Professional Documents
Culture Documents
August 2015
This report has been produced by Nomura Research Institute solely for information purposes. It is not intended to be a
complete description of the markets or developments to which it refers. No warranty for representation, express or implied is
made as to the accuracy or completeness of any of the information herein and Nomura Research Institute shall not be liable
to any reader of this report or any third party in any way whatsoever.
whatsoever
Japan
China
Korea
Increase of liquidity
q
y within slow economic g
growth
Taiwan
Japan
China
Korea
Increase of liquidity
q
y within slow economic g
growth
Taiwan
Japan
Office Market
Residential Market
Households
(thousand)
Actual Forecast
60,000
120 000
120,000
50,000
100,000
40,000
80 000
80,000
014
1564
30,000
60,000
65+
Household
20,000
40,000
10,000
20,000
2060
0
2055
5
2050
0
2045
5
2040
0
2035
5
2030
0
2025
5
2020
0
2015
5
2010
0
2005
5
2000
0
1995
5
1990
0
1985
5
1980
0
1975
5
1970
0
Source: NRI based on National Institution of Population and Social Security Research
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
250
Population
(thousand)
200
150
Inflow
100
Kanagawa
Chiba
50
Saitama
Tokyo
0
1980
1985
1990
1995
2000
2005
2010
50
Outflow
100
150
Source: NRI based on Basic Resident Register Population Migration Report
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
Actual Forecast
Actual Forecast
16,000
,
35 000
35,000
14,000
30,000
Chiba
Saitama
25,000
K
Kanagawa
20,000
Tokyo
15,000
Chiba
12,000
10 000
10,000
8,000
Saitama
Kanagawa
Tokyo
6,000
10 000
10,000
4,000
40
204
2035
2030
2025
2020
2015
2010
200
05
00
200
1995
1990
198
85
0
198
80
0
197
75
2,000
197
70
5,000
Source: NRI based on National Institution of Population and Social Security Research
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
Households in Tokyo are expected to increase over the medium term owing to the strength
of one-person households.
The number of single-person households is expected to peak out in 2030.
2030
Actual Forecast
7,000
6,000
Oneperson
5,000
Coupleonly
C
Coupleandchild(ren)
l
d hild( )
4 000
4,000
Oneparentandchild(ren)
3,000
Other
2,000
1,000
0
1995
2000
2005
2010
2015
2020
2025
2030
2035
Source: NRI based on National Institution of Population and Social Security Research
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
Population in Tokyo is predicted to increase over the long term only in the three wards along
Tokyo Bay.
Population is expected to increase in the Chuo,
Chuo Koto and Minato wards
wards.
In seven wards, the population is projected to decrease by over 10% between 2010 and 2040.
Population Trends in Tokyo (2010=100)
Ward
Chuo
Koto
Minato
Shinjuku
Nerima
Sumida
Arakawa
Chiyoda
Setagaya
Shinagawa
Edogawa
Bunkyo
Toshima
Ota
Itabashi
M
Meguro
Taito
Shibuya
Nakano
Kita
Suginami
Katsushika
Adachi
2010
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100 0
100.0
100.0
100.0
100.0
100.0
100 0
100.0
100.0
100.0
2015
112.9
102.7
105.0
103.3
103.8
100.8
102.4
106.9
102.1
102.4
101.5
101.8
107.3
101.6
100.9
100 8
100.8
100.6
100.3
99.4
99.4
99 4
99.4
98.2
98.0
2020
115.3
104.4
107.0
104.4
105.1
101.7
103.0
106.9
102.7
102.9
101.7
101.9
106.1
101.6
100.5
100 2
100.2
99.5
98.8
97.7
97.6
97 6
97.6
95.7
95.2
2025
116.6
106.8
107.9
104.8
105.3
102.6
102.8
106.1
102.4
102.7
101.1
101.3
104.5
100.8
99.1
98 8
98.8
97.7
96.6
95.5
95.1
95 1
95.1
92.4
91.6
2030
116.8
108.2
107.8
104.4
104.5
102.7
102.2
104.6
101.5
101.7
99.8
100.1
102.2
99.4
97.2
96 8
96.8
95.4
93.9
92.9
92.2
92 0
92.0
88.7
87.5
2035
116.1
108.8
107.0
103.4
102.9
102.0
101.2
102.2
100.0
100.0
98.2
98.2
99.2
97.5
94.7
94 1
94.1
92.6
90.9
89.8
89.0
88 5
88.5
84.8
83.1
2040
114.4
108.5
105.2
101.6
100.6
100.6
99.7
99.3
97.9
97.8
96.2
95.7
95.3
95.1
91.8
91 1
91.1
89.4
87.4
86.2
85.5
84 5
84.5
80.8
78.7
Source: NRI based on National Institution of Population and Social Security Research
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
Japan
Office Market
Residential Market
10
Japan s economic growth is the lowest compared to other major economies with low
Japans
forecasts for future growth.
IMF forecasts estimate Japans
Japan s GDP growth rate at 1% for the next 5 years
years.
15.0
Actual
Actual
Estimate
Estimate
10.0
India
China
5.0
Korea
US
UK
Japan
0.0
5.0
10.0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: NRI based on IMF data (2014 Oct. and 2015 Update)
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
11
Despite the weak growth, Japan remains one of the largest economies in the world.
Although Japan was overtaken by China and fell to the third place in world nominal GDP,
GDP India
India, Brazil and Russia will still remain behind
Japan by 2020, assuming current growth rates continue.
Nominal GDP of Major Countries
(Billi USD)
(Billion
25,000
Actual
Forecast
US
20 000
20,000
China
15,000
10,000
Japan
5,000
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Source: NRI based on IMF (2014 Oct.)
Note: Figures up to 2019 are IMF forecasts and those up to 2020 are calculated with the assumption that the CAGR from 2014 to 2018 will be maintained.
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
12
Y
Year-on-Year
Y
Change
Ch
iin JJapans
C
Consumer P
Price
i IIndex
d ((excluding
l di ffresh
h ffoods)
d )
4.0
3.0
2.0
Inflation target
set by BOJ
1.0
0.0
1.0
2.0
3.0
Source: NRI based on Japan Ministry of Internal Affairs data
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
13
130
120
110
100
90
80
70
14
30
25
20
15
10
5
0
5
5
10
15
2003
2004
TradeBalance
2005
2006
2007
ServiceBalance
2008
2009
Primaryincomebalance
2010
2011
2012
2013
Secondincomebalance
2014 ()
CurrentAccount
15
Government debt has mounted, raising concerns about a potential financial collapse.
The IMF forecasts that Japans
Japan s ratio of government debt to GDP will peak out but still remain high
high.
A surplus in the primary balance, which is one of the conditions for preventing financial collapse, is expected to be difficult to achieve at
least for the next several years.
Ratio of Government Debt to GDP
250
Actual Forecast
Japan
UK
2
Germany
200
US
2
2
150
US
100
Japan
4
6
UK
50
Germany
10
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2003
12
12
16
A financial collapse is unlikely as long as domestic capital remains in Japan and continues
to circulate.
The possibility of Japanese government bonds collapsing is seen to be small since more than 90% of the bonds are held by domestic
investors.
Household financial assets, which are a resource for government bond purchases, have increased due to rising stock prices in recent
years.
Government Bond Investors
Households
Household
s Financial Assets in Japan
100%
(Trillionyen)
1800
1600
80%
1400
1200
60%
1000
1000
40%
800
600
20%
400
200
0%
Japan
US
Domesticinvestors
UK
Germany
Foreigninvestors
Note: Figures for Japan and US are from Dec 2014; for UK and Germany, from 2014 Q3.
Source: BoJ, FRB, ONS, Bundesbank
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
()
0
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: NRI based on Bank of Japan data
17
Tokyo continues to be the worlds largest city in terms of population and GDP.
Tokyo
35,000
Delhi
30,000
Shanghai
j g
Beijing
Mumbai
Dhaka
SaoPaulo
Cairo
MexicoCity
25,000
20,000
NewYork
BuenosAires
15 000
15,000
LosAngeles
Paris
10,000
5 000
5,000
0
0
500
1000
1500
2000
2500
18
Rank
Company
Revenue(Mil$)
23
152 125
152,125
45
Honda Motor
118,210
51
JX Holdings
111,014
53
109,054
61
Nissan Motor
104 635
104,635
78
Hitachi
95,988
105
Sony
77,532
108
Mitsubishi
75,755
124
Marubeni
70 429
70,429
135
Softbank
66,546
Seoul,14
139
66,194
Osaka,8
145
Toshiba
64,907
Shanghai 8
Shanghai,8
148
AEON
64 240
64,240
Houston,7
164
60,340
Moscow,7
173
Mitsui
57,302
176
56,572
184
55,062
199
51,667
Beijing,52
Tokyo,41
London,18
Paris,18
NewYork,17
Others,310
19
Japan
Office Market
Residential Market
20
10,000
Others
JREIT
8 000
8,000
6,000
7 205
6 242 7,205
6,242
5,159
4,000
2,156
4,439
2,000
1 791
1,791
3,307
2,123
611
2,210
2,236
305
676
895
1,549
1,359
439
539
604
792
1,555
2,237
FY2001 FY2002 FY2003 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 FY2012 FY2013
21
8,000
Office
Residential
Retail
Logistics
Hotel
Others
Others,16.0%
,
%
6,000
Hotel,3.3%
Office,33.8%
1,107
4 000
4,000
835
404
2,000
981
Logistics,
Logistics
13.8%
790
161
267
1,611
686
270
552
1,516
1,293
1,589
746
1,321
808
1,728
2,194
2,124
2,503
479
348
891
710
0
FY2001
FY2002
FY2003
FY2004
FY2005
FY2006
FY2007
FY2008
289
235
556
FY2009
252
441
615
788
452
603
550
768
309
406
512
1,092
FY2010
FY2011
FY2012
Retail,16.0%
,
Residential,
17 1%
17.1%
1,501
FY2013
N t B
Note:
Because the
th utility
tilit off securitizations
iti ti
th
thatt require
i actual
t l TMK iis unclear,
l
th
they h
have nott b
been iincluded
l d d after
ft 2001
2001. B
Because off this,
thi th
the yearly
l ttotals
t l and
d amounts
t will
ill nott match
t h up with
ith th
the d
documents
t
cited for this entry.
Source: NRI based on Ministry of Land, Infrastructure, Transport and Tourisms Survey of the Current State of Real Estate Securitization
22
Lack of assets in Tokyo is likely to cause investment money to head to other regions.
For last few years, it has been extremely difficult for investors to find investment opportunities in Tokyo. In 2014 and 2015, transactions
in the ex-Tokyo area are expected to increase significantly in a trend similar to the one seen in pre-global financial crisis era.
GreaterTokyo
FY2013
Osaka
Nagoya
51.9%
FY2012
13.3%
47.9%
FY2011
Fukuoka
15.3%
58.8%
FY2010
12.0%
53.0%
10.5%
FY2008
51.9%
12.7%
41.9%
10%
20%
12.1%
30%
40%
50%
10.5%
60%
6.9%
8.4% 6.9%
8.8% 5.5%
6.4%
70%
17.8%
19.9%
8.0% 4.0%
11.8%
FY2009
0%
10.0% 3.7%
9.5% 5.1%
66.0%
FY2007
Others
14.9%
12.0%
17.2%
17.4%
23.1%
80%
90%
100%
23
15 0
15.0
10.0
Total Return
7.3
Income Return
3.7
5.0
7.4
5.0
0.3
2.3
0.0
5.0
Capital Return
7.2
10.0
11.7
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
15.0
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
24
Cap rates fell sharply and by 2014 most likely reached the 2007 level.
In the Tokyo market, an increasing number of real estate deals have cap rates of 3-4%.
3 4%. Some investors believe that arguing cap rates
is futile as one can expect higher rents. Such market players consider timing and level of rent increase more important rather than cap
rate compression.
C R
Cap
Rate
t T
Trend
d iin JJapan
8.0%
7 0%
7.0%
6.0%
Office Osaka CBD
Logistics Tokyo Multi
5.0%
Residential Tokyo
Retail Tokyo
4.0%
OfficeTokyo CBD
OfficeOsakaCBD
RetailTokyo
ResidentialTokyo
Aug14
Mar14
Oct13
May13
Dec12
Jul12
Feb12
Sep11
Apr11
Nov10
Jun10
Jan10
Aug09
Mar09
Oct08
May08
Dec07
Jul07
Feb07
Sep06
Apr06
Nov05
Jun05
Jan05
Aug04
Mar04
Oct03
3.0%
LogisticsTokyoMulti
25
Transaction
Month/Year
Dec, 2013
Mar, 2014
Asset
Property Type
Land
Area
Aug, 2014
Oct, 2014
Nov, 2014
Meguro Gajoen
Office
OfficeHotel
Office
Residence
Minato, Hamamatsucho
Chiyoda, Otemachi
Meguro, Meguro
Chiyoda, Marunouchi
Seller
Kokusai Kogyo
Lone Star
Buyer
Mizuho Bank
Mori Trust
GIC
Blackstone
Transaction
Amount
Gross Floor
Area
7,205
34,200
34
200
(Floor Area of Acquisition)
155,820
38,840
38
840
(Floor Area of Acquisition)
NA
Otemachi Tower
Source: NRI based on Nikkei Real Estate Market Report and others
26
Money from
M
f
investors
i
t
with
ith diff
differentt perspectives
ti
have
h
caused
d reall estate
t t prices
i
tto rise
i and
d
capital to diversify in various market segments.
Properties that domestic investors do not favor due to risk concerns have been purchased by foreign and non-professional
non professional (e.g. highhigh
net-worth) investors with different goals, causing real estate prices to rise in the ex-Tokyo area. The trend is undoubtedly due primarily
to the fact that such investors cannot find any good investment opportunities in Tokyo.
Transaction
Month/Year
Jun, 2014
Sep, 2014
Oct, 2014
Nov, 2014
Nov, 2014
Asset
Nihonbashi Tomihisa
Daini Building
Seiko BldgH
Property Type
Office
Office
Residence
Retail
OfficeRetail
Area
Minato, Shinbashi
Chuo, NihonbashiHoncho
Shibuya, Shoto
Chuo, Ginza
Seller
NA
Ascott
NA
Hulic
NA
Buyer
high-net-worth
high-net-worth
(Taiwanese)
high-net-worth
high-net-worth
high-net-worth
Transaction
Amo nt
Amount
NA
NA
NA
NA
NA
Gross Floor
Area
2,646
1,310
2,873
1,340
3,342
Source: NRI based on Nikkei Real Estate Market Report and others
27
Transaction
Month/Year
Jul, 2014
Oct, 2014
Oct, 2014
Oct, 2014
Jan, 2015
Asset
Renaissance Resort
Okinawa
Shinagawa Seaside
(3 properties)
Property Type
Resort Hotel
Office
Office
Hotel
Office
Area
Okinawa
Shinagawa
Miyagi, Sendai
Oita
Mebashi, Oyama
Seller
Japan Tabacco
Sumitomo Life
AZ Hotel Chain
Daiichi life
Buyer
Idera Capital
Management
Lone Star
Elliott Management
Goldman Sachs
Fortress Investment
Group
KAISER ASSET
Transaction
Amount
NA
40 million USD
Gross Floor
Area
40,195
140,000
20,411
19,422
12,000
Source: NRI based on Nikkei Real Estate Market Report and others
28
Loose
5
0
5
10
Tight
15
20
25
35
Mar00
0
Sep00
0
Mar01
1
Sep01
1
Mar02
2
Sep02
2
Mar03
3
Sep03
3
Mar04
4
Sep04
4
Mar05
5
Sep05
5
Mar06
6
Sep06
6
Mar07
7
Sep07
7
Mar08
8
Sep08
8
Mar09
9
Sep09
9
Mar10
0
Sep10
0
Mar11
1
Sep11
1
Mar12
2
Sep12
2
Mar13
3
Sep13
3
Mar14
4
Sep14
4
30
29
Japan
Office Market
Residential Market
30
Office Market
90%
1.7%
80%
14.9%
70%
4.7%
1.0%
1.8%
(1.95million )
(1.03million )
(5.00million )
60%
1.0%
(1.12million )
(1 85 illi )
(1.85million
(15.91million )
2.1%
1.6%
(1.72million )
(2.23million )
3.3%
(2.54million )
5.5%
(3.57million )
(5.87million )
Osaka Area
17.7
50%
40%
30%
12 major cities
106.73million
59.9%
20%
(63.94million )
10%
0%
Tokyo
Yokohama Saitama
Chiba
Osaka
Kobe
Kyoto
Nagoya
Fukuoka
Sapporo
Sendai Hiroshima
31
Office Market
Adachi
Itabashi
Kita
Nerima
Saitama
7.15millionpeople
Tokyo
13.22millionpeople
Kanagawa
9.07millionpeople
Chiba
6.15milionpeople
Arakawa
Toshima
Bunkyo Taito Sumida
Nakano
Shinjuku
Suginami
Chiyoda
Koto
Chuo
Shibuya
Katsushika
Edogawa
30km
Minato
Setagaya
Meguro
Shinagawa
Ohta
30km
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
32
Office Market
Vacancy rates in the Tokyo office market have been improving for two consecutive years.
Retrospectively,
Retrospectively vacancy rates have been experiencing regular ups and downs
downs.
Vacancy rate movement in Tokyo CBD
Y l (1998 - 2014)
Yearly(1998
14.0%
14.0%
12.0%
12.0%
10.0%
Shinjuku
Chuo
Shinjuku
10.0%
Minato
Minato
8.0%
8.0%
6.0%
Chuo
6.0%
Chiyoda
Chiyoda
4.0%
Shibuya
Oct1
14
Jul1
14
Apr1
14
Jan1
14
Oct1
13
Jul1
13
0.0%
Apr1
13
0.0%
199
98
199
99
200
00
200
01
200
02
200
03
200
04
200
05
200
06
200
07
200
08
200
09
2010
2011
2012
2013
2014
2.0%
Jan1
13
Shibuya
2.0%
Jan1
15
4.0%
33
Office Market
Although rent increase is slow, there has been a clear reversal in the rent trend.
