLL report says.

Strong economic growth and the expansion of the middle class in developing Asia are spurring demand for higher education. by 2020, more than 7 million students will study outside their home country, the bulk of which will come from developing Asian economies such as China and India, it is predicted.

kEY SELECTION CRITERIASeveral different factors influence students in choosing

their study destination, however the language of instruction, quality of education and the availability of housing options

COVER STORYSTUDENT HOUSING


UNITED STATES – THE WORLD’S MOST POPULAR STUDENT DESTINATION

Together with Europe, North America captures the bulk of the international student market (75%) and belongs to the leading education providers worldwide (JLL).

The development of the US student housing sector was fuelled by appealing demand fundamentals, JLL report. In the 1995-2009 period, total university enrolments rose by 6.2 million (+43%) or on average 2.6% annually, placing upward pressure on the student housing market. In the 2010-2020 period, total enrolments are likely to increase by 13%, to 23 million, presenting a favourable outlook for the sector (JLL).

Student housing has been one of the bright spots in the US commercial real estate market - total annual sales in this niche have been estimated to be as much as $2.5 billion, as demand continues for newer facilities that better fit the needs of today’s students, Colliers report.

Managing Director of Colliers’ Student Housing Group, Dorothy Jackman said :

“Purpose-built student housing has become much more sophisticated having to meet the needs of universities and students alike.”

“Amenities packages continue to be a focus for students, and developers are delivering state-of-the-art fitness centres, swimming pools, Jacuzzis, tanning beds, media rooms and, in some cases, concierge services. The Class ‘A’ student property of today delivers those amenities one used to associate only with 5-star hotels,” she further commented.

Warren Dahlstrom, President of Colliers’ Investment Services Group in the US, added :

"Student housing has grown in scale and sophistication to become an asset class in its own right. Investors have responded to the sector’s unique benefits and resilience, year-in

and year-out. It's a definite global trend, as evidenced by the billion-dollar portfolio transactions breaking out in Europe recently."

According to data from JLL, the sector’s average yield in June 2012 was 6.58%.

FUTURE OPPORTUNITIESAs a developed student housing market, the US offers very good investment

opportunities through consolidation, development and acquisition, JLL say. The fragmented ownership offers an opportunity for consolidation among key market players and institutional interests looking to diversify their portfolio, the firm says.

On the development front, there are many on-campus development opportunities due to the limited funding capacity of universities to start new student projects which create opportunities for private investors, developers and operators to fill the gap.

Acquisition opportunities may arise with non-specialised developers exciting the sector. JLL say that residential developers frequently get involved in the student housing sector due to higher returns than in apartments, but often lack the necessary operational expertise.

Currently, private investors own around 48% and operate around 65% of the total purpose-built market in the US (JLL).

COVER STORY STUDENT HOUSING


for 2013 are expected to remain strong compared to other property classes as the student sector continues to be in high demand from all kinds of investors.”

The exceptional performance of the Uk student housing sector is obviously driven by the strong growth in student enrolments.

“The student population in the Uk is growing with applications up 3.5% year-on-year in 2012, hence fresh demand every year and a track record of strong rental growth make this a particularly at-tractive asset class,” Roberts of Savills commented.

“The sector benefits from high occupancy levels with no empty rate liabilities and limited void costs. A move towards higher transparency of operating costs has also improved market liquidity. In addi-tion, occupational demand for student housing is traditionally less affected by the economic climate, unlike other sectors, and with rising global recogni-tion of the high standard of Uk higher education,

the student housing market is an appealing sector for buyers,” Roberts added.Similarly to the US, good opportunities in the Uk currently exist through consolida-

tion, development and acquisition, JLL say.

UNITED kINGDOM – A MATURE MARkET WITH GOOD OPPORTUNITIES

According to JLL, the Uk is the world’s second most popular destination for overseas students. Supply of the country’s purpose-built student accommodation is mainly concen-trated in cities where popular universities are located, such as London, Oxford, Cambridge, Manchester, Nottingham, Leeds, Liverpool and bristol.

London has the largest student base but also the lowest provision of student housing which has translated into strong rental growth, JLL say. The firm’s research shows that in the 1995-2009 period, rental values in the Uk grew by 156%, almost three times more than that of its closest competitor (retail at 54%). See Figure 1.

ATTRACTIONSThroughout 2011, student accommodation in the Uk has

performed exceptionally well as an asset class compared to traditional investments and has outperformed every other commercial property class, having provided average returns of 11.5%, knight Frank say.

According to JLL, “2012 returns were reported at 9.6%, and although fallen from the 2011 return, this is still over twice the overall property return figure of 4.3% for 2012. Returns



FIGURE 1 | RENTAL VALUE GROWTH BY SECTOR, THE UK

Student accomodation

Retail

Industrial

All properties

RPI*RPI (Taken at September)

Office

19950

25

50

75

100

Inde

x 19

94 =

100

125

150

175

1997 1999 2001 2003 2005 2007 2009

Source : IPD, NUS, Jones Lang LaSalle

COVER STORY STUDENT HOUSING


EUROPE – FRANCE IS MOST MATURE MARkET

As mentioned previously, while the Uk has a developed student housing market, the sector is relatively immature elsewhere in Europe.

“Speaking very generally, the European market is where the Uk sector was approximately 15 years ago with a supply and demand imbalance, less quality product and a relatively small number of developers and investors focused on this market,” Roberts of Savills commented.

“However, each country’s market char-acteristics are different. The most active European student housing markets are France, Ireland (primarily Dublin), Germany, Austria and the Netherlands, followed by Spain and Italy,” Roberts added.

“Overall, we perceive France as the most mature student housing market in Europe after the Uk for several reasons. These include the variety of product available, the ability for individual investors to gain access to the market and the fact that developers in France are building product with a management lease wrapper in place that provides investors with a guaranteed return,” he further commented.

According to the expert, there is a strong imbalance between supply and demand in France, with an average student housing provision rate of approximately 11%.

but it’s not just France’s market that is attractive to investors. Despite the challenges in the wider economy, student registration figures in Germany for example have remained robust, creating a widening housing gap in the country.

“Living and accommodation costs are relatively low in comparison to other countries and Germany’s higher education system is regarded as one of the best in the world, particularly for engineering and other technical studies,” Roberts said.

“In terms of investor opportunities, demand for living space is currently higher than supply across Germany and in each market segment, from cheap student halls to high-end apartments. At the moment, the majority of investors and developers are targeting students with an above-average income, however, there is a greater shortage of stock for students with an average and below-average monthly income. This housing gap still needs to be filled and consequently presents an opportunity for investors,” he explained.

In fact, student numbers are on the rise in the entire region which obviously has implications on the student housing sector.

“Combined student numbers in Germany, France, the Netherlands and the Uk are forecast to grow by over 3% between now and 2025, bringing with it an increased need for student accommodation and therefore greater development within Europe,” baum of JLL commented.

FUTURE OPPORTUNITIES Due to the relative immaturity of its various student housing markets, continental

Europe has strong potential for expansion in the sector, JLL say. Overall, the provision (total enrolments over total supply) of student housing in European countries is far below that of the Uk (around 23%). For example, in France it is on average 11%, Spain 7%, and just 3% in Italy, providing an opportunity for established players with a scalable operational platform to access the market and reap the benefits, JLL say.

Image : Newington Court, UK, Savills



alternative investment property class,” baum further commented.

However, Savills mentioned that the country’s in-ternational education sector is currently going through a period of change. In 2012, international student enrolments in Australian universities continued to decline since adjustments were made to Australia’s migration policy and the rise of the Australian dollar.

The Australian dollar has had a direct effect on cost of living in Australia compared with alternative destinations. International students studying in Australia face significantly higher costs than domestic students, with university fees often three times higher, Savills say.

FUTURE OPPORTUNITIESThe rapid rise in overseas student numbers has

created a strong demand for high-quality student housing in Australia, providing great opportunities from a development perspective.

From an institutional investment level, the Australian market is considered to be around 10 years behind mature markets in providing adequate

accommodation, which appeals to potential investors, JLL say. The firm believes that the fragmented nature and relative infancy of the student housing sector in the country provide an opportunity for investors to reap the benefits of an early stage.

AUSTRALIA – EARLY STAGES OF DEVELOPMENT WITH FAVOURAbLE OUTLOOk

Over the past decade, more international students have chosen to study at Australian universities. between 2002 and 2011, international student enrolments in Australian higher education institutions almost doubled, reaching 242,350 (JLL).

This is not surprising given the fact that Australia’s main universities are ranked among the 100 most reputable global universities. The country also enjoys proximity to the key sourcing region Asia; between 2000-2011, the majority of enrolments (67%) came from the Asian countries of China, Malaysia, India, Indonesia, Singapore, Hong kong and Vietnam (JLL). See Figure 2.

“Australia is the third most popular destination for overseas students; enrolments have doubled over the past decade. With this increase in international students comes the need for an increased number of purpose built beds; there are currently only 41,000 beds for 240,000 students,” baum commented.

“Australia will naturally benefit from its proximity to Asia and the international students that reside on the continent. We anticipate that investors in Australia will see the opportunities that were seen in the Uk over the past decade and forecast that the sector will grow into a major

FIGURE 2 | KEY SOURCING COUNTRIES, AUSTRALIA'S INTERN ATIONAL STUDENT MARKET

Vietnam

Hong Kong

Singapore

Malaysia

Indonesia

India

China

Source: AEI20020%

10%

20%

30%

40%

50%

60%

70%

2003 2004 2005 2006 2007 2008 2009 2010 2011


SOUTH CYPRUS FINANCIAL CRISISLEADS OVER-SEAS PROPERTY INVESTORS TO TURN TO TURkISH NORTH CYPRUS

Due to the South Cyprus financial crisis, the north of the island is becoming a rapidly expanding investment haven in contrast to the stricken European South, says North Cyprus property developer Evergreen Developments, who claims its sales are up monthly by 350%.

