occupier insight navigating emerging markets 2013 #cre

2013

Occupier insightnavigating eMerging Marketsa corporate Occupier & investor services publication

navigating eMerging Markets

intrODuctiOnthe potential for slow economic growth is expected to hamper expansion in north america and the euro zone. as a result, multinationals are consistently turning to emerging markets in search of revenue. rapidly growing populations, an increasingly educated workforce, expanding middle-class incomes, and substantial foreign and domestic investment are all compelling arguments for corporate expansion in these markets.

in our latest Occupier insight report, we discuss the risks associated with occupancy and expansion in emerging economies. This report identifies 43 countries across Latin America, Africa, the Middle East, and Asia Pacific where global companies are contemplating expansion. in this piece, we discuss the key considerations for multinationals when assessing a market’s suitability for occupancy, identify the economic indicators that should be assessed in determining risk, and examine the current state and prospects of the property market.

We hope you find this information useful and informative. Please do not hesitate to contact Cushman & Wakefield’s Global Occupier Services leadership, or the authors of this report should you require a deeper assessment of the trends discussed in the piece.

Mark T. Wanic americas head of Occupier services

John C. Santora president and ceO corporate Occupier & investor services

Michael Creamer eMea head of Occupier services

Richard Middleton apac head of Occupier services

cushMan & WakeFieLD 1



ecOnOMic perspectiveeMerging anD Bric Markets are a FOrce in the gLOBaL ecOnOMyKen McCarthy, Chief Economist, Cushman & Wakefield

Over the past two decades emerging markets have become an increasingly important part of the global economy, first as manufacturing locations for global corporations that sought to outsource production to reduce costs, and now as markets for goods in their own right as incomes have increased and a middle class has emerged in many of these countries.

For the past 22 years, a group of 54 nations identified by Oxford Economics as Emerging Markets and including countries like the Bric economies (Brazil, russia, india, china) as well as developing economies like Bangladesh, egypt, namibia, Jamaica and vietnam to name just a few, has grown much more rapidly than the rest of the world. since 1990, gDp in these emerging markets as a group has grown at an average annual rate of 9.9% while the rest of the world has grown at less than half that pace or roughly 4.2% per year. In 1990 the GDP of China, arguably the world’s first and leading emerging market economy, was roughly $388 billion and represented approximately 1.7% of global gDp. today china has the second largest economy in the world and accounts for about 11.5% of global gDp. as a result, emerging markets now account for almost 35% of global gDp and are a potent factor in the global economy that can no longer be ignored.

trade with these nations has also grown rapidly. their impact on the global economy can be seen in the growing share of global trade in goods that these countries represent. according to the iMF, exports from emerging and developing nations have grown at a compound annual rate of 15.5% since 2003, more than twice the rate of the rest of the world. as a result, today these nations account for approximately 44.5% of total world exports. in 2003 these nations accounted for only 26.7% of world exports. this increasing share of global trade means these nations are becoming more and more integrated into the global economy.

Over the next several years, as the global economy becomes ever more integrated, corporations will need to be in more locations than ever. any business that ignores emerging markets will be missing out on the fastest growing part of the global economy.

26.7% 28.4%

31.1%

33.0% 33.9%

36.6% 35.3%

37.4% 39.1%

40.7%

20%

25%

30%

35%

40%

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Sources: World Trade Organization, International Monetary Fund

eMerging anD DeveLOping natiOns’ expOrts as a percent OF WOrLD expOrts



assessing the risks OF cOrpOrate expansiOnGiven the juxtaposition of significant GDP growth and the high levels of instability and risk in many foreign markets, corporations must weigh a variety of risks to determine the suitability of each market. Below are some of the key issues that any real estate department must consider when analyzing location opportunities.

iMpact On tOtaL Occupancy cOsts given the limited supply of already built property, as well as the lack of infrastructure in many remote markets to support new construction, rental rates for multinationals will be high relative to their total portfolio. some of the world’s highest rents can be found in são paulo, rio de Janeiro, Luanda, and abuja, where prime rental rates can top long-established and mature markets such as new york, London, paris and tokyo. For real estate departments trying to control expenses across their portfolios, the impact of the occupancy cost in these markets to their broader portfolio should be examined.

quaLity OF OWnershipIn many of these markets, it can be challenging to find property owners with the professional experience, knowledge, and financial capital to serve the modern corporation. While REITs, private equity investors, and other institutional owners have been investing in many of these markets for some time, the percent of stock these organizations own and operate remains small in relation to the broader inventory. In the more established growth markets, finding professional ownership is less of a challenge. in many countries, ownership is held by families or individuals and can be multi generational, making it challenging to negotiate leases and building improvements.

transparency OF prOperty rights anD LanD usein some countries, corporations are not legally allowed to own real estate. in others, owners have the right to negotiate rental rates annually over the course of a lease term. knowing up-front the legal framework for how the corporation is allowed to acquire and operate real estate is essential.

investMent in inFrastructure assessing the state of the broader infrastructure is critical. in established markets the quality of the infrastructure can be excellent, and in some cases even better than domestic markets. in others, there can be issues with such basic things as roads, schools, hospitals, and the banking system. corporations need to know if there is adequate law enforcement, government spending and legal protection and they should ask such basic questions as how will employees live and travel to and from work? the state of the infrastructure determines how easy it will be to conduct daily business operations.

heaLth & saFety OF eMpLOyees From basic issues such as securing clean water and efficient energy, to complying with western and/or corporate standards for materials, fire, safety, and security, multinationals can be challenged to find facilities that provide acceptable work environments for their employees. Many corporations have additional requirements related to social responsibility and sustainability, further increasing costs and limiting the amount of available stock.

LeveL OF cOrruptiOn Corruption makes it hard for corporations to operate and for economies to fully develop. It stifles trade, investment, and economic development. From bribery, to taxation and the threat of government overthrow, corruption can be a significant issue in some markets. The more mature markets, such as China, India, and Saudi Arabia have made significant progress in reducing their levels of corruption. in other markets, such as sudan, Myanmar, Zimbabwe, Mexico, and venezuela, corruption makes it extremely difficult to operate a business with any level of assurance.

in many emerging markets, it can be challenging to find property owners with the experience, knowledge and capital to construct office buildings that meet the needs of today’s corporations.

cOuntry OvervieWs



as corporations explore new markets, an understanding of risk must weigh into their expansion strategies. We have identified a number of issues – from the level of corruption, to the quality of infrastructure, transparency of property rights, and class of ownership – that should be considered. as real estate departments support corporate expansion priorities, they face a daunting task in helping make sense of these risks and opportunities.

in the following sections of this report, we provide an overview of the key economic indicators, risk rankings and property markets for the 43 countries noted below. The global map below is interactive. By clicking on a specific region, you will be led to an overview of the key trends for that region, followed by a region map. On the map, click on each country to receive a detailed description of the criteria best used to determine the suitability of that country for corporate expansion.

centraL & sOuth aMerica (7)

argentinaBrazilchilecolombiaMexicoperuvenezuela

aFrica & MiDDLe east (25)

algeriaangolaBotswanacote D’ivoireDemocratic republic of congoegyptghanakenya

asia paciFic (11)

chinaindiaindonesiaphilippinesthailandvietnamBangladeshcambodiaMongoliaMyanmarsri Lanka

LibyaMorocconigeriasenegalsouth africa tanzaniatunisiaugandaZambia

ZimbabweBahrainJordanLebanonOmanqatarsaudi arabiauae

interactive gLOBaL Map With highLighteD regiOns



quantifying risk and opportunity across Latin america (LataM) depends on the country and market of interest. cities such as rio de Janeiro, Buenos aires, and são paulo have made significant progress over the last decade in improving the quality of their infrastructure, which in turn has attracted significant foreign capital to the real estate sector and put them on the list of top markets for office demand. Parts of these cities remain underserved by utilities and the quality of commercial construction can vary from building to building, even within the same submarket. Outside these markets, the political, infrastructure, and economic risks for corporate occupancy vary dramatically.

Below is a ranking of the key LataM countries covered in this report according to their gDp growth from 2011 to 2012.

ECONOMIC GROWTH – LATAMcountry ranking per yOy change in real gDp

nO. cOuntry % change in gDp1. peru 6.3

2. veneZueLa 5.6

3. chiLe 5.5

4. cOLOMBia 4.0

5. MexicO 3.9

6. argentina 1.9

7. BraZiL 0.9

source: Oxford economics, 2012

prOperty Market trenDsWhile Brazil continues to be one of the most sought-after countries in LataM, the nation’s recent economic slowdown and political turmoil is expected to negatively impact demand in the commercial office market. New office inventory delivered across Brazil’s major cities in 2013 will exceed 2011 and 2012 levels combined. the major markets of rio de Janeiro and são paulo have already seen a pullback in corporate leasing activity and the market is expected to struggle over the next few years to fill the new inventory scheduled to come on-line, which at this point stands at only 30% pre-leased. that being said, these markets are not expected to cede ground as the leaders in LataM.

Peru is experiencing a significant increase in occupier interest. The country ranks as one of the most business friendly global markets. according to the World Bank’s ease of Doing Business ranking (eODB), peru ranks 43 out of 185 and is near the top of c&W’s list in this report (Thailand has the highest EODB ranking with 18/185). The long-term prospects for Peru are positive and the country is expected to achieve gDp growth of 6.5% in 2013, on top of the 6.3% it generated in 2012. although small, colombia’s recent strong economic performance has driven occupiers to this market over the last 12 months and c&W puts colombia second to peru in its growth prospects for occupiers in LataM.

Overview continued on the following page…

Latin aMerica

the issue most affecting markets in Latin america over the next five years will be the completion of the $5.2 billion panama canal project.

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navigating

eMerging Markets


in contrast, venezuela is one of the most challenging markets globally to conduct business. the World Bank gives it an eODB ranking of 180 out of 185. Despite its vast oil reserves and the recent death of hugo chavez, venezuela is expected to remain challenging for corporate location. the country recently de-valued its currency, which has eroded middle-class income and further decreased the purchasing power of consumers.

Below is a ranking of the key LataM cities in this report according to rental rates.

priMe OFFice rent

nO. city cOuntry priMe rentaL rate trenD1. riO De JanierO Brazil 65 stable

2. sÃO pauLO Brazil 61 stable

3. caracas venezuela 46 stable

4. BOgOtÁ colombia 34 stable

5. BuenOs aires argentina 29 stable

6. MexicO city Mexico 30 stable

7. santiagO chile 26 stable

8. LiMa peru 19 accelerating

9. quitO ecuador 15 accelerating

Source: Cushman & Wakefield, Rent quoted as asking rent USD/sq. m/month

Perhaps the issue that will most affect LATAM in the next five years will be the expansion of the panama canal. While central american markets did not make c&W’s list this year, due to only marginal interest from corporations for office space, the Panama Canal project will likely change this. the $5.2 billion infrastructure project is scheduled to be completed by 2015 and will allow ships that hold up to 13,000 twenty-foot containers to pass more quickly from east to west and strengthen the already growing trade relationship between LataM and china. corporations should take this project and its potential affect on the region into account when assessing location opportunities in LataM.

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The past five to ten years have seen the emerging markets of Africa and the Middle East (AME) come to the fore in terms of future development and interest. While many of these markets have already seen a wave of multinational corporations establish a presence in recent years, the progression of infrastructure and transparency improvements have further opened up these countries to receiving new business.

Occupancy risks within parts of aMe are arguably higher than in any other part of the world. a number of countries suffer from high levels of corruption, poor security, inadequate infrastructure and a lack of transparency. While these issues pose important and restrictive barriers to entry, how AME develops over the next five years will be a critical factor in shaping global economic growth. as can be seen from the chart below, a majority of these nations are growing economically, despite their risks. the key for multinationals will be how to harness the opportunities that exist in the region, while simultaneously protecting the business from downside risk.

Below is a ranking of the key aMe countries covered in this report according to their gDp growth from 2011 to 2012.

ECONOMIC GROWTH – AME

nO. cOuntry% change

in gDp nO. cOuntry% change

in gDp1. cOte D’ivOire 8.1 13. ZiMBaBWe 4.5

2. angOLa 8.0 14. kenya 4.3

3. ZaMBia 7.3 15. tunisia 4.1

4. DeM rep OF cOngO 7.2 16. senegaL 3.4

5. ghana 7.1 17. Bahrain 3.4

6. sauDi araBia 6.8 18. uniteD araB eMirates 3.3

7 tanZania 6.6 19. MOrOccO 2.7

8. nigeria 6.5 20. JOrDan 2.7

9. BOtsWana 6.1 21. aLgeria 2.5

10 qatar 6.0 22. sOuth aFrica 2.5

11. OMan 5.5 23. egypt 2.2

12. uganDa 4.5 24. LeBanOn 1.0



the risks of locating in markets across africa and the Middle east are greater than in any other part of the world. however, the potential business opportunities are equally as great.

aFrica & the MiDDLe east

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eMerging Markets


prOperty Market trenDsThere is a discernible difference between the office locations of Africa and the Middle East, with most of the countries in the Middle east and south africa having relatively transparent markets. the majority of african nations are rapidly developing and markets may consist of only a handful of buildings in some instances, others can suffer from a lack of adequate supply and a lack of responsive ownership.

corporate occupiers are drawn to africa and the Middle east for a variety of reasons, including mineral wealth, oil, or an expanding middle class. the characteristics of these markets results in situations where Luanda, the capital of angola, is the most expensive location within the region. The combination of significant demand from the extractive sector, and a lack of suitable quality space has resulted in rents in angola being some of the highest in the world. Furthermore, markets in nigeria have continued to expand due to notable domestic demand from a variety of sectors to becoming the more expensive office locations in the region.

Below is a ranking of the top ten aMe cities in this report according to rental rates.

priMe OFFice rent

nO. city cOuntry priMe rentaL rate trenD1. LuanDa angola 120 Stable/Declining2. LagOs nigeria 85 stable3. aBuJa nigeria 65 stable4. DOha qatar 60 stable5. DuBai uae 45 Stable/Accelerating6. aLgiers algeria 45 stable7. kinshasa Democratic republic of congo 45 stable8. aBu DhaBi uae 41 stable9. cairO egypt 40 Stable/Declining10. accra ghana 40 stable


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The Asia Pacific (APAC) economy in 2012 exhibited a divergence in growth rates, revealing a split between the developed and developing economies in the region. While the externally oriented, more developed economies of the asian tigers and Japan bore the brunt of the pullback in external demand, apac’s emerging nations were able to call on domestic drivers to buffer economic growth.

While these countries remain susceptible to the global ebb and flow of hot capital, there is little doubt that the diverse apac region, with countries in various stages of development, holds much of the potential that could drive global economic growth into the next decade. some of these countries, having only begun emerging from the clutches of crippling political and social instability in this decade, were only able to kickstart their economic reform recently; others, having embarked on such programs earlier, are refining economic policies for further development.

Almost all countries will present challenges – including security and political risks, corruption, and archaic land use systems – that are endemic in developing economies. Yet, all offer favorable demographics, rapid urbanization, and growing incomes that are fuelling the need for investments in infrastructure – and where demand for corporate real estate is escalating.

Below is a ranking of the key apac countries covered in this report according to their gDp growth from 2011 to 2012.

ecOnOMic grOWth- apac

nO. cOuntry % change in gDp1. MOngOLia 12.3

2. china 7.8

3. the phiLippines 6.6

4. thaiLanD 6.4

5. sri Lanka 6.4

6. BangLaDesh 6.3

7. caMBODia 6.2

8 inDOnesia 6.2

9. MyanMar 5.9

10. inDia 5.0

11. vietnaM 5.0

source: Oxford economics, gDp 2012


While the more developed apac nations bore the brunt of the pull back in global demand, apac’s emerging countries were able to call on domestic strengths to support growth.

asia paciFic

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prOperty Market trenDsthe principal markets in apac have seen a slowdown in occupier demand over the last year. While Beijing remains the primary office market in the region (and has been considered a leading global market for over a decade), secondary markets in china such as chengdu, nanjing, and others are seeing increased occupier demand. these markets now offer competitive economies and improved infrastructures. in china, many transnational corporations have relocated their back-up functions, regional offices or even headquarters to second-tier cities. Manufacturers such as Honeywell, Daimler, and General Motors have established their offices in Chengdu, tianjin, Wuhan, etc. and it service corporations like iBM, intel, and Microsoft have different functions set up in nanjing and Dalian.

Outside china, the markets garnering the most occupier attention include the philippines, where demand from the Business process Outsourcing (BpO) industry in Manila has been a significant driver and Yangon and Jakarta, which have seen rental rates climb to 82USD and 36USD per/sq. m/month.

Below is a ranking of the key apac cities in this report according to rental rates.

priMe OFFice rent

nO. city cOuntry priMe rentaL rate trenD1. yangOn Myanmar 82 accelerating

2. uLaan Baatar Mongolia 70 accelerating

3. hO chi Minh city vietnam 49 Declining

4. hanOi vietnam 38 Declining

5. Jakarta indonesia 36 accelerating

6. nanJing china 32 accelerating

7. chengDu china 25 accelerating

8. Dhaka Bangladesh 24 accelerating

9. ManiLa (Makati) the philippines 23 accelerating

10. BangkOk thailand 21 accelerating

11. cOLOMBO sri Lanka 20 accelerating

12. phnOM penh cambodia 19 accelerating

13. ManiLa (FOrt BOniFaciO) the philippines 16 accelerating

14. chanDigarh india 9 slowing

15. kOchi india 7 slowing

Source: Cushman & Wakefield, Rent quoted as asking rent USD/sq. meter/month

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regiOnaL OvervieWsthe following are overviews of the key trends for each region identified in this report. There is a map at the end of each region overview—click on each country to receive a detailed description of the criteria best used to determine the suitability of that country for corporate expansion.

