PERPETUAL CORPORATE TRUST GLOBAL AND DOMESTIC CAPITAL TRENDS IN COMMERCIAL REAL ESTATE Glen Dogan Head of Sales and Relationship Management
AGENDA GLOBAL CAPITAL FLOWS & TRENDS APAC CAPITAL FLOWS & TRENDS AUSTRALIA S CAPITAL FLOWS & TRENDS 2
1H17 CHANGE IN TRANSACTION VOLUME U.S. volume slowed as fewer megadeals transacted, accounting for only 21% of volume in 2Q17 versus 32% in 2015. U.K. volume in 2Q17 grew because of increased activity in London, where two-thirds of capital originated overseas. -21% H1 5% Q2 INCREASE DECREASE >25% 10 to 25% 0 to 10% 0 to -10% -10 to -25% < -25% - 30% - 9% 32% 50% 11% 5% 14% During 1H17 Hong Kong overtook Tokyo to become Asia s largest marked for income-producing transactions. -46% 35% France in 2Q17 was suffering political uncertainty and for the first time sat outside Europe s top five markets. Investors balking at high prices and owners holding onto stock hurt investment volume, which dropped by 35% YOY in 1H17. 3 Source: Real Capital Analytics, Global Capital Trends, 1H 2017
Volume Change 12 Mths Through Q2 17 vs 12 Mths Through Q2 16 STALLING GLOBAL MOMENTUM 150% 100% Czech Republic Spain 50% 0% -50% United States Finland Canada Australia Sweden France Poland Ireland Taiwan Austria Netherlands Switzerland Denmark India United Kingdom China Hong Kong Mexico Brazil South Africa Singapore Germany Belgium Japan Norway Russia Italy South Korea -100% -150% -100% -50% 0% 50% 100% 150% Volume Change H1 17 vs H1 16 4 Source: Real Capital Analytics, Global Capital Trends, 1H 2017
1H17 GLOBAL TRADE ROUTES Rank Source Destination Vol ($m) YOY Chg 1 U.S. Germany 6,668 185% 2 China U.S. 4,999 12% 3 Singapore U.S. 3,496 71% 12 2 17 4 Hong Kong U.K. 3,092 100% USA 1 10 8 11 5 6 7 14 16 GBN NLD DEU 13 3 15 19 4 9 CHN HNG SGP KOR JPN 5 U.S. U.K. 2,978-46% 6 Germany U.S. 2,234-17% 7 U.S. Japan 1,834 24% 8 U.S. Netherlands 1,710-16% 9 South Korea Germany 1,619 n/a 20 10 U.S. Italy 1,618 29% 18 11 U.S. France 1,313-29% 12 Canada U.K. 1,302 23% 13 Japan U.S. 1,260 79% 14 U.S. Spain 1,249-16% 15 Hong Kong Canada 871 301% 16 Israel U.S. 859-20% From Americas 17 China U.K. 701-38% From Europe 18 Singapore Australia 636-22% From Asia Pacific 19 Singapore U.K. 621-75% From Middle East Route Rank 20 Hong Kong U.S. 607 55% Source: Real Capital Analytics, Global Capital Trends, 1H 2017
2017 TOP 30 MARKETS MOST ACTIVE METROS 1H17 Market Sales Volume ($m) YOY NYC Metro LA Metro London Metro SF Metro Hong Kong Boston Metro Dallas DC Metro Atlanta Tokyo Shanghai Singapore Miami/So Fla Amsterdam/Randstad Berlin-Brandenburg Frankfurt/Rhine-Main Rhine-Ruhr Houston Chicago Paris Seattle Madrid Austin Phoenix Seoul Denver Charlotte Sydney Orlando Yokohama 8,269 8,064 8,010 7,783 6,515 6,207 5,854 5,801 5,699 5,262 5,041 4,954 4,928 4,918 4,683 4,568 4,289 4,190 3,818 3,678 3,631 3,469 3,390 3,279 3,260 2,998 11,866 15,112 14,759 20,180-40% -7% 0% 0% -3% -33% -33% -38% -56% -26% -16% -42% -30% 5% 1% 27% 27% 43% 50% 6% 11% 58% 78% 41% 59% 3% 16% 48% 45% 6 Source: Real Capital Analytics, Global Capital Trends, 1H 2017