Previously a lesser-known investment zone, the Turkish Republic of Northern Cyprus (TRNC) now boasts rising property values in key investment areas, as well as new tax-free zones and high Turkish and local TRNC bank interest rates of up to 9.5% for overseas investors, Evergreen says. Together with its attractions of the mild Mediterranean climate, low property prices, a brand new transport and social

infrastructure, TRNC is gaining attraction among international investors.

“Of course we would like to see the whole of Cyprus in a positive financial situation” says Angela Henderson, Property Market-ing Manager for Evergreen Developments. “but there is no doubt that an unexpected side effect of this unfortunate crisis has been to create new interest in the North. Now, as the global media spotlight is on the banking crisis in the European South, our challenge is to ensure that investors worldwide recognise the banking and property system in Turkish North Cyprus is safe and has no link to the South.”

James Swanson, Product Development and Marketing Manager at the local Near East bank is also witnessing a massive op-portunity for business expansion in an area where banks are outside the jurisdiction of the European Union. “We experienced a 24% growth last year as the fastest growing bank in the TRNC. […]We are putting in place new incentives for overseas investors to invest with us, as informed investors recognise that our banking system is totally separate from the troubled European South.”

EUROPE NEWS

According to Cushman & Wakefield, slight optimism has returned to the Czech industrial property market in the first quarter of 2013.

“More than 195,000 sqm of modern industrial space was leased in the first three months of this year. This is 26% more than last year and as much as 38% more than in the record-breaking year 2010,” says Jaroslav kaizr, Head of Cushman & Wakefield’s Industrial Letting Team.

“In year-on-year terms, the amount of vacant space decreased by 50,000

sqm which results in about 276,000 sqm being available to tenants at present. This is just 6.6% of all ex-isting industrial space in the Czech Republic,” he further says.

The outlook for 2013 is positive. “As long as there are no major economic shocks, we can expect supply and demand to be on the level of 2011. That was one of the best years in the history of the industrial property market,” kaizr concludes.

CZECH INDUSTRIAL SPACE MARkET RULED bY OPTIMISM

CzeCh industrial market Q1 2013

Leasing up 26% from Q1 2012

More quality supply needed

Vacancy rate down to 6.6% Positive outlook for 2013

Source : Cushman & Wakefield


PRIME LONDON RESIDENTIAL – HISTORICALLY STEADY, MATURE

Prime London house prices have re-corded an unprecedented two and a half years of steady growth, according to latest analysis from international real estate adviser, Savills. The firm’s prime London residential property index has recorded single-digit annual price growth for the tenth quarter in a row, marking a period of stability not seen since the index was established in 1979.

Double digit annual price growth has not been seen across the all prime London market since the heady days of 2009/10 when the world’s wealthiest individuals transferred their assets from stocks and shares into real assets. Since then,

demand for prime London property has been strong, from both wealthy London-ers and the 34 percent of prime London buyers who are from overseas, but has not resulted in overheating. Transaction numbers are still below their previous long-term average and balanced supply and demand dynamics signal a steady market, Savills says.

Average price growth across all prime London has totalled a relatively modest 17.6 percent since the end of 2010. Annual price growth trended down marginally in 2012 and now stands at 4.7 percent.

Yolande barnes, Director of Savills World research, commented : “In historic terms, this rate of growth looks steady for a prime residential market and much less volatile than some other prime world markets. It flies in the face of those who claim the market is overheating."

EUROPENEWS

FRENCH REAL ESTATE INVESTMENT PERFORMANCE REMAINS POSITIVE WITH A 6.3% RETURN

According to the IPD France Annual Property Index, released last month, the total return for all French property stood at 6.3% for 2012, with capital growth at 0.7%. After subdued growth in 2011, French property performance continued to slow. While 2011 saw a moderate increase in property values, in 2012 values stalled; average capital growth for the last three years now stands at 2.4%pa. Meanwhile income return remained relatively stable, thanks to rising rents and stable va-cancies. The consistency in income return has helped to reinforce real estate’s attractiveness as an invest-ment, despite its weaker performance than the other asset classes in 2012.

Offices recorded a total return of 5.6% in 2012, a performance that

was brought down by negative capital growth of -0.3%. However, the diver-gence of pricing between Paris and the rest of France continues to grow. For the Paris CbD, property values

increased by 3.0%, reflecting the strong appetite of investors for less risky assets, while values fell outside Paris.

The logistics and industrial property sectors registered the weakest per-formance in 2012, at 3.9% and 3.8% respectively. Their values have con-sistently fallen over the last five years, with a cumulative decline of 25.3% for logistics and 18.1% for industrials. Conversely, these sectors registered the highest income return at 7.4%.

Residential values continued to rise in 2012, but more slowly than in the previous year, resulting in a capital growth of 3.1%. Finally, retails rose in value in 2012, although more moderately than in 2011, with capital growth standing at 2.1% for the year, bringing their total return to 7.8%.

Canadian offiCe markets at a glanCe

Total return for all property 6.3% Return for offices down to 5.6% Logistics and industrial

sectors the weakest at 3.8 and 3.9% return respectively

Retail return up to 7.8%

Source : IPD

Image : Hamptons International


INVESTORS’ FAVOURITEWith many European economies either stagnant or in serious decline, Germany is regarded as

a safe haven by many property investors. While office properties in the country’s ’Big6’ cities are the most favoured products, it is the residential sector that provides the highest returns.

In 2012, the German commercial market recorded the highest investment volume for the last five years at EUR 25.31 billion (USD 33.36 billion as of 17.4.13), marking an

8.5% increase compared to an already strong 2011, says the latest Savills European Investment market report. 51% of the country’s total investments went into the top six German cities, namely berlin, Düsseldorf, Frankfurt am Main, Hamburg, Munich and Stuttgart. Overall, EUR 12.9 billion (USD 17 billion) was invested in the big6 cities, marking a 20% rise y-o-y, Savills says.

POINTS OF ATTRACTIONGiven the fact that most of Europe’s economies are

stagnant or in decline with a bleak outlook, this is quite a remarkable achievement.

“The German investment market benefits from the Eurozone crisis due to several reasons. On one hand there is still a huge demand for office, retail and industrial spaces

from a wide range of business sectors. Additionally, the latest economic forecasts for Germany were adjusted and are more positive for 2013 and 2014 than before. On the other hand, a significant number of investors are looking for worthwhile investment opportunities in the context of low interest rates and a lack of investment alternatives,” says Ignaz Trombello, Head of Investment of Colliers International, Germany.

“Foreign investors, who were involved in eight out of ten of the year’s biggest deals, invested approx. EUR 9.6 billion [USD 12.6 billion] in Germany, around EUR 1 billion more than in 2011,” Trombello adds.

Savills anticipates the German commercial real estate market to remain strong in 2013 and expects growing interest from international investors.

EUROPE INVESTMENT

Image : Skyer office building Frankfurt, Colliers

and above-average take-up the previous year.“We expect to see stable vacancy rates in most of the major

cities. Additionally, we expect an increasing number of develop-ments in the next 12 to 24 months because of the historically low completion rates in the past two years,” comments Andreas Trumpp, Head of Research at Colliers International, Germany.

“The prime rents will slightly rise in 2013 due to a lack of supply of newly built office properties in central locations. The average rents will remain more or less stable because of the expected lower take-up figures in 2013,” Trumpp further adds.

RESIDENTIAL MARkETComprising approximately 1.4 billion square metres at an

estimated value of more than EUR 2 trillion, the German residential market is the largest in Europe (Savills). In some areas, rents have increased by 80% over the last 15 years while having declined by 20% in other regions.

From an investment perspective, while Germany’s com-mercial market might attract the highest investment volume, it is the residential market that provides the highest returns.

According to the recently released IPD Germany Annual Property Index, in 2012, across sectors, residential properties had the highest total returns of 7.4%, followed by retail proper-ties with 5.5%. In contrast to the other sectors, residential property has now provided consistently positive capital ap-preciation over a period of seven years, IPD says.

According to figures from CbRE, residential transac-tion volumes throughout Germany have doubled over the course of the last year. In terms of regions, Munich is re-garded as a particularly safe haven for residential investments,

GERMANY’S bIG6Last year, Germany’s six major real es-

tate centres (berlin, Düsseldorf, Frankfurt am Main, Hamburg, Munich and Stuttgart) significantly expanded their share of the total transaction volume in Germany compared to 2011. Altogether, around EUR 14.6 billion were invested in the top 6 cities in 2012, up 31 % from 2011, Colliers reports. The firm expects this trend to continue throughout 2013.

At the end of the 2012, berlin was the front-runner with a transaction volume of EUR 4.1 billion, up 86 %, followed by Munich with a solid EUR 3.7 billion (+29%) and Frankfurt with EUR 2.9 billion (+5%), Colliers says.

OFFICE MARkETAccording to Colliers’ latest German

Cities Review, by the end of 2012, German and foreign investors had invested almost EUR 11.7 billion (USD 15.4 billion) in German office real estate, giving office property an approx. 46 % share of total transaction volume. Retail property came in second with investments totaling almost EUR 6.8 billion (USD 8.9 billion), losing its 2011 first place position, which had resulted from numerous large-volume sales.

“A large number of the office proper-ties which were sold in 2012 were highly attractive investment opportunities in the core market because of the good occupancy rates resulting from new lease agreements and term of lease extensions made in the past two years,” Trombello explains.

