2010 Global Market Report - NAI Commercial Real Estate

Tel Aviv, IsraelAlmaty, KazakhstanContactNAI Yair Levy Strategy+ 972 3 613 66 99Country DataArea (KM 2 )GDP Growth (%)GDP 2009 (US$ B)GDP/Capita (US$)Inflation Rate (%)1334.3-0.09%$215.73$29,671.593.60%The condition of the Israeli economy in the last year is relativelystable compared to the current global crisis. Israelibanks did not collapse and most of their losses are a resultof real estate investments abroad that the banks funded fortheir Israeli clients, mainly in Eastern Europe.In 2009, the Israeli real estate market acted contrary to thetrends. The residential market had a significant increase of15% compared with 2008. The activity in the commercialreal estate market divided as follows: In the office market, nonew projects started construction and some of the projectsunder construction were halted. New sublease propertiesentered the market and caused a price drop of about 17%,causing the demand to decline significantly.Most of the activity in the market focused in yield deals. Thebeginning of the year reflected a yield of about 9.5%, whileend of the year yields declined to 8% reflecting the growingdemand for yield properties.In the industrial market, the building of new structures orsites has not begun and the rent prices are in decline sincethe demand for traditional industries has decreased. Inthe last year, several new commercial centers opened incentral Israel, which stimulated great interest among clients.In Israel, four main groups have formed specializing in retail.In our opinion, most of their future development lies in theexpansion of neighborhood commercial centers. We anticipatethe start of 2010 will be characterized by serious damage tothe commercial real estate market and we estimate that theresidential sector will moderate in the near future.In the coming year, public companies in the field of the realestate in Israel will find it difficult to return their bonds, whichwill force them to sell many properties in the country andabroad. In our opinion, this may result in further decliningprices in the commercial field.ContactNAI Aristan7 727 278 94 08Country Data*Area (KM 2 )GDP Growth (%)GDP 2009 (US$ B)GDP/Capita (US$)Inflation Rate (%)1334.3-2%$107.04$6,875.507.53%Almaty is the largest city in Kazakhstan with a populationof more than 1.5 million. It plays an important role as thebusiness hub for all of Central Asia. According to officialstatistics, GDP growth in 2008 was 3.3% and is forecastedto drop to 2% in 2009. The inflation rate was fixed at 9.5%by the end of 2008. The economy of Kazakhstan is based onoil and gas, mining, metals, grain and the production of othernatural resources.Office rental rates fell significantly by an average of morethan 40-50% during 2008 and Q1 2009. The market seemsto have stabilized in Q3 2009 when the rental rates hitbottom. By October 2009, the average net rent office spacefell to US $35/SM/month US $20/SM/month for Class Aspace and US $20/SM/month for Class B.International mass market retailers such as Mango, Promod,Celio and Sinequanone all reported a robust increase in theirsales volumes in Kazakhstan and noted they are positionedamong the top compared with similar stores worldwide. Thishas resulted in many global retailers looking for regional andlocal partners for franchise cooperation in Kazakhstan.However, one of the main obstacles for global retailers toexpand in Kazakhstan is a limited number of modern professionalproperties both in