Africa & Middle East

Global

Latin America

Asia Pacific



quantifying risk and opportunity across Latin america (LataM) depends on the country and market of interest. cities such as rio de Janeiro, Buenos aires, and são paulo have made significant progress over the last decade in improving the quality of their infrastructure, which in turn has attracted significant foreign capital to the real estate sector and put them on the list of top markets for office demand. Parts of these cities remain underserved by utilities and the quality of commercial construction can vary from building to building, even within the same submarket. Outside these markets, the political, infrastructure, and economic risks for corporate occupancy vary dramatically.

Below is a ranking of the key LataM countries covered in this report according to their gDp growth from 2011 to 2012.

ECONOMIC GROWTH – LATAMcountry ranking per yOy change in real gDp

nO. cOuntry % change in gDp1. peru 6.3

2. veneZueLa 5.6

3. chiLe 5.5

4. cOLOMBia 4.0

5. MexicO 3.9

6. argentina 1.9

7. BraZiL 0.9


prOperty Market trenDsWhile Brazil continues to be one of the most sought-after countries in LataM, the nation’s recent economic slowdown and political turmoil is expected to negatively impact demand in the commercial office market. New office inventory delivered across Brazil’s major cities in 2013 will exceed 2011 and 2012 levels combined. the major markets of rio de Janeiro and são paulo have already seen a pullback in corporate leasing activity and the market is expected to struggle over the next few years to fill the new inventory scheduled to come on-line, which at this point stands at only 30% pre-leased. that being said, these markets are not expected to cede ground as the leaders in LataM.

Peru is experiencing a significant increase in occupier interest. The country ranks as one of the most business friendly global markets. according to the World Bank’s ease of Doing Business ranking (eODB), peru ranks 43 out of 185 and is near the top of c&W’s list in this report (Thailand has the highest EODB ranking with 18/185). The long-term prospects for Peru are positive and the country is expected to achieve gDp growth of 6.5% in 2013, on top of the 6.3% it generated in 2012. although small, colombia’s recent strong economic performance has driven occupiers to this market over the last 12 months and c&W puts colombia second to peru in its growth prospects for occupiers in LataM.


Latin aMerica

the issue most affecting markets in Latin america over the next five years will be the completion of the $5.2 billion panama canal project.

GLOBAL MAP

REGION MAP

navigating

eMerging Markets


in contrast, venezuela is one of the most challenging markets globally to conduct business. the World Bank gives it an eODB ranking of 180 out of 185. Despite its vast oil reserves and the recent death of hugo chavez, venezuela is expected to remain challenging for corporate location. the country recently de-valued its currency, which has eroded middle-class income and further decreased the purchasing power of consumers.

Below is a ranking of the key LataM cities in this report according to rental rates.

priMe OFFice rent

nO. city cOuntry priMe rentaL rate trenD1. riO De JanierO Brazil 65 stable

2. sÃO pauLO Brazil 61 stable

3. caracas venezuela 46 stable

4. BOgOtÁ colombia 34 stable

5. BuenOs aires argentina 29 stable

6. MexicO city Mexico 30 stable

7. santiagO chile 26 stable

8. LiMa peru 19 accelerating

9. quitO ecuador 15 accelerating


Perhaps the issue that will most affect LATAM in the next five years will be the expansion of the panama canal. While central american markets did not make c&W’s list this year, due to only marginal interest from corporations for office space, the Panama Canal project will likely change this. the $5.2 billion infrastructure project is scheduled to be completed by 2015 and will allow ships that hold up to 13,000 twenty-foot containers to pass more quickly from east to west and strengthen the already growing trade relationship between LataM and china. corporations should take this project and its potential affect on the region into account when assessing location opportunities in LataM.

GLOBAL MAP

REGION MAP



Click on each country for specific detail on its suitability, including an overview of its economic indicators, risk profile, and commercial property market.

Latin aMerica

MexicO

veneZueLa

cOLOMBia

peruBraZiL

chiLe

argentina

Asia Pacific


Global


Latin aMericaLatin aMerica

c&W ranked the economic indicators and risk factors in each region to showcase how each country ranks within its respective region. the rankings are as follows:

tOp quartiLe secOnD quartiLe thirD quartiLe BOttOM quartiLe

suitaBiLity OvervieWArgentina is the second largest country in Latin America by size. It benefits from rich natural resources, a highly literate population, an export-oriented agricultural sector, and a diversified industrial base. During 2012, economic growth in Argentina was just under 2%. prospects for the region economically in 2013 appear brighter due to the high price of grain and the continued strong growth prospects for Brazil. the argentine government has pursued a strict policy with regards to the exchange rate of its currency, even going so far as to ask for stated use of the dollars that are purchased. Occupiers will find it challenging to conduct business in Argentina and four of the above five risk rankings for the country are in the bottom two quartiles within LATAM. While the country is receiving more than its fair share of foreign investment, its extreme southern location and relatively small population may make other countries more demographically compelling for occupier investment.

OFFice Market OvervieWActivity across the Argentine office market has been relatively consistent over the last several quarters. Buenos Aires, although considered a global city, is not prone to the cycle swings of other more dynamic markets. Asking rental rates and office vacancy have hovered around $30 USD/sqm/m and 10% since 2010. Many multinationals have reduced their footprint in the region and office vacancy is expected to rise slightly in the coming quarters.

economic indicators population, thousands 41,164gDp, us$ millions 475,066gDp per capita, us$ 11,540cpi 10Population Growth % y/y 0.9FDi, us$ millions 7,006GDP real % y/y 1.9Prime Office Rent Q1 2013 (USD/sq. meter/month) BuenOs aires 29

key industries

Food & agriculture, consumer durables, textiles, chemicals, printing,

steel, auto manufacturing

Source: Cushman & Wakefield, Oxford Economics (2012), Rental rate as of Q1 2013

risk rankings ease of Doing Business Overall ranking (Out of 185) 124

Dealing with construction permits (Out of 185) 171

registering property (Out of 185) 135

corruption perceptions ranking (Out of 174) 102

political stability and absence of violence (100 = Most stable) 53.77

source: World Bank & transparency international (2012)

argentina

BOttOM quartiLethirD quartiLetOp quartiLe


secOnD quartiLe

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economic indicators population, thousands 198,599gDp, us$ millions 2,255,038gDp per capita, us$ 11,355cpi 5.4Population Growth % y/y 0.9FDi, us$ millions 68.1GDP real % y/y 0.9Prime Office Rent Q1 2013 (USD/sq. meter/month) riO De JaneirO sÃO pauLO

65 61

key industries power, mining, industrial production, banking, consumer goods, oil & gas








suitaBiLity OvervieWalthough still considered an emerging market, Brazil boasts one of the world’s leading economies by nominal gDp and is the largest by far in Latin america. according to the World economic Forum, Brazil was the top country in upward evolution of competitiveness in 2009, overcoming Russia for the first time and closing the competitiveness gap with India and China. Together with Mexico, Brazil has been the leader in Latin america in terms of multinational presence. While the country has long attracted the attention of international banks, Brazil now possesses the second largest industrial sector in the americas, is making inroads in pharmaceuticals and life sciences, and has a strong housing sector. Home grown companies are also doing well. Petrobas, an oil & gas refiner, is ranked number four in the world on the Forbes global 4000, with 2011 total revenue of $138.0 billion.

Despite the improvements to its infrastructure and the significant capital that continues to pour into the country, many parts of Brazil are still underdeveloped. even in the major centers of rio de Janeiro and são paulo, neighborhoods can vary widely from one street to the next.

OFFice Market OvervieWthe sheer volume of new construction activity across Brazil far exceeds the new construction levels being posted by any other market in Latin America. Brazil closed the first quarter with the delivery of new inventory totalling 219,000 sq. meter, up almost 30% over the same period in 2012. For the balance of the year, inventory delivered in the major cities of são paulo, rio de Janeiro, curitiba, Brasilia, salvador, porto alegre, recife and vitoria will exceed 1.3 million sq. meter, an increase of 62% over 2012 levels. Occupier demand is expected to keep pace with the level of new construction, as there continues to be strong interest from multinationals seeking to locate in Brazil and there is a shortage of modern and corporate compatible inventory.

rental rates across class a markets in Brazil are up year over year. however, the rate of increase does appear to be slowing, as quarter-over-quarter prime cBD rent is up only 0.3%. that being said, a slowdown in leasing or lower costs for occupiers are not in anyone’s forecast for the near future. São Paulo boasts one of the highest rents in the global market, with prime office space leasing for close to 61USD per/sq. meter/month. Brazil is home to a significant number of high-growth oriented companies and according to iBge, these companies are employing close to 20,000 more people each year.

BraZiLc&W ranked the economic indicators and risk factors in each region to showcase how each country ranks within its respective region. the rankings are as follows:


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suitaBiLity OvervieWchile is one of the most stable marketd in LataM, and one of the most effectively managed countries in the americas. chile has the highest per capita gDp of any country in LataM and presents one of the lowest risk opportunities for corporate expansion. chilean consumers continue to be optimistic abut the country’s prospects, despite what might be going on in other parts of LataM. the country is expected to see strong private consumption growth and robust gains in consumer and retail sales in 2013. the country’s unemployment rate at the beginning of 2012 was 6.1%, the lowest it has been since December 2006. the most critical factor weighing on economic growth for chile will be the extent of the slowdown in china and its effect on chilean exports. should chinese growth in 2013 be stronger than anticipated, the Chilean exports economy will perform more strongly. Chile has one of the lowest inflations rates in LataM boosted by the current favorable exchange rates with the peso.

OFFice Market OvervieWThe Santiago office market is one of the smallest in LATAM. While extremely stable, the market witnesses only a handful of transactions in a given quarter. Rentals rates have remained flat over the last 12-24 months and the ownership in the market is held by REITS and pension funds, looking for stable and uneven annual returns. Despite the country’s impressive financial performance, santiago has not seen widespread occupier interest. Demographically, chile is one of the slowest growing countries in LataM and multinationals seeking to capitalize on strong and increasing consumer demand are currently looking to other markets for expansion opportunities.



economic indicators population, thousands 17,443gDp, us$ millions 268,298gDp per capita, us$ 15,381cpi 3.0Population Growth % y/y 0.9FDi, us$ millions 9,233GDP real % y/y 5.5Prime Office Rent Q1 2013 (USD/sq. meter/month) santiagO 26

key industries Mining & materials, wood,

wine, fish, textiles








chiLe

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suitaBiLity OvervieWcolombia recorded gDp growth of 4.0% in 2012, boosted by its growing service sector base. Forecasts for 2013 indicate that growth could reach as high as 4.8-5.0%. Much like peru, the government of colombia has taken measures to control spending, boost private consumption, and encourage competition. although reductions in government spending have been unpopular with some industries, the economic result has been largely positive. Corporations will find the business climate friendly in Colombia, particularly for US-based corporations, and the barriers to entry lower than Brazil. in February, thousands of workers in the coffee industry went on strike in Bogota, citing the need for further government subsidy and support in the wake of falling global commodity prices. While lower commodity prices have devalued to colombian peso, this is expected to lead to an uptick in exports and boost the country’s competitiveness.

OFFice Market OvervieWrental rates in Bogota are up 2.0% year-over-year, despite a near 50% increase in the overall supply to the market. Over the last two years, net new absorption has outpaced new supply to the market; however, this trend does appear to be ending. While the colombian economy will continue to perform well, rental rates are are expected to stabilize as occupiers have reached a critical juncture where they are weighing the price of occupancy and the necessity of being in the market. given the slowdown and political unrest in Brazil, and the lack of alternative space, it is expected that occupiers will continue to show strong interest in colombia.

economic indicators population, thousands 47,524gDp, us$ millions 369,798gDp per capita, us$ 7,781cpi 3.2Population Growth % y/y 1.3FDi, us$ millions 5,655GDP real % y/y 4.0Prime Office Rent Q1 2013 (USD/sq. meter/month) BOgOta 34

key industries coffee, coal, petroleum, agriculture










cOLOMBia

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suitaBiLity OvervieWMexico benefits from being the closest emerging economy to the United States and it has made great strides over the last five years to become a more open and transparent country. indeed, the World Bank gives Mexico an eODB ranking of 48 out of 185, placing it in the top quartile for the americas region. the election of president enrique pena nieto has given hope to a potential decreases in crime and corruption, as well as a more disciplined government with respect to trade and finance. Drug trafficking is a significant barrier to economic growth in Mexico. according to Business Monitor international (BMi), Mexico’s continued “crime and drug problem pose the biggest obstacle to growing the economy”. Drug cartels continue to escalate violence, even in previously peaceful areas. this has bolstered the opinion that Mexico is an insecure nation. Despite this issue, a reform agenda is underway and corporations continue to show interest in tapping into the nation’s key strengths—its manufacturing expertise, natural resources, and various production capabilities. At the end of the first quarter of 2013, unemployment in Mexico stood at 5.8%, 50 basis points below the same period one year earlier. gDp growth, although moderating due to a slowdown in global manufacturing, is still expected to be above 3% by the end of the year.

OFFice Market OvervieWProperty market dynamics are improving in Mexico’s main market of Mexico City. Leasing activity in the first quarter increased almost 15% from the comparable period in 2012, with the central business district witnessing the bulk of demand. total leases signed in the first quarter of 125,787 sq. meter represent the largest first quarter leasing number posted since 2008. Active occupiers in the market include electronic and manufacturing distributor Samsung Electronics, international law firm Jones Day, India-based technology and business consulting firm Infosys, and Boston Consulting Group. Outside of Mexico City, automotive lighting and electronics manufacturer heLLa has started construction on a new 100 million usD facility in guanajuato, providing an optimistic outlook for supply manufacturing.

economic indicators population, thousands 116,304gDp, us$ millions 1,177,489gDp per capita, us$ 10,124cpi 4.1Population Growth % y/y 1.2FDi, us$ millions 971.4GDP real % y/y 3.9Prime Office Rent Q1 2013 (USD/sq. meter/month) MexicO city 19.70

key industries Oil & gas, manufacturing, production, distribution








MexicO

BOttOM quartiLethirD quartiLesecOnD quartiLetOp quartiLe

c&W ranked the economic indicators and risk factors in each region to showcase how each country ranks within its respective region. the rankings are as follows: GLOBAL

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suitaBiLity OvervieWperu has rapidly made it to the top of the list for occupiers looking to expand in south america. the country’s business friendly government has opened-up trade and supported foreign and domestic corporate expansion. the peruvian economy is expected to grow by 6.5% in 2013 on the back of the countries strengths in mining, services, construction and trade. this is up from 6.3% growth in gDp recorded in 2012. peru’s government has inceased trade with north america (i.e., the united states and canada), and the economy has benefitted from decreased exposure to the prolonged economic malaise in EMEA. Although small, the country has strengthening demographics, willingness to be transparent and recent strong economic performance has made peru and force in the LataM economy.

OFFice Market OvervieWPeru’s main office market is the country’s capital, Lima. The first quarter of 2013 saw Lima introduce new supply in its central business district. The recent unrest in Brazil has benefitted the occupier market in Peru. As companies reassess their commitment to São Paulo and Buenos Aires, they are looking to Peru’s governmentr. Asking rents in Lima hover around the $19 per sq.meter/month, up almost 3% year-over-year. rent growth is expected to continue over the next twelve months, even as the market introduces new supply. in 2012, Lima saw 109,000 sq. meter of new supply hit the market, the most in the last six years. the primary submarket is san isidro, which has seen the bulk of occupier demand and absorption.

economic indicators population, thousands 29,750gDp, us$ millions 199,533gDp per capita, us$ 6,707cpi 3.7Population Growth % y/y 1.1FDi, us$ millions 12,027GDP real % y/y 6.3Prime Office Rent Q1 2013 (USD/sq. meter/month) LiMa 19

key industries services, manufacturing, extraction








peru

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suitaBiLity OvervieWVenezuela is one of the more difficult countries to in which to conduct business in LATAM. Long ruled by President Hugo Chavez, who died in March 2013, venezuela has pursued strong government interventionist policies and it is widely believed that the new government under a president Maduro will continue to follow chavez’s social spending agenda. in February of this year the government devalued the Bolivar by adjusting the official exchange rate of the currency. Government intervention in all aspects of fiscal, monetary and business spending is only expected to increase. in late February, the government issued a 72-hour closure notice for spanish-based retailer Zara, citing the company’s increase in retail prices as the reason for closure. Occupiers will find it extremely challenging to operate in this type of environment. venezuela holds a World Bank ease of Doing business ranking of 180 out of 185, making it one of the most difficult nations globally for foreign expansion and foreign operated businesses. The country also ranks 165 out of 174 for corruption. Currently, inflation is running in the low 20% range, which significantly cramps consumer spending, making it even less compelling from an investment and occupancy perspective. all this being said, venezuela has some of the largest oil reserves in the world and offers significant opportunity for multinationals the oil, energy metals and mining.

OFFice Market OvervieWCaracas is the main office market in Venezuela and it is mostly dependant on foreign occupiers in the oil and gas industry. There is little new office construction in Caracas and the available inventory for occupiers seeking space in the market is thin. Prime rental rates can range from a low of 44-50USD per sq. meter/month/year to as high as 87USD per sq. meter/year.



economic indicators population, thousands 29,891gDp, us$ millions 381,473gDp per capita, us$ 12,759cpi 21.1Population Growth % y/y 1.5FDi, us$ millions 3,200GDP real % y/y 5.6Prime Office Rent Q1 2013 (USD/sq. meter/month) caracas 46

key industries Oil, steel, aluminium,

cement, manufacturing








veneZueLa

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The past five to ten years have seen the emerging markets of Africa and the Middle East (AME) come to the fore in terms of future development and interest. While many of these markets have already seen a wave of multinational corporations establish a presence in recent years, the progression of infrastructure and transparency improvements have further opened up these countries to receiving new business.