Indeed, according to Colliers, in 2012, the German office vacancy rate reached its lowest level in 10 years, due to the low level of new activity in building construction, conversion of existing, older properties


EUROPEINVESTMENT

and investors seem to be prepared to pay a premium for the high level of safety the Munich market offers them.

Looking at 2013 investment in the German real estate market as a whole, Colliers see great opportunities in the country’s top 7 cities (adding Cologne to the ’big6’ list).

“In these markets, the chance for potential rent in-crease is given and will take place during 2013. And not only in the core segment but also in the value-add-sector if investors are prepared to accept higher equity rates and if financing is possible. We will see much more value-add properties this year for sure,” Trombello and Trumpp conclude.

Germany’s BiG6 investment outlook

Berlin | Core properties in highly sought-after inner city locations are expected to continue to attract significant interest

Düsseldorf | Opportunities for profitable investments exist in the value-add segment this year, while an increased presence of security-oriented foreign investors in the market is expected

Frankfurt | Positive signs also exist for Germany’s financial capital; international buyers are showing growing interest

Hamburg | Continued high level of demand and stable transaction volume is expected for 2013

Munich | High level of security guarantees the Bavarian city a prime spot in the investor focus. 2013’s transaction volumes are forecast to reach the EUR 3 billion mark.

Stuttgart | Transaction activity is currently dominated by the project development sector. Due to a lack of supply however, a decline in transaction volume is forecast.

Source : Colliers


EUROPE INVESTMENT

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PLENTY OF OPPORTUNITY AMIDST PERSISTING CHALLENGES

Russia has a highly dynamic retail market, which is growing in importance amongst both local and international retailers. Last year alone saw 17 new international retailers enter

the Russian market. With Europe’s largest shopping centre currently under construction, the world’s largest country offers lucrative opportunities for investors willing to take up

the challenge of doing business in a complex, and often complicated environment.

According to the Ministry of Economic Develop-ment, the Russian economy grew by 3.5% in 2012 y-o-y, a good result compared to most

European countries.On the back of a relatively stable economic perfor-

mance when compared to elsewhere in Europe, the Rus-sian real estate market has demonstrated gradual growth throughout last year, with some indicators achieving pre-crisis levels. In 2012, real estate investments showed historically high results of USD 8.7 billion, with Q4 invest-ments having demonstrated a 41% growth y-o-y, says the lasted Jones Lang LaSalle Russia Commercial Real Estate Market Report.

The firm’s Q1 2013 research also shows that investment into retail real estate dominated the first quarter of this year, accounting for 60% (compared to just 37% in Q1 2012) of total investments (see figure on the right hand page).

In the light of the growing affluence of the Russian consumer, increasing retail sales and international retail-ers’ entrance and expansion plans, the 2013 forecast for the Russian retail sector is positive.

RISE IN AFFLUENT HOUSEHOLDSDespite a slowdown of the broader economy, the

number of affluent households in Russia continues to grow. A recent economic report by the bank of America/Merrill Lynch (bOA) says that, according to the latest RosStat data, the number of people with disposable monthly incomes in excess of RUb 45,000 (USD 1,500) in Russia rose by more than 3 million or by some 25.5% to reach an all-time high of 14.9 million in 2012. The number of people with monthly incomes in excess of RUb 27,000 (USD 900) increased by more than 5.5 million to exceed 27% of the total population.


EUROPE SECTOR ANALYSIS

Image : Evropeyskiy Shopping Mall, Moscow

in consumption,” says Valentin Gavrilov Director of the CbRE Russia Research Department.

“And last but not least, despite the presence of quite a large amount of international brands in Russia, there is still enough room for new entrants as customers are ready to test something new,” Gavrilov adds.

Looking at the types of retailers currently expanding into the Russian market, Rogozhin says these are mainly fashion and DIY retailers, as well as restaurants and café chains that target the expanding middle class.

In 2012, CbRE saw 17 new international chain retailers enter the Russian market which included Michael kors, Mamas & Papas, SIA Home Fashion, Hamley’s, Scotch & Soda, Paul, Vera Wang bride, kilian and others.

In terms of location, retailers mainly favour Moscow’s high-street retail spots such as Tverskaya Street or the city’s premium shopping malls such as Evropeyskiy or Metropolis, the CbRE team says.

“New developments planned to be delivered between 2013 and 2015 include both large scale schemes with a GLA of more than 100 – 200 thousand square metres, as well as small district projects with a GLA between 5 and 15 thousand square metres. At the same time, it is worth mentioning that no new premium schemes will be delivered in 2013, which potentially creates problems for new retailers seeking to enter the market,” Rogozhin points out.

However, the most notable development set to be delivered to the Russian retail market in the near future is the Avia Park development in Moscow. With a total leasable area of 2.3 million square feet over four floors, with space for 460 stores, Avia Park will be Europe’s largest shopping centre when it is completed in 2014.

The report also suggests that Russia’s middle class – defined as those with disposable incomes in excess of RUb 30,000 (USD 1,000) – will triple in 2011-20 to 66 million or about a half of the total population by the end of the decade.

IMPLICATIONS FOR RETAIL DEMAND

The growing affluence of the average Russian consumer is the key driver behind structural improvements in consumer demand, supporting strong growth in de-mand for high-value goods and services, the bOA report says.

“Affluent households generate solid demand for high value goods and services. Furthermore, the number of people in Russia earning more than USD 1,000 per month has more than doubled com-pared to 2008,” adds Mikhail Rogozhin, Managing Director of CbRE’s recently established Russian Retail Department.

In order to meet growing client demand in the region, CbRE has launched a new Rus-sian retail capability in February this year.

“The Russian retail market is growing at 4-5% per year supported by the middle class consumption. As a result, we now see new mid-level international brands entering Russian market. And of course, those brands are interested in Moscow in particular because the capital has the highest concentration of affluent and middle class customers,” Rogozhin further comments.

ATTRACTIONS FOR INTERNATIONAL RETAILERS

The concentration of wealthy custom-ers in Moscow incentivises international brands to follow premium pricing strate-gies, earning higher margins as compared to other markets, the expert explains.

“Russia’s relative strong GDP growth of about 3 – 3.5% also places the country in a more favourable position than that of many other European markets. Oil prices remain quite high, generating substantial oil revenues and fuelling further growth


EUROPESECTOR ANALYSIS

ToTal invesTmenTs per real esTaTe secTor, Q1 2013

Retail59.8 %

Office34.9 %

Industrial0.5 %

mixed 4.8 %

Source : Jones Lang LaSalle

OUTLOOkLooking ahead at the development of the Russian retail

market, JLL see a positive scenario.“Having considered macroeconomic turbulences in the

Eurozone, we expect Russia to retain its status as a key market for retailers and developers in 2013. Medium-term turnover growth forecast (5.3% in 2013-2014) exceeds that of most other European countries. Furthermore, the trend of active development in cities with populations less that 1 million people is likely to persist, with a large pipeline planned for kursk, Tyumen and Yaroslavl,” JLL conclude.

Other future large scale projects include the Vegas in Crocus City, butovo Mall and Columbus, all of which are to be located in Moscow and the capital’s region.

CHALLENGES ACCOMPANY OPPORTUNITIES

Despite such strong market funda-mentals and opportunities aplenty, the Russian market comes with certain complications.

With regards to retailers seeking to enter the market, the CbRE team highlights two major challenges : The lack of premium entrance schemes and difficulties in finding a right local partner.

“Despite the large number of existing shopping malls and around half a million square metres on Russian high streets, the opportunities for good entrance are quite limited; both Evropeyskiy and Metropolis have tenant waiting lists,” says Polina Zhilkina, Associate Director, Strategic Consulting and Valuation at CbRE Russia.

Then there are the difficulties in finding a right local partner. “Sometimes this can be a real problem given the Russian market specifics and the necessity to know local business practices,” she adds.

From an investment perspective, international investors still tread the Russian market warily. FDI into Russia is still quite low compared to other emerging economies such as brazil and India as the world’s largest country is regarded as a questionable investment destination by many Westerners.

However, if investors are willing to take up the challenges, lucrative opportunities await, experts say.


EUROPE SECTOR ANALYSIS

Russia’s relative strong GDP growth of about 3 – 3.5% also places the country in a more favourable position than that of many other European markets. Oil prices remain quite high, generating substantial oil revenues and fuelling further growth in consumption.

Image : Metropolis Shopping Mall, Moscow

www.cityscapeqatar.com/cmm

Creating a picture ofQatar’s National 2030 Vision

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VILNIUSAn engine of economic activity, the Lithuanian capital currently

experiences high levels of foreign direct investment. Positioning itself as an attractive tourist destination and as a host for major conferences

and events, the Baltic city’s real estate market is transforming.

In 2012, the baltic countries maintained a position of the fastest growing economies among EU states. Although Lithuania’s economic growth slowed down in 2012 as

a result of the Eurozone crisis and general international economic environment, the country’s capital Vilnius is forecast to show growth of 6.7% per annum over the next five years, says the latest DTZ European Retail Guide.

The city of Vilnius has also set a specific goal to become a regional leader in attracting investment. According to official data, in the first quarter of 2012, the city registered a quarterly increase four times higher than that registered in the last quarter of 2011.

One initiative is the establishment of the New City Centre; a 120 hectare site in which around USD 170 million of private investment is expected in the near future. Vilnius also plans to develop sporting facilities including a national stadium, renew the city’s waste recycling sector and introduce a tram network – projects which all will go into international tender.

OFFICE MARkETDespite the unstable situation in the Eurozone, 2012

was a good year for Lithuania’s office market.“The recovery of the economic situation in Lithuania,

the growth of rental rates and the decrease in vacancy encouraged developers to start construction of projects which were postponed during the crisis. This was espe-cially seen in the capital city Vilnius, where conditions for new projects were the most favourable,” says the Colliers International Lithuania 2013 Real Estate Market Review.