Retrospectively,
Retrospectively the high rent period have been short,
short making office owners
owners negotiation power weaker than that of tenants.
tenants
Yen/month, tsubo
Yen/month, tsubo
26,000
26,000
24,000
24,000
22,000
22,000
20,000
16,000
Jan
n15
Novv14
p14
Sep
Jul14
Mayy14
Marr14
10,000
Jan
n14
10,000
Novv13
12,000
Sep
p13
12,000
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Shinjuku
14,000
Jul13
Shinjuku
Chiyoda
Shibuya
Minato
Chuo
18,000
Mayy13
14,000
18,000
Marr13
16,000
Chiyoda
Shibuya
Minato
Chuo
Jan
n13
20,000
34
Office Market
The number of Tokyos office workers is declining at a fast rate than the published forecast.
4,500
4,000
3,818
3,835
3,660
3,648
3,643
3,461
3,565
3,500
3,498
23
wards
23
3,243
3,000
2,500
2,020
1,988
2,000
2 083
2,083
2 078
2,078
2,035
1,884
1,539
1,500
1,533
1,998
Central 5 wards
1,501
1,473
Central 3 wards
1 467
1,467
1 474
1,474
1,415
2000
2005
2010
1,000
500
0
1990
1995
2015
2020
2025
35
Office Market
Despite the dwindle in the number of office workers, new office supply will continue to grow.
250
# of buildings
70
Officesupplyarea
Numberofbuilding supplied
216
60
200
183
175
50
154
150
100
100
83
108 104
125
119
114 118
99
92
119
72
56 55
111 110
88
86 85
77
65
40
124
117
91
74
50
121
96
58
36
20
10
0
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
30
Source: NRI based from Mori Building Companys Mega Office Building Market Trends Survey (Preliminary figure) dated October 22, 2014
36
Office Market
Cap rate has been dropping for three consecutive years since 2012.
As of March 2015
2015, office deals with cap rates of 3-4% are commonly carried out
out, resting on investors
investors expectations for higher rent and
NOI, henceforth.
Tokyo office market cap rate trend
6.5%
6.0%
5 5%
5.5%
5.0%
Shinjuku
Shinjuk
Shinagawa
Shinaga
4.5%
Shibuya
Minato(Toranomon)
Chuo(Nihonbashi)
Chiyoda(Marunouchi)
4.0%
3.5%
Oct14
Apr14
Oct13
Apr13
Oct12
Apr12
Oct11
Apr11
Oct10
Apr10
Oct09
Apr09
Oct08
Apr08
Oct07
Apr07
Oct06
Apr06
Oct05
Apr05
Oct04
Apr04
Oct03
3.0%
Chiyoda(Marunouchi)
Chuo(Nihonbashi)
Minato(Toranomon)
Shinagawa
Shinjuku
Shibuya
Source: NRI based on Japan Real Estate Institutes Real Estate Investors Survey
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
37
Office Market
The improvement of the vacancy rate is not leading to the recovery of rents in the ex-Tokyo
ex Tokyo
office market.
20.00%
24,000
18.00%
(yen/tsubo)
22,000
16.00%
Fukuoka
20,000
14.00%
Nagoya
Yokohama
12.00%
Sapporo
10.00%
8.00%
Sendai
18,000
Osaka
16 000
16,000
Tokyo
14,000
Tokyo
6.00%
12,000
Osaka
N
Nagoya
Yokohama
20
014
Sendai
Sapporo
20
013
20
012
20
011
20
010
20
009
20
008
20
007
20
006
Fukuoka
Fukuok
20
005
20
014
20
013
20
012
20
011
20
010
20
009
20
008
20
007
8,000
20
006
0.00%
20
005
10,000
20
004
2.00%
20
004
4 00%
4.00%
38
Office Market
6.0%
Fukuoka
N
Nagoya
Yokohama
Osaka
5.0%
4 0%
4.0%
Octt14
Aprr14
Octt13
Aprr13
Octt12
Aprr12
Octt11
Aprr11
Octt10
Aprr10
Octt09
Aprr09
Octt08
Aprr08
Octt07
Aprr07
Octt06
Aprr06
Octt05
Aprr05
Octt04
Aprr04
Octt03
3.0%
Source: NRI based on Japan Real Estate Institutes Real Estate Investors Survey
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
39
Japan
Office Market
Residential Market
40
Residential Market
6,000
NumberofHo
ouseholds(unitt:10,000)
Company
Housing
2%
PrivateRental
Housing,
Others
9%
PrivateRental
House,
Apartment
House(non
wood)
20%
OwnHouse
63%
25%
5,000
4,000
3,760
4,989
4,716
4 421
4,421
4,097
5,238
20%
18%
16%
15%
15%
12%
3,000
9%
2,000
1,411
1,000
334
20%
1,578
490
1,682
650
1,724
750
1,783
879
1,857
996
10%
5%
0%
'88
'93
'98
'03
'08
RatioofHo
ouseholdsLivingginPrivateRen
ntal&
ApaartmentHouse(nonwood)
PublicRental
House
6%
'13
HouseholdsLivinginHousing
HouseholdsLivinginRentalHouses
Ho seholds Li ing in Pri ate Rental & Apartment Ho ses (non ood)
HouseholdsLivinginPrivateRental&ApartmentHouses(nonwood)
RatioofHouseholdsLivinginPrivateRental&ApartmentHouses(nonwood)
Source: NRI based on data from Housing and Land Survey, Ministry of Internal Affairs and Communications of Japan.
41
Residential Market
1,600
1,400
1 200
1,200
39%
1,103
600
48%
45%
44%
1,221
1,186
50%
45%
40%
1 135
1,135
1,039
1,000
800
46%
45%
884
868
782
532
427
35%
939
778
557
698
502
30%
25%
639
466
20%
447
400
15%
10%
200
5%
0%
8488
8993
9498
9903
0408
NumberofMovingHouseholds inPast5Years
NumberofHouseholdsMovedintoRentalHouses
NumberofHouseholdsMovedintoPrivateRental (Apartment)Houses
RatioofHouseholds MovedintoPrivateRental (Apartment)Houses
0913
Num
mberofMovingg Households(Unit:10,000)
Source: NRI based on data from Housing and Land Survey, Ministry of Internal Affairs and Communications of Japan.
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
42
Residential Market
Housing
g Stock by
y Type
yp 1988-2013
140
70
50
40
54
50
50
44
39
30
30
20
16
18
20
12
21
22
15
14
23
16
10
0
'88
'93
'98
130
130
'03
'08
NumberofHouses
Number of RentalHouses
NumberofRentalHouses
NumberofRental&ApartmentHouses(nonwood)
'13
GrrowthRate(19
988=100)
Ho
ousingStock((Unit:1million
n)
60
61
58
124
120
119
110
100
90
112
112
114
114
107
103
108
112
112
100
NumberofHouses
NumberofRentalHouses
NumberofRental&ApartmentHouses(nonwood)
80
80
'98
'03
'08
'13
Source: NRI based on data from Housing and Land Survey, Ministry of Internal Affairs and Communications of Japan.
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
43
Residential Market
Construction of new rental housing declined in 2009 but is now on a recovery path.
The number of new constructions decreased in 2014 as a reaction to last minute surge in demand prior to the tax increase.
The ratio of rental house has increased as the number of new rental housing has leveled off while the total number of new construction
has declined.
1,800
45%
1,600
40%
1,400
35%
1,200
30%
1,000
25%
800
20%
600
15%
400
10%
200
5%
0%
RentalHouse
HouseBuiltforSale
RatioofRentalHouse
CompanyHouse
700
600
ProvincialRegion
KinkiRegion
ChuubuRegion
Metropolitan Region
MetropolitanRegion
500
400
300
200
100
0
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
OwnHouse
800
NewRentallHousingConstructtion byRegion(Un
nit:1,000)
50%
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
2,000
RatioofRentalHouses
erofConstructiionStartsUnitt 1,000
Numbe
Source: NRI based on data from Survey of Construction Work Started, Ministry of Land, Infrastructure, Transport and Tourism of Japan.
44
Residential Market
'03
'08
17
'13
RentaalHousingVaccancyRate(Un
nit:%)
20%
15%
10%
5%
16
15
15
14
13
12
11
AllTokyoareas
10
23Tokyodistricts
Tokyocities
Kanagawa
Source: NRI based on data from Data from Housing and Land Survey, Ministry of Internal Affairs
and Communications of Japan.
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
2013
Nov
Sep
Jul
Jan
Sep
Jul
Jan
Sep
Jul
2012
May
M
Hiroshima Fukuoka
Mar
Osaka
Nov
Nagoya
May
M
Tokyo23
Wards
Mar
Sendai
Nov
Sapporo
May
M
0%
Mar
8
Jan
25%
2014
Source: NRI based on data from Report on Rental Housing Market, TAS Corp. (Analyzed by TAS
Corp. Data Supplied by At Home Co., Ltd.).
45
Residential Market
Private(A
Annual Average) RentIndex(Base
eYear2010)
108 0
108.0
106.0
104.0
102 0
102.0
100.0
98.0
96 0
96.0
94.0
92.0
90 0
90.0
Japan
88.0
Tokyo23Wards
14
13
12
11
10
09
08
07
06
05
04
03
02
01
00
99
98
97
96
95
94
93
92
91
86.0
Source: NRI based on data from Consumer Price Index, Ministry of Internal Affairs and Communications of Japan.
46
Residential Market
100%
96%
94%
Tokyo3centraldistricts
Tokyo23districts
Nagoyacity
Osaka city
Osakacity
Fukuokacity
92%
90%
4,500
4,000
3,500
3,000
2,500
2,000
Tokyo3centraldistricts
Tokyo23districts
Nagoyacity
Osaka city
Osakacity
Fukuokacity
1,500
1,000
500
2012
2013
2014
2012
2013
Mar
Jan
Nov
Sep
Jul
May
Mar
Jan
Nov
Sep
Jul
May
Mar
Jan
Mar
Jan
Nov
Sep
Jul
May
Mar
Jan
Nov
Sep
Jul
May
Mar
0
Jan
OccupancyRate(Unit:%)
98%
MonthlyRentLevel(UnitYe
M
en/m2)
5,000
2014
Source: NRI based on data from ARES J-REIT Property Database, Association for Real Estate Securitization of Japan.
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
47
Japan
Office Market
Residential Market
48
FloorArea
786
4,500
738
FloorArea(1000m2
2)
730
750
738
654
638
584
3,500
,
3,000
800
705
700
620
600
500
450
500
2,500
4,178
,
2 000
2,000
3,335
1,500
1,000
4,545
3 983
3,983
3,729
400
4,369
300
2,860
2,455
1,919
2,081
2,351
2,824
200
2,193
Num
mberofprojectts(cases)
4,000
731
900
Numberofprojects
100
500
0
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Note: The reported numbers for the fiscal years 2002 and 2008 include stores without floor space indication.
Source: NRI based on data from the Ministry of Economy, Trade and Industrys Large-scale Retail Chain Site Expansion Report
49
Overall floor area and per-store floor area for shopping centers
Overallfloorarea
2)
(in1millionm
(i
1 illi
FloorareaperSC
OldSCStandard
60
Overaallfloorarea
11.8
11.8
11 6
11.6
12.1
12.4
30.4
14.1
42.1
40
30.6
12.8
13.6
31.5
33.1
34.6
36.5
14.2
42.7
14.5
14.8
15.0
15.3
16
47.9
44 2
44.2
46.4
14
45.7
12
38.0
10
30
8
6
20
4
10
Floo
orareapershoppingcenter
50
13.2
(in1000m
(i
1000 2/store)
/t )
NewSCStandard
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
NB: In the old SC standard, only shopping malls with more than 10 retail tenants were considered.
In the new SC standard, the shopping center must have more than 10 tenants including food stalls, service centers and retail outlets.
On the same note, the shopping center must have more than 1,500 m2 retail space.
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
Source: NRI based on data from the Council of Shopping Centers SC White Book
50
0.3
0.3
0
1
2.2
2
3
2.1
1.6
05
0.5
0.0
0.5
1.3
1.5
1.7
0.1
2.0
3.4
4
4
5
6
7
6.8
8
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: NRI based on the Japan Council of Shopping Centers Overall Sales Statistics Report
51
Compared to other areas, rent level of Ginza, Omotesando and Shinjuku are still high.
1st floor rent ranking in 13 principal business areas (yen/month/tsubo)
yen/month/tsubo
60,000
Ginza
Omotesando
50,000
Ginza
Shinjuku
NB2
40,000
NB4
30,000
NB1
Ikebukuro
NB3
Omotesando
Shi j k
Shinjuku
Shibuya
Sakae
Ikebukuro
20,000
Shibuya
Yokohama
Shinsaibashi
Oodori(Sapporo)
Sannomiya(Kobe)
Sendai
10,000
Tokyo
Metropolitan
Area
Provincial
Areas
Tenjin(Fukuoka)
Shij k
Shijokawaramachi(Kyoto)
hi (K
)
Sakae(Nagoya)
Late2011 Early2012 Late2012 Early2013 Late2013 Early2014
NB1: Rent in Yokohama is shown to have spiked in the early half of 2012, but this can be attributed to the extremely small sample size
NB2: Rent in Shinjuku is shown to have spiked in the late half of 2012
2012, but this can be attributed to a sample bias toward small
small, high-rent properties
NB3: Rent in Ikebukuro is shown to have dived in the early half of 2013, but this can be attributed to a sample bias toward low-rent properties in unfavorable locations
NB4:Rent in Shibuya, Sakae and Ikebukuro are shown to have spiked in the early half of 2014, which can be attributed to a sample bias towards a small number of
properties with high rent
Source: NRI based on the Japan Real Estate Institute
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
52
Suburban, Nagoya
Suburban, Osaka
Suburnban, Tokyo
Metropolitan ,
Metropolitan, Osaka
5.0%
4.0%
Metropolitan,Omotesando
Metropolitan, Ginza
3.0%
2 0%
2.0%
1.0%
0.0%
NB:
Metropolitan high-class specialty stores:
Length of time after construction -or- large-scale repair/improvement: less
than 5 years
Tenants: Mainly retailers of high-class brands.
Rent system: Mainly fixed-term,
fixed term, variable rental schemes based on the
revenue.
Areas: Along Chuodoori in Ginzas Chuo district.
Along Omotesando in Omotesandos Shibuya district.
Suburban shopping centers:
Sales floor area: around 20,000m2
Key tenants: Prominent general merchandise stores (GMS)
R t system:
Rent
t
Mainly
M i l fifixed-term,
dt
fixed-charge
fi d h
rental
t l schemes
h
Areas: 1-hour Shinkansen ride along key stations to Tokyos Metropolitan
District
Stores for areas outside Tokyo follow similar locational conditions as above.
Source: NRI based on the Japan Real Estate Institutes Real Estate Investors Survey
53
Accessibility and density level of commercial facilities are the important factors in selecting
locations.
In evaluating a commercial district,
district the most heavily considered factor is its accessibility (i
(i.e.
e inter-district factors)
factors), followed by
quantitative aspects such as choice of items/services and number of shops/facilities within a district.
Intra-district factors are also regarded important (i.e. mobility between shops/facilities). On the other hand, exclusivity of a district is not
heavily considered (i.e. presence of shops/facilities exclusive to the location, lack of similar shops/facilities around home/work).
Important Factors in Selecting Commercial Districts by General Consumers (in Metropolitan Area)
0%
Exclusivity of a district is
not heavily considered
20%
High accessibility
40%
60%
42%
Abundant
choice of items/services
80%
41%
22%
100%
12% 5%
49%
21%
7%
Ample shops/facilities
20%
48%
24%
9%
19%
48%
24%
9%
High mobility
between shops/facilities
18%
Shops/facilities
Sh
/filiti
exclusive
l
i tto
th
the llocation
ti
16%
45%
25%
14%
28%
42%
18%
32%
36%
14%
12%
12%
33%
33%
23%
Lack of similar
shops/facilities around home/work
11%
35%
32%
23%
8%
7%
High density
of companies 6%
High frequency of
realignment of shops/facilities 5%
n=41,273
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
Very
important
30%
31%
26%
34%
24%
20%
31%
33%
33%
31%
Important
37%
44%
Slightly
important
Questionnaire name
Investigation about integrated area
PractitionerNRI
Period of timeJuly 2014
August2014
Not
important
54
Large scale development of commercial buildings will proceed mainly around Tokyo station.
350
100%
300
80%
250
60%
200
150
40%
Totalarea(Existing)
Newstorerate
15%
20%
8%
7%
6%
Roppongi
AoyamaOmotesando
Nihon
nbashiYaesu
Kyobashi
SShinjuku(West)
Ginza
OtemachiMaruniouchi
Yu
urakucho
Shibuya
0%
SShinjuku(West)
Totalarea(Futureplan)
24%
100
50
36%
34%
0%
NB)
Total area(Existing) includes department stores and specialty stores. Data as of May 2014
Total area(Future plan) is calculated via following formula: Total area(Future plan) = Site area Floor area rate Commercial building rate Shop floor rate
Note that the above-calculation is based on a presupposition that floor area rate, commercial building rate and shop floor rate to be 700%, 20% and 60%, respectively.
SourceNRI based on the Sangyo-Times Commercial Facilities Schedule Guide, Toyo Keizai Shinposha National Supermarket Guide 2015
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
55
Japan
Office Market
Residential Market
56
The truck-based
truck based transport volume (in tons)
tons), which forms the bedrock of Japans
Japan s cargo
industry, has continued to decline in recent years.
Truck-based (automobile) transport is the primary transport method that constitutes a large share of Japans
Japan s freight traffic
traffic.
In recent years, the volume of cargo transported via automobile has declined due to the downturn in the quantity of trucks sold for
private use.