Occupancy risks within parts of aMe are arguably higher than in any other part of the world. a number of countries suffer from high levels of corruption, poor security, inadequate infrastructure and a lack of transparency. While these issues pose important and restrictive barriers to entry, how AME develops over the next five years will be a critical factor in shaping global economic growth. as can be seen from the chart below, a majority of these nations are growing economically, despite their risks. the key for multinationals will be how to harness the opportunities that exist in the region, while simultaneously protecting the business from downside risk.

Below is a ranking of the key aMe countries covered in this report according to their gDp growth from 2011 to 2012.

ECONOMIC GROWTH – AME

nO. cOuntry% change

in gDp nO. cOuntry% change

in gDp1. cOte D’ivOire 8.1 13. ZiMBaBWe 4.5

2. angOLa 8.0 14. kenya 4.3

3. ZaMBia 7.3 15. tunisia 4.1

4. DeM rep OF cOngO 7.2 16. senegaL 3.4

5. ghana 7.1 17. Bahrain 3.4

6. sauDi araBia 6.8 18. uniteD araB eMirates 3.3

7 tanZania 6.6 19. MOrOccO 2.7

8. nigeria 6.5 20. JOrDan 2.7

9. BOtsWana 6.1 21. aLgeria 2.5

10 qatar 6.0 22. sOuth aFrica 2.5

11. OMan 5.5 23. egypt 2.2

12. uganDa 4.5 24. LeBanOn 1.0



the risks of locating in markets across africa and the Middle east are greater than in any other part of the world. however, the potential business opportunities are equally as great.


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navigating

eMerging Markets


prOperty Market trenDsThere is a discernible difference between the office locations of Africa and the Middle East, with most of the countries in the Middle east and south africa having relatively transparent markets. the majority of african nations are rapidly developing and markets may consist of only a handful of buildings in some instances, others can suffer from a lack of adequate supply and a lack of responsive ownership.

corporate occupiers are drawn to africa and the Middle east for a variety of reasons, including mineral wealth, oil, or an expanding middle class. the characteristics of these markets results in situations where Luanda, the capital of angola, is the most expensive location within the region. The combination of significant demand from the extractive sector, and a lack of suitable quality space has resulted in rents in angola being some of the highest in the world. Furthermore, markets in nigeria have continued to expand due to notable domestic demand from a variety of sectors to becoming the more expensive office locations in the region.

Below is a ranking of the top ten aMe cities in this report according to rental rates.

priMe OFFice rent

nO. city cOuntry priMe rentaL rate trenD1. LuanDa angola 120 Stable/Declining2. LagOs nigeria 85 stable3. aBuJa nigeria 65 stable4. DOha qatar 60 stable5. DuBai uae 45 Stable/Accelerating6. aLgiers algeria 45 stable7. kinshasa Democratic republic of congo 45 stable8. aBu DhaBi uae 41 stable9. cairO egypt 40 Stable/Declining10. accra ghana 40 stable


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MOrOccO

aLgeria

tunisia

LiBya egypt

LeBanOn

sauDi araBia

OMan

JOrDan

uniteD araB eMirates

qatarBahrain

senegaL

cÔte D’ivOire

ghananigeria

Dr cOngO

kenya

uganDa

tanZania

ZaMBia

ZiMBaBWe

BOtsWana

angOLa

sOuth aFrica

Latin America

Asia Pacific

Global



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suitaBiLity OvervieWalgeria has historically maintained a strong reliance on hydrocarbon and oil exports, although the government has taken steps to diversify the economy as a way to boost foreign direct investment. additionally, a few large-scale infrastructure projects are now underway in hopes to stimulate international investment interest even further, with projects including the construction of new roads and railway improvement. algeria’s gDp growth has been positive over the past few years, with 2011 seeing a growth rate of 2.6%. this was largely driven by the construction and public sectors as well as increased internal demand. however, recently algeria has struggled to stimulate economic expansion, as the slowdown within europe as well as the protests of early 2011 have both hampered financial services and delayed any planned infrastructure development. That said, going forward, the anticipated high price of oil should help to sustain further economic growth in the medium- to long term. Furthermore, the next few years will see an intensification of political, economic and social reform in response to pressing social demand, with changes intended to both strengthen the democratic process and improve living conditions.

OFFice Market OvervieWThe primary office submarkets within Algiers are Hydra, Pins Maritime, and Bab Ezzouar, with the former reaching the southern areas of the city centre and the latter two markets located close to the main international airport. in particular, Bab ezzour’s high-quality infrastructure and building availability as well as its proximity to the airport have seen its prominence as a business centre emerge, while pins Maritime is home to the newly completed algeria Business centre. however, as a whole the market suffers from an oversupply, exacerbated by several developments with large floorplates that are in progress or near completion. Indeed, with this large amount of new construction – particularly in the Hydra and Pins Maritime submarkets – rental levels have eased under the pressure of high availability. consequently, future market demand is less likely to drive from new entrants to the market but more from consolidations from existing companies into better-quality space. Traffic congestion also remains a concern within Algiers’s city centre, which has seen prime or high-quality developments targeted in the more suburban areas of the city.

economic indicators population, thousands 36,462gDp, us$ millions 185,858gDp per capita, us$ 5,097cpi 8.9Population Growth % y/y 1.4FDi, us$ millions 2,869GDP real % y/y 2.5Prime Office Rent Q1 2013 (USD/sq. meter/year) aLgiers (asking rent) 540

key industries petroleum, natural gas, light

industries, mining, food processing










the peOpLes DeMOcratic repuBLic OF aLgeria

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suitaBiLity OvervieWangola’s economy is heavily dependent on the oil industry. as a member of Opec since 2006, this sector accounts for over half of the country’s gDp. Furthermore, angola has sustained multiple years of positive gDp growth since 2010, bolstered primarily by rising oil prices as well as strong expansion in non-oil related industries. angola’s oil production is expected to continue unabated amidst climbing oil prices, and consequently angola’s economy is expected to go from strength to strength. another important component of angola’s economy is the diamond industry: the country remains one of the largest producers of rough diamonds in the world. Much like the oil industry, diamond and other commodity production is expected to see prices continue to rise for the foreseeable future, which not only will fuel angola’s economic development but will ensure the extractive industries remain the largest constituents of the local economy. that said, like many other african nations, concerns over corruption and inadequate legislation prevent increased investment activity within angola, and these issues are expected to remain pertinent barriers to greater investment interest in the long term.

OFFice Market OvervieWAngola’s major economic centre and thus primary office market is within Luanda, with the Marginal and developing Luanda Sul submarkets serving as the prime office areas of the city. Angola is well known for its high-profile oil and diamond industries, which have bolstered an increasing number of international businesses establishing a presence within Luanda, particularly from the banking and energy sectors. recent years saw Luanda characterised by a lack of high-quality supply amidst robust demand, particularly from prominent extractive companies, which drove rents to significant levels. This made Angola not only the most expensive office market in Africa but a contender to some of the most expensive global office locations. However, this year has seen early signs of waning growth, a consequence of the substantial office and infrastructure development that followed the demand boom. It is now anticipated that rental expansion will begin to abate by the second half of 2013. In terms of supply levels, office stock in Luanda is estimated to be around 850,000 sq. meter with the majority of space concentrated in the city centre. vacancy is expected to exceed 8% as the year progresses.

economic indicators population, thousands 20,196gDp, us$ millions 119,660gDp per capita, us$ 5,928cpi 10.3Population Growth % y/y 2.8FDi, us$ millions N/AGDP real % y/y 8.0Prime Office Rent Q1 2013 (USD/sq. meter/year) LuanDa (asking rent) 1,440

key industries petroleum and oil, diamonds,

iron ore, uranium, gold, cements










the repuBLic OF angOLa

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suitaBiLity OvervieWThe perceived political unrest in Bahrain over the last few years has caused apprehension in relation to international firms from relocating to the Island. At the current time, Dhaka has benefited from this perception, as companies that are looking to establish a Middle east presence are choosing the emirates over Bahrain. the economy is based primarily around the oil & gas sector and it remains the principal constituent of gDp growth with companies such as Bapco and tatweer prominent. the well regulated banking sector continues to underline the kingdom’s commitment to ensuring Bahrain remains a business friendly location, and also supports diversification of the domestic economy. Consequently, some of the more prominent multinational occupiers are from the banking and financial services sector, such as BNP Paribas, KPMG, and Ernst & Young. An ongoing concern and a factor in the shift in demand from the Diplomatic area to the al seef District is in part due to the congestion and lack of parking in the old cBD. therefore, one of the key long term infrastructure aims will be to try to alleviate the congestion within Manama and improve the attractiveness of the old cBD.

OFFice Market OvervieWWithin the capital Manama, the last three years have seen a shift in demand away from the Diplomatic area, the historical commercial and financial district on the Island, toward the Al Seef District, which is establishing itself as the premier commercial hub. Since the beginning of 2009, the market has been characterised by an oversupply of space. During this time, demand has fallen due to the continued global financial downturn and perceived political unrest within the Kingdom of Bahrain. This has resulted in four years of successive falls in rental rates. however, it is felt that rental rates have now bottomed out although they are expected to remain stable through to the end of 2013. the outlook for 2013 remains more positive than previous years, although continued high rates of supply will mean that rental rates are unlikely to rise. The majority of demand will be from smaller firms looking for fitted out office space in high profile, easily accessible areas, with ample parking. Many of these smaller firms represent an rise in internal movement for established companies, as opposed to new firms entering the Bahraini market. Larger requirements will predominantly be coming from government entities, as was the case in previous years. Additionally, large, international firms who signed lease agreements in the landmark buildings at the height of the market, now have their leases coming to an end and they are looking to relocate to the much sought after seef District, which offers much more competitive rates.

economic indicators population, thousands 1,393gDp, us$ millions 31,761gDp per capita, us$ 22,792cpi 2.8Population Growth % y/y 2.2FDi, us$ millions 913GDP real % y/y 3.4Prime Office Rent Q1 2013 (BHD/sq. meter/month) MANAMA – FINANCIAL HARBOUR (asking rent) 8

key industries Banking, oil and gas,

aluminium smelting, shipping










the kingDOM OF Bahrain

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suitaBiLity OvervieWThe mining and agriculture industries are the main constituents of Botswana’s economy, where mining – particularly of diamonds and, to a lesser extent, copper – comprises the majority of resource-based income. On the other hand, the agricultural sector provides the greatest employment for the country. Botswana stands as one of the most economically viable markets within africa and is firmly established as a middle-income country. The country has seen steady economic expansion over the past few years, with growth rates forecast to steadily rise in 2012 and 2013. going forward, Botswana’s economy is anticipated to see further positive growth, supported by the mining sector. Further, enhanced growth may come from the potential opportunity to develop the copper and uranium extractive industries. Botswana’s inflation rate at December 2011 stood at a high 9.2%, a figure well above the target range set by the Bank of Botswana. nevertheless, the rate came down in 2012 and is expected to see further easing in 2013, largely as a result of subdued demand and thus output in the mining industry as well as reduced public expenditure.

OFFice Market OvervieWBotswana’s primary office markets are the capital Gaborone and, to a lesser extent, Francistown. In Gaborone, significant developments are underway that are anticipated, once completed, to change the face of the city’s office market. The delivery of multiple large-scale projects – such as the Fairscape Precinct – is expected to see the creation of a new CBD area in the heart of the city and significantly expand the availability of high-quality office supply to unprecedented amounts. With this wide choice of modern, centrally located office buildings, occupier demand is anticipated to come under increasing pressure. This is exacerbated further by the large amount of speculative development included in this great wealth of construction activity. as a result, rental growth in gaborone is expected to wane as more space is delivered onto market. this comes at a time when governmental and other public sector occupiers – the current drivers of occupier demand – have been forced to freeze requirements in light of austerity measures. Furthermore, this rapid increase in high-quality space could instigate a two tier market, with secondary space struggling to attract occupier interest.

economic indicators population, thousands 2,050gDp, us$ millions 17,840gDp per capita, us$ 8,702cpi 7.5Population Growth % y/y 1.1FDi, us$ millions 314GDP real % y/y 6.1Prime Office Rent Q1 2013 (USD/sq. meter/year) gaBOrOne (asking rent) 198

key industries Diamond mining, minerals,

agriculture, livestock, tourism, textiles










the repuBLic OF BOtsWana

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suitaBiLity OvervieWthe côte D’ivoire saw an end to its civil war in 2011, which left a fragile political environment following the election of a coalition government. however, stability has ever since been slowly recovering, and consequently the economy saw a slight improvement in 2012. indeed, last year saw a 8.1% rise in gDp, albeit this rate was coming from a low base in 2011. the economy remains dominated by the agricultural sector – most notably cocoa production, which continues to employ a large percentage of the workforce within côte D’ivoire. however, oil and cocoa production remain the key constituents of the economy in terms of export revenues, with oil extraction expected to rise over the next few years. that said, the number of multinational occupiers remains low, largely a result of the civil war in 2011, with the majority of businesses based in the principal commercial centre, abidjan. although political tensions are easing, many companies are awaiting prolonged stability before looking to expand or resume operations within the côte D’ivoire. The outlook for the economy will depend largely on an extended period of political stability that will increase business confidence both domestically and in terms of international investment. With agriculture accounting for the majority of activity within the labour market, it is clear that the economy needs to diversify. it is hoped that oil production may create the important stimulus to enable this change over the next few years.

OFFice Market OvervieWalthough the capital city in côte D’ivoire is yamoussoukro, the principal business and commercial centre of côte D’ivoire is the port city of abidjan. the plateau area of the city is the key location for most multinational occupiers as well as for many embassies and consulates that have remained in abidjan. however, a number of occupiers are looking for space in quieter, less congested parts of the city, which are both major concerns within the plateau submarket. as a result, the cocody and Zone 4 parts of the city have gained momentum as alternative business locations, with a number of occupiers choosing to relocate to these areas. that said, overall demand levels are low, especially from multinational occupiers – a consequence of the ongoing political uncertainty within Côte D’ivoire. indeed, as many international tenants have been deterred from operating within abidjan market: domestic companies are the most active within the market. This has had a stalling effect on the office development pipeline, which was already relatively limited before the conflict in 2011. Nevertheless, a few of the infrastructure and administrative buildings in the large scale Prevoyance scheme have reached completion, which has added a good deal of grade a space onto market.

economic indicators population, thousands 20,648gDp, us$ millions 23,151gDp per capita, us$ 1,121cpi 2.1Population Growth % y/y 2.3FDi, us$ millions 424GDP real % y/y 8.1Prime Office Rent Q1 2013 (USD/sq. meter/year) aBiDJan (asking rent) 264

key industries agriculture, food stuffs, oil

refining, wood products, textiles










the repuBLic OF cÔte D’ivOire

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suitaBiLity OvervieWthe Democratic republic of the congo (Drc) is recovering slowly from many years of social, economic and industrial upheaval. although it is a particularly rich country in terms of potential mineral wealth, it is also one of the poorest countries on the continent. DRC is also considered one of the most difficult locations in which to undertake business. Consequently, the presence of multinational occupiers is fairly low for a country of its size. however, there are a number of foreign mining companies active within the Drc, including xstrata plc and Banro resources corporation. indeed, the vast majority of export income originates from the mining industry, and despite a 7.2% rise in GDP in 2012, the economy remains highly reliant on the fluctuations of global commodity prices. these revenues from mining have helped to try and bring improvements to infrastructure quality and economic growth, but ongoing political uncertainty has delayed or postponed a number of these crucial schemes. For example, the Drc faces a major challenge in considerations such as youth employment. More than 70% of those aged 15 to 24 have no jobs, with urban areas particularly affected.

OFFice Market OvervieWThe principal office market within the DRC is the capital city and commercial centre, Kinshasa. The CBD in Kinshasa is located in the Gombe part of the city, with the key office submarket found along the Boulevard du 30 Juin. However, other parts of the city have begun to witness increasing occupier demand on the back of a limited availability of modern space and poor infrastructure quality within the traditional cBD. Furthermore, although modern and high quality space within the city is scarce, this is not an issue for demand levels, which are considerably low due to the lack of multinational occupiers active within the market. indeed, demand is primarily propelled by domestic occupiers. any demand is largely derived from the developing telecommunications, oil and mining sectors, and these industries are anticipated to continue driving tenant interest over the next year or so. although demand is weak, the lack of high quality supply has helped to sustain higher rental levels. concerning development, there are a number of new city centre projects currently under construction, including gare centrale by rakeen congo. this scheme will be a mixed-use development comprising offices and apartments in two twin towers as well as incorporating retail space and underground parking.

economic indicators population, thousands 69,655gDp, us$ millions 19,098gDp per capita, us$ 274cpi 10.9Population Growth % y/y 2.7FDi, us$ millions N/AGDP real % y/y 7.2Prime Office Rent Q1 2013 (USD/sq. meter/year) kinshasa (asking rent) 540

key industries Mining, oil refining, mineral

processing, agriculture, cement, textiles










the DeMOcratic repuBLic OF the cOngO

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suitaBiLity OvervieWegypt has suffered from ongoing political uncertainty over the past few years, and this has had a halting effect on the egyptian economy. indeed, gDp growth has eased and foreign direct investment (FDi) levels are noticeably reduced as both occupiers and investors alike remain cautious to enter the fragile egyptian market. the outlook for the economy is also negative, stemming from the election due towards the end of this year as well as the lack of conclusion reached with the iMF regarding an important loan agreement, both of which are anticipated to hamper economic growth. This loan is particularly crucial for Egypt as, when finalised, it is expected to boost the domestic economy and help to attract further assistance. Furthermore, one of the largest and most important constituents of the economy, tourism, has witnessed declining visitor numbers of the past year or so. consequently, important revenues and employment from this sector have been negatively affected. that said, there remain a number of multinational occupiers within cairo, primarily in the manufacturing sector (transport and textiles) which is still the most prominent within egypt.