With six new business centres opening last year, adding 19,600 square metres of new office space, Vilnius took clear leadership in both supply and demand over other cities. Colliers says that during last year, Vilnius’ office space supply grew by almost 5.5 per cent y-o-y, which at the end of 2012 stood at 376,450 square metres. Grade A office space accounted for approximately 33 per cent of the total office space.

EUROPE CITY PROFILE

HOTEL MARkETVilnius is becoming an increasingly important tourist

destination; the Lithuanian accommodation sector further demonstrated good results in 2012. Expansion of the hospitality sector has let to a 23% annual increase in the number of tourists visiting the city and further hotel openings are planned for 2013. Average room occupancy rate grew while the abolishment of the VAT exemption for hotels at the beginning of 2012 did not have a dramatic effect on accommodation sector as it had been expected, Colliers says.

The new national carrier Air Lituanica is set to offer first flights to a few major des-tinations next year out of Vilnius, which is expected to further support incom-ing visitor numbers.

Furthermore, devel-opment of the Vilnius Convention bureau is ongoing to establish the city as a host for major conferences and events. According to Colliers, last year saw the exhibition market grow by 10 per cent was which had a positive impact on the Lithuanian hotel market in general.

WAREHOUSE SECTORThe Vilnius region holds the biggest concentration of

warehouse space in Lithuania as the capital city attracts the majority of investments. At the end of 2012, the Vilnius region’s speculative warehouse space supply was 354,000 square metres, an increase of 2.3 per cent when compared to 2011, Colliers says.

However, despite the fact that a lack of modern warehouse space is recorded across Lithuania, developers are not in a hurry and are diligently evaluating every opportunity for investment, the firm further says.

At present, the state government is making efforts to develop new logistics parks in Lithuania’s biggest cities. The construction of the first stage of a public freight village - Vilnius Logistics Centre (VLC), whose founders are Lithuanian railways and Vilnius municipality, is planned to begin in 2014.

As demand for high quality commercial objects in Vilnius is constantly increasing, future expectations for the development of office space are optimistic. According to Colliers, four business centres with a total GLA of 18,400 square metres are planned for completion in Vilnius this year. Further major centres are planned to be constructed in the capital during 2014 – 2015, offering about 80,000 square metres of new office space.

RETAIL MARkETDespite the fact that the growth

of the Lithuanian retail market slowed down in 2012 as com-pared to 2011, positive tendencies remained, Colliers says.

“In 2012, an active expansion of grocery retail chains contin-ued, as it was forced by further growth of retail turnover (4.5% y-o-y). Moreover, the need for new retail space also grew due to the entrance of new retail brands into the Lithuanian market. This whole situation created a positive view of the Lithuanian retail market and encouraged market players to renew their activities in the retail segment,” the Colliers report says.

At the end of 2012, the total supply of retail space in Vilnius shopping centres with more than 5,000 sqm of leasable space (constructed since the year 2000), was 526,600 sqm.

Although planned large scale develop-ments have been postponed due to unfavourable economic conditions in Europe, several projects are currently underway including the 25,000 square metres IkEA, the firm’s first store in the baltic region, which is expected to be completed by the end of this year.


EUROPECITY PROFILE

Vilnius forecasts Vilnius will maintain the leading position

among other cities in Lithuania in terms of office market recovery over the coming years

Grocery retail chains will continue to be the most active in the retail sector as further development of supermarkets is expected

A growing tourism sector as well as exhibition and conference segments create favourable conditions for the hotel market

Demand for warehousing space is set to further grow on the back of a positive export situation and increasing industrial production

Source : Colliers


AMERICAS NEWS

US HOME MARkET HEADING FOR A SUSTAINED RECOVERY IN 2013

According to the latest Home Data Index from real estate firm Clear Capital, US home prices increased nationally by 0.9% in the first three months of 2013; the firm forecasts further growth of 1.7% over the next nine months.

Coming out of winter, national prices were up 6.5% over the year. As prices continued to move up incrementally over the winter months, slight quarterly gains fuelled stronger yearly growth.

Alex Villacorta, Director of Research and Analytics at Clear Capital commented : “This is very strong evidence of the start to a new leg of the recovery, one that should give further confidence to consum-ers and lenders alike that the recovery is real. As buyers become more confident

that the recovery is sustainable, this sentiment should grow to create a positive feedback loop.”

He added that home prices across the nation are starting the second quarter of the year on solid ground and are expected to remain in growth mode throughout 2013. The three quarter forecast for the nation is 1.7%, which would bring 2013’s total yearly price growth to 2.6%. Villacorta described the winter seasons as ‘solid’. Regionally, the West, Midwest, South and Northeast are expected to see additional gains of 0.7%, 1.9%, 1.8% and 2.1% over the next three quarters.

Villacorta also said that overall, March was another good month for home prices. “buyers showed up throughout the cold winter months in high enough volumes to prevent price erosion. Now, as we head into spring and summer, the more active buying seasons, home prices are likely to continue their winning streak. All signs point to the recovery enduring through 2013 at a more moderate pace, compared to the last year,” he concluded.

Mexico is on course to change the rules that restrict foreign buyers from buying property on coastal plots and its borders, a recent report by online news service propertywire says.

The lower house of congress has voted to loosen the longstanding restrictions but change still needs to be approved by the Senate and by Mexico’s 32 state legislatures.

Currently the only way foreigners can buy much sought after beachside property is through front companies as Article 27 of the Constitution prohibits non-Mexicans from directly owning

land within 31 miles of the coast and 62 miles of the nation’s borders.

That means buying a property through Mexican companies or real estate trusts which then lease the property back to its foreign occupant for an annual fee.

The change would allow foreign-ers to buy beachside property for residential purposes but they would not be allowed to buy commercial property. The aim is to encourage more foreign investment, draw more overseas visitors and boost the real estate sector.

MExICO SET TO CHANGE RESTRICTIONS ON FOREIGN PROPERTY OWNERSHIP

FACT : Between 2000 and 2012, some 49,000 foreigners bought beachside property through Mexican companies or real estate trusts. However, the time involved and extensive paperwork has put off a lot of overseas buyers and there is a lot of support for change.

Source : Propertywire


AMERICASNEWS

ECONOMIC GROWTH DRIVES OFFICE CONSTRUCTION, LEASING OPPORTUNITIES IN kEY LATIN AMERICAN MARkETS

Jones Lang LaSalle have identified real estate opportunities emerging across Latin America in response to mushrooming investment and growth by office-using companies, particularly in Peru, Colom-bia, brazil, Mexico and Chile. Driven by a combination of direct foreign investment and some of the strongest GDP numbers

in the world, the growth stories range from space shortage in Lima, one of the world’s tightest office markets, to a flurry of leasing to take advantage of affordable rental rates in the more mature office markets of Mexico.

“Strengthening economies, in several cases reflecting government efforts to boost stability and economic activity, are fueling demand for prime office space in a number of Latin American markets,” said Shannon Robertson, Regional Director for Jones Lang LaSalle Latin America.

“As developers answer the call for additional space with new construction, a few markets, such as Mexico City have experienced a temporary softening, but most of the region’s growth markets have soaked up the new supply and still hunger for more space,” Robertson added.

CANADA COMMERCIAL REAL ESTATE 2013

Global office market demand was hit with a one -two punch after the recession of 2008, but not so for Canada’s central markets, says the latest Cushman & Wakefield Cana-dian Commercial Real Estate Outlook report. In fact, most major markets saw unprecedented demand growth beginning in the summer of 2009, particularly in downtown Toronto, which posted record absorption levels.

Growth was boosted by recovering resource prices, a buoyant engineering sector and fueled by low interest rates. At the same time, more Canadians bought in to the idea of downtown living and businesses responded by moving closer to the growing pools of educated workers. Consequently, Canada’s overall central office vacancy

nosedived to one of the lowest points in the past 30 years — 5.1%, with class A vacancy at 4.2% (as of Q3 2012).

Resilient demand and rising rental rates have driven one of the most

robust development cycles in Canada’s top office markets since the late 1980s. Even though demand appears to be easing, the U.S. is poised for a more robust recovery which should boost Canadian markets, particularly sub-urban markets, where activity is more closely tied to the U.S.

While markets will remain extraor-dinarily tight, most will not see any significant central market additions to new supply until 2014 through 2016. Positive demand conditions are expected to resume in the latter half of 2013, and some markets are likely to experience pent-up demand before the new buildings hit the market, particularly in the tightest cities such as Vancouver, Calgary and Toronto.

Canadian offiCe markets at a glanCe

Vancouver | Strong development cycle

Calgary | Low vacancy drives new build cycle

Toronto | More robust development

Montreal | Growth expected towards late 2013

Source : Cushman & Wakefield


IT’S NOT ALL ABOUT GAMESWith the 2014 FIFA World Cup just around the corner and the Olympic Games coming up

in 2016, international investors have their eyes set firmly on South America’s largest country. Further supported by major infrastructure projects, a growing middle class and a dynamic

oil and gas industry, Brazil is experiencing real estate development across all sectors.

In the build up to the 2014 FIFA World Cup and the 2016 Olympic Games, overseas investment in property in brazil has hit an all time high.“There’s no doubt that the FIFA 2014 World Cup and

the 2016 Olympic Games have made an important contribution to [the current] growth trend, given that the great legacy of the World Cup and the Games will be the urban infrastructure projects now being developed in major brazilian cities. The combined efforts of the private sector and the three levels of government have created many business opportunities, and these have caught the eye of investors worldwide,” commented Fábio Maceira, CEO of Jones Lang LaSalle brazil.

but it’s more than the upcoming sporting events that make brazil an attractive destination for foreign investors.