Cargo
Ca
go qua
quantity
t ty by transport
t a spo t method
et od ((FY2012)
0 )
Unit: 1 million tons
Coastwisevessels
366,8%
Domesticaviation
1,0%
Railways
42,1%
Automobile cargo
g q
quantity
y movement
1 million tons
7,000
Business
Personal
6 000
6,000
5,000
4,000
3,000
Motorvehicles
4,366,91%
2,000
,
1,000
0
'60 '65 '70 '75 '80 '85 '90 '95 '97 '99 '01 '03 '05 '07 '09 '11 '13
NB: The chronological continuity of data from prior to 2009 could not be guaranteed due to the
changes made to the in tallying methodology in the middle of 2010.
Source: NRI based on the Ministry of Affairs Transport quantity by transport method and the Ministry of Land, Infrastructure, Transport and Tourisms Automobile Transport Statistics Survey
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
57
2000
0.10.5t
5,000
10,000
0.51t
15,000
15t
20,000
Above5t
25,000
(thousand
instances)
64.4%
2000
0.10.5t
500
69.2%
75.3%
1,500
Above5t
2,000
(thousand
i t
instances)
)
CAGR
7.3%
2005
59.2%
CAGR
3.7%
2010
1,000
15t
46.4%
CAGR
4.5%
2005
0.51t
CAGR
12.6%
2010
2010
72 4%
72.4%
Source: NRI based on the Ministry of Land, Infrastructure, Transport and Tourisms Logistics Census
58
22.5
20.2
20
18.1
16.2
14.4
15
11.7
10
12 8
12.8
9.7
5
0
2012
2013
2014
2015
2016
2017
2018
2019
2020
NB: Business to-consumer e-commerce: sale of products and services to consumers in general via the Internet
Source: NRI
59
Otherthantransport
Transportindustryshare
(Buildings)
60,000
50,000
25%
20%
2,000
Entireindustry
Otherthantransport
Transportindustry
1,500
40,000
15%
1,000
30,000
10%
20,000
10,000
0%
'88
'89
'90
'91
'92
'93
'94
'95
'96
'97
'98
'99
'00
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
0
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
500
0
'88
'89
'90
'91
'92
'93
'94
'95
'96
'97
'98
'99
'00
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
5%
Source: NRI based on Ministry of Land, Infrastructure, Transport and Tourisms Construction Statistics
60
Realestateindustry
Transportindustry
Others
500
400
300
200
100
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Note: Only contracts worth 5 billion yen above are included
Source: NRI based on Ministry of Land, Infrastructure, Transport and Tourisms Construction Order Trends, Statistics and Survey
61
Vacancy rate in Tokyo area, which was on a rise, has diverted downwards.
(yen/month/tsubo)
5,000
Osakaarea
Jul.2008
4,500
Rent offer
Jan.2015
Jul.2010
4,000
J ul.2008
ul 2008
Oct.2012
3,500
Jul.2010
Jan.2015
Oct.2012
3,000
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
Vacancy rates
NB: Logistics facilities which have a total lot area or total floor area of 10,000m2
Source: NRI based on data from Ichigo Real Estate Information Services Survey on the Logistics Facilities Rental Market
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
62
Cap rates have been falling since 2012, with Tokyo hitting all-time low.
Multi-tenant
7.5%
7.5%
7.0%
7.0%
6.5%
6.5%
6.0%
Chiba(inland)
6.0%
5.5%
Tokyo(inland)
5.5%
Chiba(inland)
Tokyo(inland)
Tokyo(bay)
Tokyo(bay)
Occt05
Ap
pr06
Occt06
Ap
pr07
Occt07
Ap
pr08
Occt08
Ap
pr09
Occt09
Ap
pr10
Occt10
Ap
pr11
Occt11
Ap
pr12
Occt12
Ap
pr13
Occt13
Ap
pr14
Occt14
Oct05
pr06
Ap
Oct06
Ap
pr07
Oct07
pr08
Ap
Oct08
Ap
pr09
Oct09
pr10
Ap
Oct10
Ap
pr11
Oct11
pr12
Ap
Oct12
Ap
pr13
Oct13
pr14
Ap
Oct14
5.0%
5.0%
NB: Single tenant: 2-3 floors; total floor area of around 10,000m2
NB: Multi-tenant: 3-4 floors; total floor area of around 50,000m2
Source: NRI based on Japan Real Estate Institutes Real Estate Investors Survey
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
63
Japan
Office Market
Residential Market
64
16
14.4
12.7
12
4
0.9
04
0.4
0
ListedREIT
PrivateFund
PrivateREIT
Equity Type
Listed
CMBS
Debt Type
Unlisted
Close-Ended
RMBS
Open-ended
Residential
Mortgage
Commercial
Mortgage
NB: Listed REIT figure is updated as of end of Jan 2015, private fund figure is updated as of end of Dec 2014, unlisted REIT is an estimated figure as of end of Oct 2014,
RMBS/CMBS figure is updated as of end of Sept 2014.
Source: NRI based on the Association for Real Estate Securitization, Sumitomo Mitsui Trust Research Institute Co., Ltd., and the Japan Securities Dealers Association
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
65
(No.ofJREITs)
(N
f J REIT )
50
10,000
40
8,000
30
6,000
20
4,000
10
2,000
0
2001/9 2002/8 2003/7 2004/6 2005/5 2006/4 2007/3 2008/2 2009/1 2009/12 2010/11 2011/10 2012/9 2013/8 2014/7
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
Market Capitalization
No. of JREITs
Source: Bloomberg
66
OtherAreas
7.9%
KinkiArea
13.1%
ChubuArea
4.2%
Approx.
12.7
trillion yen
Logistics
10.2%
5Central
Wardsof
Tokyo
37.8%
Others
3.8%
Hotel
3.3%
Retail
18.2%
Approx.
12.7
trillion yen
Office
47.4%
KantoArea
18.9%
23Wardsof
Tokyo
18.2%
Residential
17.0%
%
* As of the end of January 2015
Source: NRI based on ARES
67
The Tokyo
y Stock Exchange
g ((TSE)) REIT Indices have recovered from 2013.
The TSE REIT Indices has dropped sharply from its peak in May 2007, and has recovered rapidly from 2013.
TSE REIT Index, TOPIX, and the Listed Real Estate Industry Index
3,000
2,500
2,000
1,500
1,000
500
0
2003/3 2004/1 2004/11 2005/9 2006/7 2007/5 2008/3 2009/1 2009/11 2010/9 2011/7 2012/5 2013/3 2014/1 2014/11
TSEREIT Index
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
TOPIX
TOPIXRealEstate SectorIndex
68
8.0%
7.0%
6.0%
5.0%
4 0%
4.0%
3.0%
2 0%
2.0%
1.0%
0.0%
2002/1 2002/11 2003/9 2004/7 2005/5 2006/3 2007/1 2007/11 2008/9 2009/7 2010/5 2011/3 2012/1 2012/11 2013/9
Spread
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
JREITsDividendYield
JGB10YearYield
Source: NRI based on Bloomberg, TSE.
69
ARES Japan Property Index (AJPI) and ARES Japan Fund Index (AJFI)
25%
25%
AJPI:IncomeReturn
20%
AJFI:IncomeReturn
AJPI:TotalReturn
20%
15%
AJPI:CapitalReturn
15%
10%
10%
5%
5%
0%
0%
5%
5%
10%
10%
15%
15%
20%
20%
25%
2002/12
25%
2002/12
2004/8
2006/4
2007/12
2009/8
2011/4
2012/12
AJFI:TotalReturn
2004/8
2006/4
2007/12
2009/8
2011/4
2012/12
Source: NRI based on The Association for Real Estate Securitization (ARES) ARES Japan Property Index and ARES Japan Fund Index
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
70
Asset Backed Securities Breakdown by Type of Backing and RMBS Breakdown by Originator
(100m)
60,000
0%
2004FY1H
2004FY2H
2005FY1H
2005FY2H
2006FY1H
2006FY2H
2007FY 1H
2007FY1H
2007FY2H
2008FY1H
2008FY2H
2009FY1H
2009FY2H
2010FY1H
2010FY2H
2011FY1H
2011FY 2H
2011FY2H
2012FY1H
2012FY2H
2013FY1H
2013FY2H
2014FY1H
HousingFinanceAgency
50,000
40,000
4,370
7,418
30,000
7,679
8,755
6,937
20,000
32,311
1,994
20%
10,338
40%
60%
Banks/TrustBanks
80%
RegionalBanks
100%
Nonbank
Others
563
30,260
2,038
10,000
3,511
980
20,955
14,815
16,935
16,276
12,143
9,702
341
1,701
16,352
11,113
7 537
7,537
1,288
413
8,491
140
153
138
15,064
11,132
8 341
8,341
10,742
11,148
9,741
10,760
0
2004
2004
2005
2005
2006
2006
2007
2007
2008
2008
2009
2009
2010
2010
2011
2011
2012
2012
2013
1stHalf 2ndHalf 1stHalf 2ndHalf 1stHalf 2ndHalf 1stHalf 2ndHalf 1stHalf 2ndHalf 1stHalf 2ndHalf 1stHalf 2ndHalf 1stHalf 2ndHalf 1stHalf 2ndHalf 1stHalf
RMBS
CMBS
CDO
Lease
ConsumerLoan
ShoppingCredit
Accountsreceivable/CommercialBills
Others
71
Japan
China
Korea
Increase of liquidity
q
y within slow economic g
growth
Taiwan
72
China
Residential Market
73
10,000
8 000
8,000
6,000
4,000
2,000
0
80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14
Source: IMF
74
Real GDP growth rate declined in 2007 and reached below 8% in 2012 and the following
years.
Changes in real GDP growth rate of China and sectoral contribution
16
14
12
10
8
6
4
2
0
-2
2
-4
Net
Exports
-6
00
01
02
03
Investment
04
05
06
Consumption
07
08
09
10
11
12
13
75
120,000
100,000
High-income country: RMB 78,405
80,000
60,000
40,000
20,000
Note: IMF definition of high-income country: GDP per capita USD 12,616 (about RMB 78,405 according to the rate on Friday, May 1, 2015)
76
Tertiary industries has been growing with its contribution to GDP growth reaching approx
approx. 50% in 2014
2014.
This growth became the main factor for increasing real estate investment in urban areas.
77
78
The productive-age
g population is expected to peak out by
y 2015.
Peak
300
250
China
Japan
p
200
150
100
50
0
50 55 60 65 70 75 80 85 90 95 00 05 10 15 20 25 30 35 40 45 50
1990's
2000's
Source: United Nations
79
When demographic dividend of China disappears in 2015, the country has to face increased financial
burden decrease of labor force
burden,
force, consumption slump
slump, etc due to decreased proportion of young
population and high population aging rate.
After 2015, when it is estimated China's demographic dividend disappears, the government has to face increased financial burden,
decrease of labor force
force, consumption slump and other problems due to declining birthrate and aging population
population.
As a countermeasure, the government announced a policy that aims to ease the one-child policy at the end of December 2013.
The one-child policy was implemented in China in 1979. To solve the problems of aging population and decrease in labor force, the
government announced an easing policy, two-child policy, which allows couples to have one more child if any one of them is the only
child in their parents family
family, at the end of December 2013
2013.
In 2014 and after announcement of the two-child policy by the central government, local governments of Beijing, Shanghai, and
Guangdong province announced detailed regulations to "allow couples to have one more child if any one of them is the only child in
their parents family" and started receiving applications for approval of birth of the second child.
It is believed the two-child policy will be implemented throughout China in the future
future.
Change in proportion of young population (<15)
(%)
(%)
45.0
30.0
40.0
25.0
35.0
20.0
30.0
15 0
15.0
25.0
2050
2045
2040
2035
2030
2025
2020
2015
2010
2005
2000
1995
1990
1985
1980
1975
1970
1965
1960
1955
2050
2045
2040
2035
2030
2025
2020
2015
2010
2005
2000
1995
1990
1985
1980
1975
1970
1965
0.0
1960
10.0
1955
5.0
1950
15.0
1950
10.0
20.0
80
Note Urban population in 2020 is the target value stated in government policy
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
81
100 0%
100.0%
90.0%
80.0%
70.0%
National average: 53.7%
60.0%
50.0%
40.0%
30 0%
30.0%
20.0%
10.0%
0.0%
82
16
50%
14
40%
12
30%
40
6%
35
5%
30
4%
25
10
20%
20
8
10%
6
0%
4
2
0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
areas
Growth rate
3%
15
2%
10
-10%
-20%
1%
0%
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Growth rate
83
Average growth rate of disposable income per capita has maintained 11% for the last 16
years, with this indicating robust consumer spending.
Disposable Income per capita and Growth Rate in Urban Areas
(RMB)
84
In 2013
2013, the Population of Intermediate in China was 11
11.97
97 million
million, about 1% of the total population
population.
About 15% of the assets of the affluent population is related to real estate investment. This figure may increase in the future.
Changes of affluent population
(10,000 people)
Note: Population of Intermediate Wealthy" is defined as people whose disposable assets are RMB 600,000 to 6 million (which is 11.77 ~117.774 million Yen
according to exchange rate as of Friday, May 1, 2015)
Source: 2014 China People Wealth White Paper (Hurun Research Institute)
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
85
More than half of the affluent population (especially whose in Pearl River Delta
Delta, Guangdong)
are willing to continue investment in real estate.
Note: Jing
Jing-jin
jin area: Beijing and Tianjin
Tianjin.
Yangtze River Delta: Shanghai, Jiangsu, and Zhejiang provinces.
Peal River Delta: Guangdong province.
Source: 2014 China People Wealth White Paper (Hurun Research Institute)
86
Salary income and transfer income are 64% and 24% of average household income per capita,
respectively Zhejiang and Yunnan show relatively higher property income (including real estate
respectively.
income).
Source of annual household income per capita of urban population (2013)
(RMB)
50,000
Salary
Income
45,000
Revenue
Business
40,000
Asset
Income
35,000
Transfer
Income
30 000
30,000
25,000
20,000
15 000
15,000
10,000
5,000
Note: Salary income: wage income. Business revenue: revenue from commercial buying and selling activities.
Asset income: revenue from moveables and real estate. Transfer income: income from severance pay, pension etc.
Source: National Bureau of Statistics, China
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
87
Total retail sales of consumer goods has increased by more than 4.5 times between 2001 and 2013,
and the average growth rate after 2008 reached 18%
18%, which stimulated the demand for construction of
commerical facilities.
Total Retail Sales of Consumer Good and Its Growth Rate
88
China
Residential Market
89
90
Ratio of real estate investment over urban fixed asset investments has scored over 50% in
Beijing followed by Hainan Zhejiang and Guangdong
Guangdong, which far exceed the national
average.
The Ratio of Real Estate Investment in Urban Fixed Asset Investment by Region in 2013
(100 mil Yuan)
91
The most vibrant region for real estate investment is Eastern Area, accounting for half of the
total investment in China
China, while the Western Area started to be vibrant as well in recent
years.
26%
24%
22%
20%
18%
16%
14%
2012
2012
2013
2013
Eastern Area: Beijing, Tianjin, Shanghai, Hebei, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong, Hainan
Middle Area: Shanxi, Anhui, Jiangxi, Henan, Hubei, Hunan
Western Area : Sichuan,
Sichuan Guizhou,
Guizhou Yunnan,
Yunnan Shanxi
Shanxi, GansuQinghai,
Gansu Qinghai Neimenggu,
Neimenggu Guangxi,
Guangxi Xizang,
Xizang Ningxia,
Ningxia Xinjiang
Xinjiang, Chongqing
Northeast : Heilongjiang, Jilin, Liaoning
Source) National Bureau of Statistics of China
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
92
The
traditional
housing
The traditional housing
distribution
distribution system was
system was
abolished
abolished
93
Housing
g investment comprises approx. 70% of the entire real estate investment.
94
95
In most cases
cases, real estate investment projects in China are financed by Real Estate
Investment Trust through banks.
The current real estate finance market in China features of an extremely large primary market of housing loan but very small second
market. i.e. securitization market of mortgage loan that supports the primary market.
Although there are almost 200 listed real estate development companies, few of them are utilizing private real estate funds or REIT.
In 2010, the central government reviewed its policies on real estate market and limited direct financing from banks. As a result, real
estate investment trust and other tools became the main route for investment in real estate projects
projects.
Investment structure of Real estate finance in China
Investor
(Individuals,
companies,
investment
organizations
etc.)
Banks/insurance
companies
Asset
management
products
Open market
(stock exchange etc
Real Estate
Investment Trust
Private real estate
funds
Other tools
Main
Few
Very few
Real estate
development
project
Listed
Li
d reall estate
companies
Stocks and bonds
products
Securitized
Few
Trial
96
97
Source: Made by NRI based on 2013 private real estate funds(RMB) annual reporthinaVenture
98
Special
Special asset
asset management
management
Share of fund
Share of fund
Owner
Owner
Private
Privatefund
fund
Fund management
Fund management
Project company 1
Project company 1
Building
Building
Project company 2
Project company 2
Value of Assets
Expected Growth of
rental income in the
following 5 years
Low-risk
Low-risk
oriented
oriented
investors
investors
Senior debt
Senior debt
High-risk
High-risk
oriented
oriented
plan
investors
plan
investors
Inferior
Inferior
creditors
creditors
claim
claim
Expected Growth in
selling income in the
following 5 years
3.511 Billion
RMB
1.527 Billion
RMB
4%-6%Year
3%-5%
Year
8%-11%
Year
5%-8%
Year
Source: Made by NRI Based on Qi Hang Special Assets Management Plan of CITIC
99
China
Residential Market
100
Luxury
commercial
residence
Ordinary
commercial
residence
Urban
housing
Public
P
bli rental
t l
housing
Houses that can be freely resold
Houses that can be resold with
conditions
Ordinary condominium
Affordable
housing
Price-limited
housing
Low price
public housing
Sold at
market
prices
p
Sold at
preferential
prices
Leased at
Preferential
prices
101
Description
Affordable housing
Families with the right to purchase are those with a household register as well
as with income of 60,000 Yuan or less.
Price-limited
housing
Public rental
housing
L
Leased
db
by G
Governmentt or institutions
i tit ti
i itits commission
in
i i to
t low
l
and
d middleiddl
income families at market prices
Government provides a certain amount of housing allowance to its occupant
families every month.