OFFice Market OvervieWcairo is by far the largest city in egypt and is the key location for business generation and operations. in addition, as the capital city, virtually all government functions and administration are undertaken here. as a result of the ongoing political protests in the centre of cairo, the trend of most occupiers to look toward the more peripheral areas of the city has continued into this year. Within central Cairo, the main office markets are mostly located within Downtown Cairo, where the Nile City development provides a significant proportion of space within the submarket. however, it is locations such as new cairo, 6th October city, and pyramid heights in particular that continue to attract occupier attention. these areas can offer a higher quality of space than the majority of buildings within Downtown cairo and also enhanced security. Despite the political protests over the past few years, demand has largely held up, although rents in the peripheral areas of the city remain higher than those in the city centre. However – and also as a result of the recent unrest in the city centre – rental levels have fluctuated from 2010 onwards but have settled at around 40USD/sq. meter/month.

economic indicators population, thousands 83,944gDp, us$ millions 254,505gDp per capita, us$ 3,031cpi 7.1Population Growth % y/y 1.7FDi, us$ millions 67.3GDP real % y/y 2.2Prime Office Rent Q1 2013 (USD/sq. meter/year) cairO (asking rent) 480

key industries

textiles, agriculture, tourism, chemicals, pharmaceuticals, manufacturing,

construction, cement, metals










the araB repuBLic OF egypt

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suitaBiLity OvervieWghana is seen as a stable business-friendly location within africa, bolstered by its strong economic growth including a 7% rise in gDp in 2012. consequently, it remains an attractive location for many international occupiers. ghana is traditionally known for its cocoa production, and this industry continues to be a important constituent of the economy. however, the mining sector and an emergent oil production are driving growth at the moment, with multinational companies such as alcoa and chevron active within the market. another developing sector within ghana is telecommunications, where companies like vodafone are already present. economic growth is expected to be driven by these key sectors in the future as the government looks to keep the economy moving forward by focusing on industrial development. although agriculture accounts for a large proportion of the workforce, industries such as mining, oil production and telecommunications are anticipated to become more prominent in the future. it is hoped that this will enable the government to improve infrastructure levels across the country, which should in turn help improve per capita gDp and sustain ghana’s position as one of the more business friendly locations within africa.

OFFice Market OvervieWthe capital city of ghana, accra, serves as both the commercial and administrative centre of the country. accra possesses a well developed office market, with the CBD concentrated around the city’s main high street. However, this location suffers from a poor level of infrastructure as well as particularly severe traffic congestion. There remains a lack of modern, high quality space within the CBD, and consequently, a number of occupiers are looking at the more decentralised parts of Accra – such as close to the airport – in order to secure space. as a result, schemes such as One airport square are being developed with an estimated 30,000 sq. meter of high quality space expected to come onto market within the next 24 months. Going forward it is anticipated that further office development will take place in the more decentralised parts of the city in preference to the traditional cBD. Demand from occupiers for high quality space has increased over the past year or so, and this has resulted in sustained rises in rental levels. Both domestic and international occupiers have been active from a number of industries – not just from the more traditional cocoa and mining businesses but, most significantly, from the financial services sector and the rapidly developing telecommunications sector.

economic indicators population, thousands 25,561gDp, us$ millions 38,578gDp per capita, us$ 1,509cpi 9.2Population Growth % y/y 2.3FDi, us$ millions 3,117GDP real % y/y 7.1Prime Office Rent Q1 2013 (USD/sq. meter/year) accra (asking rent) 480

key industries

cocoa production, mining, lumber, light manufacturing, aluminium smelting,

cement, commercial ship building










the repuBLic OF ghana

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suitaBiLity OvervieWJordan is one of the smaller economies within the Middle east, where gDp has grown by just 2.7% in 2012. Output from the economy’s main constituents, including agriculture and phosphate mining, decreased over the year due to disruption from transport networks and labour disputes. Multinational occupiers are present within Jordan mostly in the financial services, pharmaceutical, and IT sectors, with companies such as Microsoft, hewlett packard, and ericsson operating domestically. however, the regional political unrest has affected economic growth, with tourism revenues noticeably reduced and oil and gas pipelines sporadically interrupted. More specifically, the civil conflict in Syria has increased the strain on both the domestic economy and infrastructure, with an estimated 500,000 refugees currently residing within Jordan. although the outlook for the economy is more positive in the years ahead, this is largely a result of an anticipated recovery in the global economy supporting a rise in exports. Jordan possesses an expanding manufacturing sector, and with some mineral wealth available (predominately phosphates), this is anticipated to be the main source of the country’s revenues. however, the risk remains that the conflict in neighbouring Syria may escalate further or may even erupt within Jordan itself, and any sustained recovery in Jordan is dependent on the subsequent easing of these regional uncertainties.

OFFice Market OvervieWSince the end of the conflict in Iraq, the office market in Jordan – principally the capital city and business hub, Amman – has witnessed a construction boom. Developers have built space with the expectation that companies will relocate from iraq and other affected locations to Amman, Jordan’s key office market. Within Amman, the principal office submarkets are located in the 5th and 6th Circles and include the Sweifieh, Chmeissani, Mecca Street and Deir Ghabar districts. A number of corporate occupiers are located in these areas as well as the more prominent financial districts of Shmeisani and Abdali. Although Amman has experienced the development boom, grade a space remains relatively scarce and the market is characterised by an oversupply of grade B space. however, the growth in the development pipeline has resulted in the increased availability of larger floor-plates (circa 1,500 sq. meter). which were previously limited in availability. Furthermore, the recent social and political upheaval within Syria has supported significant demand from relatively wealthy syrian migrants seeking residential premises. as a result, some of the abundant grade B space is being transformed into residential space in response to the soaring residential demand levels. this high amount of supply conversion may also help to somewhat alleviate the oversupply of grade B stock available in the market.

economic indicators population, thousands 6,431gDp, us$ millions 31,025gDp per capita, us$ 4,824cpi 4.7Population Growth % y/y 1.9FDi, us$ millions 1,488GDP real % y/y 2.7Prime Office Rent Q1 2013 (USD/sq. meter/year) aMMan (asking rent) 190

key industries petroleum, petrochemicals, textiles,

furniture, food processing, fertilizers









the hasheMite kingDOM OF JOrDan

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suitaBiLity OvervieWthe kenyan economy has been slowly but steadily advancing in recent years, leading to a gDp growth of over 4% in 2012. the economy is dominated by agriculture and tourism, with the agricultural sector employing the vast majority of the kenyan workforce. however, growth in the banking and telecommunications industries has expanded over the past few years and may help to diversify the economy away its dependence on the traditional industries. For example, recent multinational entrants to kenya include google and Cisco Systems, with the capital city, Nairobi, the most sought after location. Inflation and youth unemployment will remain the primary short term concerns within the economy, as food prices may rise further if agricultural output fluctuates. Because agriculture is heavily dependent on harvest yields and global commodity prices – which can often be unstable – the government is looking towards financial services and telecommunications to move the economy forwards. In the longer term, much-needed infrastructural improvements, as well as the continuing famine in the north, may prove to be major concerns for both business confidence and the improvement of living standards, particularly if resolutions are not found quickly.

OFFice Market OvervieWNairobi is both the capital city and commercial centre of Kenya. It is also one of the more mature office markets within Africa, with an established cBD and a good supply of modern space. nairobi is increasingly sought after as a destination for multinational occupiers and is growing in notability as one of sub saharan africa’s key commercial hubs. indeed, business prominence has supported a large number of multinational companies from a variety of sectors establishing a presence in nairobi, mostly as a base for their east African operations. Away from the CBD, Nairobi’s key office locations are Waiyaki Way, Riverside Drive, Mombasa Road, Upperhill, and gigiri. tenant preference is for modern high quality space in the core submarkets, particularly in the submarkets away from the CBD which continues to suffer from severe traffic congestion. Indeed, recent demand has largely been driven by local tenants relocating out of the CBD. Office supply in the decentralised submarkets of Nairobi has continued to rise over the past few years, with approximately half of it located in the Westlands part of the city. the steady development pipeline of prime space is beginning to keep pace with recent demand levels, and as a result, rents have recently stabilized. With demand levels expected to remain steady over the next year or so, rents for high quality space should remain under pressure.

economic indicators population, thousands 42,840gDp, us$ millions 42,262gDp per capita, us$ 986cpi 9.4Population Growth % y/y 2.8FDi, us$ millions 357GDP real % y/y 4.3Prime Office Rent Q1 2013 (USD/sq. meter/year) nairOBi (asking rent) 180

key industries tourism, agriculture,

forestry, fishing, financial services








the repuBLic OF kenya

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suitaBiLity OvervieWLebanon’s economy has slowed noticeably over the last year or so, with gDp growth slipping to only 1% in 2012 as export levels declined and tourist numbers were significantly reduced. Political uncertainty within Lebanon has been exacerbated by the ongoing difficulties within neighbouring Syria, and this has had a halting effect on economic activity. The majority of multinational occupiers present within Lebanon derive from the banking and financial services sectors, including companies such as HSBC and Standard chartered. Other prominent sectors include it and pharmaceuticals, where multinationals such as Metlife alico, ge, ericsson, nokia, and Sanofi Aventis are operating within Lebanon. The outlook for the economy remains uncertain, and therefore the expectation is that gDp growth will remain subdued. any improvement in the economy is dependent on any noticeable progress in terms of resolving the political uncertainty within Lebanon – notwithstanding the ongoing conflict in neighbouring Syria, which also currently is without resolution. however, any long-term recovery is expected to be driven by the dominant construction and banking sectors, as infrastructure levels need to be improved or redeveloped in order to sustain business activity growth.

OFFice Market OvervieWThe key office market within Lebanon is located in Beirut, the capital city. At the current time, the market is strong, with relatively high demand for Grade A office space and larger floorplates of a minimum of 1,000 sq. meter. The supply of this space type is most sought after by multinational occupiers and is largely limited to the Beirut central District (BcD) where safety and security measures are implemented for sustained business activity. however, the lack of modern, good quality space within both the BcD and the suburbs of Beirut combined with consistent occupier demand are together eroding grade a supply levels. pre-lets strategies are becoming paramount for developers and occupiers looking to secure high quality space at relatively competitive rental prices. as a result, multinational occupiers are starting to relocate to the suburban locations within Beirut in order to reduce rental levels and find space befitting of their interest. Furthermore, the unstable political situation within the region is increasing the cautious outlook of many occupiers, with most reluctant to commit to expansion plans or to larger capital-expenditure-based projects. consequently, a number of plans are either on hold or the tenant has opted for an annual lease until the disruption eases.

economic indicators population, thousands 4,291gDp, us$ millions 43,156gDp per capita, us$ 10,058cpi 6.6Population Growth % y/y 0.7FDi, us$ millions 3,523GDP real % y/y 1.0Prime Office Rent Q1 2013 (USD/sq. meter/year) Beirut (asking rent) 450

key industries Banking, tourism, food, agriculture,

textiles, mineral & chemical products









the reBuBLic OF LeBanOn

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suitaBiLity OvervieWthe Libyan economy remains dominated by the oil industry which currently represents 90% of the country’s total budget. although the industry experienced a decline in 2011, a swift rebound has resulted in gDp levels recovering appreciably. the quick resumption in oil production was largely due to the expertise of a number of multinational operators. the recent upturn has also seen companies such as shell, exxon, total, repsol, Bp, and Occidental establish operations within Libya. although the political landscape has dramatically changed over the past two years, public protests and political uncertainty remain significant. However, the quick recovery in oil production has enabled public finances to improve, and consequently a surplus is accumulating, prompting business confidence to recover. Furthermore, with oil production expected to return to full capacity around 2014, the government should be able to use the budget surplus in order to undertake a considerable and rapid infrastructure program, bringing much needed improvements to ageing networks. this should help to stimulate FDi levels not only from the oil sector but from those companies that can provide crucial expertise in updating and overhauling large systems and facilities.

OFFice Market OvervieWAfter the recent political upheaval within Libya, the country is gradually coming to terms with the post al-Qadhafi regime, although there still remain periodic episodes of protest and aggression. concerning Libya’s property market, most of the existing high quality office buildings are clustered to the west of the Medina and the centre of Tripoli, as well as in the more residential Gargaresh district. Demand is largely derived from the re-emergent oil sector, which largely re-entered the country following the cessation of the internal uprising. Therefore, it is primarily energy based companies that have instigated the building of Energy City – a mixed-use commercial centre specifically for energy companies – on the outskirts of Tripoli, around 70km from the city centre. Regarding office developments, the Al-Tadamom Twin Towers was completed in 2010, adding over 50,000 sq. meter of office space to the market. It is the fourth major office high-rise in Tripoli, joining the Al Fateh Tower (now called the Tripoli Tower), Corinthia and Five Towers. additionally, the recently completed Burj al Baher complex has seen impressive occupancy rates, although tower 69 is still ongoing and due for completion in the next few year or so.

economic indicators population, thousands 6,455gDp, us$ millions 70,233gDp per capita, us$ 10,879cpi 6.1Population Growth % y/y 0.8FDi, us$ millions 2,705GDP real % y/y 104Prime Office Rent Q1 2013 (USD/sq. meter/year) tripOLi (asking rent) 480

key industries Oil and gas production, metals,

food processing, textiles, cement


risk rankings ease of Doing Business Overall ranking (Out of 185) N/A

Dealing with construction permits (Out of 185) N/A

registering property (Out of 185) N/A






the state OF LiBya

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suitaBiLity OvervieWeconomic activity in Morocco has recently slowed on the back of the europe’s recession that has seen an easing in exports and tourism revenues. agriculture remains one of the principal constituents of the Moroccan economy, currently accounting for around 15% of GDP. However, the sector is also at the mercy of adverse weather conditions, such as flooding and drought, and the incidences of drought have been more common over recent years which have affected harvests significantly. Another notable industry within Morocco is manufacturing, which is traditionally closely aligned to the agricultural sector and the phosphate industry. With its proximity to Europe, a number of manufacturers are locating in Morocco – for example Renault and Nissan have opened a large joint production facility to take advantage of competitive labour costs and its closeness to the major european car market. although Morocco has largely avoided the political upheaval that was witnessed in other parts of north africa, concerns remain regarding the country’s political stability. This overall regional instability, combined with the euro zone crisis, has had a significant effect on the growing tourism industry, with receipts falling in 2012. however, the outlook for the next year or so is more positive, in line with improving euro zone sentiment and expanding agricultural output.

OFFice Market OvervieWThe main business and – therefore office – location in Morocco is Casablanca, although a notable amount of public administration functions are undertaken and located in the capital city, Rabat. In Casablanca, the principal office submarkets are in Sidi Maarouf and the downtown parts of the city. these submarkets remain the most sought after by most tenants, although some of the more peripheral locations have witnessed growing interest from the information technology (it) sector looking for more campus-style accommodation. Concerning development, the first part of the Casablanca Marina scheme is due for completion in 2013. This should help to improve the amount of higher quality space within the market, which remains generally undersupplied in terms of modern office buildings befitting of tenant preference. Overall demand levels, particularly from multinational occupiers, have largely held up despite the sporadic political protests seen across the region in 2011 and 2012. as a result, rents have steadily moved upwards in casablanca over the past 12 months.

economic indicators population, thousands 32,598gDp, us$ millions 96,713gDp per capita, us$ 2,966cpi 1.2Population Growth % y/y 1.0FDi, us$ millions 2,207GDP real % y/y 2.7Prime Office Rent Q1 2013 (MAD/sq. meter/month) casaBLanca (asking rent) 312

key industries

phosphate, mining and processing, textiles, construction,

tourism, food processing










the kingDOM OF MOrOccO

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suitaBiLity OvervieWNigeria is one of the largest producers and exporters of oil in the world, and as a result it accounts for a significant proportion of gDp. consequently, gDp growth in 2012 was a healthy 6.5% as nigeria cemented its position as the second largest economy in africa behind south africa. the government is committed to using some of the these oil revenues to improve infrastructure standards throughout the country, which in some cases severely limits both business growth and living standards. additionally, unemployment is very high: more than 60% of the population lives below the poverty line. nigeria must tackle this dilapidated infrastructure and over-dependence on oil and gas in order to ease unemployment and boost FDi. Beyond infrastructure improvements, the government has also put steps in place to promote the services sector – most notably Banking and Telecommunications – and this has been helping to both drive the economic growth and diversify the economy. as a result, there has been considerable interest from international occupiers from these sectors, in addition to oil, over the past year so. going forward, strong gDp growth is anticipated to sustain over the next year or so, supported by both the oil industry as well as the expanding services sector, which should help to keep conditions positive within nigeria.