“brazil has gained international prominence in recent years as a destination for investment in various sec-

tors. Coupled with lower unemployment and greater access to credit, the expansion of the middle class has been instrumental in creating a scenario for sustained economic growth. The high interest rates are per se very attractive for foreign investments,” Maceira said.

“Many real estate ventures are being developed in bra-zil’s largest and mid-sized cities. Development has ad-vanced far into upstate and interior regions and into areas like the brazilian northeast, which, until recently, did not have much tradition in this sector,” he further pointed out.

brazil is South America’s largest country and one of the world’s fasted growing economies. At current stage, brazil’s population is estimated at 200 million, making it the fifth most populous country in the world after China, India, the US and Indonesia.

“brazil is showing that it has potential to grow, so investors who are planning to place capital in the

AMERICAS MARkET INSIGHT

Brazil is showing that it has potential to grow, so investors who are planning to place capital in the country are not doing so only because of these major events; they have a broad vision of the potential and opportunities the country offers in the long term.

“brazil still needs to improve with regards to labour laws, taxation and financing supply. Most inbound foreign investment does not arrive via FDI, but through local operators, either through the purchase of shares of local companies, through a private equity fund that acts locally, or through association with local developers,” Maceira explained.

“On the other hand, the improved level of transparency in the real estate market in recent years and the entry of institutional capital have led the brazilian real estate market to a greater degree of maturity and higher asset quality. As local developers adopt international best practices, asset quality will increase, providing new sources of investment products,” he added.

DEVELOPMENT ACROSS AL SECTORSbut not only brazil’s upcoming prestigious sporting events

act as a driver to the country’s real estate development.A growing middle class with increased purchasing power

creates new demand both in the retail real estate sector (stores, shopping malls, supermarkets) and in the industrial real estate sector, as new warehouses are needed to stock all these products, Maceira said.

Secondly, brazil has a dynamic oil and gas industry which benefits development, especially in the office and industrial sector.

country are not doing so only because of these major events; they have a broad vision of the potential and opportunities the country offers in the long term,” Maceira said.

INITIATIVES TO bOOST INVESTMENT AND CONSTRUCTION

Major government initiatives are fo-cused on encouraging foreign investment into brazil’s infrastructure, both in main cities such as São Paulo and Rio de Janeiro as well as in secondary cities, which will directly benefit the real estate market, Maceira said.

“The improvement of inland access, mainly in the country’s Midwest region, through new highways and river ports, has a direct positive impact on the real estate market, seeing that the infrastructure attracts new projects, new inhabitants, and consequently, improves local com-merce with new stores, supermarkets and services to meet the new demand,” he further commented.

In a direct measure to boost invest-ments in brazil’s buoyant real estate market, the government announced tax exemptions for foreign investors in real estate trusts in brazil earlier this year. Officials said this was part of an overall plan to develop funding alternatives for local builders, many of which are overly dependent on loans from the state devel-opment bank bNDES, the main source of long term corporate financing in brazil. The government hopes that foreign investors, who currently have little participation in REITs, could bring some needed cash to the industry.

However, brazil still has a fair bit to do to improve its regulatory framework in order to be able to lead its real estate market to greater maturity.


AMERICASMARkET INSIGHT


AMERICAS MARkET INSIGHT

The improved level of transparency in the real estate market in recent years and the entry of institutional capital have led the Brazilian real estate market to a greater degree of maturity and higher asset quality. As local developers adopt international best practices, asset quality will increase, providing new sources of investment products.

“The most important movement is coming from the investments that Petrobras [brazil’s national oil company] is doing mainly in Rio. On the other hand, the service sector is the main driver for the office market increase – services account for almost 70% of the brazilian GDP. In Rio for example, all the companies comprising the oil and gas chain need to install an office in the city, or need to expand their operations, so this is a positive impact that creates new dynamics in the brazilian real estate market,” Maceira said.

Looking at the residential market, agents say that a few years ago, foreign buyer interest was mainly focused on second home beachside properties. However today, the holiday home buyer has been replaced by the pure investor. brazil based real estate agent uv10 has reported that the firm is now selling more off plan investor properties than anything else.

WHAT AbOUT THE LONG TERM IMPACT?

Cities around the world that have hosted major sporting events have all seen a natural increase in real estate rental and purchase values. Maceira believes that while the events definitely represent a favorable scenario for real estate sector expansion, the final arbiter will always be supply and demand.

“We believe that the main legacy of the sporting events will be the improvement in the country’s infrastructure which, in long term, will impact positively on the real estate sector,” he concluded.

Event Calendar

Jeddah Centre for Forums and Events, Jeddah, Saudi Arabia

3 ~ 5 May 2014

22 ~ 24 April 2014Abu Dhabi National Exhibition Centre, Abu Dhabi, UAE

27 ~ 29 May 2013Doha Exhibition Centre, Doha, Qatar

10 ~ 12 December 2013 Riyadh International Exhibition Centre, Riyadh, Saudi Arabia

20 ~ 23 March 2014 Cairo International Convention and Exhibition Centre, Cairo, Egypt

8 ~ 10 October 2013Dubai International Convention & Exhibition Centre, Dubai, UAE

Amcham Business Centre, Sao Paulo Brazil

Shanghai Convention Centre, Shanghai, China

1 ~ 3 October 2013

4 ~ 6 September 2013

Your Guide To Emerging Real Estate Markets

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A groundbreaking experiment that is hoped to revolutionise Qatar and the region’s green building industry, Qatar’s

Passivhaus (passive house) is a joint project by kahramaa (Qatar General Electricity & Water Corporation), Qatar Green building Council (QGbC) and barwa Real Estate (bRE), which has been completed last month.

The passive house concept was developed in Germany in the 1990s by the Passive House Institute (PHI), and consists of a series of building standards that are truly energy efficient, comfort-able and affordable at the same time.

While verified in Europe and other climate-sim-

ilar regions, the effectiveness of a passive house strategy has never been explored in detail for cli-mate zones such as Qatar before. The Qatar Pas-sivhaus experiment consists of two villas, identical in size and design, which are built side-by-side at barwa Village in Mesaimeer, Qatar — one con-structed to conventional standards and one built using passive house standards. Each villa will be occupied by similar-sized families and the experi-ment will monitor energy use, water consumption and thermal comfort conditions for one year.

“Throughout the testing and commissioning stage of this project, in which AECOM is a scientific partner, the project’s aim is to raise awareness

’BAYTNA’ – QATAR’S FIRST ’PASSIVHAUS’Baytna (Arabic for ’our home’) is an innovative project to develop Qatar’s first energy-efficient passive house. Developed by the Passivhaus (Passive House) Institute in Germany, the passive house concept is a set of performance standards and specific building construction strategies, which aim at significantly reducing a building’s energy and water consumption as well as its CO2 emission.

ARCHITECTURE


amongst the inhabitants as to the con-sumption of water and energy. After a period of monitoring to establish regular base energy and water consumption patterns, an intense educational and op-erational training package will be delivered to the inhabitants of both villas, following which the changes in their behaviour will be monitored,” commented Martin Hay, Director of AECOM Architects, Qatar.

The experiment hopes to demonstrate that the passive house villa can achieve a 50 percent reduction in annual operational energy, water and carbon dioxide emis-sions compared to the other villa.

DESIGNArchitecture, thermal and energy mod-

elling, interior design, 3-D visualization and cost consultancy to the project have been provided by AECOM. In its design, the firm has tailored the villa’s details to suit the specific climatic conditions of Qatar.

“The Qatar Case Study Passivhaus Pro-ject’s key innovation is the use of 370mm of extruded polystyrene thermal insula-tion around the entire airtight building en-velope, including the foundations. This will result in an ultra-low energy building that requires minimal energy for space cooling, a first of its kind in Qatar,” Hay explained.

“In addition, the shading system, which is combined with the photovoltaic panel system, will shade the ground around the building and encourage greater plant growth. It will also extend the seasonal use of exterior space, promoting healthy living,” the architect added.

An internal courtyard is integrated into the Passivhaus villa which acts as an intrinsic part in maintaining the building’s balance with the exterior environment.

“When external temperatures permit, the internal courtyard creates additional living space and acts as an environmental buffer that helps to balance the thermal dynamics of the building with those of the external environment,” Hay explained.

With regards to the interior, empha-

sis has been placed on the provision of ample light and environmentally friendly materials.

“The courtyard allows daylight to penetrate into the heart of the building, meaning that the interior remains light even when blinds or curtains on external windows are closed. Additionally, the materials used have ei-ther been recycled or are sourced from sustainable supply chains,” Hay said.

IMPLICATIONS FOR QATAR’S GREEN bUILDING SECTOR

Environmental protection is a vital part of Qatar’s 2030 Vision; various organisations within the country have already launched internal initiatives to promote the concept of energy saving.

Commenting on the wider implications of the Qatar Pas-sivhaus experiment on the country’s green building sector, Hay said that in its aim to create a building standard for Qatar that is truly energy efficient, sustainable, environmentally friendly and economically viable, the project will, if successful, provide evidence on which to base future criteria for low energy housing in the region.

“Through participation in such an innovative project, AECOM and the other partners can offer developers the latest in green technology and be in a position to shape eco-housing developments in the Middle East,” Hay concluded.

The project’s key innovation is the use of 370mm of extruded polystyrene thermal insulation around the entire airtight building envelope, including the foundations, resulting in an ultra-low energy building that requires minimal energy for space cooling, a first of its kind in Qatar.