Leased to low-income
low income families at the lowest lease price determined by
Government.
Provided sizes: 35 for 1LDKs, 45 for 2LDKs, and 55 for 3LDKs.
Resalable or not
102
Affordable housings can be provided at drastically cheaper price than ordinary commercial
housings as the price is set according to costs.
It should be noted that affordable housing is sold under Allocated
Allocated land usage rights
rights, which does not require the payment of land grant
charges to the government, and that the percentage of profit allocated to developers from its development is politically controlled under
3% or less.
Comparison of price structure between ordinary commercial housing and affordable housing
Ordinary commercial
housing
Affordable housing
Eviction/compensation costs
Planning/designing costs
Construction costs
for infrastructure within the housing
SG&A
T
Tax
Unlimited
3% or less
Profit
Land grant charge
Land right type
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
103
Due to urbanization
urbanization, the housing demand in urban areas is hovering at a high level
level,
resulting in an increasing trend over the supply of commercial residences.
Supply of commercial residences slowed down at times due to policy adjustments and fiscal tightening
tightening, although the volume of both
housing demand and construction area have been on the rise during recent 12 years.
The area of commercial residences completion in China
(10,000 )
104
7.64
7
64 million commercial units are supplied annually in Chinas
China s urban areas
areas, with this being
30 times larger than the number of houses built annually for sale in Japan.
The number of newly completed commercial residences in China in 2013 was 7.49
7 49 million; approx
approx. 3 times larger than that of 12 years
ago (2.14 million in 2000) and 30.9 times larger than the supply of houses built for sale in Japan( 2.47 million) in 2013.
Typical commercial houses have a layout of 2LDK or 3LDK with a completion area of approx. 110 m2.
The number of commercial residence completions and its average completion area
(10,000 House)
( per house
105
Approx. 90% of commercial housing is general residential property while the investment
Approx
towards the Affordable housings for low and middle income class is in extremely short supply.
Changes of the Ratio of Housing
Ho sing In
Investment
estment b
by ttypes
pes
100%
80%
60%
40%
20%
0%
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
Note: Since numbers related to affordable housing after 2010 is not provided in the China Statistical Yearbook, the data
here was calculated from selling price and actual construction household
106
107
108
*Since sales prices of the economical housing for low-and-middle income earners in 2011 were not reported in
China Statistical Yearbook 2012, the data here was calculated on the basis of data in 2010 by 110% growth rate.
Source) National Bureau of Statistics of China
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
109
Sale price of residential properties has been rising at growth rate more than 40% in the last
5 years with the second-tier cities demonstrating this tendency
Sale Price of Commercial Housing in Major Cities (Comparison between 2008 and 2013)
/
110
Source: Statistical material by the Ministry of Land and Resources and the National Bureau of Statistics
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
111
Although the policy implemented by the government in 2009 had some effects in reducing housing
price it caused increase of stock of houses and deterioration of the overall market conditions
price,
conditions. This is
why the government implemented easing policy in 2014.
Monetary easing policies implemented after the Lehman shock resulted in skyrocketing housing price in Beijing, Shanghai, and other
major cities in China
China. As a countermeasure
countermeasure, the Chinese government implemented a series of policies that made it more difficult for
acquisition of houses after October 2009.
However, since such policies resulted in increase of stock of houses and deterioration of the overall market conditions, the government
had to cancel the housing restriction policies implemented in 43 cities (but not including Beijing, Shanghai, Shenzhen, and Sanya).
Monthly sales area of commercial housing compared with the previous year (after 2007)
(%)
October 2009
Implementation of housing price
suppression policies
Abolishment of tax incentives (real estate
transaction tax and personal income tax)
Implementation of differentiated housing
loan policy
End of 2008
Economic recovery
through reduction of
interest rates and
exemption of real estate
acquisition tax etc.
January 2011
Further increase of down
payment/interest of loan for the
second house.
Trial introduction of property tax
for the third house in Shanghai
and Chongqing.
Increase of house supply
through provision of affordable
houses.
Easing
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
Restriction
September 2014
Decrease of down
payment/interest of loan
for the second house by
the central bank.
Policy for limiting house
purchase was abolished
in most cities.
Promoted expansion of
financing route and
supported banks and
other financial institutions
to issue housing bonds
and REITS.
Easing
Source: National Bureau of Statistics, China
112
Excessive housing stock became a significant problem due to real estate suppression policy. In
September 2014
2014, the government announced a real estate easing policy
policy, and housing price plummeted
in many cities.
Since the issuing of the regulatory plan
plan, the property developers were lead to cut the housing prices to encourage sales and increasing
number of cities witnessed a decline of housing prices since September 2011. This demonstrates that the governments restrictions
have been effective in bringing down housing prices.
However, housing prices began to rise in more than 90% of the major cities in 2013. The growth rate is more than 20% in the four major
cities, Beijing, Shanghai, Guangzhou and Shenzhen, with the rate being highest in the history. There lies an acute risk of bubbles.
After the government announced a real estate easing policy that encourages but not limits housing purchase, more and more cities
experienced declination of housing price and worried about how to "digest" the existing housing stock.
The change of cities' number with the housing prices deviation at the link relative ratio in the 70 major cities of China 2011-2015
113
1 and 2 cities
Excessive house supply in tier 3 and 4
cities
China
Residential Market
115
Commercial development boom in large cities has started since 2008 and the supply of
commercial facilities has dramatically increased.
Change In Nationwide Commercial facilities Supply
10 thousand
116
Investment for commercial development has been rapidly growing at an annual rate of 26% on
average since 2000. The volume of investment in 2013 was 20 times larger than that of 2000.
Change in Investment
In estment Amount
Amo nt and Growth
Gro th Rate of Commercial Facilities
(100 mil Yuan)
117
Average unit sales price of offices in 2013 has risen by 3 times of that in 1998
1998, and about 40% of the
sales volume are concentrated in the eastern part of China, where it is economically developed.
Changes iin S
Ch
Sales
l S
Spaces/Unit
/U it S
Sales
l P
Price
i off
Commercial Facilities in China
10 thousand
Changes iin S
Ch
Sales
l S
Spaces/Unit
/U it S
Sales
l P
Price
i off
Commercial Facilities by Region (2012
RMB/
10 thousand
RMB/
118
119
Office supply in urban areas in China has experienced a downturn after the failure of
Lehman Brothers in 2008, however, a growing trend continues as a whole.
Change in Nation
Nationwide
ide Office S
Supply
ppl
10 thousand
120
Investment towards office development has been expanding at an annual growth rate of
more than 18% on average in the last 14 years.
121
Average unit sales price of offices have doubled between 1998 and 2013
2013, with more than 60% of the
office sales concentrating in the eastern part of China where economy is rapidly developing.
10 thousand
RMB/
122
Approx. 30% of office sales in 2013 was concentrated in Yangtze River Delta Area (Shanghai
Approx
(Shanghai, Jiangsu
and Zhejiang). Office sales in regions such as Heilongjiang and Guizhou have dramatically increased.
123
Demand for offices in central Beijing has been increasing in the last 2 years
years.
This has created low vacancy rate, and accordingly, the office rent has risen.
Map of Central Beijing
Source) Made by NRI based on the published data of DTZ (Debenham, Tewson & Chinnocks)
124
RMB//Month
125
Large-scale
Large
scale and comprehensive development of commercial properties was seen in many cities in
China in recent years, particularly in tier 2 and inland cities. There is a risk of excessive construction.
In recent years
years, there was a fast development of "urban
urban complex"
complex , which is a large-scale commercial building that includes houses
houses,
stores, offices, hotels, and entertainment facilities, in many cities in China. Chengdu, Shenyang, and Chongqing are top three cities in
terms of existing and future development volume.
Development
D
l
t off urban
b complexes
l
iin major
j cities
iti iin Chi
China
(as of end of 2013)
Development
D
l
t off urban
b complexes
l
iin major
j cities
iti iin Chi
China
(Estimated development volume from 2014 to 2016)
126
In 2015
2015, there will be higher needs for high-quality
high quality and efficient commercial facilities
facilities,
including E-business, which goes beyond comprehensive and large-scale complexes.
Directions of China's real estate market in 2015
1
Urbanization
U
b i ti and
d development
d
l
t off the
th third
thi d industry
i d t
result in higher needs for improved urban service
functions
2
Higher influence of E-business on consumers
127
China
Residential Market
128
Rank
1
2011
2012
2013
2014
Total Sales
Total Sales
Total Sales
Total Sales
Total Sales
Company Name
(100 mil Company Name
(100 mil Company Name
(100 mil
Company Name
(100 mil Company Name
(100 mil
Yuan)
Yuan)
Yuan)
Yuan)
Yuan)
Vanke Group
1,026
Vanke Group
1,215
Vanke Group
1,452
Vanke Group
1,776
Vanke Group
2,120
Poly Group
660
Dalian Wanda
Group
953
Poly Group
1020
Shanghai Greenland
Group
1,625
Shanghai
Greenland Group
2,080
Shanghai
Greenland Group
650
Evergrande Group
804
Shanghai
Greenland Group
1013
Poly Group
1,251
Dalian
Wanda Group
1,501
China Overseas
Land
578
Shanghai
Greenland Group
770
China Overseas
Land
945
China Overseas
Land
1,103
Evergrande Group
1,376
Evergrande Group
527
Poly Group
732
Dalian Wanda
Group
1,073
Poly Group
1,362
China Greentown
522
China Overseas
Land
925
1,068
Country Garden
1,250
Dalian Wanda
Group
369
Country Garden
844
China Overseas
Land
1,152
Longfor Group
336
Longfor Group
383
Crland China
505
Crland China
688
Shimao Property
Holdings
708
Country Garden
330
China Greentown
353
Country Garden
491
Shimao Property
Holdings
683
Crland China
700
10
R&F Properties
321
Crland China
330
Shimao Property
Holdings
660
Sunac China
658
Total Sales of
Developers Top 10
The Percentage of
Developers Top 10
Forge Ahead
Cities
Average of
Developers Top 10
Country Garden
5,319
6,680
8,297
10,771
12,907
10.1%
11.3%
12.9%
13.3%
16.9%
30.6Cites
40.5Cities
53.1Cites
67.2Cites
73.7Cites
129
Most major real estate developers in China have switched from house development to commercial
complex development and are conducting diversified businesses in silver industry, culture, tourism etc.
Vanke
(No.1)
2011: Commercial development and house development for the silver population.
2013: The "80% residential + 20% commercial" strategy. Entry in overseas real estate markets in the US, Hong Kong, Singapore, etc.
2014: Started "real estate + network" business through cooperation with information service providers.
Real estate developers aimed to become urban service providers and implemented "asset-light" strategy.
Green Land
(No.2)
2013: Expanded commercial property business. The target was "more than 50% commercial property by 2015".
2014: Started subway business.
2015:Accelerated business activities in overseas markets (including Japan).
Wanda
(No.3)
Hengda
(No 4)
(No.4)
Poly
(No.5)
(No 5)
2007: Established Wanda Department Store. The target was to "open 110 stores and become the largest department store chain in
China by 2015".
2009: Culture and tourism industry was positioned as the next major business area.
2011: Established a film-making company.
2014: Introduced E-business in operation of commercial facilities.
2015: New policy: "35% real estate business and 65% service business by 2020"
2020". Also
Also, the company aimed to make the proportion
of overseas business to be higher than 20% by 2020.
2011: Started resort development and house development for the silver population.
gy
2012: "70% residential and 30% commercial" strategy.
2014: Expanded overseas real estate investment and promoted silver, tourism, and commercial property businesses.
Note: Numbers in parentheses are sales ranking of real estate companies in 2014.
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
130
Real estate is the third popular overseas business for Chinese companies
companies. Other two are
energy and mining businesses.
Looking at large-scale overseas investment projects (USD 100 million above) of Chinese companies from 2005 to 2013
2013, it is able to see
that 12.3% (67) of 545 projects were related to real estate development. The figure was 30.1% for energy and 22.8% for mining
industry.
Although insurance companies, commercial banks, and investment funds were also investing in overseas real estate. Major Chinese
real estate developers are main players.
Most Chinese investors focus on overseas commercial properties, but not residential properties.
Overseas real estate investment of Chinese companies
(2003-2013)
131
Europe
Asia
Others
Toronto (Canada)
France
Frankfurt (Germany)
Green Land
Iceland
Zhongkun
London (UK)
Wanda, COHL
Taiwan
Vanke, Wantong
Singapore
Vanke, Huashan
Malaysia
Country Garden
Madrid (Spain)
Green Land
North Caucasus
North Africa
Sydney (Australia)
Poly
Green Land, Yihe
132
1
Reduction of profit rate of real estate
business
Increased investment risk
133
Japan
China
Korea
Increase of liquidity
q
y within slow economic g
growth
Taiwan
134
Korea
Business Trends
1-2
135
Business trends
6.2%
4.2%
3.5%
10.7
9.7
8.8 8.9
5.8 6.3
(%)
16.0
12.0
8.8
7.2
7.2
5.8
4.0
800
4.6
2.8
4.0
8.0
6.3
5.2 5.1
3.7
2.3
2.0
2.8
4.0
0.3
600
0.0
400
200
-4.0
40
-5.7
57
-8.0
0
'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19
Gross Domestic Products
d
(Reall GDP)
(OECD)
Economic Growth(OECD)
Source: NRI based on IMF, OECD, The Bank of Korea, Media Research
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
136
Business trends
Non-manufacturing
manufacturing
All
2,262
2,290
2 103
2,103
1,849
1,600
737
(46%)
864
(54%)
2009
814
(44%)
1,036
(56%)
2010
907
(43%)
1,196
1
196
(57%)
2011
983
(43%)
1 279
1,279
(57%)
2012
0913
9%
10%
9%
1113
4%
3%
7%
1213
1%
-2%
5%
1,030
(45%)
1,260
1
260
(55%)
2013
Source: NRI based on National Statistical Office(KOSTAT)
137
Business trends
CAGR(11-13)
11%
5%
2011
2012
2%
-5%
-8%
-2%
19%
11%
6%
-4%
0%
11%
-4%
2%
3%
8%
8%
19%
-13%
-17%
2013
325.8
26%
22%
190.6
156.4
150.2
115.0
76.1
48.8
Electronic
components
and
communicatio
n equipment
Car
Chemical Refined
products petroleum
products
Other
Food
Primary Transportat
ion
metal
products
equipment
37.1
Electrical
equipment
33.2
20.3
Other
Nonmetalli
machine
c mineral
and
products
equipment
19.7
Clothing
17.5
Rubber,
Plastic
products
13.6
Metal
goods
11.8
Medicine
11.6
Paper
products
8.8
Beverage
5.2
Textile
goods
3.9
Medical
precision
optical
instrument
3.7
Leather,
bag and
shoes
2.5
Furniture
138
Business trends
CAGR(11-13)
4%
2011
11%
2012
12%
3%
7%
3%
12%
2%
15%
-2%
8%
20%
19%
2%
-5%
2013
316.7
161.8
146.1
107.1
101 8
101.8
76.7
41.5
22.0
Wholesale
El t i it
Electricity,
and retail
gas, and
Construction
(distribution
steam supply
industry)
Transpor
-tation
Publishing,
b d
broadcast/
t/
Real estate
Communicaand leasing
tion and
service
information
service
Expert,
technique
and service
Business
support
service
21.1
18.9
4.8
3.4
Sewerage,
t and
d
waste,
Leisure and Accommodat
Educational environment
related
ion and food
al restoration
service
service
service
service
1.7
Fishery
1.7
Mining
industry
1.3
Agriculture
139
Business trends
In terms of aggregate market value of listed companies, information and communication, and semiconductor industry accounts for the highest
highest. That of healthcare industry in past 3 years demonstrates
the highest growth rate at approx. 27%.
Aggregate Market Value by industry (KRX, 11-14)
11 14)
(unit: trillion KRW, %)
27%
CAGR(11-14)
15%
15%
11%
9%
2%
-4%
Growth rate of
aggregate market value of all industries: 4%
10%
8%
-6%
-15%
-18%
Healthcare
highest growth rate of aggregate market value
0%
6%
1%
7%
-13%
330
320319
250
240
237
242
2011
2012
179
2013
132
120113
108
29 30
Car
40
31
Distribution
11 14 17 17
Leisure
31 33
40 47
57
92 97 89
67 62 74
11 13 12
39 37
23
Media/Tele
Consumer
communica
Health care
goods
tion
ICT
Semiconductor
38 41
28 24 20 22 25 36
20
18
Construc- Transportion
tation
Ship
building
56 55 51
46
2014
61 65 67
75
65 66 70 72
79
46 48 53
56
17 19 16 18
steel
Energy/
gy
chemical
banking
Non-bank
financial
Stock
insurance
140
Business trends
7.4%
7.6%
7.4%
6.1%
5.3%
2.3%
4.8%
4.0%
(04 14)
(04-14)
(14)
Total
10.5%
100%
Daewoo
7.5%
16%
GS
8.9%
16%
Samsung 11.7%
24%
Daerim
8.6%
15%
Hyundai 14.1%
29%
2.8%
-0.4%
61
99
9.9
49
45
(unit: trillion KRW)
33
22
4.8
24
5.1
26
5.7
28
6.1
6.6
6.9
36
7.1
7.4
38
6.7
7.9
40
8.8
8.2
70
7.0
79
7.9
8.5
8.5
6.0
7.2
7.3
6.3
6.2
7.2
8.9
9.3
56
5.6
57
5.7
4.9
5.0
5.3
5.2
4.1
4.3
4.9
4.6
4.3
4.3
5.1
5.6
7.3
9.3
10.0
10.1
10.4
10.6
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
68
6.8
5.9
9.0
14.9
13.4
6.0
4.0
9.5
8.4
17.4
'14
141
Business trends
Investment in construction and facilities and its ratio to GDP has topped out in 2011.