OFFice Market OvervieWAlthough Abuja is the capital city of Nigeria, Lagos is the principal business location and, therefore, the key office market within the country. Within Lagos, the main submarket and cBD is located on Lagos island. however, as this part of the city suffers from crippling levels of traffic congestion, other parts of Greater Lagos have emerged as prominent office locations for many international companies, including victoria island, ikoyi, and Lekki. nevertheless, Lagos island has retained its interest for local occupiers as well as the large oil corporation, shell. in addition to congestion, overall infrastructure and utilities in nigeria can often be unreliable, and many buildings suffer from frequent electricity shortages. however, there are several major schemes underway that seek to ease the city’s chronic infrastructure difficulties and provide a high availability of good quality space previously unseen in Lagos. These range from the hugely ambitious 7 sq.km eko atlantic scheme taking shape off the southern shore of victoria island to the more modest twin Lakes scheme opposite the large chevron complex on the Lekki peninsula. concerning rental values, the consistent scarcity of prime space amid growing demand from the oil industry has kept rental values within Lagos extremely high, with growth sustaining over the past few years.

economic indicators population, thousands 166,970gDp, us$ millions 267,606gDp per capita, us$ 1,602cpi 12.2Population Growth % y/y 2.6FDi, us$ millions 9,413GDP real % y/y 6.5Prime Office Rent Q1 2013 (USD/sq. meter/year) LagOs (asking rent) aBuJa (asking rent)

1,020 780

key industries crude oil, agricultural products,

chemicals, construction materials










the FeDeraL repuBLic OF nigeria

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suitaBiLity OvervieWthe Omani economy has its foundations in the hydrocarbon sector with many multinational companies from within the oil and gas industry operating in Oman. however, there has been increasing emphasis from the government to diversify the economy, with a particular focus on the industrial sector including the ongoing development of industrial ports at salalah, Duqm, and sohar. Muscat remains the commercial hub for the Sultanate, with limited significant commercial activity occurring outside the capital area. The government has also undertaken a number of development schemes in order to improve domestic infrastructure, such as new roads as well as power and water facilities. Oman performs well within the africa & Middle east in terms of being seen as a business friendly location within the region. as a result of its reliance on the hydrocarbons and oil and gas industries, Oman’s gDp per capita is one of the highest within the region.

OFFice Market OvervieWMuscat’s key office locations are Shatti al Qurum and Qurum. Although showing tentative signs of stability, the office sector in Muscat office market remains fragile as supply continues to outstrip occupier demand. Until recently there was very little good quality office space available, but a number of completed schemes have added over 150,000 sq. meter of prime space to the market over the last two years. Consequently, vacancy levels have increased over the past year. Although not enough to match supply, demand for office space briefly rallied in recent months after a noticeable dip due to the unrest in the Sultanate at the start of 2011, spurred by significant growth in the economy following the impacts of the global financial crisis. Tenant preference is primarily for smaller and fully finished spaces in good quality buildings, and as a result the take-up rate for larger shell and core office space is slow in comparison. This is mostly due to the fact that there are relatively few larger companies requiring office space in excess of 500 sq. meter in Muscat at present. it is anticipated that a gradual but ongoing reduction in rental values should occur, pushed down as further new office space is introduced into the market. Much of this released supply is found in low-to-moderate grade, mixed use buildings. Incentives such as rent-free periods, stepped rents and office fit outs carried out by the landlord will become increasingly imperative in attracting and retaining tenants in an ever more competitive market.

economic indicators population, thousands 2,893gDp, us$ millions 75,657gDp per capita, us$ 26,153cpi 2.9Population Growth % y/y 2.0FDi, us$ millions 2,936GDP real % y/y 5.5Prime Office Rent Q1 2013 (OMR/sq. meter/month) MUSCAT – SHATTI (Asking Rent) MUSCAT – AZAIBA (Asking Rent)

8 7

key industries Oil & gas, banking &

financial, shipping/ports, logistics










the suLtanate OF OMan

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suitaBiLity OvervieWthe economy of qatar is dominated by the oil and hydrocarbon industries, which account for over 60% of gDp, and as a result, the country possesses a comparatively high standard of living. With significant reserves of natural gas, a large number of companies present within qatar are related to these key extractive industries, including Bp and shell. however, as the qatari government endeavours to slowly diversify the economy, an increasing number of non-oil international companies based elsewhere in the region are also looking to open offices in the capital, Doha. These include international law firms, shipping companies, and pharmaceutical businesses, such as clifford chance, axa and Maersk. Furthermore, the upcoming World cup in 2022 will provide an excellent opportunity to present Qatar to a global audience. In preparation for this, the country has seen an influx of construction and infrastructure support companies establishing businesses within Doha. it is anticipated that these companies will complement the existing improvements that are already underway to improve the scale and quality of infrastructure throughout the country.

OFFice Market OvervieWThe office market in Qatar is generally confined to the capital city, Doha, which over the last few years has both seen the scale of development expand and, consequently, also seen the amount of available office space increase dramatically. The quantity of leasable office space in the principal West Bay CBD submarket alone has risen by over 100% since 2009 to an estimated 1.4 million sq. meter. new core buildings that are due to arrive onto the market in 2013 include Doha tower and the World trade tower. although the government is still a major occupier in the cBD area accounting for up to 30% of currently occupied space, the number of multinational tenants has risen notably over the past few years. The dominant oil and hydrocarbons sectors – in addition to construction and infrastructure support companies in preparation for the 2022 World Cup – are increasingly prevalent within the market. Notwithstanding the number of new entrants entering Doha’s office market, the city remains characterised by an oversupply. as a result, rents have come under a downwards pressure, with some rates falling by up to 30% since the beginning of 2010. Looking ahead, it is anticipated that this ongoing growth of space coming on to the market will continue erode prime rental values. that said, prime space – particularly of smaller floor-plates – is still sought after by a number of tenants. This should help to keep rents for this supply quality largely afloat.

economic indicators population, thousands 1,868gDp, us$ millions 206,870gDp per capita, us$ 110,708cpi 1.9Population Growth % y/y 3.0FDi, us$ millions 4,948GDP real % y/y 6.0Prime Office Rent Q1 2013 (QAR/sq. meter/month) DOha (asking rent) 220

key industries Crude oil production/

refinement, financial services










the state OF qatar

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suitaBiLity OvervieWgenerally the economic outlook for saudi arabia is a positive one, with gDp and gDp per capita levels some of the highest within the region. the main source of gDp continues to be from the oil sector, however the government is actively seeking to diversify the economy away from natural resources. therefore, with the key industry still petrochemicals virtually all of the major global oil companies have a representation in kingdom. the manufacturing sector, particularly food, is also a growth industry as the kingdom looks to meet the demands of its growing population. Walls, kraft, and 3M are also represented, as are most major international brands whether in their own right or through a joint venture or franchise arrangement with a local saudi partner. the government is investing some of the oil revenues heavily in major infrastructure projects, including road, rail and a refurbishment, and upgrade of the main airports. Finally, the adjustment of the weekend to Friday/Saturday, which has been approved by the government, is anticipated to result in a major shift in the work patterns and general outlook of the population.

OFFice Market OvervieWThe main business centre and capital city within the Kingdom is Riyadh, and the main commercial office submarket is located along and between king Fahd road and Olaya street, between the northern ring road and cairo square. the city is however migrating slowly northwards and it is envisioned that with the release of the king abdullah Financial District the city will become focused towards the centre of the junction of king Fahd road and the northern ring road. the current trend across the main submarkets of riyadh and the second city Jeddah, is a general over supply, which will only be further exacerbated when a number of government backed schemes are released to the market over the next year or so. therefore, both of the key centres within saudi arabia are expected to be characterised by an oversupply of space over the next few years. Within Jeddah, the development is linear and generally follows the coast line although office development is however sporadic. However, development within Jeddah is largely focussed on kings road, thalia street, and palestine street parts of the city. Furthermore, the long awaited mortgage law which was finally passed in 2012 which should improve the Kingdoms overall real estate and financing market by introducing a system for the provision of mortgages and other financial arrangements by financial companies.

economic indicators population, thousands 28,684gDp, us$ millions 727,306gDp per capita, us$ 25,356cpi 4.5Population Growth % y/y 2.2FDi, us$ millions 12,395GDP real % y/y 6.8Prime Office Rent Q1 2013 (SAR/sq. meter/year) riyaDh (asking rent) JeDDah (asking rent)

1,000 – 1,600 900 – 1,500

key industries Oil, food manufacturing










the kingDOM OF sauDi araBia

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suitaBiLity OvervieWthe senegalese economy is still largely reliant on agriculture and phosphate mining. as a result, it is primarily export-based and also highly dependent on the vagaries of the weather that can affect both harvest yields and global commodity prices. gDp growth was 3.4% in 2012, and it is expected to expand even further in the coming years. positive growth is being driven by private consumption, which itself is sustained by remittances from the senegalese diaspora working abroad as well as by the industrial and service sectors. although senegal’s economic performance is slowly improving, it still receives assistance from a number of external donors, for example the heavily indebted poor countries (hipc) program via the iMF. in addition, unemployment is a major concern for senegal, particularly for the young whose employment rate is 25% below that of adults. although efforts have been made by the government and its partners to tackle this obstacle, they have not yielded the results hoped for in terms of the numbers and the quality of jobs. however, the government is also focusing its attention on improving infrastructure quality through the country, including programs that aim to increase power capacity and improve the transport network – especially in the congested capital, Dakar. The Les Grands Projects is an example of such a scheme, and all of these projects are intended to increase business capacity and promote foreign investment.

OFFice Market OvervieWthe capital city of Dakar is the administrative and commercial centre of senegal. the plateau submarket, located towards the south of the peninsula, is the key office location. Within this area, the Boulevard de Général de Gaulle is the principal location for corporate occupiers from the financial sector as well as for a number of key government and administrative tenants. The market in Dakar is becoming increasingly dispersed; while the city centre (plateau) remains an important business location, there is also a growing trend for occupiers to look for offices in the areas toward the north of the city. This is largely due to the fact that these locations are less congested than the city centre and have noticeably lower rental levels. concerning development, there is a handful of larger schemes due for completion in the short term. an example of this is ecobank’s new landmark headquarters on the vDn road close to the airport is reaching completion imminently. these development schemes are expected to help satisfy the strong occupier demand for high quality space currently, and it is also thought that, once the new schemes have been delivered, this will ease the pressure on rental values. There have been significant recent lettings of new buildings to multinational companies, including Ericsson in Les Mamelles and philip Morris in Les almadies. in terms of modern, high quality space in the market, it is now established market practise that offices are usually completed to a “shell and core” finish.

economic indicators population, thousands 13,950gDp, us$ millions 18,950gDp per capita, us$ 1,358cpi 6.7Population Growth % y/y 3.2FDi, us$ millions 2,001GDP real % y/y 7.3Prime Office Rent Q1 2013 (USD/sq. meter/year) Dakar (asking rent) 240

key industries

Agricultural and fish processing, petroleum refining, phosphate mining,

construction materials










the repuBLic OF senegaL

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suitaBiLity OvervieWsouth africa’s economy is one of the largest and most developed within africa, and the country is also one of the core business locations on the continent. gDp growth was 2.5% in 2012, supported by the domestic market as a weak global economy hampered external demand. Although economic conditions were largely robust, South Africa continues to suffer from high inflation, a steep unemployment rate and notably outdated infrastructure – for example, risks of power cuts are still present as the country’s electricity network is being upgraded. the business regulatory environment is conducive to sustained business activity, although a lack of capacity in the public sector, as well as deepening divisions within the governing coalition over the government’s policy direction, presents a downside risk in the medium term. the economic outlook is for slow and steady growth, with gDp anticipated to increase but with the labour strikes occurring in the mining industry – a diminishing but still important constituent of the economy. However, sectors such as financial services and tourism have grown over the past few years, with many international companies entering the market deriving from these industries. there has also been an emergence of south african companies investing throughout africa, contributing a considerable amount of the continent’s FDi.

OFFice Market OvervieWsouth africa has the most developed property market on the african continent. although pretoria is the capital city, demand is highest from corporate occupiers in the principal commercial centre, Johannesburg. While occupier interest for other grades of space remains fragile, demand for modern and high-quality space is robust, especially in the key business locations. however, the city’s overall vacancy rate increased marginally in the latter half of 2012 after it had stabilised in the earlier part of the year. indeed, the current situation regarding vacancy is unlikely to improve until there is a notable upturn in south africa’s economic performance. economic growth has largely been constrained by global economic uncertainty as well as slowing domestic retail sales and manufacturing output. Nevertheless, the South African office market has performed comparatively well to other markets worldwide, having avoided the worst of the global downturn and thus witnessing steady demand from corporate occupiers from a wide variety of sectors. space under construction continued to rise over the year and now stands at around 750,000 sq. meter. however, there remains a shortage of prime space in the core office areas, and with demand from both domestic and international companies remaining consistent, rental levels for prime or good quality space should remain afloat.

economic indicators population, thousands 50,765gDp, us$ millions 384,908gDp per capita, us$ 7,582cpi 5.7Population Growth % y/y 0.5FDi, us$ millions 12,372GDP real % y/y 2.5Prime Office Rent Q1 2013 (ZAR/sq. meter/month) sanDtOn (asking rent) JOhannesBurg (asking rent) DurBan (asking rent)

125 100 100

key industries

Mining, automobile assembly, manufacturing, metalworking,

financial services










the repuBLic OF sOuth aFrica

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suitaBiLity OvervieWtanzania remains one of africa’s poorest countries. however, economic growth has been encouraging over the past year, largely due to the rise in the value of gold exports, which has resulted in increased production levels. Furthermore, improvements have been made towards the country’s infrastructure, supported by funding from external donors, and this initiative has also given the construction sector a crucial boost. As a result, Tanzania has been of interest to a wide variety of sectors – for example, the growing tourism sector has resulted in operators such as Hilton expanding into Dar es Salaam. Additionally, financial and business services companies such as Deloitte, pWc, and standard chartered are all established operators within tanzania. the outlook for economic growth is optimistic; at the same time, there remain concerns regarding inflation, especially if the domestic harvest yields poor results and food prices are pushed up further. gDp growth reached 6.6% in 2012 amidst the ongoing challenges in the global economic market as well as the impact of the continuing domestic power shortages. The government is likely to maintain a tight fist on both fiscal and monetary policies in order to rein in non-priority recurrent spending, contain inflation and reduce aid dependence by half over the next four years from the current 25% of the government budget.

OFFice Market OvervieWDar es Salaam is the primary city for business and commercial activity within Tanzania. The principal office submarkets include the cBD and the gardens area, with the latter located immediately to the east of the city centre. tanzania is currently witnessing increasing investment activity in various economic sectors, and this is reflected in the increasing demand for office accommodation that is currently rising ahead of supply levels. Consequently, modern and high-quality office space has largely held onto rental values. indeed, notwithstanding expectations that rents may ease due to an increasing number of new buildings, rental levels are moving up to such an extent that even Grade B buildings have been able to renew leases at a rent of between US$192 and US$228sq. meter/year for ground floor premises. Furthermore, rental levels for National Housing Corporation (NHC) office properties which used to be significantly lower than the market average are also coming under review, allowing these prices to more accurately reflect the current market conditions. this trend is expected to persist in the short-to-medium term, particularly as the majority of new construction is expected to come onto market towards the end of 2013. From thereafter, rents are anticipated to stabilise largely because most buildings in the pipeline fall short of major tenants’ requirements – specifically by lacking an adequate amount of parking space.

economic indicators population, thousands 47,829gDp, us$ millions 29,024gDp per capita, us$ 607cpi 16.0Population Growth % y/y 3.2FDi, us$ millions 1,191GDP real % y/y 6.6Prime Office Rent Q1 2013 (USD/sq. meter/year) Dar es saLaaM (asking rent) 252

key industries agricultural processing, manufacturing,

diamond, gold and iron mining










uniteD repuBLic OF tanZania

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suitaBiLity OvervieWtunisia’s economy is continuing to recover from the downturn seen in 2011, which came as a result of the political disruption that saw the overthrow of president Ben ali, the leader of tunisia since 1987. indeed, the political situation within tunisia remains uncertain, as the recent collapse of the interim government highlights, and this will affect the capability of government institutions to operate effectively. Nevertheless, business confidence is slowly returning, supported by a gradually expanding local economy. GDP growth was positive in 2012, driven by an upturn in tourism, although concerns regarding tunisia’s largest export market, europe, are anticipated to constrain conditions in the year ahead. Bolstered by historic connections, French companies remain prominent in tunis, with citroen and total having well established operations within the country. however, tunisia’s close links to both european and African economies has resulted in a number of multinational companies – such as Fiat, Microsoft, Siemens, and PWC – seeking to capitalise on this dual region market advantage by locating within tunis.