ARCHITECTURE


Image : Passivhaus wall section

Spain and kuwait-based practice AGi archi-tects have delivered a unique project to kuwait’s residential market, the so-called S

Cube Chalet. Having won the Middle East Architect Awards 2012 as Residential Project of the Year, the project demonstrates an innovative approach to providing connected spaces whilst maintaining the privacy of its residents at the same time.

S Cube Chalet consists of 3 semi-detached beach houses. Two of the houses are located on the ground floor level and are mirror images of each other, separated by a staircase that leads to the third house. The third house is positioned on a higher level and across from the two residences, enjoying a large roof terrace with direct views

towards the sea. Each of the three houses enjoys an individual outdoor area that is open to the sky, offers privacy from its neighbor as well as extended sea views.

DESIGNThe owners of S Cube Chalet - two brothers and

their sister each with their own families - wanted to continue enjoying the same exceptional environ-ment in which they grew up, but with complete independency and privacy from each other. Hence, “the design of these three small houses called for a duplicated program, which maintains privacy while benefiting from outdoor areas and sea views through the use of several terraces.”

BeACHsIDe lIVINg IN A CLASS OF ITS OWNSpanish/Kuwaiti based practice AGi Architects have designed a unique intertwined family chalet which offers its residents the benefits of pleasant outdoor areas and superb sea views while maintaining complete privacy. The S Cube Chalet consists of 3 semi-detached beach houses, each with their own outdoor space.

ARCHITECTURE


Images : S Cube Chalet, Kuwait, AGi Architects

The team behind the design of the family chalet consists of Joaquín Pérez-Goicoechea and Nasser Abulhasan, Co-founders and Partners at AGi Architects, as well as Salvador Cejudo, Design Partner at AGi architects.

“The [chalet’s] design objectives were very clear : to be able to create three separate dwellings that enjoy the most of the outdoor areas and sea views, without sacrificing the privacy of each one. To do this we had to be as fair as possible, designing very neutral spaces but at the same time not identical houses, while meeting the particular needs of each family, relatively distinct from each other,” the team commented.

“The design is very simple and practical, with a compact base that houses three concentrated parts. Spaces are rectangular and contain the essentials, [de-signed] unpretentiously. The aesthetic of the chalet has been strongly influenced by the available budget,” the AGi team said.

OUTDOOR SPACEThe outdoor spaces on the ground

floor and on the roof terrace of the third house on the upper level are the main distinguishing elements and spaces of this project, AGi say. All three houses are organised around those spaces and are designed to optimise and enhance the residents’ outdoor experience.

In order to guarantee a comfortable climate in the houses’ outdoor spaces, the latter are designed to harvest the prevail-ing winds and enhance their circulation within the courtyards.

“The outdoor spaces are designed to allow the circulation of wind flows - both sea and desert breezes - and together with the existing shading spaces allow for comfortable outdoor being, which is essential in an arid climate. We minimised the planted areas facing the desert,

using only local plants, while on the sea shore, grass and local plants are combined to create a geometric landscape,” the AGi design team said.

INTERIORWith regards to the chalets’ interior design, the team has

placed high emphasis on functionality.“Functionality is [paramount] in the S Cube Chalet. We

proposed very compact elements, rare in this society, but necessary for functional issues, responding to the clients’ needs,” the team said.

“The furniture is also very functional, mainly from Spanish brands based on high quality and competitive price. The three houses [only] contain the essentials because as beach houses, they are designed to optimise and enhance the outdoor experience.”

All materials used in the S Cube project are locally manufac-tured. Flooring, stairs and dividing walls are all cladded using Indian sandstone. Interior walls and ceilings are finished using plaster and paint, whilst handrails are cladded with wood.

ARCHITECTURE


S Cube Chalet faCtS Architecture | AGi Architects Location | Bnaider, Kuwait Type | Residential Size | 750 square metres

The [chalet’s] design objectives were very clear : to be able to create three separate dwellings that enjoy the most of the outdoor areas and sea views, without sacrificing the privacy of each one.

There is a major drive throughout the world for sustainable living, especially in modern cities. As people move into the urban centres

it becomes imperative for the buildings and infra-structure to provide a safe, healthy and comfortable space to live, work and play. These buildings typically come with a price, both financially, as well as to the environment. For the past 50 years buildings have been designed, built and operated without giving serious consideration to the impact they have on the environment in terms of energy consumption. In the UAE particularly, the pace of development has been made possible by the availability and relatively

low cost energy. With an escalating population and increasing demand for energy, there is now a need to focus on the energy consumption of the existing buildings of the nation. It has become vital to upgrade existing buildings in order for them to operate efficiently, in turn reducing the costs for the building owner and increasing profitability of the asset.

In most cases the main barrier for building owners in upgrading their asset is the capital investment required to accomplish energy and financial savings goals. This along with the lack of financing options available for energy efficiency projects in the UAE makes it difficult to successfully

* takasolutions is an energy services company that uses innovative financing, technology design, and management to reduce the energy use and costs in buildings for owners, tenants and utility providers using Energy Performance Contracting

BuIlDINg CosT ReDuCTIoN USING EPC

Commercial28%

Reducing a building’s energy consumption is an important aspect in ensuring its sustainability. Building owners are often put off by the initial costs associated with upgrading their asset. However, a new innovative solution to energy efficiency project financing called ‘Energy Performance Contracting’ (EPC) can be applied to existing assets for drastic energy and cost reductions with no cost to the owner.

By Charles Blaschke, General Manager, takasolutions*

SUSTAINABILITY


Figure 1 2011 uAe electricity consumption (gWhr)

UAE Buildings Require : 17.76 GW of the UAE Power Capacity 63,000,000 MWh of energy 42,000,000 kg of CO2 AED19.1 billion annually in energy


The soluTion

WhaT is energy Performance conTracTing?

execute these projects. There are many ways of financing energy upgrade projects, either through capital budgets, incentives, traditional loans or private financing. An innovative solution to energy efficiency project financing is Energy Performance Contracting (EPC). This unique and proven method can be applied to existing assets for drastic energy, and cost reductions with no cost to the owner. The savings generated from the project cover the costs required to maintain forecasted energy and cost performance goals. The money is already being spent, wasted, on energy; EPC helps to unlock it for savings. If planned and executed properly, EPC can achieve over 30% energy cost reductions with zero investment by the building owner.

UAE bUILDINGS USE TOO MUCH ENERGYThe pace at which the buildings were designed, constructed

and operated, along with the extreme weather conditions in the UAE has resulted in buildings which are inefficient, and use drastically more energy than needed. Without regulation to enforce energy consumption, most buildings continue to consume more than necessary. (Figure 1)

ENERGY HAS A HUGE IMPACT ON bUSINESS

The high energy use in buildings of UAE has an enormous impact on building owners profitability. The cost of the energy for the building is typically one of the largest expenses of the asset. Current utility rates are in-line with average rates in developed western countries, with no signs of moving anywhere but higher in the future. These utility rates, along with inefficient

Reducing eneRgy and costs in existing Buildings using PeRfoRmance contRacting

ImplementAnalyze manage

Image : takasolutions

SUSTAINABILITY

HOW DOES ENERGY PERFOR-MANCE CONTRACTING WORk?

The ESCO guarantees the project energy and cost savings which will be sufficient to pay for the project over the term of the contract. At the end of the contract, the building is handed over to the owner, who then benefits from all savings along with an upgraded and optimized building. During the contract period, savings are shared between the owner and the ESCO. The portion of the sav-ings going to the ESCO is used to cover the initial investment they made in the building, as well as ongoing fixed costs. This means that owners get an increased cash flow from day one of the project, without investing any money, as well as an increase in asset value. Most of the buildings in the UAE can typically expect contract lengths of five years or less to satisfy project costs required to reduce energy reductions of 30% or more. (Figure 2)

As owners become familiar and comfortable with the process, the ESCOs can provide ongoing support and energy management to continuously drive down energy consumption, increasing savings even more. As new products and technologies penetrate in the market, the ESCO can implement these into the existing buildings to optimize the facility further, while reducing energy consumption and energy related costs.

The long term goal is a building stock that is optimised and does not require any energy input from outside sources. The buildings will be truly sustainable, self-sufficient, optimized facilities with all required energy being produced and controlled on-site with its generation capabilities and local micro-grid. The only way to reach these goals is through constant and continuous monitoring, upgrades and implementation. EPC offers a feasible, proven model to accomplish this.

WHAT IS THE PROCESS OF AN EPC?

In an EPC, the ESCO conducts a comprehensive energy audit of the building to understand how the build-ing is using its energy and to identify possible improve¬ments that can help the building save

money. The ESCO then designs and oversees project installation and implementation. During the contract period the ESCO manages, analyzes and reports energy and cost savings to ensure the contractual and performance goals are being met.

key to the process is that ESCO arranges the required capital to finance the project. This can come internally from the ESCO, traditional bank loans from commercial financial institutions, private financial firms, crowd funding or directly from the owner.

SUMMARYThere is a big opportunity for building owners

to make the assets more profitable now, with no cost using energy performance contracting.

Using EPC, buildings have the ability to reduce the energy consumption and cost, while reducing energy supply risks and future increases in utility rates, energy security. Performance contracting is a mechanism of making energy efficiency upgrades to buildings with no cost to the owner, all paid for through the energy savings over the life of the contract. A strong relationship between the building owner, ESCO, tenants reduce the impact of buildings on the environment and reduce the energy demands, while increasing the profitably of the assets.