Investment on Construction and Facilities, and its ratio to GDP
26.1%
24.7%
25.9%
24.6%
22.7%
19 7%
19.7%
19 3% 18.7%
19.3%
18.0%
11 3% 10.8%
11.3%
10 8%
11.8%
17.2% 16.6%
15.7% 16.2%
14.7%
12.8% 13.1%
11 3%
11.3%
10.2%
10 8%
10.8%
8.9%
126
133
7.1%
Construction Investment
Facilities Investment
(unit: trillion KRW)
105
46
'91
106
46
'92
118
46
'93
125
58
'94
137
69
147
76
150
131
69
41
'95
'96
'97
'98
57
'99
126
75
'00
69
'01
142
74
'02
154
73
'03
156
76
'04
155
80
'05
156
86
'06
158
94
'07
154
93
'08
159
84
'09
153
106
'10
146
143
109
'11
107
'12
153
106
'13
154
112
'14
142
Business trends
5.8
52
5.2
2.2
21
2.1
1.4
2.2
4.1
20
2.0
1.6
1.6
19
1.9
1.4
1.2
1.2
'91
'92
'93
'94
'95
35
'13
'14
39
34
31
19
35
46
1.1
30
4.3
2.5
2.2
37
4.5
3.5
1.4
4.2
'96
'97
'98
'99
'00
'01
'02
'03
10
'04
'05
'06
'07
'08
'09
'10
'11
'12
143
Business trends
Interest rate consistently dropped to 1% after the bankruptcy of Lehman Brothers in 2008
2008. Low
interest rate is expected to lead increment on liquidity.
Korea Interest Rate (97-14)
( 97- 14)
(: %)
16
14
Call Rate(1day,average)
Base Rate
12
10
8
6
4.75
5.25
4
4.25
4.5
3 75
3.75
3.25
3 75
3.75
3.25
3
2
'97
'98
'99
'00
'01
'02
'03
'04
'05
'06
'07
'08
'09
2.5
'10
'11
2.75
'12
2.5
'13
1.75
'14
'15
144
Business trends
Both employment and unemployment rate has been improved since 2009
2009. This is derived
from increase in employment of middle-aged/elderly workers over their 50s.
Employment Rate and Unemployment Rate in Korea
Improvement
in Employment Rate
61
44
4.4
60
5.0
4.5
60.2
4.0
60.0
3.6
59.8
3.3
60
3.7 3.7
3.6
3.5
59.8
59 7 59
59.7
59.7
7 3
3.2
2 3.2
32
(unit: %)
(unit: population(million))
3,500
60.2
59.8
59.5
58.6
3,000
58.7
59 1
59.1
59.4
59.5
60
4.0
3.7
3.5
3.4
32
3.2
59.5
58
2,500
3.5
3.1
59.5
59.4
3.0
2,000
289
311
329
349
269
274
430
450
479
508
535
561
585
Number
of
56
employee
over 50s
(36.5%)
648
655
652
655
661
662
664
668
54
604
601
584
583
579
576
574
571
52
399
389
378
371
365
361
357
363
262
26
264
409
59.3
59
59.1
2.5
1,500
59.0
2.0
58.7
59
58.6
58.5
58
1,000
1.5
500
10
1.0
Employment Rate
Unemployment Rate
58
0.5
0.0
'00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14
50
'07
10s
'08
20s
'09
30s
'10
40s
'11
50s
'12
'13
over 60s
'14
Employment rate
Note: Employment Rate=(employee/population over age 15)x100, Unemployment Rate=(The Unemployed/Economically Active Population)x100
Source: NRI based on National Statistical Office(KOSTAT)
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
145
Korea
Business Trends
1-2
146
Office market in Seoul consists of 3 districts: CBD where government offices and corporate
headquarters are located; CBD as a financial district; and GBD where IT
IT-related
related industry is
concentrated.
Office Market in Seoul by Business District
CBD
(Central Business District)
YBD
(Yeouido Business District)
GBD
(Gangnam Business District)
147
Office supply in Korea has been concentrated in CBD and YBD since 2010 and will expand
to GBD after 2015.
Office Supply in Seoul
CBD Centered (70~86)
GBD Centered
CBD YBD
GBD
(87~09)
(
(10-11)(
)(12-13))
(14-)
160
CBD
GBD
YBD
140
(unit: ten thousand )
120
100
80
60
40
20
0
'70
'72
'75
'77
'79
'81
'83
'85
'87
'89
'91
'93
'95
'97
'99
'01
'03
'05
'07
'09
'11
'13
'15
148
16.0%
(unit: KRW/3.3/Month)
120,000
Total
CBD
GBD
YBD
Total
total
14 0%
14.0%
GBD
YBD
110 000
110,000
12.0%
100,000
10.0%
90,000
8.0%
80,000
6.0%
70,000
4.0%
60,000
2.0%
50,000
0.0%
CBD
40,000
,
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
149
70
7
CBD
GBD
60
YBD
Oth (Seoul)
Other
(S
l)
BBD
T t lT
Total
Transaction
ti V
Value
l
70
7.0
57
48
50
40
41
35
30
5.6
39
38
4.1
4.2
6
51
5
4.8
4.6
26
25
2.8
2.6
20
5.5
59
6.0
53
52
42
57
58
1.7
2.6
2.2
19
1.9
10
8
0.4
1.2
0
'99
'00
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
150
Sales p
price of office is approx.
pp
4,600,000 KRW/ and Cap.
p Rate is 5.9%.
Transacted Gross Area by Business District and Sales Price of Office Space per in Seoul
(unit: 10 thousand )
140
7000
CBD
GBD
YBD
Other ((Seoul))
BBD
Cap
p Rate
120
6000
9.2%
100
4 632
4,632
7.9%
80
2,344
6 7%
6.7%
2,488
4,297
4000
3,513
7.3%
2 818
2,818
4,284
3,760
3,658
60
4,103
4,034
6.6%
6.2%
5000
6.8%
3000
6.3%
6.0%
5.9%
5.4%
40
2000
20
1000
0
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
151
Investment by foreign institutions induced the rise of average sales price of office space
space.
Average sales size is approx. 10,000 per 3.3 and sale price is 15.3 million KRW/3.3.
Sales Price of Office Space in Seoul per Unit Area by Business District(Transaction in 2014)
(Sale Price: per 3.3 10thousand KRW/3.3)
3000
Average Area of Transaction
g
Wategate
28 900(m2)
28,900(m
State tower
State-tower
building
Namsan
Gran Seoul
2500
(A-dong)
Fine Avenue
A
YG
Tower
T
2000
Olive Tower
Average Sales Price of Transaction
: 1,530 (10 thousand KRW / 3.3m2)
Dongyanglife
Jamsil
1500
building
Hyang-gun
Tower
1000
1000
500
3000
2500
500
0
-
20,000
40,000
60,000
80,000
100,000
120,000
CBD
GBD
YBD
Area of Transaction()
Note: Analyzed 33 Office Transaction mainly made at CBD, GBD and YBD in 2014 / Final Consumption Expenditure=Household Final Consumption Expenditure + General Government
Final Consumption Expenditure / **Expected Figure is Reported by IMF
Source: NRI based on Analyst Report
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
152
Spread
Cap. Rate
Treasury Bond(5 year)
14%
12%
11.9%
11.1%
9.8%
10%
9.7%
8.7%
9.2%
7.9%
8%
7.3%
6 2%
6.2%
6.7%
6 3%
6.3%
6%
4.8%
4.4%
4.5%
5.0%
5.3%
6.2%
6
2%
5.4%
6 3%
6.3%
6.6%
6.0%
5.4%
4.3%
4%
6.8%
5.9%
3.9%
4.6%
3.2%
3.0%
2.8%
'12
'13
'14
2%
0%
'00
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
153
Korea
Business Trends
1-2
154
Population in Nationwide
(unit: household(thousand))
(unit: population(thousand))
21000
Household
19000
population
2018
50500
50000
49500
17000
49000
15000
48500
13000
48000
47500
11000
47000
9000
46500
7000
46000
45500
5000
'00
'05
'10
'15
'20
'25
'30
(unit: population
Population
Population
ratio of
in capital
area
capital
area
in noncapital
area
(thousand))
60,000
49.3%
50 000
50,000
49.7%
48.2%
40,000
30 000
30,000
51%
50%
49%
48%
46.3%
45.3%
20,000
47%
46%
45%
44%
10,000
,
43%
42%
Note: Data is estimated based on Population statistics of 2005 / Employees includes people who did searching activities for job for more than 4wekks
Source: NRI based on National Statistical Office
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
155
Increase of 1~2
person
household
(41%)
20%
10%
0%
2000
2005
2010
2 person household
2015
2020
3 person household
2025
4 person household
2030
2035
156
CPI
5.1
1
4.9
4.4
4
37
3.7
4.7
4.1
3.5
3.1
3.6
3.4
3.2
2.5
2.8
5.3
2.8
2.8
2.1
2.5
2.3
3
1.7
2.2
2.2
0.7
1.3
08
0.8
1.3
'13
13
'14
14
0
'00
00
'01
01
'02
02
'03
03
'04
04
'05
05
'06
06
'07
07
'08
08
'09
09
'10
10
'11
11
'12
12
Note: CPI indicates monthly weighted average of 481product categories which standardizes year 2010 as 100
CPI for living necessities indicates weighted average of 142 product categories out of 481 which are designated as daily necessities or purchased frequently
Source: NRI based on The Bank of Korea, Media Reserch
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
157
Business trends
10.8
10
10
8
7.5
7.3
6
5.2
4
2.5
2
1.6
1.9
2.2
2.8
2
2
1.3
0.8
1.7
0.7
2.2
0.7
1.8
1.7
0.6
0.8
2.3
2.4
2.2
2.2
0.8
0.8
0.7
0
'00
'01
'02
'03
'04
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
Note: Benchmark Interest Rate from The Bank of Korea / Default Rate on Household Debt and Credit Card Default Rate from Financial Supervisory Service (Seasonal Adjustment, Year-End) and IMF
Source: NRI based on The Bank of Korea, Financial Supervisory Service, IMF
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
158
93.5
94.1
93.2
97.1
96.2
95.1
100.2
98 2
98.2
90.0
CAGR
13.8%
264
229
224
233
223
264
224
207
204
Land Transaction
Volume
(unit: Number of Lot)
39
28
26
23
17
19
16
CAGR
27.5%
20
26
National
Seoul
'06
'07
'08
'09
'10
'11
'12
'13
'14
159
Housing
g transaction volume reached its p
peak in 2006. Though
g it had showed g
general declining
g
trend since 2007, it recently started to bounce back.
Housing Transaction Volume(National)
(unit: number
of transaction)
Nationwide
Capital Area
Seoul
Rural Areas
1,200,000
(unit: number
of transaction)
800,000
1,082,453
1,000,000
1,005,173
981,238
697,676
867,933
893,790
870,353
799,864
,
800,000
449,867
482,533
600,000
443,923
384,777
475,075
400,000
159,396
147,023
372,814
138,016
88,737
'07
'08
'09
'10
600,000
543,062
488,757
462,111
363,093
114,315
'11
83,257
'12
500,000
400,000
300,000
271,955
0
'06
735,414
463,459
282,503
263,599
200,000
608 424
608,424
517,361
395,278
385,400
851,850
700,000
200,000
111,889
148,266
100,000
0
'13
'14
160
Total
900,000
Apartment
Multi-unit dwelling
Officetel
Urban-type housing
854,095
800,000
804 019
804,019
800,000
726,726
700,000
600,000
500,000
658,025
644,512
544,909
412,891
476,462
400 000
400,000
459,887
263,153
468,642
297,183
300,000
200,000
,
100,000
500,000
356,762
376,086
349,661
340,477
152,042
106 251
106,251
25,767
186,637
16,008
219 823
219,823
8,102
7,669
13,596
'07
'08
'09
'10
278,739
'11
400,000
300,000
277,594
274,869
69,000
63,000
32,692
41,170
200,000
100,000
13,532
'06
347,687
124 000
124,000
84,000
163,357
10,097
600,000
504,481
276,989
700,000
'12
'13
'14
161
Average Housing Price Index has slightly increased. Housing Price index in Seoul capital
area recovered from decrease to stagnation
stagnation, and that of in rural areas maintains its
upswing.
Housing Price Index1) (10 years)
(unit: index)
(unit: index)
120
110.0
110
105.0
104.8
103.4
100
102.4
100.5
100.4
100.0
90
100.1
97.6
80
National Average
70
Seoul
Seoul
Rural Area
Rural Area
90.0
60
'05
'06
'07
'08
'09
'10
'11
National Average
95.0
'12
'13
'14
'12
'12
'12
'12
'13
'13
'13
'13
'14
'14
'14
'14
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
162
70 8%
70.8%
73.2%
71.8%
70 4%
70.4%
67.0%
71.8%
69.6%
66.8%
67.7%
70 3%
70.3%
67.8%
68.1%
70 4%
70.4%
21.5
5.7
2.8
6.4
0.6
0
6 0.7
07
0.4
1.2
1.9
0.7
0.7
1.6
1.4
1.9
1.2
1.7
1.9
3.6
3.3
1.4
2.1
1.2
1
2
1.9
2.3
2.3
2.6
1.0
1.0
2.4
3.4
0.8
0.7
2.7
4.2
49
4.9
3.4
2.4
2.4
'06
'07
'08
2.7
1.6
2.0
2.8
3.6
'02
'03
'04
'05
4.5
5.7
4.9
4.7
4.9
1.0
08
0.8
1.0
0.8
0.9
09
0.9
4.0
3.6
0.9
10
1.0
3.6
3.5
5.4
5.0
4.1
3.9
4.6
4.6
5.1
'09
'10
'11
'12
5.4
4.0
4.6
Apartment
Single/
Multi Household House
1.1
1.2
1.1
1.3
4.2
4.5
4.1
3.8
Shopping Area/Office-tel
/Neighboring Facilities
6.2
6.2
ETC.
'13
'14
Row House/Multiplex
Land/Forest/Field
Note: 1) Size of Auctioned Assets is based on Assessed Value, 2) Ratio of sale value = (Sale value / Appraised Value) * 100
Source: NRI based on Auction Statistics of Supreme Court
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
163
(unit: index
(unit: index)
120
115
110.5
110
110
109.9
108.4
100
105
105.8
90
100
97.4
80
National Average
Seoul capital Area
70
95
National Average
96.3
95.2
Seoull
Seoull
Rural Area
Rural Area
90
60
'05
05
'06
06
'07
07
'08
08
'09
09
'10
10
'11
11
'12
12
'13
13
'14
14
'12
'12
'12
'12
'13
'13
'13
'13
'14
'14
'14
'14
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
164
Leasing
g cost is 62% of National Housing
g Price and 60% for Seoul capital area.
CAGR
60
Nationwide
1.0%
50
40
30
20
10
0
'11 3Q
'11 4Q
'12 1Q
'12 2Q
'12 3Q
Nationwide
'12 4Q
'13 1Q
'13 2Q
'13 3Q
Capital area
Seoul
'13 4Q
'14 1Q
'14 2Q
'14 3Q
'14 4Q
Rural area
Source: NRI based on Economic Statistics Bureau in the Bank of Korea, IMF(Global Financial Stability Report, 2013) Report
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
165
Monthly lease index in Seoul capital area has declined since 2013
2013. Deposit (Jeonsei)-to(Jeonsei) to
Monthly-Rent Conversion Rate also led to the decline of profitability.
Monthly Leasing Index and Deposit(Jeonsei)-to-Monthly-Rent
Deposit(Jeonsei) to Monthly Rent Conversion Rate
(unit: index)
Deposit(Chonsei)-to-Monthly-Rent
9.1 9.1 9.0
9 0 9.0
90 9
9.0
0 8
8.9
9 8.8 8.8 8.8 8.8 8.8 8.8 8.8 8.8
8.7 8.6
8.5 8.4
8.3 8.3 8.3 8.3 8.3 8.3 8.2 8.2
105
100
100
100
98
96
95
95
N i
National
lA
Average
C i l Area
Capital
A
S
Seoul
l
5 metropolitan
li
cities
ii
90
'12 '12 '12 '12 '12 '12 '12 '12 '13 '13 '13 '13 '13 '13 '13 '13 '13 '13 '13 '13 '14 '14 '14 '14 '14 '14 '14 '14 '14 '14 '14 '14
05
06
07
08
09
10
11
12
01
02
03
04
05
06
07
08
09
10
11
12
01
02
03
04
05
06
07
08
09
10
11
12
166
2015 Housing Policy trend is expected to continue supporting vitalization of housing sales
and stabilization of housing lease.
Current 2 Years
Years Trend of Housing Policy (Since Park Gunhye cabinet started)
2013
Market Situation
Vitalization of
Sales Market
Vitalization of
Leasing Market
2014
Stagnation in Seoul capital area was
slightly ameliorated,. Upturn in NonSeoul capital area was slowed
Persistence of aggravation of shortage
of Jeonsei and Monthly-Rent-Conversion
Amelioration of regulation on house
reconstruction permit on vertical extension
reconstruction
Promotion of housing purchase by improvement
of housing subscription system
Interest rate reduction for fist
fist-time
time housing buyers
Relaxation of Price ceiling regulation on the new
apartment price
Support for rental housing REITs
Change tax system of rent from deduction
to tax credit
Relaxation of regulation and tax support
for Rental housing/Semi-rental housing
Support for rental business corporation
Introduction of loan system for monthly
lease
2015
Recovery of sales volume
overall stagnation is expected to liger
Aggravation of shortage of Jeonsei and
Monthly-Rent-Conversion is expected to
persist
Extension of sharing type of
mortgage (1.27)
167
Korea
Business Trends
1-2
168
2,500
56.2%
2,000
52.3%
52.5%
55.7%
56.2%
57.1%
58.1%
Percentage of Chinese
and Japanese tourists
within Total International Tourists
59.2%
60.0%
55.0%
51.2%
51.5%
50.0%
1,500
45.0%
1,000
500
602
616
645
689
782
880
980
1,114
1,218
1,420
1,547
1,726
1,927
40.0%
35.0%
30.0%
'05
05
'06
06
'07
07
'08
08
'09
09
'10
10
'11
11
'12
12
'13
13
'14
14
'15(E)
15(E)
'16(E)
16(E)
'17(E)
17(E)
Source: NRI based on Tourism Knowledge and Information System, Media Research
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
169
Economic growth led to an upsurge of Chinese tourists. They account for the largest percentage since
2013 The number of Japanese Tourist has been diminishing owing to diplomatic matters and change in
2013.
exchange rate since 2012.