OFFice Market OvervieWThe capital city, Tunis, is the principal commercial centre within Tunisia and thus is home to the country’s primary office market. The easing in the recent political upheaval has improved business confidence, which has seen many multinational occupiers regaining their presence within Tunisia. As a result, demand levels have begun to slowly pick up again. Traditionally, the office market has consisted of four main submarkets: Berges du Lac, centre urbain nord, avenue Mohamed and Belvedere. however, it is Berges du Lac that is emerging as a key location for a growing number of occupiers, not only bolstered by the area’s proximity to the airport and the cBD but also the quality of space that is available. consequently, Berges du Lac is home to the majority of multinational companies that are operating within tunisia as well as a number of foreign embassies and consulates. in terms of new developments, the tunis Financial Harbour is finally under construction. This is a scheme that aims to deliver North Africa’s first offshore financial centre and utilise tunisia’s position as both closely connected with europe and lying at the heart of the north african economy. Once completed, this development will create around 16,000 jobs and also significantly increase the amount of good quality space within Tunis.

economic indicators population, thousands 10,699gDp, us$ millions 47,093gDp per capita, us$ 4,401cpi 5.5Population Growth % y/y 1.0FDi, us$ millions 523GDP real % y/y 4.1Prime Office Rent Q1 2013 (USD/sq. meter/year) tunis (asking rent) 120

key industries petroleum, mining,

tourism, textiles, agriculture










tunisian repuBLic

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suitaBiLity OvervieWas one of the largest producers of oil in the world, the economy within the united arab emirates (uae) continues to be driven by the oil sector, which accounts for over 30% of total GDP. However, a recovery in both the domestic financial services and construction sectors are expected to help diversify the economy away from oil-related output in the years ahead. indeed, the uae has become an increasingly attractive location for many multinational occupiers, supported by the country’s positive economic indicators including low inflation combined with its strategic location in the region. Furthermore, the UAE has a particularly business friendly environment, and as a result it is home to a number of occupiers with regional headquarters. For example, in Dubai’s Free Zones occupiers include general electric, 3M, Microsoft, siemens, and cnn; and in Dubai’s non Free Zones tenants include Maersk, abbott, and ericsson. the capital, abu Dhabi, is largely dominated by government and municipal occupiers, although some international companies have secondary or satellite offices here. International law firms are also prevalent in Abu Dhabi including Clifford Chance and Herbert Smith.

OFFice Market OvervieWthe principal commercial centres within the uae are abu Dhabi and Dubai, with multinational occupiers largely favouring Dubai over Abu Dhabi as a regional headquarters location. In Dubai, there has been a continuing recovery in the office market, and this has fuelled an increase in demand for space and, consequently, a rise in rents in some popular submarkets. Free Zones remain of tenant interest, which has seen vacancy rates decrease in the more established zones with slight rental rises. however, the business districts under strata ownership have seen the largest rental rises as a percentage over the past few years, albeit they are coming from a low base since 2009/10. In Abu Dhabi, the office market has not yet recovered to the same extent as in Dubai; however, the market remains stable with rents at similar levels to 2012. in Dubai, the expectation is for occupancy levels to increase across the prime business districts of the city, with rents continuing to rise steadily in some of the key submarkets. infrastructure improvements in the newer areas such as Business Bay are anticipated to see increased demand and higher rents. abu Dhabi is expected to see new supply come onto market later this year, including the al Bustan development as well as nation towers both due to launch in q2 2013. although there is continued downward pressure on secondary and tertiary rents, prime rental levels are anticipated to remain stable as companies continue to take the opportunity to upgrade from secondary stock.

economic indicators population, thousands 7,856gDp, us$ millions 360,423gDp per capita, us$ 45,874cpi 0.7Population Growth % y/y 2.2FDi, us$ millions 9,171GDP real % y/y 3.3Prime Office Rent Q1 2013 (AED/sq ft/year) DuBai (asking rent) (USD/sq ft/year) aBu DhaBi (asking rent)

180

1,800

key industries

petroleum, petrochemicals, manufacturing, commercial ship repair,

construction, materials, textiles, fertilizers, cement










uniteD araB eMirates (uae)

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suitaBiLity OvervieWthe ugandan economy has remained subdued but largely unchanged over the past year or so despite the recent global economic slowdown. agriculture is the most important sector within uganda in terms of employment but accounts for a declining proportion of overall gDp. as a result, the government has taken steps in order to diversify the economy, such as the infrastructure improvements outlined in the national Development plan in the period of 2010-2015. however, gDp growth managed to hold steady in 2012 at 4.5% on the back of gradually stabilizing economic conditions. This has helped to keep occupier demand for office space largely afloat, with the majority of multinational companies based in the capital Kampala. Financial services operators tend to dominate the tenant base within uganda including citibank, standard chartered and the Bank of Baroda. in addition, the development of the energy sector is underway with the opening of the country’s first oil well, developed close to Lake Albert in the northwest of the country. the outlook for the ugandan economy anticipates for similar slow-but-steady conditions to continue, although rising inflation may be a challenge, particularly concerning food costs if production is affected by adverse weather.

OFFice Market OvervieWin addition to serving as uganda’s capital, kampala is the primary commercial and administrative centre of the country and thus sees the most business activity. The principal office areas of Kampala are the Kololo and Nakasero submarkets, as well as the city’s CBD. the nakasero submarket is the most prestigious within kampala, and thus many embassies, consulates and high quality hotels are located within this area. Traditionally, demand for prime space has originated from the financial services and telecoms sectors, with many multinational banking operators locating in either the kololo and nakasero submarkets. however, the recent economic slowdown has seen demand from these sectors wane, with many companies either seeking to consolidate their space requirements or move to less expensive premises within kampala. in terms of supply, the beginning of 2010 saw a large speculative pipeline, and by the end of the year many of the schemes were brought onto market despite the challenging economic environment. this upturn in completions significantly increased the amount of modern, high quality space in the market. At the turn of 2011 the proposed office development scheduled for completion in 2013 totalled 150,000sq. meter. However, this figure has since reduced as many projects have either been cancelled or postponed due to the decline in demand or the difficulty in obtaining development financing.

economic indicators population, thousands 35,700gDp, us$ millions 22,731gDp per capita, us$ 636cpi 14.0Population Growth % y/y 3.3FDi, us$ millions 857GDP real % y/y 4.5Prime Office Rent Q1 2013 (USD/sq. meter/year) kaMpaLa (asking rent) 200

key industries Agriculture (coffee, fish, tobacco),

cotton textiles, mining, manufacturing










repuBLic OF uganDa

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economic indicators population, thousands 13,950gDp, us$ millions 18,950gDp per capita, us$ 1,358cpi 6.7Population Growth % y/y 3.2FDi, us$ millions 2,001GDP real % y/y 7.3Prime Office Rent Q1 2013 (USD/sq. meter/year) Lusaka 240.

key industries

copper mining & processing, construction, agriculture, wholesale

& retail trade,chemicals, textiles








suitaBiLity OvervieWthe economy of Zambia relies heavily on copper mining, although the agriculture, construction and tourism sectors are becoming increasingly important. the country has experienced strong economic growth due to high copper prices, privatisation and increased foreign investment from european and asian mining companies that are currently present within Zambia, for example glencore International and Vedanta Resources. Additionally, Zambia’s economy has benefitted from being a part of the Heavily Indebted Poor countries (hipc) program. as a result, companies from a variety of sectors are present within Zambia, such as saB Miller and Associated British Foods (ABF). Zambia’s monetary policy is concerned with maintaining sustainable, single-digit inflation while retaining the liquidity of capital required for investment in the country. Furthermore, recently the country’s government pursued certain business reforms as a way to encourage private sector development. partnerships have been fostered with the larger, developing markets of china and india. the outlook for the Zambian economy remains favorable in the medium term, underpinned by robust growth and single-digit inflation. The country, however, remains vulnerable to external shocks, with a sluggish global economic recovery a concern for its key mining exports. high youth unemployment and slow progress in poverty reduction may also overshadow the gains made from strong growth and limited inflation.

OFFice Market OvervieWThe principal office market in Zambia is located in the capital city, Lusaka. The most popular areas for occupiers and new developments are between the great east road and the Mass Media area, up to the Longacres part of the city. the market in Lusaka itself is fairly well established, although much of the current office stock is of lower quality. However, prevailing occupier demand is mostly for high quality, modern and flexible space. As this quality of stock is limited within the CBD and demand remains high, rents for prime space have increased substantially over the past two years. however, supply levels are set to remain low; indeed, despite recent international investment and development, there is a notable lack of land adequate for constructing good-quality offices. Consequently, with supply expected to remain low and demand for high-quality space to outstrip supply, prime rents are expected to move up over the next 12 months. With only one new office development currently under way in Lusaka, it is moving quickly towards a market that will favour landlords more heavily than before. The era of tenants having choice when looking to upgrade their office space will soon be over, particularly so as the majority of speculative space has already been pre-leased at competitive rates.

repuBLic OF ZaMBia



suitaBiLity OvervieWnotwithstanding its ongoing political uncertainties, Zimbabwe is currently making a steady recovery after a decade of economic decline. The economy has recently registered its first growth in a decade, although further expansion and recovery will be heavily reliant on reaching political stability. however, the country still faces many problems, including both a large debt burden and lack of formal employment. the government’s land reform program has badly damaged the commercial farming sector, which serves as the traditional source of exports and foreign exchange as well as the provider of 400,000 jobs. nevertheless, the power-sharing government formed in February 2009 has brought some economic improvements: eliminating the use of the Zimbabwe dollar and thus ending hyperinflation; replacing the currency with foreign values; and removing price controls. Since the inception of the Inclusive government of Zimbabwe in February 2009, Zimbabwe has been recovering from a low economic base. growth decelerated between 2010 and 2012 due to policy inconsistencies and political uncertainty, which indicates that, while recovery is relatively easy to ignite, sustaining it requires consistent policies that address the binding constraints on growth. regulations involving the economic empowerment program as well as the country’s dilapidated infrastructure will both continue to constrain the economy.

OFFice Market OvervieWThe principal office market in Zimbabwe is located in the capital, Harare. It is a well established market, with current office stock ranging between Grades A, B and C. Owing to Zimbabwe’s ongoing political uncertainty, demand for office space has continued to decline over the couple of years. In addition, Zimbabwe’s fluctuating currency amidst the recent economic crisis has seen many businesses scaling down their operations within the country. Furthermore, occupiers have begun seeking space away from the cBD for increased cost efficiency measures. Speculative development in Zimbabwe is minimal due to the hyperinflationary and limiting credit conditions of the last few years. However, hyperinflation now appears to have ended as a result of the new legislation on foreign currencies, which has seen prime rental values rise significantly. For example, rents in Harare are now standing at approximately US$150/sq. meter/year. Vacancy rates in the Harare’s CBD have moved upwards as demand has increasingly been focused on suburban office parks. Nevertheless, significant increases in prime office rents – in the order of 100% – have been noted since the introduction of multi-currency trading in February 2009. investment activity has been subdued for some time due to the prevailing tight liquidity conditions and the absence of long term credit.

economic indicators population, thousands 13,143gDp, us$ millions 7,286gDp per capita, us$ 554cpi 3.9Population Growth % y/y 2.2FDi, us$ millions N/AGDP real % y/y 4.5Prime Office Rent Q1 2013 (USD/sq. meter/year) harare (asking rent) BuLaWayO (asking rent)

150 72

key industries Mining, steel, chemicals, agriculture










repuBLic OF ZiMBaBWe

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The Asia Pacific (APAC) economy in 2012 exhibited a divergence in growth rates, revealing a split between the developed and developing economies in the region. While the externally oriented, more developed economies of the asian tigers and Japan bore the brunt of the pullback in external demand, apac’s emerging nations were able to call on domestic drivers to buffer economic growth.

While these countries remain susceptible to the global ebb and flow of hot capital, there is little doubt that the diverse apac region, with countries in various stages of development, holds much of the potential that could drive global economic growth into the next decade. some of these countries, having only begun emerging from the clutches of crippling political and social instability in this decade, were only able to kickstart their economic reform recently; others, having embarked on such programs earlier, are refining economic policies for further development.

Almost all countries will present challenges – including security and political risks, corruption, and archaic land use systems – that are endemic in developing economies. Yet, all offer favorable demographics, rapid urbanization, and growing incomes that are fuelling the need for investments in infrastructure – and where demand for corporate real estate is escalating.

Below is a ranking of the key apac countries covered in this report according to their gDp growth from 2011 to 2012.

ecOnOMic grOWth- apac

nO. cOuntry % change in gDp1. MOngOLia 12.3

2. china 7.8

3. the phiLippines 6.6

4. thaiLanD 6.4

5. sri Lanka 6.4

6. BangLaDesh 6.3

7. caMBODia 6.2

8 inDOnesia 6.2

9. MyanMar 5.9

10. inDia 5.0

11. vietnaM 5.0

source: Oxford economics, gDp 2012


While the more developed apac nations bore the brunt of the pull back in global demand, apac’s emerging countries were able to call on domestic strengths to support growth.

asia paciFic

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prOperty Market trenDsthe principal markets in apac have seen a slowdown in occupier demand over the last year. While Beijing remains the primary office market in the region (and has been considered a leading global market for over a decade), secondary markets in china such as chengdu, nanjing, and others are seeing increased occupier demand. these markets now offer competitive economies and improved infrastructures. in china, many transnational corporations have relocated their back-up functions, regional offices or even headquarters to second-tier cities. Manufacturers such as Honeywell, Daimler, and General Motors have established their offices in Chengdu, tianjin, Wuhan, etc. and it service corporations like iBM, intel, and Microsoft have different functions set up in nanjing and Dalian.

Outside china, the markets garnering the most occupier attention include the philippines, where demand from the Business process Outsourcing (BpO) industry in Manila has been a significant driver and Yangon and Jakarta, which have seen rental rates climb to 82USD and 36USD per/sq. m/month.

Below is a ranking of the key apac cities in this report according to rental rates.

priMe OFFice rent

nO. city cOuntry priMe rentaL rate trenD1. yangOn Myanmar 82 accelerating

2. uLaan Baatar Mongolia 70 accelerating

3. hO chi Minh city vietnam 49 Declining

4. hanOi vietnam 38 Declining

5. Jakarta indonesia 36 accelerating

6. nanJing china 32 accelerating

7. chengDu china 25 accelerating

8. Dhaka Bangladesh 24 accelerating

9. ManiLa (Makati) the philippines 23 accelerating

10. BangkOk thailand 21 accelerating

11. cOLOMBO sri Lanka 20 accelerating

12. phnOM penh cambodia 19 accelerating

13. ManiLa (FOrt BOniFaciO) the philippines 16 accelerating

14. chanDigarh india 9 slowing

15. kOchi india 7 slowing

Source: Cushman & Wakefield, Rent quoted as asking rent USD/sq. meter/month

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asia paciFic

china

vietnaM

MyanMar

BangLaDesh

caMBODiathaiLanD

phiLippines

inDOnesia

sri Lanka

MOngOLia

inDia


Latin America

Global


asia paciFic

suitaBiLity OvervieWas one of the largest producers of textiles and ready-made garments in the world, the economy of Bangladesh is growing fairly strong at 6-7% levels for the last five years, higher than the Asian average. Led by finance and banking, manufacturing and telecommunications sectors, the services sector continues as an important element of the economy. During the same time, the country has laid the foundation for a diverse outsourcing market that is currently growing at an annual rate higher than 20%, largely supported by favorable government policies and the presence of it infrastructure. going forward, a gradual shift of garment production to low-cost countries amid rising costs in china are expected to further strengthen the textile industry that already contributes nearly 78% of total exports and accounts for almost one-fifth of the economy. A steady improvement in foreign investments over the last five to seven years, largely in the garment sector followed by the banking, energy and telecom sectors, is a sign of improving business sentiments towards Bangladesh. positive factors such as business liberalization, macroeconomic growth, supportive environment for business start-ups, lower production costs, favorable tax polices providing incentives, and formation of export processing zones that provide quality infrastructure and administrative support make Bangladesh an increasingly attractive location for several multinational occupiers. companies such as samsung, Dupont, youngone, nestle, Microsoft, IBM, Chevron, Ericsson, Standard Chartered, and HSBC are already operating from Dhaka. Moderate to high inflation and infrastructure bottlenecks outside the business promotion zones still remain a concern; however, the long-term outlook for economic development remains strong, considering the steadily rising foreign investments and growth potential of the outsourcing industry.

OFFice Market OvervieWDhaka, the capital of Bangladesh, is the principal commercial center accommodating a large number of multinational occupiers from various sectors. The market has been on a growth trajectory from 2006-2007, largely supported by foreign, state-owned/privately held commercial banks; financial and insurance services agencies; IT; consumer goods; and telecom companies, etc. The demand for office space has been moderately strong in popular submarkets such as Gulshan, Motijheel/Dhanmondi. As vacancies have gradually declined in major locations in Dhaka over the last couple of years, rentals have grown by 12-15% across the city on an annual basis. rentals for high quality spaces are comparable with some of the other emerging market locations within the region. The influx of multinational occupiers has changed the construction standards in Dhaka over the last two to three years and the majority of the recent and upcoming supply follows the global standards. the city has positioned itself as a key it services market by strengthening the delivery capabilities, lower operational costs and marked improvement in related infrastructure. With personnel costs running at 40% lower than established locations such as gurgaon, Bangalore, and Manila, the it services and outsourcing industry within Bangladesh is growing steadily and signals a considerable growth potential which could translate into a sizeable demand for high quality office space over the next three to five years. Amidst a stable demand and moderate supply conditions, vacancy levels are expected remain under pressure until 2014-2015, thus steadily pushing up prime rents across major localities.

economic indicators population, thousands 152,542gDp, us$ millions 112,646gDp per capita, us$ 738cpi 8.7Population Growth % y/y 1.3FDi, us$ millions 797GDP real % y/y 6.3Prime Office Rent Q1 2013 (USD/sq. meter/month) Dhaka (USD/sq. meter/year) Dhaka

24.21

290.52

key industries

textiles, pharmaceuticals, ceramics, food processing, light engineering, cement, fertilizers







BangLaDeshc&W ranked the economic indicators and risk factors in each region to showcase how each country ranks within its respective region. the rankings are as follows:


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asia paciFic

suitaBiLity OvervieWthings are changing and cambodia, which only three decades ago was devastated by the tragedy of the killing Fields, but is now seen as part of the nascent emergence of the indochina economies. Malaysian banks like public Bank Bhd, Maybank, and ciMB Bank have been making inroads into cambodia. canadian insurer, Manulife, also opened in the country last year, lured by the enormous growth opportunities where insurance and savings accounts continued to be owned by a minority. From 2002, cambodia’s average gDp rose by 6% annually while foreign direct investment from 1995 to 2011 stood at us$24.7 billion. this steady growth has caused property values to soar. cambodia’s gDp growth will reach 7 percent to $15.65 billion usD in 2013, thanks to continued increases in tourism, agriculture, garment and construction, according the World Bank’s economic outlook report in april 26. the country will get out of the status of a low-income to a lower-middle-income country by the end of this year, with its gDp per capita is predicted to reach us$1,080. Cambodia’s economy is mainly supported by four main sectors – garments, tourism, real estate and construction, and tourism remains an attractive destination for industrial work, with a low inflation rate of 3% and low minimum wages of $80 per month; net FDI inflows into cambodia surged by an estimated 75% in 2012, to us$1.5bn. as wages spiral upwards in china and thailand, opportunities for foreign investors to capitalize on low production and labour costs will drive the cambodian economy forward.