SUSTAINABILITY


Figure 2 Sample perFormance contracting caSh Flow

Your Savings

Your Savings

Taka Payment

energy + O&m Costs

DuRINg EPC Contract

AFTeR EPC Contract

BeFoRe EPC Contract

Build

ing

Cash

Flo

w

energy + O&m Costs

energy + O&m Costs

OppOrtunities amidst a vOlatile glObal marketThe only global summit in the region ensuring you can:• Hear from the most influential international investors, financiers, developers and public sector bodies• Discover new strategies for investing and developing in the hottest real estate locations world-wide• Engage with new business partners during our extensive networking opportunities

8~10 October 2013 Dubai International Convention and Exhibition Centre www.cityscapeglobal.com

Part of

The UAE retail scene is evolving. Over the last few years, shopping mall formats and product offerings have improved

considerably to become much more innovative and dynamic, says Robin Teh, Country Manager UAE / Director of Valuations & Advisory MENA at Chesterton International.

A few years back, the UAE retail scene was controlled by a few large retailers, leaving con-sumers with little choice. However, a prolonged recession and intense competition have resulted in a greater variety of product offerings and en-hanced customer experiences, Teh says. Today,

most malls focus on providing non-retail events such as fashion shows, painting workshops, free sound and water shows etc. to attract customers.

Although today there seems to be more variety in both retail and non-retail offerings in UAE shop-ping malls, Stuart Gissing, Regional Director/Retail, Middle East at Colliers International, wouldn’t go as far as to say that the local retail market has matured to become more balanced.

“I would agree to some extent that the market is maturing but there are still many areas that need to contribute to an across-the-board mature retail market. I agree maturity is there on a value-mid to

THe CHANgINg FACE OF THE UAE RETAIL SCENEProduct offerings have diversified and shopping mall formats are becoming more dynamic. E-commerce is gaining increased popularity and retailers need to be more inventive than ever when it comes to attracting consumers. Is the UAE retail scene maturing or does the local market experience one-dimensional development? Cityscape takes a look.

RETAIL


Image : Yas Mall, Abu Dhabi

RETAIL

mid and upper level based on a franchise structure but we are clearly lacking in any base line or generic growth,” he says, communicating Colliers’ wider outlooks on the market.

“There needs to be an ’across the board’ structure to show a balanced market in terms of product offering, development and growth. Currently this market, and this is not necessarily related to the UAE only, lacks more localised representation. There are very good retail ideas, concepts and products out there such as a budding artisan community, local designers of various products from apparel, F&b, speciality product to furniture etc. that are finding it hard to be represented to a wider market,” Gissing further adds.

“This ’sole trader’ or artisan trade needs to be developed to bridge the gap of maturity in franchise products and fundamental generic product. I don’t think full maturity can be expressed correctly without this half of the retail community being represented more and allowed to flourish. The barriers to entry are still hard for artisan type traders (local as well as expatriate designers and traders) and also the developments/formats that target their growth in some way or another. There are many formats that would allow this part of the retail community to develop strong underlined growth. When we see both ends of this retail community (franchised and local representation) meeting in the middle it could be argued that we have a mature market,” Gissing explains.

According to Robin Teh, one trend ex-emplary of the diversification process of the local retail scene has been the emergence of specialty malls. Such malls distinguish themselves though a collec-tion of stores targeted to a particular interest group, such as adventure sports products for example. This concept works well for shoppers who are not willing to waste time in parking and searching for stores in the mega malls, he says. Teh expects this trend to possibly pick up in the future as competition intensifies and

mall developers come to realise the potential for super-specialty malls.However, Gissing thinks that the local market still has a substantial lack of new shopping format offerings.

“There is clearly a gap in the market to develop product that would house and en-courage new offerings into the community. These formats have not been fully explored. There has been a lot of discussion about the need for community malls or neighbourhood centres etc. but the offering that continues to be targeted remains the same, therefore not really committing to community growth from a retail perspective,” he says.

Gissing adds that developing formats which can house the artisan scene, local designers and traders of various kinds is something that has yet to be tackled on a more significant level.

RISE OF ONLINE SHOPPINGAlthough online shopping in the UAE is on the rise, it is still

fairly immature when compared to other global regions, partly due to cultural reasons. However, both Teh and Gissing are optimistic that the trend of E-commerce will further develop in the UAE over the coming years.

“It is true that online shopping is becoming normality among

There is clearly a gap in the market to develop product that would house and encourage new offerings into the community. These formats have not been fully explored.


UAE shoppers, however a lack of regulations protecting consumers in case of fraud or defec-tive goods may not allow it to reach the same popularity as in the US or in Europe for example. Unlike their western counterparts, the majority of female shoppers will still do their purchasing at the physical store as they have the luxury of time,” Teh says.

According to a survey conducted by UAE E-commerce website JadoPado in December last year, which surveyed 2,052 respondents with regards to their online shopping behaviour, 70.2% of the 1,777 respondents who had shopped online before were male. Most commonly bought items online were consumer electronics and IT (25.9%), followed by travel and event tickets (17.6%) and downloadable software and apps (14.9%). 80.7% of the total number of surveyed respondents indicated that they were planning to shop online in the next 12 months.

“Convenient shopping is now becoming more in demand. This is not to say that traditional retail will decrease, on the contrary it will continue to flourish, as the physical need to entertain is and will remain strong in shopping malls in various formats. The collective family outing for entertainment will still target well-conceived, mixed and entertain-ment led developments,” Gissing adds.

LOOkING AHEADAs the regional retail sector is becoming more

innovative and dynamic, and as competition rises, retailers need to keep up with the change in order to maintain a competitive edge in the market.

“The UAE has a varied consumer base, so retailers must ensure that they respond to varied tastes and preferences of the segment to be competitive. Customer service is also a key factor in differentiating oneself from the crowd,” Teh suggests.

“On the other hand, increased competition may force retailers to offer better discounts on branded products matching their western counterparts,” he adds.

Gissing believes that the challenges retailers will face are not necessarily changing completely.

“Finding the best location at competitive rates is always going to be a challenge, as too are the

running cost of outlets or overall portfolios. Maintaining equal growth and exposure amongst all brands in a portfolio may find further chal-lenges,” he says.

However, the ways in which retailers approach their market segments will become new chal-lenges, Gissing thinks.

“Retailers will look more closely at matching to their specific market, such as targeting a particular brand to a specific demography for example. It may also be argued that online retailing will see a rise; thus making some transition from traditional physical retail to the online space will be challeng-ing but something that can’t be ignored as an additional medium to reaching larger audiences,” he concludes.

RETAIL


Convenient shopping is now becoming more in demand. This is not to say that traditional retail will decrease, on the contrary it will continue to flourish, as the physical need to entertain is and will remain strong in shopping malls in various formats.

The UK market has long been one of the most attractive real estate investment markets in Europe, but how is investor sentiment from the Middle East currently looking? Andrew Phillips, Head of Central London Sales at Hamptons International, speaks about the UK market and its attractiveness to regional property investors.

Andrew Phillips

INDUSTRY COMMENT


PRIME CENTRAL loNDoN PROPERTY IN THE EYE OF REGIONAL INVESTORS

HOW WOULD YOU DESCRIBEYOUR ROLE?

As a Senior Architect at APG, the core function of my role includes preparing contract documents such as working drawings, bill of quantities, specifica-tions and construction schedules and ensuring compliance with building codes and regulations. Other tasks of mine include projects design review, Detailed Discipline Coordination (DDC) and Inter Discipline Coordination (IDC). My role is focused around design management and coordination with sub-consultants, contractors and suppliers. I oversee the work of the team, write reports and am responsible for the quality assurance of the client and authority deliverables. Our team works closely with leading real estate developers across the UAE.HOW DID YOU GET INTOARCHITECTURE?

In the big city of Cairo where I grew up, I was exposed to architecture everywhere. Things that I saw spurred my interest in the field and formed my knowledge about the basics and essences of the historical elements of Cairo’s different architectural styles. besides, I grew up in a house with a civil engineer (my father) and two architects (my sisters), which allowed

me to see ideas and projects ten years before I attend Architectural School.WHAT FASCINATES YOU THE MOSTABOUT ARCHITECTURE/DESIGN?

I am fascinated by the space, the geometry and the light of architecture in great proportions. I live by inspiration and concretise inspiration in space and light. Architecture together with land-scape can form a special reality, a special place, a place that is alive and inspiring.COULD YOU GIVE US A RUNDOWNOF WHAT IS A TYPICAL DAY FOR YOU?

I reach the office at 9 :00am and start work with a cup of coffee. The first half of my mornings are usually spent replying to emails, making follow up calls and reviewing my workload for rest of the day. In terms of meetings, on a typical day I would conduct those anytime between 9 and 11. After my morning meetings, I take half an hour to organise my action list and circulate important information to relevant team members. This ensures a consistent flow of information throughout the office and means any time sensitive issues can be addressed. Straight after my lunch break I set time aside for reviewing any updates of projects which are still in the construction phase and sometimes conduct site visits. by 4 :00pm it’s time for me to see if the daily goals have been

met. Finally, I would spend the last hour of my day ensuring no enquiry or urgent issue is left outstanding and create an action plan for the next day.WHAT ARE THE MAIN SKILLSYOUR ROLE REQUIRES?

My role is client facing, therefore it requires strong interpersonal skills. In architectural projects, excellent communication between client and designer begins with the attentive listening to the client’s stated needs, desires and expectations. The designer converses the functional solutions and artistic expression along with the client’s vision into a final concept. The design solution should stress the preeminence of the function, incorporate innovative artistic means and deliver high quality workman-ship to achieve client satisfaction. My role involves technical coordination and design review of projects which requires an extensive experience and knowledge of international building codes and regulations.IF YOU WEREN’T AN ARCHITECT,WHAT WOULD YOU BE?

