May 26, 2016 Japan Real Estate Institute (JREI) JREI-kenkyu-madoguchi@imail.jrei.jp Summary of JREI Global Property Value/Rent Indices (No. 6, Apr. 2016) We are pleased to release a summary of the result of the Forth JREI Global Property Value/Rent Indices (as of April 2016). Survey Results at a Glance (in Comparison with Survey No. 4, Change Rate from Oct. 2015 to Apr. 2016 in Parentheses) Office Market Tokyo (+4.3%) and Osaka (+3.1%) were ranked as the first and second highest cities in terms of the growth rate of office building value with continuing cap rate compression due to robust investment demand in an extra-loose monetary policy. In spite of a slowing Chinese economy, Shanghai witnessed the largest growth of office building rent, buoyed especially by the demand from international financial institutions and trade firms in the Pudong district. The office rent in Singapore declined by 6.1% due to the oversupply, renter s market. The office building market lost steam in for both investing and leasing. Most market participants have been taking a wait-and-see position before the Brexit referendum in June 2016. Condominium Market The two biggest gainers of condominium values were Shanghai (+11.0%) and Beijing (+8.3%). The Chinese government s stimulus policy ignited the realization of the robust pent-up demand, especially in first-tier cities, such as Shanghai and Beijing. Condominium values fell in Hong Kong, Taipei, Singapore, and Kuala. Hong Kong saw a huge drop of 9.3% during the last six months due to a market correction. Office Building Value Change Office Building Rent Change Condominium Value Change Condominium Rent Change Y/O/Y Y/O/Y Y/O/Y Y/O/Y Tokyo +4.3% Shanghai +3.1% Shanghai +11.0% Shanghai +5.5% Osaka +3.1% +1.8% Beijing +8.3% Beijing +5.3% Beijing +2.7% HCMC +1.7% Tokyo +2.7% Jakarta +2.2% HCMC +2.1% Bangkok +1.3% Jakarta +2.2% +0.9% +2.1% NY +1.3% Osaka +1.8% Tokyo +0.8% Shanghai +1.4% Tokyo +1.0% +1.2% NY +0.7% Bangkok +1.3% Beijing +0.8% Seoul +0.8% HCMC +0.5% NY +1.0% Hong Kong +0.7% NY +0.8% Bangkok +0.3% Hong Kong +0.7% Osaka +0.6% HCMC +0.6% Osaka +0.2% Taipei +0.5% Taipei +0.5% Bangkok +0.4% Taipei +0.1% Seoul +0.4% Seoul +0.4% KL -0.2% Seoul -0.4% Jakarta +0.4% KL +0.3% Singapore -1.4% KL -0.8% KL +0.3% Jakarta -2.4% Taipei -5.6% Hong Kong -2.4% Singapore -0.6% Singapore -6.1% Hong Kong -9.3% Singapore -2.4% Copyright by All rights reserved. No part of 1
1. Half-Year Growth Rate of Value/Rent Index by 1-1. Growth Rate of Office Building Value Index (Six Months from October 2015 to April 2016) Figure 1-1 shows the half-year growth rate of the office building value index in each surveyed city. As of April 2016, the growth rate was highest in Tokyo (+4.3%) followed by Osaka (+3.1%) and (+2.1%). On the other hand, a negative rate was reported in Singapore (-0.6%). Figure 1-1: Comparison of Half-Year Growth Rate of Office Building Value Index 6% Oct-15 Apr-16 4% 2% 0% -2% Tokyo Osaka Seoul Beijing Shanghai Hong Kong Taipei Singapore Kuala Bangkok Jakarta HCMC New York Oct-15 5.8% 4.0% 2.3% 0.7% 1.4% 0.7% 0.5% 0.3% 0.4% 2.2% 1.4% 2.3% 1.6% 3.4% Apr-16 4.3% 3.1% 0.4% 2.7% 1.4% 0.7% 0.5% -0.6% 0.3% 1.3% 0.4% 2.1% 1.0% 2.1% 1-2. Growth Rate of Office Building Rent Index (Six Months from October 2015 to April 2016) Figure 1-2 shows the half-year growth rate of the office building rent index in each surveyed city. As of April 2016, the growth rate was highest in Shanghai (+3.1%) followed by (+1.8%). Two cities, Singapore (-6.1%) and Jakarta (-2.4%), witnessed a negative rental growth. Figure 1-2: Comparison of Half-Year Growth Rate of Office Building Rent Index 4% Oct-15 Apr-16 2% 0% -2% -4% -6% -8% Tokyo Osaka Seoul Beijing Shanghai Hong Kong Taipei Singapore Kuala Bangkok Jakarta HCMC New York Oct-15 2.3% 0.8% 0.6% 0.2% 1.4% 0.7% 0.5% -4.5% 0.5% 2.2% -2.5% 2.2% 2.2% 1.3% Apr-16 1.0% 0.6% 0.4% 0.8% 3.1% 0.7% 0.5% -6.1% 0.3% 1.3% -2.4% 1.7% 1.3% 1.8% Copyright by All rights reserved. No part of 2
