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Monthly Archives: June 2011

PRESS RELEASE

Contact:

Robert McGrath                             

212.984.8267                                   

robert.mcgrath@nullcbre.com

CB RICHARD ELLIS RELEASES NEW GLOBAL CAPITAL MARKETVIEW REPORT

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Report Shows Capital Investment Values and Activity Increasing Globally

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Analyzes Global Capital Environment in Asia Pacific, EMEA and Americas

Los Angeles, June 6, 2011 – CB Richard Ellis’ (CBRE) new Global Capital MarketView Report shows that capital investment values are increasing globally, with the CBRE Global Office Capital Value Index increasing 12.0% year over year in the first quarter of 2011. The report analyzes global capital environments across Asia Pacific, Europe, Middle East and Africa (EMEA) and the Americas, including office capital value trends, development completions, debt financing availability, global investment volumes, cross-border capital flows and yield spreads. 

“Our report finds that rising global capital values are continuing to be led by the strong recovery in values in the Asia Pacific region, an expectation for improved property fundamentals in the Americas and moderate positive change in the European markets,” said Dr. Raymond Torto, CBRE’s Global Chief Economist. 

Findings in the report include: 

Global Capital Value Trends: Office 

  • The CB Richard Ellis Prime Office Capital Value Index for Asia Pacific increased a significant 18.9% year over year—the largest increase since Q2 2008 and twice the next-largest increase for the period, which was in the Americas.
  • In the EMEA region as a whole, capital values started to recover in late 2009, but these increases concealed a wide differential in trends at the city level. For example, office rental value growth has proven more robust in London and Paris than elsewhere in the region.
  • Capital Values in the Americas have mainly increased in the major markets such as New York, Washington, DC, and San Francisco; in particular, values have increased for the prime product. 

Debt Financing Availability 

  • For the Asia Pacific region, the issue is not the availability of debt, but rather, its cost. Spreads between interest rates and cap rates are already remarkably tight, and with rising inflation, there are concerns about the potential for interest-rate increases.
  • For the EMEA region, the limited number of active lenders has hindered growth in investment activity. The debt capital constraints, together with higher interest rates in the Eurozone, are restraining transaction activity in EMEA. Nevertheless, EMEA’s sales volume grew 35.4% year over year in Q1 2011.
  • The commercial mortgage market in the U.S. is recovering; CMBS issuance this quarter alone nearly reached the level recorded during the entirety of 2010. 

Global Investment Volumes 

  • Transaction volume in Asia Pacific as a whole rose 5.5% year over year to US$21.3 billion in Q1; however, there was a large variation in activity across the region, with an increase of 14.9% in Asia and a decrease of 44.8% in the Pacific region, year over year.
  • Despite the European debt crisis, the commercial real estate investment market in the EMEA region had a solid quarter, with transaction activity amounting to US$41.9 billion.
  • The Americas’ economies continued to improve in the first part of 2011, albeit slowly. High unemployment levels in the U.S. are still a major concern, and until we see employers increasing their hiring, the recovery remains fragile. 

Cross-Border Capital Flows 

  • Since the global financial crisis, Asia Pacific has emerged as a key target for cross-border global real estate investors. The high economic growth witnessed through most of the region during the recovery is now translating into strongly rising rents and values, especially for Hong Kong, Singapore and China.
  • Despite the strong growth in investment market turnover that has been recorded in the EMEA region over the past two years, cross-border capital flows have not been increasing markedly and comprise approximately one-third of total market activity.
  • While the majority of transactions occurring in the Americas are domestic, cross-border transactions in the region in Q1 2011 showed strong growth, with a 50.3% year-over-year increase. The vast majority (93.9%) of cross-border acquisitions in this region occurred in the U.S., with these transactions increasing 141% year over year in Q1 2011. 

Yield Spreads 

  • The spread between cap rates and long-term nominal interest rates in Asia Pacific continued to fall in Q1 and remains the tightest of all the global regions.
  • Within the Eurozone, the difference between the various countries’ government bond yields has increased enormously, but in most cases for reasons that are not relevant to the pricing of real estate.
  • Interest rates in the Americas remain abnormally low. There is no intention by the Federal Reserve to increase short-term interest rates anytime soon due to the pace of the economic recovery. 