I wanted to be a movie editor or director when I was younger at school, but after finishing high school I thought that architecture and design are more fit to my skills.

Senior Architect

APG

Abu Dhabi, UAE

A DAY IN THE LIFE OF… Ahmed Tharwat

INDUSTRY INSIGHT


moVeRs& SHAkERSEach edition we profile a selection of real estate professionals who have recently taken on new positions across the MENA region. Read on to find out what your industry colleagues have been up to…

CHRISTOPHER R.J. KNABLEIS NEW COO FOR KATARAHOSPITALITY

Qatar-based hospitality group katara Hospitality has appointment Christopher R.J. knable as its new Chief Operating Officer, who brings with him global expertise in the areas of hospitality investment, development and operations. In his new role, knable will work with the CEO to build on the growing success of katara Hospitality which aims to expand its operations significantly over the following decade.

TI’ME STRENGTHENSMARKETING TEAM

UAE-headquartered hospitality company TI’ME Hotels Management has welcomed three new senior corporate executives to the team as it continues with aggressive plans to capitalise on the forecasted 67% rise in tourism receipts between now and 2016. Heading up strategic development is Vice President Sales & Marketing, Tommy Ressopoulos; Svetozar kujic is new Marketing & Communications Manager and Chris Fourment is new Hotel Manager.

JLL APPOINTS WAHI MOHSENAS NEW HEAD OF LONDONRESIDENTIAL SALES

Earlier this year, Jones Lang LaSalle announced the launch of a new busi-ness line named ‘London Residential Sales’, within its MENA Capital Mar-kets Group, and has appointed Wahi Mohsen as new Head of London Resi-dential Sales.

With over 13 years of experience in the residential real estate sector across the UAE and Uk, Wahi has previously handled sales for prestigious projects such as World Trade Centre Residence and Palm Jumeirah’s Tiara and Oceana developments. He has an engineering degree from Uk’s kingston University and is fluent in both Arabic and English. Whilst working closely with JLL’s London team, Wahi will be based in the Dubai Office, reporting jointly to CEO Alan Robertson and Capital Markets Head, Gaurav Shivpuri in the MENA region.

MCCAULEY TO DIRECT SALESAND LEASING AT ASTECO

Asteco Property Management has appointed Sean McCauley as ‘Director - Agency’, tasked with driving the growth and development of the firm’s real estate sales and leasing divisions. His main areas of responsibility will be market pricing and project positioning, managing complex sales negotiations and directing overall sales strategy to achieve Asteco’s corporate objectives.

McCauley brings with him 15 years’ experience in property sales in South Africa and the MENA region. Prior to joining Asteco, McCauley spent 12 years in executive positions with the Rawson Property Group, one of South Africa’s largest real estate companies, managing over 1,000 estate agents in 140 offices. Most recently McCauley was VP Sales at DAMAC Properties where he was involved in numerous projects throughout the Middle East.

INDUSTRY NEWS


Agency : Both placements have been made by Macdonald and Company.

DR. TAREK COURY, CHIEF ECONOMISTTanween, Qatar

Dr. Coury holds a PhD in Financial Eco-nomics from Cornell University, and has previously served as an Economics Faculty at Cambridge University and Oxford Uni-versity (5 years).

In the Developer Challenge Presentation, he will discuss the three elements that are likely to result in higher construction costs, such as higher payroll for construction companies and developers, higher con-struction costs for raw materials as well as higher borrowing costs for the government in the coming few years.

MALEK HUSSEINI, GM, GE HEALTHCAREDiagnostic Cardiology, EAGM

Malek brings more than 22 years of industry experience to GE Healthcare. In his previous position, he spent 7 years as the Director for ECRI Institute, a col-laborating centre for the World Health Organisation in the ME.

Participating in the Healthcare Real Estate Focus Panel, Malek will discuss the challenges for healthcare sector growth, quality, sustainability, look at healthcare market trends in the GCC and Qatar as well as regulation challenges and how to facilitate future projects.

RONALD EGELMAN DIRECTOR OF DEVELOPMENTME & Africa, InterContinental Hotels Group

In the hospitality industry since 1994, Ronald has extensive experience in Hotel Operations and Hotel Finance and has worked on developments throughout the Middle East. He holds a Hospitality Management Degree from Hogeschool Zuyd Maastricht, NL.

Speaking on the Hospitality and Tourism Focus Panel, Ronald will discuss the perfor-mance of Qatar’s hotel market, growth in hotel inventory versus demand, tourism infra-structure projects that would drive demand to Qatar and shed light on hotel development opportunities in the mid-market segment.

CITYSCAPE EVENTS


CITYSCAPE QATAR 201327 – 29 May Doha Exhibition Centre

On the back of a booming domestic economy, the future of Qatar’s real estate market paints an extremely promising

picture. Working in line with Qatar National Vision 2030 to develop the real estate sec-tor and to meet the development needed in the country’s infrastructure prior to 2022 FIFA World Cup, this year’s Cityscape Qatar will provide a platform for networking and business where industry professionals can meet to discuss the future of the Qatari real estate industry and formulate strategies for growth.

With 81 exhibitors, over 5,000 visitors

and delegations from over 58 countries, the inaugural edition of Cityscape Qatar last year was already a phenomenal success. This year’s event will once again be backed by top industry experts such as Qatari Diar, Barwa and Ezdan who share our common aim to foster the growth of business oppor-tunities related to real estate. Visit Cityscape Qatar to find out about the most lucrative real estate investment opportunities the country currently has on offer.

QATAR REAL ESTATE SUMMIT 2013Taking place alongside Cityscape Qatar, the Qatar Real Estate Summit is the ultimate industry event addressing the most critical topics that affect business in the local market.

ANOTHER SUCCESSFUL EVENT FOR CITYSCAPE JEDDAH

Held from 2 - 4 March, the 6,000 square metre exhibition hosted exhibitors from

across the industry that were show-casing their latest projects, products and services to a targeted audience of 6,000 visitors.

In addition, the unique 3 sector specific conferences and investor round tables offered a powerful platform to share knowledge and build growth in one of the world’s foremost real estate markets.

BIG CROWDS AT CITYSCAPE EGYPT

Cityscape Egypt has once again deliv-ered a strong turnout of serious home buyers and investors packing the exhibi-tion halls over the course of its duration from 28 – 31 March.

Many visitors commented that they weren't aware of the showcased pro-jects before visiting Cityscape Egypt. The

exhibition provided home buyers and large scale investors alike with a platform to evaluate the various projects on showcase, connecting all of Egypt’s leading developers under one roof.

The Egypt Real Estate Summit also returned for the second year, with a dream line-up of inaugural speeches by H.E. Dr. Tarek Wafiq, Minister of Housing and Urban Communities, and H.E. Dr. Osama Kamal, Governor of Cairo, while the Pre-Summit Retail Masterclass featured speakers from experts including Al Futtaim and Majid Al Futtaim.

THE CAPITAL’S LEADING DEVELOPERS CAME TOGETHER AT CITYSCAPE ABU DHABI

Abu Dhabi’s only real estate investment and development event opened its doors again on April 16th for the seventh edition

of the most significant annual gathering of real estate professionals and investors.

The exhibition, which ran concurrently alongside ecoConstruct expo and Vision 2030 Conference Center, was a huge success with many of the key Abu Dhabi based developers and government entities exhibiting, including Abu Dhabi Chamber of Commerce and Industry, Abu Dhabi Department of Municipal Affairs, Abu Dhabi Urban Planning Council, Abu Dhabi Educa-tion Council, Aldar Properties, Sorouh Real Estate, Mubadala Real Estate & Infrastruc-ture, Al Qudra, TDIC, Reem Island, Reem

Investment, Al Maabar and many more.Also part of this year's show was the

'Vision 2030 Conference Centre,’ held in coordination with the Abu Dhabi Urban Planning Council (UPC). The unique 3-day programme featured a variety of expert speakers addressing pivotal projects and their interaction towards the realisation of Abu Dhabi Vision 2030, such as the creation of complete sustainable communities, the Abu Dhabi transport masterplan and the overall consolidation of Abu Dhabi future developments and investment opportunities.

CITYSCAPE EVENTS


Don’t miss out on this superb opportunity to position your brand in front of the region’s most attractive and influential real estate investors and developers. Book now and enjoy a special early bird rates for our September and other forthcoming editions as well as for all our online products.Call us on +971 (0) 4408 2801 or email [email protected] for more information.

IN THE NEXT EDITION

SEPTEMbER 2013OUR HIGHLY

ANTICIPATEDSEPTEMbEREDITION, landing right before Cityscape Global, will cover some of the world's most promi¬sing real estate investment markets and highlight their lucrative opportunities. As usual, there will also be our regular features on cutting-edge architecture, retail and sustainability and our insightful industry section where we give prominence to commentary and profiles of leading experts from the region.The September edition will also provide a preview to our most exciting event, Cityscape Global, to be held from 8 - 10 October 2013 at the Dubai International Convention and Exhibition Centre.

CITYSCAPE GLObAL 2013 IS JUST FIVE MONTHS AWAY…With promising conditions returning to the local real estate market and with recovery for most major global markets underway, it comes as no surprise that Cityscape Global has received exceptional interest to date and is once again growing substantially from last year’s event. be part of the region’s most influential real estate event and head to the

Dubai International Convention and Exhibition Centre from 8 – 10 October!To book your stand, enquire about spon-sorship opportunities or pre-register your visit, please contact the Cityscape team on [email protected] today.

SUSCRIbE TODAY!Suscribe to the Cityscape magazine today and receive advance copies of the MENA region’s only real estate investment and development publication hot off the press.

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The Magazine Cityscape June 2013

Real Estate

Transcript of The Magazine Cityscape June 2013