2016 TOP 30 MARKETS CROSS BORDER CAPITAL ONLY Market NYC Metro London Metro Paris Amsterdam/Randstad Berlin-Brandenburg SF Metro LA Metro Sydney Hong Kong Dublin Singapore Shanghai DC Metro Seoul Melbourne Rhine-Ruhr Munich Chicago Milan Saxon Triangle Miami/So Fla Frankfurt/Rhine-Main Prague Dallas Tokyo Copenhagen Seattle Warsaw Atlanta Manchester Metro 8,242 6,620 6,133 5,702 5,652 4,686 4,584 3,982 3,776 3,681 3,547 3,188 3,032 2,997 2,657 2,615 2,601 2,540 2,435 2,368 2,342 2,273 2,094 2,027 1,962 1,921 1,880 1,836 Sales Volume ($m) Global 17,769 17,711 Continental NY s Global Share Edges London in 2016 30% 20% 10% 0% '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 7 Source: Real Capital Analytics, Global CPPI TM Capital Global Trends, Cities 1H 2017
Price YOY Change RCA CPPI GLOBAL CITIES: MARKET MOMENTUM 25% Boston Bubble sized past four quarters volume 20% 15% Hong Kong 10% 5% New York Paris Melbourne Toronto Chicago Nordic A Los Angeles San Franisco Sydney German A Amsterdam London Tokyo Singapore 0% -5% Washington -10% -40% -30% -20% -10% 0% 10% 20% Volume YOY Change 8 Source: Real Capital Analytics, CPPI TM Global Cities
BUYER COMPOSITION 34.0% 41.0% 34.0% 43.0% 37.0% 18.0% 13.0% 13.0% 10.0% 15.0% 23.0% 18.0% 26.0% 13.0% 21.0% User/Other 22.0% 25.0% 24.0% 28.0% 25.0% Private REIT/Listed Institutional 6.0% Cross-Border 2013 2014 2015 2016 2017 2017 9 Source: Real Capital Analytics, CPPI TM Global Cities
ASIA PACIFIC
ASIA PACIFIC CAPITAL TRENDS 1 China 11% 2 Japan 14% 3 Australia - 35% INCREASE >25% 4 Hong Kong 5% 10 to 25% 0 to 10% DECREASE 0 to -10% -10 to -25% 5 Singapore 50% < -25% 11 Source: Real Capital Analytics, Asia Pacific Capital Trends, 1H 2017
Share of Global Cross-Border Flows, Rolling 12 Month ASIA CAPITAL FLOWS 60% Asia-Pacific Europe North America Avg Cap Rate 10 Yr Bond Spread (bps) 50% 40% 30% 20% US 6.5% 2.3% 415 Australia 6.3% 2.6% 369 France 6.3% 0.8% 547 Germany 6.0% 0.5% 554 U.K 5.9% 1.3% 466 Spain 5.0% 1.5% 349 Japan 5.0% 0.1% 493 10% 0% '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 Canada 5.0% 1.8% 323 Hong Kong 2.9% 1.5% 139 Singapore 2.8% 2.1% 66 12 Source: Real Capital Analytics, Asia Pacific Capital Trends, 1H 2017
APAC CAPITAL TRENDS BY PROPERTY TYPE Investments in Asia Pacific income-producing properties rose 5% YOY in 1H17. TRANSACTIONS BY PROPERTY TYPE Apartment Retail Industrial Hotel Office 109% 8% -3% -8% -8% Q2 17 Volume ($B) 13.9 3.0 7.4 4.6 2.7 31.6 130.9 162.4 H1 17 Volume ($B) 30.3 6.3 12.1 10.4 4.8 63.9 239.7 303.5 Income Properties Dev Site Grand Total 13 Source: Real Capital Analytics, Asia Pacific Capital Trends, 1H 2017
AUSTRALIA