shopping centers and the streetretail sector.During 2008 and the first half of 2009, the investmentmarket was not active. There were almost no inquiries andinstitutional foreign investors have stopped financingreal estate projects seemingly everywhere in the world.Most of the investment transactions were between localinvestors and such deals were not as visible. Localcommercial banks have disposed of a large number of realestate assets that were pledged over the past few years.Metro C&C opened its first store in 4Q 2009 in Astana withplans to open up to 14 centers over the next several years.Inditex Group and Al Hokair Group signed lease agreementsto open the first Zara store in Almaty by the end of 2009and the second store in February 2010.UnemploymentRate (%)8.20%UnemploymentRate (%)7.40%Interest Rate(%)0.75%Interest Rate(%)9.00%Population (Millions)7.27Population (Millions) 15.568Tel Aviv At A GlanceConversion 3.75 NIS = 1 US$ RENT/M 2 /MO US$ RENT/SF/YRLow High Low High VacancyCENTER CITY OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)SUBURBAN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)INDUSTRIALBulk WarehouseNISNISNISNISNISNISNIS90.0085.0060.0070.0060.0045.0034.00NIS 120.00NIS 110.00NIS 70.00NIS 75.00NIS 65.00NIS 50.00NIS 38.00$ 26.76$ 25.27$ 17.84$ 20.81$ 17.84$ 13.38$ 10.11$$$$$$$35.6732.7020.8122.3019.3214.8611.3012.0%8.0%15.0%25.0%14.0%15.0%10.0%ManufacturingHigh Tech/R&DRETAILNIS 26.00N/ANIS 28.00N/A$ 7.73N/A$ 8.32N/A5.0%N/ADowntownNeighborhood Service CentersCommunity Power Center (Big Box)Regional MallsSolus Food StoresDEVELOPMENT LANDNIS 110.00NIS 130.00NIS 70.00NIS 80.00N/ALow/M 2 NIS 140.00NIS 150.00NIS 80.00NIS 100.00N/AHigh/M 2 $$$$32.7038.6520.8123.78N/ALow/SF$$$$41.6244.5923.7829.73N/AHigh/SF5.0%N/AN/AN/AN/AOffice in CBDLand in Office ParksLand in Industrial ParksOffice/Industrial Land - Non-parkRetail/Commercial LandResidentialNIS 2,000.00 NIS 2,500.00 $ 49.55 $ 61.93NIS 1,600.00 NIS 1,800.00 $ 39.64 $ 44.59NIS 1,000.00 NIS 1,400.00 $ 24.77 $ 34.68N/A N/A N/A N/AN/A N/A N/A N/AN/A N/A N/A N/AAlmaty At A GlanceConversion 151 KZT = 1 US$ RENT/M2/MO US$ RENT/SF/YRLow High Low High VacancyCITY CENTER OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)SUBURBAN OFFICENew Construction (AAA)Class A (Prime)Class B (Secondary)INDUSTRIALBulk WarehouseManufacturingHigh Tech/R&DRETAILDowntownNeighborhood Service CentersCommunity Power CenterRegional Shopping Centres/MallsSolus Food StoresKZT 4,228.00 KZT 5,285.00 $ 31.22 $ 39.02 30.0%KZT 4,077.00 KZT 5,285.00 $ 30.10 $ 39.02 15.0%KZT 2,114.00 KZT 3,926.00 $ 15.61 $ 28.99 20.0%KZT 2,718.00 KZT 3,775.00 $ 20.07 $ 27.87 20.0%KZT 3,020.00 KZT 4,228.00 $ 22.30 $ 31.22 14.0%KZT 1,812.00 KZT 2,567.00 $ 13.38 $ 18.95 10.0%KZT 755.00 KZT 1,510.00 $ 5.57 $ 11.15 N/AKZT 1,057.00 KZT 1,963.00 $ 7.80 $ 14.49 N/AKZT 1,057.00 KZT 1,963.00 $ 7.80 $ 14.49 N/AKZT 7,550.00 KZT 18,120.00 $ 55.74 $ 133.78 N/AKZT 4,530.00 KZT 10,570.00 $ 33.44 $ 78.04 N/AN/A N/A N/A N/A N/AKZT 3,775.00 KZT 9,815.00 $ 27.87 $ 72.46 N/AN/A N/A N/A N/A N/ADEVELOPMENT LAND Low/M 2 High/M 2 Low/SF High/SFOffice in CBDKZT 226,500.00 KZT 679,500.00 $ 0.01 $ 0.04Land in Office ParksKZT 120,800.00 KZT 377,500.00 $ 0.01 $ 0.02Land in Industrial ParksKZT 90,600.00 KZT 226,500.00 $ 0.01 $ 0.01Office/Industrial Land - Non-parkRetail/Commercial LandResidentialKZT 105,700.00 KZT 256,700.00KZT 151,000.00 KZT 453,000.00KZT 135,900.00 KZT 302,000.00$$$0.010.010.01$$$0.020.030.022010 Global Market Report ■ www.naiglobal.com 48