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Jones Lang LaSalle on Africa: 20 Cities to watch

14/05/2013

Jeremy KellyPosted by: Jeremy Kelly
Global Research
Jones Lang LaSalle EMEA Research

What do London and Paris have in common with Cape Town and Johannesburg?

Surely not the weather…

Rather, Jones Lang LaSalle’s research has identified these cities as the most transparent and most actively traded in their respective continents.

While Europe’s established real estate markets and densely populated cities will continue to be the focus of investors’ interest for years to come, attention is starting to be drawn to the opportunities offered by Africa.  Our recent research identifies 20 African cities that will make their mark on the commercial real estate sector over the next decade.  Rapid urbanisation, youthful populations and solid GDP growth present investors, corporates and retailers with major opportunities for development and expansion.

The 20 cities to watch are:

  • Angola: Luanda
  • Egypt: Alexandria, Cairo
  • Ethiopia: Addis Ababa
  • Ghana: Accra
  • Kenya: Mombasa, Nairobi
  • Morocco: Casablanca, Marrakech, Rabat, Tangiers
  • Mozambique: Maputo
  • Nigeria: Abuja, Lagos
  • South Africa: Cape Town, Durban, Johannesburg
  • Tanzania: Dar es Salaam
  • Tunisia: Tunis
  • Zambia: Lusaka

Surprised? You shouldn’t be – but you’re not alone.  Africa is often perceived as a continent plagued by conflict and corruption.  Admittedly poor real estate transparency continues to constrain many of these cities, but operating environments are selectively improving and there are potentially huge pay-offs for  those cities that can strengthen regulatory control and the fairness of transaction processes. 

The 20 cities collectively represent an urban population of 70 million people and 11 of the cities are located in just four countries.  A closer look at these countries reveals that corporates and investors are already seizing opportunities, which is paving the way for others to follow suit:

  • Egypt: Cairo, the most populous city in Africa, and a key target for developers, despite political and economic uncertainties
  • Morocco: Casablanca, the largest city in the Maghreb region and an emerging outsourcing hub
  • Nigeria: Lagos, the commercial hub of Africa’s second-largest economy and a city witnessing rapid GDP growth at over 7 percent
  • South Africa: The continent’s only transparent real estate market

Interested in learning more? Please visit Jones Lang LaSalle’s Research resources:

Africa - Map

 

 

Click to enlarge

 

Posted in Investor Research | Comments Closed

Cash buyers dominate the Dubai market

13/03/2013

Craig_PlumbPosted by: Craig Plumb
Head of Research MENA
Jones Lang LaSalle MENA Research

The Dubai real estate market is showing signs of recovery for the first time since it was so seriously impacted by the global financial crises in 2008.  While the recovery has been led by the hotel market, there are now signs that prices and rents are increasing again in the residential sector.  To date this recovery has been focussed on the upper end of the market (particularly in the villa sector) but we expect 2013 to result in a broader based recovery.

Cash buyers remain an important component of the residential market, with Dubai’s safe haven status attracting investors from more volatile areas of the middle east as well as Africa and Central Asia.  Data from the Dubai Land Department shows that Mortgages were only used by around 20% of all residential purchasers in 2012. This trend is continuing in 2013, with many developers offering their own extended payment plans to assist cash buyers.

Posted in Investor Research, Residential Research | Comments Closed

Middle East lags on real estate market transparency

27/06/2012

Posted by: Craig Plumb
Head of Research MENA
Jones Lang LaSalle MENA Research

While transparency has increased in most markets in the Middle East and North Africa (MENA) over the past two years, the region continues to experience lower levels of transparency than other parts of the world.  This is revealed by Jones Lang LaSalle’s new Global Real Estate Transparency Index for 2012 that was released this week.

This improvement is encouraging because transparency is important to both investors and occupiers of real estate. Put most simply, the more transparent a market, the more informed decisions can be made and the lower the risk premium. More transparent markets will therefore attract higher levels of sales activity.

Dubai is the most transparent of the 15 markets covered across the Middle East and North Africa, and ranks in the semi-transparent category at the global level. Despite the best efforts of RERA (the best in class real estate regulator in the region) and the DIFC’s role as the preferred listing vehicle for REIT’s, the level of improvement since 2010 has been disappointing.

Elsewhere in the region, Lebanon stands out as the most improved market over the past 2 years, while Egypt is the only one of the 97 markets covered globally where transparency has actually declined since 2010.

As policy makers have recognised the need to improve transparency to attract increased foreign investment into the region, further forward progress is likely to be made by the time we undertake our next survey in 2014. This will be a positive factor, increasing the attraction of the real estate market to both occupiers and investors.