CROSS-BORDER REAL ESTATE CAPITAL TRACKER Country 2015 2016 2017 (YTD) China $6,334 $7,105 $1,833 United States $3,372 $5,216 $1,643 Singapore $5,124 $2,994 $4,030 Hong Kong $1,679 $1,211 $543 Japan $16 $1,109 $28 France $0 $970 $0 South Korea $452 $748 $584 United Kingdom $304 $734 $242 Germany $796 $574 $235 $386m $385m $1.4b $2.8b Switzerland $260 $417 $181 $274m Volume in $ Millions $3.9b Total crossborder flows for the first 3 quarters of 2017 coming in at $9.338b well down on the full year 2016 flows of $21.083b 15 Source: Real Capital Analytics data as at 30 September 2017
CROSS-BORDER ASSETS BY STATE US $Millions $4,000 Sydney Melbourne $3,000 Brisbane Perth $2,000 $1,000 $0 Offce Industrial Retail Hotel Development 16 Source: Real Capital Analytics data as at 30 September 2017
Volume in AUD$ TREND TRACKER OFFICE Office Volume 1H17 $10b Sydney 7.0b Melbourne 4.9b $5b Brisbane 2.8b Perth 0.5b 2009 2011 2013 2015 2017 17 Source: Real Capital Analytics 2017, Volume displayed as 12 Month Totals. Includes property or portfolio sales $10 million or greater.
TREND TRACKER OFFICE CAP RATES 10.00% Cap Rate 1H17 9.00% Sydney 5.4% 8.00% Melbourne 5.9% 7.00% Brisbane 6.8% Perth 7.5% 6.00% 5.00% 18 Source: Real Capital Analytics 2017, Volume displayed as 12 Month Totals. Includes property or portfolio sales $10 million or greater.
TOP TRANSACTIONS AUSTRALIA BY PRICE (AUD) Property Name Location Price ($AUDm) Volume ($AUDm) Cap Rate (%) Buyer MLC Centre Sydney $1,445 $723 4.5 DEXUS 839 Collins Street Docklands $423 $423 5.3 Invesco Australia, Challenger Financial $336m $1.4b Olderfleet Bldgs Melbourne $828 $414 4.8 Suntec RE Inv. Trust $360m $1.445b Hill Rd International Towers Sydney Tower 1 Wentworth Point $360 $360 N/A (development site) Sekisui House Barangaroo $1,400 $350 Varies Multiple $696m $670m $423m $828m 311 Spencer Street Melbourne $696 $348 6.4 Keppel REIT 19 Source: Real Capital Analytics data as at 30 September 2017
MLC CENTRE SYDNEY CBD offices & retail $1.4b sales price $723m volume 4.5% cap DEXUS 20
839 Collins st DOCKLANDS CBD property $423m sales price $423m volume 5.3% cap Invesco, Challenger 21
Olderfleet Building MELBOURNE CBD offices & retail $828m sales price $414m Volume 4.8% Cap Suntec RE Inv Trust 22
Hill road Wentworth point NSW Development site to be residential apartments $360m Sales price $360m Volume Sekisui House 23
International Towers Sydney Tower 1 BARANGAROO CBD Offices & retail $1.4b Sales price $350m Volume 24
311 Spencer Street MELBOURNE CBD Offices $696m Sales price $348m Volume 6.4% Cap Keppel REIT 25
TOP BUYERS AND SELLERS Buyers Sellers 0 1,000 2,000 3,000 4,000 0 1,000 2,000 3,000 4,000 Blackstone Charter Hall REIT AMP Capital DEXUS Ascendas REIT GPT Mirvac Group ISPT AXA Group UniSuper (AUS) Goodman Group Brookfield AM Frasers Centrepoint Vicinity Centres Lend Lease DEXUS GPT Mirvac Group GIC NSW Government By acq (AUD, m) in prior 24 months By disposition (AUD, m) in prior 24 months 26 Source: Real Capital Analytics data as at 30 September 2017
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