Number of Chinese Tourists Visiting Korea
700
8,000
600
5,429
500
2,000
7,000
600
1,397
6,000
500
4,437
(GDP per Person($))
3,826
613
2 652
2,652
300
1,002
829
2,125
433
600
117
134
188
222
284
244
100
'07
'08
'09
234
224
238
305
302
329
352
275
400
228
1,000
200
'06
1,000
200
2,000
90
913
800
'05
783
1,200
3,000
100
71
1,400
1,238
(KRW-100 YEN)
859
4,000
300
107
1,600
5,000
3,424
1,749
1,394
1,800
1,481
1,265
400
400
200
700
'10
Financial Crisis
Relaxation of Visa Requirement
for Chinese visitors
'11
'12
'13
'14
China
became the
first
'05
'06
'07
'08
'09
Financial Crisis
Source: NRI based on Tourism Knowledge and Information System, Nara Indexes of National Statistical Office(KOSTAT), World Bank(World Economic Outlook)
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
'10
'11
'12
'13
'14
170
(unit: %)
(unit: day)
Airtel Package
Group Tour
Total Average
Independent Travel
17 3
17.3
Japanese Tourist
Chinese Tourists
12 6
12.6
62%
60%
64%
66%
62%
63%
65%
64%
66%
12 4
12.4
11.5
10.9
9.5
10.9
8.4
8.1
6.8
27%
29%
28%
26%
27%
27%
27%
25%
11%
11%
8%
8%
11%
11%
9%
10%
'05
05
'06
06
'07
07
'08
08
'09
09
'10
10
'11
11
'12
12
9.9
9.2
7.4
77
7.7
7.7
7.4
6.5
6.7
7.0
3.3
3.1
3.2
3.2
3.3
3.5
3.6
'08
08
'09
09
'10
10
'11
11
'12
12
'13
13
'14
14
6.6
5.6
28%
3.7
3.6
6%
'13
13
'05
05
'06
06
'07
07
Source: NRI based on Ministry of Culture, Sports, and Tourism, International Tourists Reports, Tourism Knowledge and Information System
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
171
M iin their
Men
th i 30s
30
No. 5
139
109
108
106
99
No. 1
M iin their
Men
th i 30s
30
No. 5
147
119
112
111
105
186
M iin their
Men
th i 30s
30
No. 5
153
126
123
119
Source: NRI based on Ministry of Culture, Sports, and Tourism, International Tourists Reports, National Statistical Office(KOSTAT)
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
172
Religion
100%
ETC, 0.2%
//Pilgrimage,
g
g ,
90%
1.0%
Education,
Friend/
Family Visit,
5.9%
9.7%
80%
Seoul
Leisure/
49%
47%
60%
70%
Recreation/
Business
60%
/Professiona
Holiday,
l Activities,
48.2%
23 4%
23.4%
50%
Incheon/
Gyunggi
16%
16%
6%
40%
Jeju
Shopping,
Beauty/
10 6%
10.6%
Health/
Medical,
Busan
Tourism Related
59.8%
1.0%
30%
20%
10%
10%
21%
7%
3%
14%
5%
10%
ETC
18%
12%
13%
0%
Japanese Tourists
173
1,400
1,200
CAGR of 10~14
(Current 5 years)
ETC
Seoul (Incheon Airport, Gimpo Airport,
Incheon Harbor
Busan(Gimhae Airport, Busan Harbor
Jeju(Jeju Airport)
1,000
43
37
800
20
600
82
28
76
35
80
30
103
45
(4.6%)
115
(11.7%)
71
(6 4%)
(6.4%)
128
(11.5%)
139
((11.4%))
202
(14.2%)
47.0%
142
(10.0%)
8.3%
991
(69.8%)
9.5%
18.8%
140
(11.5%)
91
89
400
616
691
772
((78.8%))
881
865
(77.6%)
(72.4%)
473
491
532
37
39
38
38
37
42
48
51
57
84
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
463
200
174
Average
g Expenditure
p
of Chinese/Japanese
p
tourists p
per p
person(2013)
(
)
(unit: $)
(unit: %)
$2,272
$2,154
$1,940
$1,648
$1,646
$1,558
$1,530
Under $500
$1,410
$1,224
8%
$1,298
19%
16%
17%
$500~
$1,000~
$1,500
$2,000
$1,000
$1,500
~$2,000
~$3,000
15%
7%
$1,173
$1,073
$1,076
$990
$1,081
Chinese Tourist
25%
Over $3,000
5%
4%
18%
25%
41%
Japanese Tourists
International Tourists(Total)
'09
'10
'11
'12
'13
A weak yen
Diplomatic
began
tension
Korean
between
Wave
Korea and
Source: NRI based on International Tourists Reports, Ministry of Culture, Sports, and Tourism
continued
Japan
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
175
Japanese tourists
tourists accommodation expenses is around 213$ (234
(234,000
000 KRW)/double room/one day
day.
This is higher than that of Chinese tourists, resulting in the rise of hotel room rate.
Expenditure of Chinese and Japanese Tourists by purpose (2013)
(unit: $)
Shopping
$1 431
$1,431
Accommodation
$386
Food/Beverage
$345
$201
$95
Spend $2,523 in
Total
$340
$65
Recreation/Culture/Sports
Transportation
$266
$147
$73
$49
ETC
((Including
c ud g Korean
o ea Travel
a e Agency)
ge cy)
$56
Spend $931 in
Total
(per individual tourist)
Note:* For group tourists, as accommodation fee is included in expenditure before Leaving, accommodation expenses is estimated based on individual tourist
Source: NRI based on International Tourists Reports, Ministry of Culture, Sports, and Tourism
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
176
76%
77%
75%
74%
68%
11%
8%
7%
7%
3%
3%
3%
11%
14%
15%
'05
'06
'07
8%
3%
6%
8%
4%
67%
11%
4%
2%
2%
16%
14%
15%
16%
18%
'08
'09
'10
'11
'12
Resort/Pension/Residence
69%
11%
6%
15%
'13
ETC(Relatives/Friends/School/etc)
Note: : As types of answers changed from single choice to multiple one in 2011, the number of answers was re-adjusted to the ratio
Source: NRI based on International Tourists Reports, Ministry of Culture, Sports, and Tourism
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
177
Though international tourists travelling to Korea has risen, increase in room supply resulted in decline
of occupancy rate.
rate In addition,
addition decrease of Japanese tourists to Korea led to decline of average room
rate in 2013.
Nationwide Hotel Average Daily Rate 1)
(unit: KRW)
2) ADR(Average Daily Rate)=Room Revenue/Available Rooms
Number of Rooms(Room)
70.0%
Occupancy Rate(OCC, %)
65.8% 65.9%
64.3%
65.0%
85,000
63.7%
79,393
60.4%
60.0%
57.5%
57.3%
130,352
,
128,351
90,000
80,000
106,325
104,809
58.2%
74,737
100,234 99,363
75,000
70,763
55.0%
68,583
53.3%
119,592
70,000
67,171
50.0%
65,000
45.0%
60,000
'05
'06
'07
'08
'09
'10
'11
'12
'13
'05
'06
Financial Crisis
A weak yen
Diplomatic
Relaxation of Visa
began
tension between
Requirement for
Korean
Korea and Japan
Chinese visitors
Ratio
of China System, Korea Hotel Association
Source: NRI based on Tourism/Accommodation
Industry Report, TourismWave
Knowledge and
Information
continued
became the first
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
'07
'08
'09
Financial Crisis
Relaxation of Visa
Requirement for
Chinese visitors
'10
'11
'12
'13
A weak yen
Diplomatic
began
tension between
Korean
Korea and Japan
Wave
Ratio of China
continued became the first
178
Hotel revenue per available room increased but turned downwards in 2013
2013. Annual revenue per
available room including profits from other facilities rapidly descended in 2013.
Nationwide Hotel Revenue per Available Room1)
(unit: KRW)
1) Revenue per Available Room (RevPAR)=occupancy rate * average daily room rate
85,902
(ADR)
81 760
81,760
78,692
5,040
5,094
72,259
4 783
4,783
66,099
4,576
4,568
61,881
60,056
57 134
57,134
53,425
'05
'06
'07
'08
'09
'10
'11
'12
'13
'09
Financial Crisis
A weak yen Diplomatic
Relaxation of Visa
began tension between
Requirement for
KoreanKorea and Japan
Source: NRI based on Tourism/Accommodation
andof
Information
System, Korea Hotel Association
Chinese visitors Industry Report, Tourism Knowledge
Wave Ratio
China
continuedbecame the first
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
'10
'11
'12
A weak yen
began
Korean
Wave
continued
'13
Diplomatic
tension between
Korea and Japan
Ratio of China
became the first
179
While the number of room in luxury hotel (special first ratings) increased
increased, overall hotel room occupancy
rate has decreased since 2012 which was followed by decline in average room rate in 2013.
Number of Hotel Room by Ratings
(unit: room)
(unit: %)
special
25,949
73% 73%
first grade
24,991
24,096
69%
21,785
22,288
64%
62%
18.9
grade
72%
72%
17.6
69%
67% 67%
15.6
14.7 14.4
68%
15 7
15.7
65%
63%
11.5
61% 61% 61%
15,779
14,282
14,280
13,983
14,052
13,992
13 341
13,341
14,292
59%
54%
53%
13 485
13,485
'10
'11
'12
'13
9.0
'05
'06
'07
8.6
8.9
9.4
9.7
55% 54%
51%
'09
9.0
57%
15,255
18.9
16.3
15.7
70%
67%
65%
special first
'08
'09
Financial Crisis
Relaxation of Visa
Requirement for
Chinese visitors
'10
'11
'12
'13
A weak yen
Diplomatic
Diplomatic
began tension
Korean between
Wave Korea and
continued Japan
6.1
6.1
6.3
'05
'06
'07
6.7
'08
7.1
72
7.2
'09
'10
Financial Crisis
Relaxation of Visa
Requirement for
Chinese visitors
10.5
99
9.9
7.8
'11
8.5
'12
8.1
'13
A weak yen
Diplomatic
began tension
Korean between
Wave Korea and
continued Japan
180
Revenue per available room in every hotel ratings rose until 2012 with a modest decrease in 2013
2013.
Annual revenue per available room including profits from sub-facilities decreased at a sharper rate.
Revenue per Available Room by Hotel Ratings
13 5
13.5
first grade
12.8
12.8
11.9
9,801
10.9
9.1
10,556
9,841
9,158
10.1
10.0
10,071
9.2
8.1
5.8
5.1
32
3.2
'05
56
5.6
5.9
6.3
6.5
7.2
7.1
4,466
4 221
4,221
4,537
4,551
3,692
31
3.1
3.4
3.7
'06
'07
'08
3.8
'09
4.4
'10
4.8
'11
5.2
'12
4.8
'13
2,047
2,171
2 267
2,267
'09
'10
'11
2,477
'12
yen
began
A weak
Korean Wave
continued
2,031
'13
Diplomatic
tension
Between
Korea and Japan
181
Increase of hotel supply resulted in visible rise in room occupancy rate in Seoul
Seoul. This led to
sharp decrease in average hotel room rate in 2013.
Number of Hotel Room by Region
(unit: room)
(unit: %)
Seoul
Busan
Jeju
Seoul
Busan
Jeju
28,342
25,710
81%
77%
78%
23,824
22,360
79%
78%
22,150
75% 76%
71%
69%
75%
70%
6,676
6,676
6,810
6 449
6,449
6,729
6,688
6,936
64% 65%
7,464
6,950
54%
52%
52%
50%
'11
'12
'13
'05
'06
'07
'09
13.7
13 1
13.1
12.7
10.4
'10
10 2
10.2
'11
'12
'13
'05
10.5
10.8
85
8.5
83
8.3
'06
'07
11.2 12.1
11.1
9.7
9.5
56%
10.0
51%
'08
13 2
13.2
12.1 13.1
61%
6,676
13.6
13.0
66%
15.9
15.6
14.9
69%
63%
'10
17.1
78%
'09
Seoul
Busan
Jeju
10.0
9.6
9.5
'08
'09
Financial Crisis
Relaxation of Visa
Requirement for
Chinese visitors
'10
'11
'12
'13
A weak yen
Diplomatic
began tension
Korean between
Wave Korea and
continued Japan
182
Seoul
Busan
Jeju
Busan
12 6
12.6
11.8
11.7
9.5
8.8
8.4
75
7.5
5.3
5.7
5.2
5.1
5.2
'05
'06
'07
'08
37 2
37.2
60
6.0
37.5
'90
'10
68.0
'11
'12
'13
'09
47.9
45.0
7.1
5.3
5.2
48.8
7.7
6.2
83.0
8.3
6.6
5.8
80.6
10.2
9.4
9.4
82.3
Jeju
77.7
10.5
8.6
Seoul
13.5
39.7
43 1
43.1
44.9
47.1
38.8
'10
'11
'12
A weak yen
began
Korean
Wave
continued
'13
Diplomatic
tension
between
Korea and
Japan
183
Korea
Business Trends
1-2
184
Funds
()
(Total Net Assets)
Total
Funds
(Total Net Assets)
Size
()
Real
Funds
Size
(Total Net Assets)
Estate
()
30
24
376
319
318
319
289
308
7.9%
277
242
20
328
6.5%
217
21%
190
4.4%
17%
3.6%
2.2%
21%
12
'05
'06
'07
'08
12
'09
14
'10
20
16
'11
'12
24
'13
30
'14
9
6
3
0
7%
0
'04
'05
'06
'07
23%
20%
19%
1.7%
'04
3.1%
0.5%
1
26%
14
5 9%
5.9%
1.2%
30%
16
7.4%
'08
'09
'10
'11
'12
'13
'14
185
Private equityy funds account for 96% of the total real estate funds.
REF CAGR(08~14)
10.2%
REF()
Size()
REF
REF()
Size (Total Net Assets)
REF
REF Ratio to Private Equity Funds (Total Net Assets)
(unit: trillion KRW)
92.6%
93.7%
94.8%
94.7%
95.5%
87.2%
96.2%
29.629.7
75.6%
24.2
23.2
67.1%
19.919.9
16.416.4
43.4%
14.014.1
11.311.6
27.3%
0.9 0.9
'04
6.8 7.1
2.6 2.6
'05
8.4 8.9
4.1 4.2
'06
'07
'08
'09
'10
'11
'12
'13
'14
186
REITs CAGR(08~14)
%
Size of
REITs (unit: trillion KWR)
REITs
98
Number
REITs
of REITs
80
70
15.0
72
11.8
48
9.5
19 0%
19.0%
10
12
16
19
5.0
21
4.9
0.6
'02
1.4
1.7
'03
'04
'05
'06
82
8.2
12.5%
33
3.3
1.1
7.6
35
7.0
8 6%
8.6%
'07
'08
'09
8 6%
8.6%
'10
'11
'12
9.7%
'13
10.0%
'14
Source: NRI based on Korea Financial Investment Association, Korea Association of Real Estate Investment Trusts
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
187
CR REITs
CR REITs
30
Self Managed
g REITs
1.8
25
1.6
14
1.4
20
1.2
15
1
0.8
10
0.6
0.4
0.2
0
0
'05
'06
'07
'08
'09
'10
'11
'12
'13
'14
'05
'06
'07
'08
'09
'10
'11
'12
'13
14
188
5
9
29
23
17
50
18
19
ETC
Hotel
8
62
28
100
45
100
75
31
71
50
40
'06
'07
'08
'09
Retail
Office
32
23
'05
50
44
31
'04
Distribution/Factory
'10
'11
'12
16
'13
22
House
'14
Source: NRI based on Korea Financial Investment Association, Ministry of Land, Infrastructure and Transport, Korea Association of Real Estate Investment Trusts, KORAMCO
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
189
CR REITs
100
(unit: %)
Listed REITs
93 8
93.8
Increase of Profit
Margin Ratio due to
sales profit
90
80
71.7
70.3
70
60
49.0
50
40.4
40
40.3
40.0
9.9
28.0
30
20
10
89
8.9
71
7.1
8.5
8.5
6.6
6.6
8.7
8.4
8.4
26.1
10.4
11.9
11.1
12 2
12.2
12 1
12.1
6.4
12.2
11.9
8.6
7.4
6.3
7.2
'07
'08
'09
6.0
3.7
7.2
3.8
9.9
9.4
16.2
9.9
6.4
4.9
4.2
5.6
8.3
7.1
9.2
7.0
'11
'12
'13
'14 3Q
10.1
0
'02
'03
'04
'05
'06
'10
Source: NRI based on on Korea Financial Investment Association, Ministry of Land, Infrastructure and Transport, Korea Association of Real Estate Investment Trusts, KORAMCO
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
190
Japan
China
Korea
Increase of liquidity
q
y within slow economic g
growth
Taiwan
191
Taiwan
M
Macro
Fundamentals
F d
t l off Taiwan
T i
192
Shinpei
City
Taichung
City
Penghu Islands
Tainan
City
Kaohsiung
City
Country name
Era name
Minguo (2014 A
A.D.=
D Minguo 103)
Capital
Major cities
Area
Population
Ethnic Composition
Currency
New Taiwan dollar (NTD) 1 NTDApprox. 3.85 yen (As of Apr, 2015)
Nominal GDP
No. of Japanese
residents
Number of Japanese
companies
Japanese Chamber of Commerce and Industry in Taipei member firms: 457 (Mar. 2015)
Number of travelers
b t
between
Japan
J
193
Actual
Forecast
25,000
P
Population(tho
ousand)
20,000
15,000
10,000
5,000
0
1980
1985
1990
1995
Ages014
2000
2005
Ages1564
2010
2015
2020
2025
2030
Age65orover
Source: NRI based on the CEPD, Executive Yuan, R.O.C.(Taiwan)
194
377,944
Landarea(squarekm)
350 000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
36,192
140
Population density
120
Taiwan
Japan
639
600
600
100
80
60
40
23
20
0
700
127
Popullationdensity(peersquarekm)
400,000
Total population
An
nnualhouseholdiincome(NTDtho
ousand)
Land area
Taiwan
Japan
500
1.9
400
337
300
200
100
100
0
Taiwan
Japan
Source: NRI based on the Ministry of Interior of ROC and the Ministry of Internal Affairs and Communication of Japan
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
195
GDP per capita is approx. 60% of that of Japan. Income level is 90%.