1-3. Growth Rate of Condominium Value Index (Six Months from October 2015 to April 2016) Figure 1-3 shows the half-year growth rate of the condominium value index in each surveyed city. As of April 2016, the growth rate was highest in Shanghai (+11.0%) followed by Beijing (+8.3%). On the other hand, a negative growth rate was seen in the following four cities: Hong Kong (-9.3%); Taipei (-5.6%); Singapore (-1.4%); and Kuala (-0.2%). Figure 1-3: Comparison of Half-Year Growth Rate of Condominium Value Index 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% Oct-15 Apr-16 Tokyo Osaka Seoul Beijing Shanghai Hong Kong Taipei Singapore Kuala Bangkok Jakarta HCMC New York Oct-15 2.3% 2.8% 2.2% 5.3% 3.4% 2.9% -4.6% -2.4% 0.4% 2.4% 2.9% 1.1% 3.5% 2.2% Apr-16 2.7% 1.8% 0.8% 8.3% 11.0% -9.3% -5.6% -1.4% -0.2% 0.4% 2.2% 0.6% 0.8% 1.2% 1-4. Growth Rate of Condominium Rent Index (Six Months from October 2015 to April 2016) Figure 1-4 shows the half-year growth rate of the condominium rent index in each surveyed city. As of April 2016, the growth rate was highest in Shanghai (+5.5%) followed by Beijing (+5.3%). On the other hand, a negative growth rate was witnessed in the following four cities: Seoul (-0.4%); Hong Kong (-2.4%); Singapore (-2.4%); and Kuala (-0.8%). Figure 1-4: Comparison of Half-Year Growth Rate of Condominium Rent Index 6% Oct-15 Apr-16 4% 2% 0% -2% -4% Tokyo Osaka Seoul Beijing Shanghai Hong Kong Taipei Singapore Kuala Bangkok Jakarta HCMC New York Oct-15 0.7% 0.4% -0.6% 2.7% 2.9% 0.7% 0.0% -1.1% 0.1% 1.7% 2.3% 0.8% 1.4% 1.1% Apr-16 0.8% 0.2% -0.4% 5.3% 5.5% -2.4% 0.1% -2.4% -0.8% 0.3% 2.2% 0.5% 0.7% 0.9% Copyright by All rights reserved. No part of 3
2. Value/Rent Trend by (October 2010 =.0) Figure 2-1: Office Building Value/Rent Indices (October 2010 =.0) [ Tokyo ] [ Osaka ] 132.8 116.3 109.8.8 [ Seoul ] [ Beijing ] 196.5 165.8 127.1 107.1 [ Shanghai ] [ Hong Kong ] 148.9 146.6 141.2 126.1 [ Taipei ] [ Singapore ] 148.6 109.1 115.7.7 Copyright by All rights reserved. No part of 4
Figure 2-1: Office Building Value/Rent Indices (October 2010 =.0) [ Kuala ] [ Bankok ] 116.8 127.3 112.4 114.4 [ Jakarta ] [ HCMC ] 196.3.0 141.4 103.5 [ New York ] 186.1 [ ] 183.4 148.5 139.1 Oct-10 Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Copyright by All rights reserved. No part of 5
Figure 2-2: Condominium Value/Rent Indices (October 2010 =.0) [ Tokyo ] [ Osaka ] 111.5 110.1 102.2.2 [ Seoul ] [ Beijing ] 155.7 148.4 98.2 95.8 [ Shanghai ] [ Hong Kong ] 158.4 133.2 126.2 123.3 [ Taipei ] [ Singapore ] 117.5 119.1 114.0 95.4 Copyright by All rights reserved. No part of 6
Figure 2-2: Condominium Value/Rent Indices (October 2010 =.0) [ Kuala ] [ Bankok ] 142.4 108.0 118.4 108.5 [ Jakarta ] 172.4 [ HCMC ] 143.7 87.0 82.5 [ New York ] [ ] 165.4 154.1 123.4 115.0 Copyright by All rights reserved. No part of 7