To speak with a CBRE expert, please contact Robert McGrath (212.984.8267 or Robert.McGrath@nullcbre.com). 

About CB Richard Ellis

CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2010 revenue).  The Company has approximately 31,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our Web site at www.cbre.com.

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FOR IMMEDIATE RELEASE May 26, 2011

For further information:
Gigi Liu
Senior Manager
Marketing and Communications – Asia
CB Richard Ellis
(852) 2820 2974
gigi.liu@nullcbre.com.hk

CB Richard Ellis Group, Inc. Office Indices Point to Global Rent Growth and
Increased Capital Values
Global Office Rent Index rose 4.3%; Office Capital Values Rose 12%

26 May, 2011 Asia — CB Richard Ellis Group, Inc. (CBRE) today published its CBRE Global Office Rent Index and CBRE Global Office Capital Value index. Both indices point to continued recovery for the worldwide office real estate market.

The CBRE Global Office Rent Index has expanded for the second quarter in a row, rising 4.3% year over year in Q1 2011 following a rise of 2.4% in Q4 2010. The CBRE Global Office Capital Value Index expanded 12% year over year in Q1 2011 and has been in recovery mode for a year now.

“The fact that capital values have rebounded ahead of rents, reflects several factors, including the deeper integration of commercial real estate into the global capital markets, risk aversion that has driven investors into core assets, attractive pricing of real estate relative to other.

PRESS RELEASE

assets and the availability of favorable financing in the U.S.,” said Dr. Raymond Torto, CBRE’s Global Chief Economist.

CBRE Global Office Rent Index

The CBRE Global Office Rent Index shows that office rental growth is taking hold globally.  The Q1 2011 increase was powered by Asia Pacific, which showed an 11.3% year over year change.  The EMEA region also showed positive rental increases, albeit more muted than Asia Pacific, at 2.5%.  EMEA had also earlier experienced a more moderate descent from its peak.  Across the Americas there was essentially no change in rent levels year over year.   

The Index has been trending higher globally for four quarters, following seven quarters of declines as a consequence of the Great Recession.  The CBRE Global Rent Index fell a cumulative total of 17% from its peak at the middle of 2008.  At its peak the Rent Index was 119 and today, after some recovery it is at 104. Seen in this light, the recent gains are a sign of improving global office market health, but certainly not a return to previous levels of rents.

While economic conditions vary globally, most economies are improving, albeit slowly.  With little in the way of more supply of office space coming into the market due to new construction, particularly in EMEA and the Americas, the CBRE Global Office Rent Index is expected to continue rebounding modestly through 2011, even in the face of continued economic headwinds, such as the sovereign debt crisis.  Asia Pacific is seeing a growth of about 5% or greater in its office inventory, so some of these positive rent changes may be tempered in coming quarters.  The following graph depicts the CBRE Global Office Rent Index over the last decade:

 CBRE Global Office Capital Value Index

While the leasing market is just starting to recover, the CBRE Global Office Capital Value Index has been increasing for the past four quarters.  The year over year change accelerated from 2% in Q2 2010 to 6% in Q3 2010 to 10% in Q4 2010 to 12% in Q1 2011 

The upturn in capital values is again led by the recovery in values in the Asia Pacific region. The EMEA region has seen more muted positive changes while the Americas recovery had been tepid prior to Q4 2010. 

Dr. Torto added, “Clearly, the capital markets are anticipating higher future leasing rents in the Americas, reflecting what some call a disconnect between capital values and rent performance for the past two quarters.  It also could be characterized as an expectation for improved property fundamentals.”

The CBRE Office Capital Value Index for the Americas has shown two strong quarters in Q4 2010 and Q1 2011 with a 6% and 9% year over year change, respectively.  In contrast, the CBRE Office Rent Index for the Americas was negative in Q4 2010 and at essentially zero change in Q1 2011.  The following graph depicts the CBRE Global Office Capital Value Index over the last decade:

The CBRE indices were created by CB Richard Ellis Research and are comprised of data from 123 cities around the world. The base period for the indices is Q1 2001. 

About CB Richard Ellis

CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2010 revenue).  The Company has approximately 31,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our Web site at www.cbre.com.

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