GDP (2014)
4,500
35,000
4,000
GDP per capita (USD))
160
40,000
4,616
Ann
nual household income (NTD tthousand)
5,000
3,500
3,000
2,500
2,000
1,500
30,000
25,000
0.6
22,598
20,000
15,000
10,000
1,000
530
5 000
5,000
500
0
0
Taiwan
Japan
Taiwan
0.9
140
120
135
120
100
80
60
40
20
0
Japan
Taiwan
Japan
Source: IMF
196
Taiwans GDP g
growth has been on a steady
y rise at approx. 3.5%.
Taiwans economy showed negative growth during IT bubble of 2001 and the financial crisis after Lehman Shock of 2009, but it quickly
returned to stable growth trend.
The reason of stable growth of Taiwans
Taiwan s economy is it keeps successfully in receiving benefits from Chinas
China s economic growth
growth. The
continuing improvement of the relationship between Taiwan and China is expected to bring Taiwan further economic growth.
GDP growth rate
(%)
15
10.76
10
5.26
6.19
4.7
5.44
Expected
Value
5.98
4.19
3.67
0.73
1.65
3 51
3.51
1.48
3.78
2.11
1.81
1 81
10
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
197
Relationship between Taiwan and China improved significantly after 2008. In recent years, however,
Taiwan has been met with events which highlighted underlying discontent against China among its
population.
History of Cross-strait relationship under Ma Ying-jiu regime
May 2008
Jul..
Dec.
p
and p
postal service)) is implemented.
p
The Three Links ((Liberalization in commerce, transportation,
Dec.
Cross-Strait Conference on the Cooperation and Exchange of the Chinese Medicine Industry, which is the project representing the cross-strait industrial
bridge, was held in Taipei.
Apr. 2009
The third summit meeting of cross-strait contact points was held. A memorandum on cross-strait financial cooperation (concerning banks, securities and
insurances) was signed and chartered flights were decided to be increased and become scheduled.
Jul.
Nov.
Jun. 2010
Signed Economic Cooperation Framework Agreement ;ECFA. At the same time announced the list for bilateral tariff negotiation items.
Jan. 2011
Nov.
Aug 2012
Aug.
Aug.
Both sides agreed on industry cooperation in following segments (LED. Municipal Wireless, Cold Chain Logistics, TFT-LCD, EV).
The customs authorities of Taiwan and China signed a Cross-Strait Customs Cooperation Agreement regarding customs service, smuggling crackdown
and
d ttariff
iff reduction.
d ti
Both sides reached a consensus to promote a mechanism of transparency information, loosing investment limitations to promote prosperity.
Jun. 2013
The Cross-Strait Agreement in Trade in Services based on WTO framework is signed. It proposes opening up over 100 services sectors in phases.
Mar 2014
The Cross-Strait Service Trade Agreement Law passed the diet. But anti-the law demonstration was happened on the next day.
April
Legislative Speaker promised to postpone review of the law until legislation monitoring all cross-strait agreements has been passed
198
Widening
Wid
i lilinks
k tto S
Second-Tier
d Ti cities
iti
even Third-Tier cities to build an
extensive flight network.
55
Taiwan
10
20
30
40
Direct links to China
Direct links to China
840
Taiwan
44
HK
Flights
Fli
ht b
between
t
T
Taiwan
i
and
d Chi
China
have already outnumbered Hong
Kongs.
800
HK
50
60
Unit: Destinations
200
400
600
Linkages to China
800
1,000
Unit: Flights/week
Linkages to China
Source: NRI based on the Civil Aeronautics Administration of the MOTC,
R.O.C.(Taiwan),
199
Return of Hong
Kong and Macau
(1997, 1999)
Conclusion of ECFA
(2010)
Chi
China
Taiwan
Conclusion
of ACFTA (2002)
Removal of tariffs (2010)
Negotiating of economic
cooperation agreement
(from 2011, with Singapore)
ASEAN
200
Taiwan
M
Macro
Fundamentals
F d
t l off Taiwan
T i
201
Following
g 7 areas compose major
j office districts of Taipei City.
y
Major office areas in Taipei City
Neihu Science Park district
The area Government aims to develop as a science park
district
Holding a large concentration of IT industry
headquarters.
Its traffic convenience has improved due to the extension
of MRT.
MRT
Songjiang Nanjing
Taipei station
area
Dun Hua/
Mingsheng
g
Neihu Science
Park district
Area
with the highest office rent level in
Hsin Yi/
T
Taipei.
i
i
World Trade Center
Highly convenient, due to the large
concentration of administrative, financial, trade
exhibitory, leisure, and residential functions.
Dunnan
Offices
of many global companies such as IBM
Holding a large number of well-known companies and
and
Microsoft
located .
foreign
g firms.
Dunn
nan
16
Taiwan
Cooperative
14
Bank : 32,000ping
China Trust Financial
12
Holding:80,000ping
140 000
140,000
120,000
10
100,000
8
80,000
Completion of Farglory
Financial Center
60,000
cy
(%)
Vacanc
rate (%)
Arreas
of new s
supply
(Ping)
160,000
40,000
20,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Areas of New Supply (Ping)
Average
g office rent of Grade A in CBD is approx. 2,400 NTD/Tsubo .
Overview of major office areas (2014)
District
Supply floor
space
(Tsubo)
A-class office
Vacancy rate
(%)
B-class office
Vacancy rate
(%)
Taipei station
district
62,139
2,200
1,691
7.76%
3.69%
32,932
--
1,746
--
4.35%
Songjiang Nanjing
district
261,293
1,936
1,720
27.36%
7.38%
g
Minsheng
/Dun Hua N.
district
265,576
2,281
1,743
11.20%
6.85%
Dun Hua/Jen-Ai
district
171,115
2,452
1,777
5.23%
4.77%
Xinyi district
282,612
2,927
1,696
10.45%
3.09%
204
Large
g number of new office spaces are expected to be supplied in 2016.
In 2016, numerous floor areas of office are expected to be supplied into real estate market.
1,200,000
1,000,000
50
800,000
40
600,000
30
400,000
20
200,000
10
0
m2
60
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: NRI based on statistics by the CPAMI, R.O.C.(Taiwan)
205
Taipei City
Taipei
Main Sta.
Ximen
Area
Nanjing E.
Rd.
Area
Dunpei
Area
Dunnan
Area
Zin-Ban
Fuchung
Area
Far Estern
Memorial
Hospital
Area
Nangang
Area
Xinyi
Area
Nankang Area
Rent:1,200 -1,300 NTD/Tsubo
This Area is expected
p
as a new CBD of Taipei
p
because of being a terminal station of .TSHR and 2
lines of MRT,
Numerous offices have been and will be constrcted
in this area.
206
Keelung
g Cityy
population:
0.37 million
207
Over the past 5 yyears, Taipei metropolitan area has been gradually
g
y expanding
g to the west.
Population Changes in Taipei City and New Taipei City over the last five years
Taoyuan
County
Taipei
a pe
city
Shimen
New-Town
region
Keelung
Cityy
Sanzhi
Jinshan
Danshui
Shinpei
City
Yilan
County
MRT
development
region
Wanli
Bali
Linkou
Wugu
L h
Luzhou
Taipei
Sanchong City
Taishan
Xinzhuang
Banqiao
Yonghe
Shulin
Zhonghe
Tucheng
Sanxia
Ruifang
Xizhi
Pingxi
Shenkeng
Yingge
New Taipei City
Keelung
City
Gongliao
Shuangxi
Shiding
Xindian
Pinglin
Legend: Average
annual growth rate
New-Town
region
Wulai
208
Line
D
Danshui
h i
NeihuMuzha Line
Wugu
Taishan
Sanchong
Xinzhuang
Fu Jen
Univ.
Huilong
Banqiao
Dazhi
Luzhou
New Taipei
Industrial Park
Sanchong
To Taoyuan Airport
Minquan
W. Rd
Taipei
T
i i
Main
Zimen Station
CKS Memorial
Hall
Banqiao
Songshan
Airport
Dingpu
Mar. 1997
Zhonghe
g Line
Guting Nanshijiao
Dec. 1998
Xindian Line
Nov. 1999
Aug. 1999
Aug. 2000
Taipei
p City
y Hall Kunyang
y g
Dec. 2000
Nangang
Elephant Mt.
Muzha
Taipei Zoo
Xindian
Xindian
May 2006
Kunyang Nangang
Yongning Dingpu
Nangang
g g Exhibition Center
Taipei Nangang
Dec. 2008
Dec 2014
Nov. 2010
Jan. 2012
Sep. 2012
Mar. 2013
Xinyi Line
Dec. 2013
Songshan Line
Songshan Ximen
Nov. 2014
Circular Line
Dec. 2015
Taoyuan
y
Airport MRT
Jun 2016
Wanta Line
Dec. 2015
Taipei Nangang
Exhibition Center
Guting
Dapinglin
Nanshijiao
Xiaobitan
Xinpu Yongning
Neihu
Songshan
Zhonghe
Yongning
NangangBanqiao Line
Zhongxiao
Xinsheng
Jingan
Shulin
Danshui Line
Xizhi
Section
Year opened
Zhongshan Junior High School
M 1996
Mar.
Taipei Zoo
Zhongshan Junior High School
Jul 2009
Taipei Nangang Exhibition Center
Luzhou Line
Xinzhuang
Line
Feb. 2011
209
Legend:
g
Average
g annual g
growth rate
210
Housing price in Taipei and New Taipei has been on a rise for the past 10 years
years, however
however,
its growth rate has changed into a moderate one in recent years.
Transition of housing price Index
Shinpeii City
Shi
Cit 2014 4Q
Price 416 thsd/tsubo
160
2010100
140
120
Financial Crisis
100
80
60
40
20
0
2003
2004
2005
2006
2007
Taipei City
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
2008
2009
2010
2011
2012
2013
2014
Shinpei
City
Source: NRI based on Cathay Real Estates Housing Index quarterly report
211
25-55
47-86
67-120
34-45
30-43
45-65
85-125
45-65 60-120
30-52
55-80
35-65
100-205
63-108
85-150
90-300
80 180
80-180
52-80
42-85
45-62
65-93
50-70
23-33
28-51
55-72
Note: Prices at each point indicate market quotations of areas around major MRT stations.
212
Location
Zhongshan Dist
(Near MRT Zhongshan
Elementary School Sta.)
Neihu Dist
(Near MRT Neihu Sta.
Sta )
Wenshan Dist
(Near MRT Xinhai Sta.)
Sta )
Address
Banqiao Dist
(Near MRT Banqiao
Sta.)
Layout
2 Room
2LDK
3LDK
Layout
3LDK
Area
30 Tsubo
41 Tsubo
26 Tsubo
Area
33 Tsubo
Age
5 year
2 years
18 years
A
Age
8 years
Price
18 million NTD
29million NTD
24 million NTD
Price
41 million NTD
Rent
29,000 NTD
50,000 NTD
27,000 NTD
Rent
65,000 NTD
Cap Rate
1.9%
2.0%
1.4%
Cap Rate
1.9%
213
40 000
40,000
700
35,000
700
35,000
600
30,000
600
30,000
500
25 000
25,000
500
25 000
25,000
400
20,000
400
20,000
300
15,000
300
15,000
200
10,000
200
10,000
100
5,000
100
5,000
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
()
()
40 000
40,000
800
Taipei City
0
2001200220032004200520062007200820092010201120122013
()
()
214
12,000
Deregulation of individual tours
of mainland Chinese
10,000
9,910
8,016
8,000
6,000
7,056
6,087
5,567
,
4,395
3,716 3,845
3,378 3,520
4,000
2,831
2,978
Mainland China
3.99 million
2,950
2 248
2,248
57%
2,000
Japan
1.63 million
0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
215
The number of guest rooms and occupancy rates of tourist hotels in Taipei City
Occupancy rates of
Intl Tourist Hotels
76.8%
74.8%
75.2%
72.0%
71.1%
75.6%
75.5%
78.0%
73.6%
77.4%
12,000
,
+5.0%
10,000
+2.3%
+1.4%
+8.5%
1,263
1,263
1,974
2,040
2,040
2,275
2,330
1,263
,
1 383
1,383
1 357
1,357
8,324
8,013
7,786
7,738
7,898
8,323
8,313
8,313
8,403
2006
2007
2008
2009
2010
2011
2012
2013
2014
8,000
-0.1%
6,000
4,000
8,879
2,000
,
0
2005
Note: Tourist hotels are hotels that meet the criteria set by the Tourism Bureau of the Ministry of Transportation and
Communications, and are broken down into international tourist hotels and general tourist hotels according to their levels.
There are 25 international tourist hotels in Taipei as of the end of December 2011.
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
216
Avera
age
price off
guest
room
ms
er night)
(/
) (NTD/Pe
5000
I t
International
ti
l Tourish
T i h Hotel
H t l 2014
Price 4,831 NTD/per night
4000
3000
2000
1000
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
217
Japan
China
Korea
Increase of liquidity
q
y within slow economic g
growth
Taiwan
218
Residential market
1,400,000
1 200 000
1,200,000
1,000,000
800 000
800,000
PrivateResidence
HDB(including EC)
600,000
400,000
200,000
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: NRI based on URA
219
Residential market
25,000
20,000
15,000
10,000
5,000
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: NRI based on URA
220
Residential market
200
180
160
160
140
120
100
100
80
Nonlanded
Landed
60
40
40
20
0
221
Residential market
Price drop is primarily caused by property cooling measures that has been gradually
toughened since 2009.
The cooling measures are expected to remain imposed for the time being
being.
Major cooling measures implemented in Singaporean residential market
- 2010
Sep. 2009
Strengthening of a regulation on housing
loans
Feb. 2010
Imposing a seller's stamp duty on selling
residential properties within a year after
acquisition
Lowering the LTV limit to 80% for housing
loans
Aug. 2010
Imposing a seller's stamp duty on selling
residential properties within three
years after acquisition
Lowering the LTV limit to 70% for housing
loans
Increasing the minimum cash payment
from 5% to 10% of the valuation limit
2011 - 2012
Jan. 2011
Imposing a seller's stamp duty on selling
residential properties within four
years after acquisition, and rise in the
SSD rate
Lowering the LTV limit to 50% for housing
loans
Dec. 2011
Dec
Imposing Additional Buyer's Stamp
Duty of 10% on the purchase of
residential properties by foreigners
Imposing ABSD of 3% on the purchase of
properties
p
by
y Permanent
residential p
Residents who already own 1 or more
residential properties and Singaporean
Citizens who already own 2 or more
Oct. 2012
Introducing the maximum tenure of new
housing loans to be capped at 35 years
222
Residential market
(%)
140
14
120
12
100
10
80
60
40
20
223
Residential market
160
140
120
100
80
Work Permit
WorkPermit
SPass
60
Employment Pass
40
20
0
20
20
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Source: NRI based on URA
224
Office market
Although
g office rent is on an upward trend, recent vacancy
y rate has been rising.
g
Latest median monthly rent of Category 1 office buildings is approximately S$114 per sq. meters, and that of Category 2 is
approximately S$68 per sq. meters.
Median monthly rent and vacancy rate of office buildings in Singapore
Category 2 (Other areas)
(%)
160
20
140
(S$/sqm)
(%)
160
20
140
120
15
100
120
15
100
80
10
60
80
10
60
5
40
20
40
20
Rent (LHS)
Category 1: Office buildings located in core business areas in Downtown Core and Orchard
Planning Area which are relatively modern or recently refurbished, command relatively high
rentals and have large floor plate size and gross floor area.
Rent (LHS)
Category 2: The remaining office buildings which are not included in Category 1 office
buildings.
225
Office market
600
Forecast
500
400
300
200
100
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2014Net2014Gross
201520151
2017
2018
2019
Source: NRI based on URA
226
Office market
Sales price of office buildings has been on an upward trend for more than five consecutive
years.
Latest median sales price of office space in Central Area is approximately S$13
S$13,300
300 per sq
sq. meters
meters, and that of Fringe Area is
approximately S$9,300 per sq. meters.
Median sales price of office buildings in Singapore
(S$/sqm)
14,000
12,000
10,000
8,000
6,000
Central Area
Fringe Area
4,000
2 000
2,000
0
Central Area: Outram, Museum, Newton, River Valley, Singapore River, Marina South, Marina East, Straits View, Rochor, Orchard and Downtown Core.
Fringe Area: Bukit Merah, Bukit Timah, Queenstown, Kallang, Bishan, Marine Parade, Geylang, Toa Payoh, Tanglin, Novena and Southern Islands.
Source: NRI based on URA
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
227
Transaction trend
Commercial(Fringe area)
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
228
Development trend
There are fewer opportunities for new development in Singapore due to shrinking supply of
new development sites.
Singaporean government owns about 80% of country
countryss land and also controls the supply of development sites
sites.
The amount of development sites sold by the government has been on a downward trend since 2011.
Development sites sold by Singaporean government
(sq. m)
400,000
350,000
300,000
250,000
Others
Industrial
200 000
200,000
150,000
100,000
Hotel
Mixed
Commercial/Office
Residential (NonLanded)
Residential(Non
Landed)
50,000
0
*The figure
g
of 1H2015 is based the Confirmed
List of Government Land Sales Program.
229
Development trend
Singaporean developers are accelerating their overseas business due to a slowdown of and
fewer development opportunities in domestic market.
They are expanding their business in ASEAN,
ASEAN India,
India China,
China USA and UK
UK.