3. Value and Rent Comparison among Surveyed Cities (April 2016) 3-1. Value Comparison of Prime CBD Office Buildings Figure 3-1 shows the index number of the value per leasable square meter for a prime office building in the CBD of each surveyed city (Tokyo s Marunouchi/Otemachi District =.0). The value of the building in the local currency of each foreign city was converted to the value in the Japanese yen and indexed. (The same method was also applied to the office building rent comparison.) Figure 3-1: Value Comparison of Prime CBD Office Buildings 170.6 (Tokyo's Marunouchi/Otemachi District as of April 2016 =.0).0 81.2 60 40 41.8 27.8 37.1 52.3 56.1 41.6 50.9 20 9.0 6.9 13.9 11.8 0 Tokyo Osaka Seoul Beijing Shanghai Hong Kong Taipei Singapore Kuala Bangkok Jakarta HCMC New York (*) Index number by city for the prime CBD office building value per square meter of each surveyed city (Tokyo s Marunouchi/Otemachi District as of April 2016 =.0) 3-2. Rent Comparison of Prime CBD Office Buildings Figure 3-2 shows the index number of the rent per leasable square meter on the typical floor of a prime office building in the CBD of each surveyed city (Tokyo s Marunouchi/Otemachi District =.0). Figure 3-2: Rent Comparison of Prime CBD Office Buildings 178.7 (Tokyo's Marunouchi/Otemachi District as of April 2016 =.0) 138.5.0 102.9 60 40 20 44.0 51.1 65.1 72.9 32.5 59.6 19.5 15.9 34.2 38.0 0 Tokyo Osaka Seoul Beijing Shanghai Hong Kong Taipei Singapore Kuala Bangkok Jakarta HCMC New York (*) Index number by city for the prime CBD office building rent per square meter of each surveyed city (Tokyo s Marunouchi/Otemachi District as of April 2016 =.0) Copyright by All rights reserved. No part of 8
3-3. Value Comparison of High-End Condominium Units Figure 3-3 shows the index number of the high-end condominium unit value per square meter of each surveyed city (Tokyo s Moto Azabu District in Minato Ward =.0). The value of the unit in the local currency of each foreign city was converted to the value in the Japanese yen and indexed. (The same method was also applied to the apartment rent comparison.) Figure 3-3: Value Comparison of High-End Condominium Units 300 (Tokyo's Moto Azabu District as of April 2016 =.0) 277.6 250.0 150 134.2 127.2 119.6 150.0 50.0 52.2 63.7 82.1 27.5 23.9 23.0 10.9 0 Tokyo Osaka Seoul Beijing Shanghai Hong Kong Taipei Singapore Kuala Bangkok Jakarta HCMC New York *) Index number by city for the high-end condominium value per square meter of each surveyed city (Tokyo s Moto Azabu District as of April 2016 =.0) 3-4. Rent Comparison of High-End Condominium Units Figure 3-4 shows the index number of the high-end condominium rent per square meter of each surveyed city (Tokyo s Moto Azabu District in Minato Ward =.0). Figure 3-4: Rent Comparison of High-End Condominium Units 350 300 (Tokyo's Moto Azabu District as of April 2016 =.0) 301.8 250 252.7 181.2 150 137.6 50.0 88.5 55.9 66.7 82.4 63.0 38.0 40.5 65.5 24.7 0 Tokyo Osaka Seoul Beijing Shanghai Hong Kong Taipei Singapore Kuala Bangkok Jakarta HCMC New York (*) Index number by city for the high-end condominium rent per square meter of each surveyed city (Tokyo s Moto Azabu District as of April 2016 =.0) Copyright by All rights reserved. No part of 9
Global Property Value/Rent Indices In order to investigate the real estate market trend of some major cities in the world, we compiled the value/rent indices of surveyed assets, which were appraised by JREI staff valuers. Survey Outline (Survey No. 6) Surveyed Cities : Tokyo, Osaka, Seoul, Beijing, Shanghai, Hong Kong, Taipei, Singapore, Kuala, Bangkok, Jakarta, Ho Chi Ming (HCMC), New York, and (14 cities) Use : Office and multifamily residential No. of Surveyed Assets : Six assets in each city (three office buildings and three residential assets) Survey Method : We compiled indices based on the appraised value or rent per square meter of each asset by assuming that the subject asset would be newly developed and sold or leased as of either April 1 st or October 1 st each year. Copyright by All rights reserved. No part of 10