OFFice Market OvervieWThe growth of the Cambodian economy particularly from the industrial investments will create a need for more office space for supporting sectors. New supply into the office building sector in 2012 has been limited, but this is due to change in 2013, with the launch of several high-quality projects. With no high-quality buildings completed last year, demand for offices rose. Still, corporate real estate needed to recover from the global economic crisis in 2009 and 2010, when many projects were paused or not even started. the future Vattanac Tower will be the first building on the Grade-A market, with 285,000 sq. meter in 2013. Completion of the Gold Tower 42 would have added 15,000 sq. meter to the Grade A market, but construction was halted due to cost overruns and poor unit sales – a problem that is emblematic in emerging economies. the new vattanac tower will open a new category, the a+ grade. total supply of office space in Cambodia is estimated to be about 20 msf. The majority, at about 59% are in the Grade C category whole the remaining are Grade A/B offices, such as Phnom Penh Tower. With rising demand, rents are expected to increase, particularly in the newer developments. Currently, there is a wide range of local, regional and international companies investing in offices of all price sectors, with the biggest investors at the moment coming from china and Japan, planning garment factories or working in the explorative industry.

economic indicators population, thousands 14,489gDp, us$ millions 14,122gDp per capita, us$ 975cpi 3.0Population Growth % y/y 1.2FDi, us$ millions 929GDP real % y/y 6.2Prime Office Rent Q1 2013 (USD/sq. meter/month) phnOM penh (USD/sq. meter/year) phnOM penh

19

227

key industries Textiles, vehicles, footwear, rubber, fish









caMBODia

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asia paciFic



economic indicators population, thousands 1,372,285gDp, us$ millions 8,239,505gDp per capita, us$ 6,003cpi 2.6Population Growth % y/y 0.6FDi, us$ millions 253,500GDP real % y/y 7.8Prime Office Rent Q1 2013 (USD/sq. meter/month) chengDu (USD/sq. meter/year) nanJing

24.81

392.00

key industries

steel, electronics, manufacturing, textiles, toys, construction, materials,

textiles, fertilizers







suitaBiLity OvervieWaided by a stimulated domestic demand, structural adjustment of the economy, as well as increasing urbanization, the 16 chinese second-tier cities tracked by c&W have experienced substantial developments, including Wuhan, chengdu, nanjing, qingdao, tianjin, chongqing, suzhou, xi’an, ningbo, shenyang, hangzhou, Wuxi, changsha, xiamen, harbin, and Dalian. in 2012, the total gDp of the 16 cities reached rMB12.1 trillion, which accounted for almost 25% of the national gDp, while FDi reached us$95.28 billion. the average cpi growth rate of the 16 cities was 2.6%, slightly below the level a year ago. Due to a more favorable economic environment and improved infrastructure, these second-tier cities offer better and more advantageous regional locations and thus, enhance their suitability for multinational occupiers. In addition, the increasing enrollment figures of local higher education institutions ensure a skilled workforce. Therefore, due to the high occupancy cost in first-tier cities and further business expansion in China, many transnational corporations have relocated their back-up functions, regional offices or even headquarters to second-tier cities. For example, manufacturers as Honeywell, Daimler, and General Motors established their offices in Chengdu, Tianjin, Wuhan, etc. IT service corporations like IBM, Intel, and Microsoft have different functions set up in Nanjing, Dalian, etc. For international financial groups like the citi-group, DBs, and standard chartered Bank, second-tier cities are almost fully covered in their expansion agenda. Leading high-tech developers like applied Materials and Micron located their new functions in xi’an. professional services providers like PWC, Deloitte, and KPMG have founded offices in Qingdao, Suzhou, etc.

OFFice Market OvervieWIn 2012, the inventory of the 16 second-tier cities’ Grade A offices surpassed 12 million sq. meter, with another 32 million sq. meter of future supply expected. cities like tianjin, chengdu, Wuhan and shenyang will see around 2 million sq. meter of new supply in the following two years, with a doubled inventory. The average rent in these cities is generally half of those in first-tier cities. In the fourth quarter of 2012, nanjing, hangzhou and xi’an were the top three cities with the highest rents at rMB203.5 per square meter per month on average. Due to a large future supply of Grade A offices, softening rents and upward vacancy rates will be seen in cities such as chengdu, chongqing and qingdao, which will help to boost the tenant’s market in the short term. Furthermore, the lack of high quality offices in accordance with international standards may hinder office rent and tenant attraction. In terms of tenant demand, the geographic advantages of second-tier cities will exert a positive influence on occupier site selection. Cities like Xiamen, Ningbo, and Dalian, with benefits of being situated near coastal areas and their export-oriented economies, will be attractive to trade, logistics and related professional services. Wuhan, chengdu, and xi’an, which are regarded as the economic centers of the mid-west regions with their superior infrastructure and intellectual resources, will be preferred by the pharmaceutical, high-tech and cultural and creative industries.

china

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asia paciFic

economic indicators population, thousands 13,950gDp, us$ millions 18,950gDp per capita, us$ 1,358cpi 6.7Population Growth % y/y 3.2FDi, us$ millions 2,001GDP real % y/y 7.3Prime Office Rent Q1 2013 (USD/sq.m/year) Lusaka 240.00

key industries

copper mining & processing, construction, agriculture, wholesale

& retail trade,chemicals, textiles








suitaBiLity OvervieWthe economy of Zambia relies heavily on copper mining, although the agriculture, construction and tourism sectors are becoming increasingly important. the country has experienced strong economic growth due to high copper prices, privatisation and increased foreign investment from european and asian mining companies that are currently present within Zambia, for example glencore International and Vedanta Resources. Additionally, Zambia’s economy has benefitted from being a part of the Heavily Indebted Poor countries (hipc) programme. as a result, companies from a variety of sectors are present within Zambia, such as saB Miller and Associated British Foods (ABF). Zambia’s monetary policy is concerned with maintaining sustainable, single-digit inflation while retaining the liquidity of capital required for investment in the country. Furthermore, recently the country’s government pursued certain business reforms as a way to encourage private sector development. partnerships have been fostered with the larger, developing markets of china and india. the outlook for the Zambian economy remains favorable in the medium term, underpinned by robust growth and single-digit inflation. The country, however, remains vulnerable to external shocks, with a sluggish global economic recovery a concern for its key mining exports. high youth unemployment and slow progress in poverty reduction may also overshadow the gains made from strong growth and limited inflation.

OFFice Market OvervieWThe principal office market in Zambia is located in the capital city, Lusaka. The most popular areas for occupiers and new developments are between the great east road and the Mass Media area, up to the Longacres part of the city. the market in Lusaka itself is fairly well established, although much of the current office stock is of lower quality. However, prevailing occupier demand is mostly for high quality, modern and flexible space. As this quality of stock is limited within the CBD and demand remains high, rents for prime space have increased substantially over the past two years. however, supply levels are set to remain low; indeed, despite recent international investment and development, there is a notable lack of land adequate for constructing good-quality offices. consequently, with supply expected to remain low and demand for high-quality space to outstrip supply, prime rents are expected to move up over the next 12 months. With only one new office development currently under way in Lusaka, it is moving quickly towards a market that will favour landlords more heavily than before. The era of tenants having choice when looking to upgrade their office space will soon be over, particularly so as the majority of speculative space has already been pre-leased at competitive rates.



xxc&W ranked the economic indicators and risk factors in each region to showcase how each country ranks within its respective region. the rankings are as follows:

tOp quartiLe BOttOM quartiLethirD quartiLesecOnD quartiLe

suitaBiLity OvervieWindia, the second most populous country in the world, has 53 cities with populations of more than 1 million. the country has evolved from an agricultural economy to one of the most diverse economies in the region with the services sector having a share of around 57% of the gDp. india topped the chart in the global services Location index by a.t. kearney, followed by china and Malaysia, as the most preferred outsourcing destination in the world. india alone has a share of approximately 58% of the global information technology (it) outsourcing industry in 2011. Additionally, global corporate leaders in the IT/ITeS, BFSI, pharmaceutical, manufacturing, FMCG, consulting, media and logistics sectors have a presence in the country. While india continues to be a prominent developing market for the u.s. and europe, its vast domestic consumer base adds to its growth advantage. india’s middle class is expected to grow from 13% in 2010 to approximately 38% of the total population by 2026. having one of the most youthful populations in the world, india will add 47 million people to its working age group population from 2009 to 2020, providing the necessary local manpower for both skilled and unskilled jobs. The growing middle class and increase in total young and working age population gives India a significant demographic advantage over other nations. this demographic dividend, coupled with a growing economy, increasing urbanization, strategic location, huge market potential and sectoral diversity, play an important role in strengthening india’s position as a favorable destination for multinational players.

OFFice Market OvervieWIndia has urban centers of varied scale with diverse businesses spread across the country. The growth in India’s office market has been driven mostly by the IT/ ITeS, BFSI, consulting, and manufacturing sectors over the past few years. Amongst the top eight Indian cities, Mumbai, NCR, and Bengaluru continue to remain as the preferred cities for office space take-ups; while Chennai, Hyderabad, Kolkata, Ahmedabad, and Pune have office spaces available at competitive costs in the mid-range segment. At the end of the first quarter in 2013, these cities alone had a grade a stock of around 340 m. square feet with a further 140 m, square feet expected by 2016. Moreover, emerging tier ii and iii destinations like chandigarh, Bhubaneshwar, indore, Jaipur, kochi, nagpur, trivandrum, vadodara, etc., have an adequate mix of talent, infrastructure and local industry resources to suit the needs of different sectors at reasonable costs. in 2012, the top eight cities recorded net office absorption of more than 30.5 msf, displaying the strong growth potential. Despite the subdued economic conditions persisting globally, the country is still expected to witness similar net absorption levels in 2013, with prospects brightening in 2014 and getting better in 2015. Many new companies are planning their foray into india’s markets due to the large potential in the subcontinent and the recently relaxed Foreign Direct investment (FDi) norms. Overall rental and capital values are expected to remain stable in the near future, though some micro-markets may witness some downward pressure on rentals due to the sudden increase in supply and lower demand.

economic indicators population, thousands 1,248,982gDp, us$ millions 1,826,859gDp per capita, us$ 1,463cpi 9.3Population Growth % y/y 1.3FDi, us$ millions 25,309GDP real % y/y 5.0Prime Office Rent Q1 2013 (USD/sq. meter/month) chanDigarh (USD/sq. meter/year) kOchi

8.91

83.20

key industries

information technology and software, pharmaceutical, biotech, food processing,

manufacturing, construction, materials, textiles







inDia

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suitaBiLity OvervieWas the fourth most populated country in the world, indonesia has shown constant population growth for the past three years of 1.4% in average, which affects economic development through larger capacity of productivity, resulting in an economic growth of over 6% annually for the last three years. indonesia’s population is now experiencing rapid expansion in the middle class, who possess higher levels of skills, educational levels and stronger purchasing power on which multinational companies entering the indonesian market can capitalize. around 25% of the total gDp is contributed by main industries’ production in manufacturing, including oil & gas, and non-petroleum natural resources, followed by 15% by agribusiness and 13% by hospitality services. constant middle class increment and positive gDp growth, combined with high domestic consumption, drive the indonesian economy and attract multinational investors. higher incomes create rapid urbanization in this archipelago nation. as the capital city of indonesia, Jakarta is absorbing the majority of business activities and home to many major international corporate offices. Business expansion and office relocations undertaken by several industries in Jakarta have been seen in the last three years, including the banking and insurance services, oil & gas, and telecommunication sectors. they include standard Chartered Bank, DBS Bank, AXA Insurance, Prudential, Total E&P Indonesie, and Huawei. Despite the significant adjustment of the minimum monthly labor wage, indonesia is still an attraction for its low-cost production, compared to taiwan and thailand.

OFFice Market OvervieWAfter the slowdown due to the global financial crisis in 2009, both supply and demand for office space in Jakarta’s CBD has been rapidly improving as indicated by the double net take-up figure recorded in 2010. Over the last three years, Jakarta’s CBD office market has seen an additional supply of about 590,000 sq. meter. this was balanced by higher absorption during the same period as businesses, particularly the natural resource-based business, continued to grow and expand their premises. the average occupancy rate, therefore, increased significantly to 92.9%, the highest since the Asian financial crisis. With soaring demand, landlords have raise rental rates, especially during the last two years. The average gross rental in Jakarta’s CBD office has increased about 43% since 2009, and is still expected to see further upward adjustments in the next few years, albeit at a slower pace. Grade A offices have been enjoying the highest increment in their base rental rates (up 53.8% since the end of 2009) as inquiries for expansions and relocations in this sub-market continued to soar, particularly from banking & financial services, insurance, oil & gas, mining and consumer goods companies. 85% of new supply in Jakarta’s cBD will be grade a space as developers have ramped up supply amidst the conducive conditions several recent large transactions include DBs Bank in DBs tower, prudential insurance in 88 kasablanka, and an oil company in TCC Tower 1. Jakarta’s CBD Office market is likely to continue in an upward trend in the next one to two years, in line with the projected positive performance of the economy and overall business climate in the country.

economic indicators population, thousands 237,677gDp, us$ millions 876,436gDp per capita, us$ 3,687cpi 4.3Population Growth % y/y 1.0FDi, us$ millions 19,853GDP real % y/y 6.2Prime Office Rent Q1 2013 (USD/sq. meter/month) Jakarta (USD/sq. meter/year) Jakarta

36.36

436.32

key industries

petroleum, natural gas, petrochemicals, textiles, cement, fertilizers, footwear,

mining, electronic appliances









inDOnesia

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suitaBiLity OvervieWDriven by significant foreign investments in mining and manufacturing, Mongolia has been one of the fastest growing economies in the world over the past two to three years. ulaanbaatar, the capital of Mongolia and the principal commercial center, is the center of unprecedented economic transformation, followed by a surge in real estate activity and rapid growth in financial services in recent times. With a stable and business-friendly environment and supported by a favorable tax and legal structure, the country has become a hot destination for multinational occupiers. Large-scale infrastructure development projects supported by the government to improve industrial sector growth and enhance connectivity with russia and china, and growing trade links with some of the largest economies such as the u.s., Japan and canada are expected to further strengthen the economic development in the near future. Furthermore, recent policies such as stabilizing flexible exchange rates, revised banking laws and fiscal responsibility laws, amendments to foreign investment and mineral laws etc., are likely to bolster the growth momentum in the years ahead. rio tinto, ivanhoe Mines, nova copper and ing have already entered the market and several other international companies have invested heavily in Mongolia’s mining industry with a strategic and long-term commitment. the current slowdown in mining activity is a temporary phase in Mongolian economy. With some of the largest mineral deposit resources in the world yet underutilized and unexplored, the long-term outlook remains bright.

OFFice Market OvervieWKey demand drivers such as double-digit economic growth, rapid growth in international investments, and the influx of multinational companies predominantly from the mining sector, have fuelled the growth of the commercial office market in Ulaanbaatar from 2007. Active business entities in the city have grown by more than 15% by 2012. Development constraints limit the office market expansion in the city and Sukhbaatar Square (CBD) remains a preferred location for smaller size satellite offices of multinational companies looking for quality space. Limited supply and strong demand have pushed the grade a vacancy rates to record lows and the occupancy costs have nearly doubled over the last two years. slowdown in foreign investments, exports and policy issues such as amendments to foreign investment and mineral laws together with a surge in supply in 2013 are expected to moderate rental growth and space constraints in the market over the next two to three years. however, considering the fact that the mining operations are yet to begin on a full scale and given the growth potential in banking, financial and insurance services, the demand outlook remains strong within a five-year horizon. government-led initiative to address infrastructure bottlenecks has prioritized the improvement of existing road networks in the city. Going forward, this could help drive the demand for office space in the peripheral areas of Sukhbaatar and Chingeltei.

economic indicators population, thousands 2,844gDp, us$ millions 10,238gDp per capita, us$ 3,600cpi 14.3Population Growth % y/y 1.6FDi, us$ millions 1,500GDP real % y/y 12.3Prime Office Rent Q1 2013 (USD/sq. meter/month) uLaan Baatar (USD/sq. meter/year) uLaan Baatar

70

840

key industries Mining, construction,

animal products, crude oil









MOngOLia

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suitaBiLity OvervieWMyanmar’s energy resources will provide the initial spurt to fuel its economic development. the country has 7.8 trillion cubic feet of proven natural gas reserves, worth about $75 billion at current benchmark prices. and energy majors like exxon Mobil are vying for a piece of the explorative action. the economy is expected to grow 6.75% in 2013, led by natural gas sales and investment, the international Monetary Fund said in a report in February. Myanmar’s gross domestic product could more than quadruple to usD200 billion with an 8 percent annual growth rate, according to Mckinsey, almost double the pace from 1990 to 2010. that may help lure usD170 billion in capital inflows, with foreign direct investment accounting for $100 billion, more than twice as much as it attracted in the previous two decades. the agriculture-dependent economy also needs power plants, roads and railways. While the risks that frontier markets pose are well known, years of debilitating military rule and economic sanctions has made it more of a challenge than it normally is. First is the threat of sectarian violence; skyrocketing land prices in yangon and other key cities of Myanmar are also crimping investments in development projects. the country lies at a critical phase in its history to turn back the years of economic neglect. the country has flirted with periods of economic liberalization before but there is a sense that this time round, the changes could be more permanent.