Posted in Investor Research, Occupier Research | Comments Closed

Technology brings buildings back to life

06/03/2012

Posted by: Oliver Kummerfeldt
EMEA Offices Research
Jones Lang LaSalle EMEA Research

Landlords – understanding new technology is crucial to attract and retain tenants, but certain old buildings might be getting a new ‘lease of life’

You might have thought that some of your offices were no longer ‘up to spec’ and getting close to their ‘sell by date’ – and if not precisely ‘a sale’, then maybe a major refurbishment or new construction. In a word the dreaded ‘obsolescence’ – newer, smarter, more efficient and flexible offices putting your long-trusted but old ‘out of spec’ performers ‘on the shelf’, and giving you the headache of major capital reinvestment.  But maybe not; for a saviour could be at hand in the form of fast-moving technology developments that have a real potential to put older buildings ‘back into play’ if the location is right. (more…)

Posted in Investor Research, Offices Research | Comments Closed

Protect your assets with green investments and avoid the risk of value erosion

26/01/2012

Bill PagePosted by: Bill Page
National Director
Jones Lang LaSalle EMEA Research

With the ever growing emphasis on sustainability, green investments will become a focus point over the next decade as a means to avoid value erosion. It is clear that green investments are the best way forward. Otherwise, occupiers who look to chase costs through lower rental values will be hit by higher operational costs of non-sustainable buildings.

Sustainable buildings are well on the way to becoming the benchmark of quality buildings – and this line of thought will be followed by the economics of rents, yields and valuation. It can’t be denied that current economic conditions are far from favourable and will probably cause a delay in green investments, however, the industry must continue to drive change to remain at the forefront of the game. After all, by 2020 sustainability variables such as carbon emissions taxes and rising insurance premiums will become reflected in valuations. There is no running away from the fact that more informed occupiers will become better educated about their sustainability requirements and will ensure that their needs are addressed.

The time has come and it is clear, no pain, no gain.

For further details, contact Bill Page on +44 (0)20 3147 1212 to book a workshop; check out Offices 2020 for more information. A great place to keep up to date is our LinkedIn page  for  regular discussions and informal idea sharing.

Posted in Investor Research, Occupier Research, Sustainability | Comments Closed

Dubai gets a $1 billion boost 

28/10/2011

Posted by: Craig Plumb
Head of Research – MENA
Jones Lang LaSalle EMEA Research

While a number of global real estate funds have looked closely at opportunities in the Dubai market over the past two years, no suitable deals have been sourced and they have all left town empty handed.  Today’s announcement that Brookfield Asset Management has teemed up with the Dubai Governments ICD (Investment Corporation of Dubai) to establish a new fund of up to $1 billion, entirely focussed on assets in Dubai is therefore a welcome shot in the arm for the market.  Sentiment is a major driver of the Dubai market and this announcement represents a welcome indication of the re-emergence of local as well as international institutional investor appetite, which has been largely absent since the on-set of the credit crisis in 2008. Although challenges in Dubai remain, with the right strategy, this fund could sweep up some interesting opportunities and begin to establish some consistent pricing & yield benchmarks which have hitherto been missing due to the limited transactional activity.

Posted in Investor Research, Occupier Research | Comments Closed

Investors and developers – throw away the rule book!

07/10/2011

Bill PagePosted by: Bill Page
National Director
Jones Lang LaSalle EMEA Research

Okay – maybe that’s a bit hasty. Probably keep some pages but maybe a ring-binder will work best, as the changes are coming thick and fast. Yes, the rules that are governing the game that is ‘offices’ are becoming very interesting. You thought the changes of the last 10 years were enough to keep you on your toes, well the next 10 are going to be character building!

‘Sustainability’ – yes, we all know about that. Well beyond the ‘green’ aspects, do we know the deeper impacts – such as how obsolete non-green offices are rapidly going to become. And the massive risk – and opportunity refurbishment provides? ‘Money’ – sorry, have to mention it. Now that the banks’ lending coffers have become decidedly rusty, who is going to fill the funding gap – and, as a result of this, what will get built and where? And this brings us onto ‘Location, location, location’ – ah, a reassuring mantra – surely that’s still in the rule book. Yes, but now it’s also about hotspots and shifting micro-locations, and a compass pointing east and further east.

And just when you thought that you had clicked with the wireless, mobile, hot-desk, break-out, chill-out office scene, somebody starts talking about ‘cloud’ and how it will seriously free-up space in some buildings, or the potential for new 12volt electrical technology to actually bring older (non-raised floor) offices back into play. As for ‘wireless electricity’ – let’s stop now!

So food for thought and there’s a whole lot more to chew on (and hopefully savour!) in our new Offices 2020* research – no rule books, no ring-binders, all online.

[*Offices 2020 is an ongoing thought-leadership initiative from Jones Lang LaSalle looking at the future of offices across EMEA].

Posted in Investor Research, Offices Research | Comments Closed

Arab Spring fails to provide major bounce in Dubai real estate market

13/07/2011

Posted by: Craig Plumb
Head of Research – MENA
Jones Lang LaSalle EMEA Research

The social and political turmoil that has swept through the MENA region over the past 6 months (the Arab Spring) has had a positive but muted impact upon the Dubai real estate market. While increasing demand in some sectors of this traditional ‘safe haven’ this has been insufficient to offset the impact of the Emirates widely reported excessive supply levels. (more…)

Posted in Investor Research, Offices Research, Residential Research, Retail Research | Comments Closed

Real Estate Investment Market in Russia

11/07/2011

Posted by: Olesya Cherdantseva
Senior Analyst
Jones Lang LaSalle EMEA Research

Investment into Russian real estate is gaining momentum, with the total volume of Q2 2011 investment in Russia up 139% YoY; to USD2.5bn. Commercial real estate investments increased 164% YoY in Q2 2011, to USD2.4bn. We expect a further increase in real estate investment volumes in 2011, with the annual volume reaching USD7bn, of which the commercial real estate component will account for about USD6.4bn.

For the first time since 2008, Q2 2011 market activity in Russia was characterised by the dominance of foreign investors, who accounted for 67% of the total Q2 investment volume, and 47% of the capital invested in H1 2011.

Sector wise, investments were much diversified. The office segment attracted 39% of all investment volumes in Q2 2011. Hotel investment volumes accounted for 29% of the total invested in real estate in Q2. Retail were also in relatively high demand, accounting for 18% of the total volume in Q2. Moreover, deal sizes were larger, with those exceeding USD300mn accounting for 53% in H1 2011 vs. 43% in 2010.

The local credit market continued to recover in Q2 2011, with the average rouble lending rate declining to 8.4%, and the US dollar rate to 4% in April 2011. The volume of liquidity available on the market is high and commercial real estate lending is now easier to access.

Retail investment: Move to regional cities

With the political uncertainties and pipeline limited by projects started before crisis in Moscow, developers and investors are now looking at retail property in regional cities. This is supported by the elevated interest of retailers in regional markets in 2011.

The regional retail market attracted 32% of the Q2 retail investment volumes. One of the factors driving this interest is the increased availability of debt financing, both senior and construction. As a result, investors have access to more liquidity to make new investments or unfreeze projects that had been started before the crisis.

The share of development projects  increased in Q2 2011 to 26% of all completed regional retail deals. As there are very few projects and standing assets available for sale in Moscow, we expect greater investor interest in the regional retail investment market.

Read more about Russian real estate investment market in our latest report

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Can things only get better? Maybe, but understanding your tenants will be key

30/03/2011

Posted by: Frances Ketteringham
Senior Analyst, EMEA Offices Research
Jones Lang LaSalle EMEA Research

Back in the dark days of 2008, it felt at times like we might never see the light at the end of the tunnel. However, selective liquidity has now returned to the market and Europe is leading the world once again in terms of cross-border transactional activity, as equity rich investors have sought to take advantage of attractive pricing to acquire low risk assets in prime locations.

As reported in our recently released European Capital Markets Bulletin, optimism is back on the agenda with the feeling that, at last, things can only get better. Given the activity that we have seen in the market during the early stages of 2011, and the volume of equity pools targeting European markets, we believe that there is the potential for activity to increase by more than 30% this year. If anything, the lack of suitable product rather than a shortage of capital will be an issue.

As perceived safe havens for a number of investors, the major Western European markets will continue to dominate. However, following the steep re-pricing of assets in these markets last year, yields are forecast to stabilise with capital value growth driven primarily by rising rents in 2011. For this reason, it will benefit investors to get to know their tenants and understand what is driving the occupational market. The good news is that tenant activity is increasing, amidst strengthening occupier market fundamentals, which will in turn generate growth. With limited new supply being added to the market, the absorption of stock in under supplied markets will place an upward pressure on Grade A and prime rents. With occupier preference firmly focused on high quality space as tenants seeks higher levels of productivity, however, this growth will be largely confined to core assets, with secondary space likely to see further downward pricing pressure. More information on what is driving the Corporate Real Estate agenda can be found in the results of Jones Lang LaSalle’s recently released Global Corporate Real Estate Survey.
 
For equity rich investors, opportunities continue to exist in the core markets of London, Paris and Frankfurt where rental growth will remain this year. For those with an appetite to widen their horizons, there will also be opportunities for core assets in a wider tier of cities as the occupational market recovers from a very low historical pricing level, including Lyon, Stockholm, Helsinki, Warsaw and Moscow.

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