OFFice Market OvervieWin the past two years the government has enacted sweeping changes, including ending the house arrest of the democracy activist Daw aung san suu kyi and allowed elections that put her into parliament. the us and eu, having eased longstanding economic sanctions, are spurring investors to seek investment opportunities here, which should propel the construction and real estate sectors. Mckinsey estimates, of the usD320 billion needed to spur the economy, about 60% will be for residential and commercial real estate. But to talk of vacancy rates in Myanmar is probably premature. Years of under-investment makes the country woefully inadequate – there is less commercial and residential property available in Myanmar than there was in other indochina economies when they were at comparable stages of development. yangon, with a population estimated at 4.3 million in 2009, is the country’s main commercial hub and the erstwhile capital of the nation. However, total office stock is estimated to be less than a million sq. feet. Singapore-listed Yoma Strategic Holdings, whose backers include U.S.- based investment management firm Capital Group, is planning a two-million sq. feet, mixed-use development in downtown Yangon with two grade-A office towers, a five-star hotel and condominium, a mall, and other properties. Office rents have surged meanwhile, which at an estimated usD82 psm a month, is pushing to levels in other more developed economies.

economic indicators population, thousands 48,739gDp, us$ millions 56,847gDp per capita, us$ 1,166cpi 1.7Population Growth % y/y 0.8FDi, us$ millions 961GDP real % y/y 5.9Prime Office Rent Q1 2013 (USD/sq. meter/month) yangOn (USD/sq. meter/year) yangOn

82

984

key industries Oil, natural gas, agriculural

produce, Wood, textiles


risk rankings ease of Doing Business Overall ranking (Out of 185) na

Dealing with construction permits (Out of 185) na

registering property (Out of 185) na



MyanMar

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suitaBiLity OvervieWAfter posting 6.6% GDP growth rate in 2012, the economy at the start of 2013, grew by 7.8% in the first quarter of 2013, the highest in asia. similar to 2012, government spending, construction and household consumption were attributed to the country’s growth. the services sector continues to be one of the driving factors of the economy for 2012 and the first quarter of 2013, which accounted for 47.9% of the country’s GDP in 2012, and currently has a 46.9% share in the first quarter of 2013. Meanwhile, the industrial sector was credited for 27% of the country’s GDP in 2012, and 28% in first quarter 2013. Foreign investments improved in 2012, with Php289.1 billion collected during the year, a 37.1% improvement from 2011, the bulk of which were allocated to the manufacturing industry. Business confidence continues to grow as well, as evident by the recent upgrades of investment grades by Fitch and Standard & Poor’s. One of the main drivers of economic growth in the country is the BpO industry, which has continued to expand, tapping into business districts in provincial areas as potential locations. Low operational costs, high quality infrastructure, and an abundance of qualified workers are what attracts BPO firms to the country. Furthermore, the government have been endorsing the use of economic zones, known as PEZA zones, where it gives fiscal and non-fiscal incentives to its locators. The major BPO players currently in the Philippines include accenture, aegis people support, convergys, e- telecare, and teletech.

OFFice Market OvervieWMakati’s CBD is considered the primary financial hub in the country, with most multinational corporations and business establishments located within the business district. there are, however, several business districts that are starting to emerge in Metro Manila, including eastwood city, the up-ayala technohub, Filinvest corporate city, and the rockwell center. One emerging district that stands out is Bonifacio global city, which is catching up with the likes of Ortigas and Makati’s cBD with a steady demand for quality spaces, as most of the developments fitting the requirements of BPO firms. In this light, both local and international BPO firms, as well as MNCs, are the driving force of office space demand in Metro Manila. According to the Information Technology and Business Process association of the philippines, the it and business process management sector grew by 19% in 2012. this, in turn, had a positive effect on the take-up of office spaces, as the growth in this sector alone contributed to an additional 137,066 jobs in the market. Office rents in Metro Manila are still rising despite the large supply coming into the market, as most of the upcoming stock has been pre-commit-ted. Demand would most likely be sustained for the next couple of years, accompanied by the growth of the BpO industry, strong demand from Mncs and the strengthening of the country’s economy. there are several upcoming developments in Metro Manila, such as alphaland Makati tower and eco tower, to be completed in 2013, and the v tower and techzone, in 2014.

economic indicators population, thousands 97,076gDp, us$ millions 250,591gDp per capita, us$ 2,580cpi 3.1Population Growth % y/y 1.7FDi, us$ millions 2,033GDP real % y/y 6.6Prime Office Rent Q1 2013 (USD/sq. meter/month) ManiLa (Makati) (USD/sq. meter/year) ManiLa (FOrt BOniFaciO)

23.23

190.75

key industries

electronics, business process outsourcing, textiles, pharmaceuticals,

chemicals, food processing









the phiLippines REGION MAP

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asia paciFic

suitaBiLity OvervieWthe growth story of sri Lanka started as early as 2006 and the economy has bounced back strongly since the end of 2009, largely supported by a strong services sector dominated by tourism, financial services and recently, information technology (IT), and enabled services. A business-friendly environment, supported by a favorable tax structure, moderate interest rates and inflation, as well as a strong rise in external trade, bolstered the economic development. international Monetary Fund (iMF) upgraded sri Lanka to a middle-income economy in 2010 and the credit ratings have largely been stable over the last couple of years. together with these positive economic indicators and ongoing infrastructure developments in major cities, sri Lanka has become an increasingly attractive location, as evident from a steady rise in foreign investments in the recent past. Furthermore, the economic development ministry of sri Lanka is exploring options to ease restrictions on foreign ownership as well as reduce the investment threshold to fillip the investments. In the capital colombo, several multinational companies, largely from the banking and it services sectors, have already started operations to capitalize on the growth momentum. For example, hsBc, standard chartered, citibank, aviva, Microsoft, Motorola, and Wns have long established their presence in sri Lanka. Being a low cost destination with a steady growth trajectory, the long-term outlook for colombo remains strong and the growth of the banking, financial services and IT sectors will be particularly prevalent in the near future.

OFFice Market OvervieWcolombo, the capital of sri Lanka, is a preferred destination for multinational occupiers from various sectors. asian Development Bank has identified Colombo as a competitive location as compared to several other outsourcing destinations within the region. Ever since the market bounced back and recovered in 2010, the absorption of high quality office space driven by banking, financial services and IT/ites companies has been strong, and the vacancy levels have bottomed in 2011-2012 with continued mismatch between demand and supply. Occupancy levels generally exceed 90% and the market has witnessed significant rent rises in the recent past. Grade A proper-ties in the CBD and in close proximity to the city center remain popular among multinational companies, especially financial institu-tions, and the occupancy costs have increased by more than 70% from 2009-2010. With tight vacancies and strong demand, occupiers often end up with medium quality space away from the core, thus constantly pushing the rentals upward. in colombo, with a sizeable supply of office space still under construction, the expectation is for occupancy levels to remain relatively tight across the core areas and secondary markets with rents continuing a steady rise until at least next year. supported by lower occupancy costs, tax incentives together with continued improvements in infrastructure, in IT and financial services are expected to record a steady growth, thus indicating a stable upward demand outlook for office space within a five-year horizon.

economic indicators population, thousands 21,200gDp, us$ millions 58,171gDp per capita, us$ 2,744cpi 7.3Population Growth % y/y 0.8FDi, us$ millions 530GDP real % y/y 6.4Prime Office Rent Q1 2013 (USD/sq. meter/month) cOLOMBO (USD/sq. meter/year) cOLOMBO

20.45

245.41

key industries textiles, food processing,

tourism, textiles, pharmaceuticals









sri Lanka

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suitaBiLity OvervieWGDP growth has averaged 5% per annum over five years and the economy has made huge strides in the last three decades, moving away from a traditional reliance on agriculture. thai equities have been among the best performing in the world in recent times, with the set index up 31% over 12 months to the end of March. in line with many emerging countries, consumerism is a major theme. known for its picturesque beaches, thailand is a large country, with its 69 million inhabitants spread around which reveals another key theme as urbanisation continues at rapid pace beyond established cities. since the last election, thailand has stabilized politically, lifting the real estate and manufacturing industries in thailand. Foreign direct investment has picked up with enormous international interest in upcoming infrastructure projects. the Bank of Japan’s efforts to shore up the Japanese economy should be positive for thailand, as Japan remains one of the kingdom’s main trading partners and an important source of FDi, particularly in the automotive sector. however, the country’s provincial cities have continued to lag behind Bangkok in economic terms as infrastructural investments to connect the country remains muted. However, all this could change if the first phase of four high-speed train projects to connect the country kicks off.

OFFice Market OvervieWBangkok’s office market remains in favor of existing landlords with the highest rental rate centralized in the city. The average rental rate around Bangkok’s CBD has also increased to THB 654.78 sq. meter/mo., up from the previous quarter by 3.52%. Bangkok’s office market showed significant growth last year due to high demand in new investment opportunities and preparation for the Asian Economic Community. The office market is generally expected to remain positive with limited existing and future supply for the next couple of years. however, some uncertainty exists as the Bangkok Metropolitan administration’s Department of city planning will announce plans which will play a crucial role in managing property development in the city, especially when lands for development are expensive and scarce. as real estate is one of major forces contributing to the city’s economic growth, Bangkok’s office market is set to rise in view of the growing demand. this market is forecast to remain positive in 2013, especially for existing landlords and prime buildings located close to mass transit stations. Demand from multinational companies’ expansion, particularly in the it and consumer product sectors have pushed vacancy rates to a historical low of 11%. the higher rental rate and lower vacancy rate can be seen particularly in the areas of ploenchit & rama i, sathorn, and Wireless, because several companies are maintaining their bases and looking to expand their work space due to growing opportunities and potential growth for business.grade-a centrally located rents is expected to continue on an upward trend.

economic indicators population, thousands 68,947gDp, us$ millions 366,036gDp per capita, us$ 5,309cpi 3.0Population Growth % y/y 0.5FDi, us$ millions 7,932GDP real % y/y 6.4Prime Office Rent Q1 2013 (USD/sq. meter/month) BangkOk (USD/sq. meter/year) BangkOk

21

248

key industries rice, automotives, electronics,

jewelry, fishery produce, textiles









thaiLanD

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suitaBiLity OvervieWthe economy of Zambia relies heavily on copper mining, although the agriculture, construction and tourism sectors are becoming increasingly important. the country has experienced strong economic growth due to high copper prices, privatisation and increased foreign investment from european and asian mining companies that are currently present within Zambia, for example glencore International and Vedanta Resources. Additionally, Zambia’s economy has benefitted from being a part of the Heavily Indebted Poor countries (hipc) programme. as a result, companies from a variety of sectors are present within Zambia, such as saB Miller and Associated British Foods (ABF). Zambia’s monetary policy is concerned with maintaining sustainable, single-digit inflation while retaining the liquidity of capital required for investment in the country. Furthermore, recently the country’s government pursued certain business reforms as a way to encourage private sector development. partnerships have been fostered with the larger, developing markets of china and india. the outlook for the Zambian economy remains favorable in the medium term, underpinned by robust growth and single-digit inflation. The country, however, remains vulnerable to external shocks, with a sluggish global economic recovery a concern for its key mining exports. high youth unemployment and slow progress in poverty reduction may also overshadow the gains made from strong growth and limited inflation.

OFFice Market OvervieWThe principal office market in Zambia is located in the capital city, Lusaka. The most popular areas for occupiers and new developments are between the great east road and the Mass Media area, up to the Longacres part of the city. the market in Lusaka itself is fairly well established, although much of the current office stock is of lower quality. However, prevailing occupier demand is mostly for high quality, modern and flexible space. As this quality of stock is limited within the CBD and demand remains high, rents for prime space have increased substantially over the past two years. however, supply levels are set to remain low; indeed, despite recent international investment and development, there is a notable lack of land adequate for constructing good-quality offices. consequently, with supply expected to remain low and demand for high-quality space to outstrip supply, prime rents are expected to move up over the next 12 months. With only one new office development currently under way in Lusaka, it is moving quickly towards a market that will favour landlords more heavily than before. The era of tenants having choice when looking to upgrade their office space will soon be over, particularly so as the majority of speculative space has already been pre-leased at competitive rates.

suitaBiLity OvervieWvietnam’s economic development has been characterized by rapid growth, improvement in living standards, a large population, and a growing integration into world trade flows and supply chains. This combination makes the country a very attractive target for exporters and investors alike. the rapid economic development has resulted in an acceleration of urbanization and industrialization, while vietnam has also become a major exporter of agricultural commodities (e.g. rice, coffee, etc.), offering large and attractive opportunities for international companies. vietnam has adopted a strategy aimed at private sector development and further integration into international trade. vietnam is looking at large structural reforms, accompanied by major investment efforts, in order to increase production, improve infrastructure and enhance productivity and competitiveness. however, in recent times, vietnam witnessed a visible slowdown in economic growth and is confronting difficult cyclical and structural challenges. Over the short term, a tighter monetary policy and the depreciation of the vietnamese Dong will constrain demand and weigh on the price advantage of imported products. in parallel, the banking sector is weak and may have to go through substantial changes. the overall political risk rating is somewhat poorer, but no major economic or financial shock is expected. Indeed, the legal and regulatory framework still needs to progress considerably, and great care should be exercised when coming to contractual details and arbitration clauses.

OFFice Market OvervieWin vietnam, the principal commercial centers are the capital hanoi and the big city ho chi Minh. in hanoi, there has been a downward trend in the office market in terms of occupancy rate and rental rate due to oversupply. It is expected to see a continuing growth in total supply in the market and as a result, rental rates are forecast to witness further compression, with Grade A offices at the forefront of these decreases. From a demand perspective, an increase in inquiries on tenant relocation is forecast throughout the rest of 2013 as firms seek to take advantage of low rental rates offered in the West of the city. in ho chi Minh city, substantial increases in the supply of Grade A and B office space has been forecast in the short to medium term, in and surrounding the CBD. However, many office development sites are suffering from construction delays and in some cases, construction has stopped altogether due to financing problems. During the past 12 months, multinational tenants have gradually been migrating back to the cBD, taking advantage of the favorable market conditions and the superior build quality of the new office supply. This trend is predicted to continue for the time being. Headline rents look to be stabilizing, although improved lease incentives continue to be offered to tenants. With increases in office supply predicted to continue in the short to medium term, 2013 will remain a tenant’s market for both hanoi and ho chi Minh city.

economic indicators population, thousands 89,686gDp, us$ millions 139,249gDp per capita, us$ 1,553cpi 9.1Population Growth % y/y 1.0FDi, us$ millions 8,371GDP real % y/y 5.0Prime Office Rent Q1 2013 (USD/sq. meter/month) hanOi (USD/sq. meter/year) hO chi Minh city

38

588

key industries

crude oil, electronics, food processing, textiles, chemical fertilizers,

glass, mining, steel and cement







vietnaMc&W ranked the economic indicators and risk factors in each region to showcase how each country ranks within its respective region. the rankings are as follows:


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Sigrid Zialcita Managing Director head of apac research [email protected]

Kenneth McCarthy chief economist [email protected]

Rick Cleveland Managing Director research & strategy, americas corporate Occupier & investor services [email protected]

cOntacts

This report has been prepared by Cushman & Wakefield, Inc. In some cases, Cushman & Wakefield relied on its alliance partners globally for information, with particular thanks to the following offices:

africa: proafrica property services Middle east: cluttons LLp; Michael Dunn & co. s.a.L. thailand: nexus property consultants Ltd.

Cushman & Wakefield (C&W) is known the world-over as an industry knowledge leader. Through the delivery of timely, accurate, high-quality research reports on the leading trends, markets around the world and business issues of the day, we aim to assist our clients in making property decisions that meet their objectives and enhance their competitive position.

in addition to producing regular reports such as global rankings and local quarterly updates available on a regular basis, c&W also provides customized studies to meet specific information needs of owners, occupiers and investors.

C&W is the world’s largest privately-held commercial real estate services firm. The company advises and represents clients on all aspects of property occupancy and investment, and has established a preeminent position in the world’s major markets, as evidenced by its frequent involvement in many of the most significant property leases, sales and assignments. Founded in 1917, it has 253 offices in 60 countries and nearly 15,000 employees. It offers a complete range of services for all property types, including leasing, sales and acquisitions, equity, debt and structured finance, corporate finance and investment banking, corporate services, property management, facilities management, project management, consulting and appraisal. The firm has more than $3.7 billion in assets under management globally. A recognized leader in local and global real estate research, the firm publishes its market information and studies online at www.cushmanwakefield.com/knowledge.

this report has been prepared solely for information purposes. it does not purport to be a complete description of the markets or developments contained in this material. the information on which this report is based has been obtained from sources we believe to be reliable, but we have not independently verified such information and we do not guarantee that the information is accurate or complete. published by corporate communications.

©2013 Cushman & Wakefield, Inc. All rights reserved.

Barrie David eMea research consultant [email protected]

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occupier insight navigating emerging markets 2013 #cre

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