Capitaland
Keppel
UOL
Developing properties in China and Malaysia
Acquired sites, developing Hotel and mixedused properties in UK
CDL
Developing properties in US, UK, Japan,
China, and Australia
Developing hotels in Japan
230
REIT Market
S REIT market capitalization recovered in 2009 and has now reached the scale of
S-REIT
approximately S$66 billion.
There are 33 listed REITs as of the end of March 2015
2015.
No. of REITs
70,000
35
60,000
30
50,000
25
40,000
20
30,000
15
20,000
10
10,000
MarketCapitalization
NumberofREITs
231
REIT Market
25
20
15
Spread
10
AverageDividend Yield
(Gross)
10yrSGBYield
232
Japan
China
Korea
Increase of liquidity
q
y within slow economic g
growth
Taiwan
233
I di
India
R lE
Real
Estate
t t Market
M k t in
i India
I di Residential,
R id ti l Offi
Office, etc.
t
Key Segments
234
China
19%
India
18%
Restt
R
52%
USA
4%
Indonesia
4%
Brazil
3%
World Population
(2013) : 7238 mn
India
17%
2050P
Rest
57%
World Population by
2050 : 9683 mn
1.50
Population g
growth rate (%
%)
2014
1.00
0.50
-0.50
China
14%
Nigeria
4%
USA Indonesia
4%
4%
-1.00
2000
India
Korea
2010
2020
2030
Time (years)
China
Japan
Russia
USA
2040
2050
Brazil
UK
As Indias population grows, the demand for infrastructure will grow further
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
235
India is witnessing
g rapid urbanization and this trend is expected to g
grow steadily.
y
Better pay, work environment and more opportunities are driving working population from small towns and villages to urban centers
resulting in rapid urbanization.
Past Trend
16.0
90%
14.0
80%
12.0
8.8
8.0
7.6
8.5
8.1
8.8
9.0
50%
40%
30%
4.0
2.0
70%
60%
9.2
10.0
6.0
8.1
3.3
3.8
4.3
4.8
2.9
2000
2005
2010
2015
2020
6.1
7.4
8.1
20%
Percentage
e of total population
Total Pop
pulation (00s m
million)
18.0
10%
0%
0.0
Urban
Time
Rural
2030
2040
2050
As urbanization trend continues, demand for urban infrastructure will rise rapidly
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
236
City
State
Area
Population
Mumbai
Maharashtra
1176 km2
12.47 mn
INR 334,812
New Delhi
Delhi
1483 km2
11.00 mn
INR 360,893
Ch
Chennai
i
T il N
Tamil
Nadu
d
1189 km
k 2
8 42 mn
8.42
INR 324
324,844
844
Hyderabad
Andhra
Pradesh
650 km2
6.80 mn
INR 180,406
Bengaluru
Karnataka
741 km2
5.57 mn
INR 269,537
Ahmedabad
Gujarat
464 km2
4.68 mn
INR 192,163
Kolkata
West
Bengal
1026 km2
4.48 mn
INR 185,840
Mumbai
New Delhi
Chennai
Hyderabad
Bengaluru
Ahmedabad
Kolkata
AHI
Top 7 b
T
by metropolitan
t
lit area, urban
b agglomeration
l
ti and
dh
household
h ld iincome
AHI-Average Household Income per annum
Area refers to City Metropolitan Area
INR: Indian rupees, mn : million
Source: CMIE April 2015 Survey Data, Census of India 2011
237
50
100
45
40
80
30
60
25
40
20
15
10
20
5
0
Percentage of popula
ation
Age (in ye
ears)
35
0
2000
2005
2010
2015
2020
Time
2040
2060
2080
2100
238
2500
100
INR (In Th
housands)
2000
US$
1500
1000
500
80
60
40
20
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Time (years)
2019
2011201220132014
2011201220132014
2011201220132014
Urban
Rural
Overall
Improving economic condition of society will increase demand of better quality infrastructure specially housing
Source: IMF World Economic Outlook Oct14
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
239
3
No
change
55
RICH
Average HHI: Rs.1.01mn
-33% over 2013
No change
83
MIDDLE INCOME
Average HHI: 0.14mn
No Change
129
+0.8%
0.8% over 2013
RANK
2009
2020
2030
U.S
4.4
CHINA
4.5
INDIA
12.8
JAPAN
1.8
U.S
4.3
CHINA
10.0
GERMANY
1.2
INDIA
3.7
U.S
4.0
FRANCE
0.9
JAPAN
2.2
INDONESIA
2.5
U.K
0.9
GERMANY
1.4
JAPAN
2.3
RUSSIA
0.9
RUSSIA
1.2
RUSSIA
1.4
CHINA
0.7
FRANCE
1.1
GERMANY
1.3
ITALY
0.7
INDONESIA
1.0
MEXICO
1.2
MEXICO
0.7
MEXICO
1.0
BRAZIL
1.2
10
BRAZIL
0.6
U.K
1.0
FRANCE
1.1
WORLD
21
WORLD
35
WORLD
55
Indias middle class population would majorly drive demand in construction sector
HHI: Household Income per annum
HHI brackets: Rich (above Rs 0.72mn), High middle income (Rs. 0.72-0.18mn), Middle income (Rs.
0.18-0.09mn), Lower Income and Poor (below Rs. 0.09mn)
Source: : CMIE Consumer Pyramid Data Retrieved 13th April, 2015
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
Note: Middle class defined as those living in households with daily per capita income between US$10100 per day at 2005 US$ PPP terms.
Source: Brookings Institution, OECD Working Paper no-285, 2010
240
I di
India
R lE
Real
Estate
t t Market
M k t in
i India
I di Residential,
R id ti l Offi
Office, etc.
t
Key Segments
241
Real-estate
Real
estate market size and growth
growth-rate
rate
Finance,
Finance
Insurance,
Real Estate &
Business
Services
20%
Agriculture,
forestry and
mining
15%
Trade, hotels,
transport &
communicatio
n
28%
160
140
Manufacturing
14%
Electricity, gas
& water supply
2%
US$ (billion)
Community
services
13%
120
100
180
80
134
60
113
40
Construction
8%
20
50
53
56
2008
2009
2010
67
79
95
0
2011 2012 2013
Time (years)
2014
2015
2020
242
Net Sales
Net Sales
Net Profit
Net Profit
Cap (BSE)
(2013-14)
YoY%
(2013-14)
YoY%
DLF Ltd.
2,88,405
23,859
11%
5,268
5%
1,04,306
20,052
169%
3,400
163%
99,949
6,226
5%
2,951
-10%
HDIL
56,000
7,708
-21%
2,449
68%
54,684
6,640
56%
977
-20%
40 491
40,491
21 129
21,129
17%
2 065
2,065
5%
30,577
849
-76%
1,446
-46%
Omaxe Ltd.
24,646
11,847
-12%
603
-30%
17,678
8,952
15%
898
40%
S t k Realty
Sunteck
R lt Ltd
Ltd.
17 634
17,634
387
21%
1 373
1,373
1893%
Kolte Patil
17,542
1,872
3%
464
-29%
DB Realty Ltd.
17,271
452.6
-2%
-411
-13807%
17,051
9,227
13%
1,060
-6%
12,881
4,384
39%
883
-19%
8,769
4,283
-7%
234
-68%
Developer name
Fluctuating financial performance of leading developers explains the volatile state of the Indian real-estate market
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
243
Private lending
lending, NBFC lending & PE funds have continued to be the primary sources of realreal
estate financing. Recently REITs and InvITs have been allowed in Indian market.
List of project financing options
QIP
Bank Credit
FCCB
NBFC Credit
Private Lending
g
Private Credit
NBFC Lending
REMF
PE funds
AIF
IPO
REIT
Foreign
g Direct Investments ((FDI))
Bank Lending
InvIT
ECB
244
B i fD
Brief
Description
i ti
C
Current
t St
Status
t
ICICI Prudential
This will help ease the pressure on the balance sheets of cashstarved developers
Infrastructure Investment
Trust (InvITs)
245
2.91
2.57
2.30
1.70
1.29
2005-06
1.23
2006-07
2007-08
0.88
0.94
2008-09
2009-10
0.85
2010-11
2011-12
2012-13
2013-14
246
Recentlyy FDI norms in construction sector have been relaxed in order to attract more FDI.
FDI Policy Norms
In view of depleting FDI inflow in construction and real estate sector in last couple of years
years, the current BJP led NDA government brought in relaxed
rules for FDI in the construction sector.
The proposal has been approved by the Union Cabinet in Oct 2014 and notified by DIPP in Dec 2014.
FDI Relaxations
Larger unit size may attract more consumers to buy units under
affordable housing scheme
247
I di
India
R lE
Real
Estate
t t Market
M k t in
i India
I di Residential,
R id ti l Offi
Office, etc.
t
Key Segments
248
Decreasing average household size and increasing total population is leading to household
shortage in the country.
Households growth rate
1200
250
1000
200
172
169
150
176
180
112
400
50
84
81
40
56
1991
2001
2011
2012
Time (years)
5.5
5.3
4.9
87
91
2013
2014
4.8
4.7
0
Average
household size
(members per
household)
800
600
138
100
40
1400
200
0
Urban
4.8
Rural
No. of househo
N
olds shortage (million)
Population (m
million)
No. of house
eholds (million
n)
300
34
35
30.1
30
26.7
26
25
18.4
20
15
19.3
20.5
24.3
22
18.7
20
15 1
15.1
10
5
0
2001
2005
2008
2010
Time (years)
Ub
Urban
2012
2014`
R l
Rural
Total Population
With increasing population and decreasing family size per household, the housing demand is ought to grow
Source: CMIE Consumer Pyramid Data Retrieved 9th April 2015
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
249
Supply of new residential units in urban centers has been primarily in the mid-price
mid price segment
range with Delhi and Mumbai having the highest inventory.
City-wise
y
Residential launches in Top
p 7 cities ((2009-13))
Supply
pp y Trend by
y Price Band in Top
p 7 cities in 2013
Percentage share per price band
100%
Delhi-NCR
Percentag
ge share of new
w launches
90%
Mumbai
80%
70%
Chennai
60%
Bengaluru
50%
40%
Pune
30%
Hyderabad
20%
10%
Kolkata
0%
2009
Delhi NCR
Delhi-NCR
Pune
2010
Mumbai
Hyderabad
2011
Time (Yearly)
Chennai
Kolkata
2012
2013
Bengaluru
Source: Content sourced from proprietary information of Jones Lang LaSalle India
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
Affordable
Low-mid
Upper-mid
High-end
250
25 0%
25.0%
Absorption R
Rate
20.0%
15.0%
10.0%
5.0%
0.0%
Time (Quarterly)
Note: Term Absorption refers to ratio of space leased to total space
Source: Content sourced from proprietary information of Jones Lang LaSalle India
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
251
Annual Rental
Growth Rate
Annual Capital
Growth Rate
Delhi/NCR
0-5%
0-5%
Mumbai
0-5%
5-10%
Kolkata
5-10%
5-10%
Chennai
INR 10
10,500
500 17,000
17 000
0 5%
0-5%
INR 6
6,500
500 10,000
10 000
10 15%
10-15%
Bengaluru
20-25%
10-15%
Hyderabad
5-10%
5-10%
Pune
u e
0-5%
0
5%
15-20%
15
20%
Note: Values represented above are average for FY12-13 and for indicative purposes only. Actual values may vary by time, specific locality area, property specifications and other factors
Source: Content sourced from proprietary information of Jones Lang LaSalle India
252
Residential market witnessed increased demand for mid & affordable housing as economy
showed recovery signs. However, new supply remained low due to existing unsold inventory
Market Factors
Reason
Residential segment can be divided into high-segment (luxury), mid-segment
(middle-class) and low-segment (affordable) housing
Demand
Supply
Capital Values
Noticeable Trends
Developers focusing
majorly on mid-segment
mid segment
housing
253
Office space vacancy is forecasted to increase in 2015 due to higher completions in 2014 as
compared to demand growth in this period
Office space
p
supply
pp y and demand in Top
p 7 cities
50
60%
50%
40
40%
35
30
30%
25
20%
20
15
Vacancy (%)
V
Completio
on/Absorption ((million sq. ft)
45
10%
10
0%
5
0
-10%
2005
2006
2007
2008
2009
New Completions
2010
2011
Net Absorption
2012
2013
2014
2015F
Net Vacancy
Note: Figures represent Top 7 cities by urban population: Mumbai, Delhi-NCR, Kolkata, Chennai, Bengaluru, Hyderabad, Pune
Source: Content sourced from proprietary information of Jones Lang LaSalle India
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
254
Average Rental
Growth Rate (FY13-14)
Average Capital
Growth Rate (FY13-14)
Delhi/NCR
0-5%
0-5%
Mumbai
0-5%
0-5%
Kolkata
INR 65 79
0-5%
0-5%
Chennai
INR 47 68
0 5%
0-5%
INR 7
7,000
000 10,000
10 000
0 5%
0-5%
Bengaluru
INR 52 72
0-5%
5-10%
Hyderabad
INR 38 48
0-5%
5-10%
Pune
INR 50 68
5-10%
5
10%
10-15%
10
15%
Note: Values represented above are average for FY12-13 and for indicative purposes only. Actual values may vary by time, specific locality area, property specifications and other factors
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
Source: Content sourced from proprietary information of Jones Lang LaSalle India
255
Net Effe
ective Rents (U
USD psm pa)
1400
1200
1000
800
600
400
200
0
4Q13
4Q14
Source: Content sourced from proprietary information of Jones Lang LaSalle India
256
FY14-15
FY14
15 Growth Trend
Reason
Demand for office space picked up in most cities, and net absorption increased
by 34% over previous year, on account of substantial pre-committed absorption
in 2013.
Demand
Companies which had postponed office expansion plans bought new spaces to
take advantage of decreasing rental/capital values
Around 20.4 mn square ft of office space was supplied in 2014, around 9%
higher than previous year. Delhi, Mumbai and Bluru being major beneficiaries
Supply
Many delayed projects got completed in 2014, and improved absorption rate
led developers to complete projects quickly, resulting in increased supply.
Rental trends have been mixed, with rentals declining in 4 of top 8 cities due to
over supply
Rental Values
Noticeable Trends
Multi-national companies
are increasing
g
investments in India
With new and stable union government in place, foreign investors sentiment is
improving and MNCs are expanding office spaces in major cities, as a result of
business expansion in India.
This trend is more prominent for IT, BFSI and Consulting based MNC
companies
257
1,146
1,000
US$ (Billion))
800
600
518
490
425
400
200
201
204
1998
2000
238
278
321
368
0
2002
2004
2006
2008
Time (Years)
2010
2012
2013
2019E
258
Retail space vacancy is set to increase due to declining demand of mall space
space, specially for
those malls located in non-prime locations of the cities.
Modern Retail space supply demand trend in Top 7 cities
25%
14.0
20%
12.0
10.0
15%
8.0
10%
6.0
Va
acancy (%)
Completion
n/Absorption (million sq. ftt)
16.0
4.0
5%
2.0
0.0
0%
2005
2006
2007
2008
New Completions
2009
2010
2011
Net Absorption
2012
2013
2014
2015F
Vacancy
Note: Figures represent Top 7 cities by urban population: Mumbai, Delhi-NCR, Kolkata, Chennai, Bengaluru, Hyderabad, Pune
Source: Content sourced from proprietary information of Jones Lang LaSalle India
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
259
Major Indian cities are still on the lower side of retail rentals as compared to other leading
Asian cities.
Retail Rental Values Trend of Major Asian Cities
18000
Net Effe
ective Rents (U
USD psm pa)
16000
14000
12000
10000
8000
6000
4000
2000
0
4Q13
4Q14
Source: Content sourced from proprietary information of Jones Lang LaSalle India
260
Retail segment has witnessed increasing demand for mall space due to rising consumerism
consumerism,
but supply declined due to delay in projects. Rental values have increased marginally.
Market Factors
FY14-15
FY14
15 Growth Trend
Reason
Growing consumerism, young population, increasingly brand conscious middleclass consumers and growing per capita income levels, will continue to drive
p
in India
demand for new retail spaces
Demand
Supply
However 14.3 million sq. ft of upcoming supply got deferred due to issues such
as financial crunch of developers, project delays and poor response from
investors and retailers.
Mall rentals have been marginally increased across Top 8 cities of India
Rental Values
Noticeable Trends
E-commerce impact on
offline retail spaces
261
India s manufacturing footprint and consumer markets are spread across the country
Indias
country, thus
arising need for domestic trade corridors and logistics hubs.
Indias Manufacturing
g Footprint
p
and Major
j Markets
Automobile
FMCG
Heavy Industries
Life Sciences (Pharma & Bio-Tech)
Automobile
FMCG
Automobile
FMCG
Heavy Industries
Automobile
FMCG
Heavy Industries
New Delhi
Ahmedabad
Kolkata
Mumbai
Pune
Hyderabad
Life Sciences (Pharma & Bio-Tech)
Bengaluru
Chennai
Automobile
FMCG
Heavy Industries
Source: Content sourced from proprietary information of Jones Lang LaSalle India
262
Major
j Domestic Trade Corridors and Logistic
g
Hubs are as follows.
Major
j
Domestic Trade Corridors
Delhi-Kolkata
1,452 kms
Chennai-Mumbai
1290 kms
Kolkata-Chennai
1,684 kms
Mumbai-Delhi
1,419 kms
Kolkata
Mumbai
Hyderabad
Chennai
Pune
Bengaluru
Ahmedabad
Thiruvananthapuram
Surat
Jaipur
Goa
Vadodara
Chandigarh
Nashik
Kochi
Indore
Visakhapatnam
Mangalore
Nagpur
Ludhiana
Coimbatore
Guwahati
Source: Content sourced from proprietary information of Jones Lang LaSalle India
263
India s widely spread agricultural and industrial resources and lack of existing quality
Indias
storage infrastructure are driving Indian warehousing industry.
Rentals of warehousing spaces across major industrial corridors are growing at an average of 5% per annum
Gurgaon-Manesar and Chennai-Bengaluru routes have shown double digit appreciation in rentals
Warehousing Market Size
300.0
250.0
228.3
197.3
171.1
148.8
150.0
Logistic Corrid
L
dors
US$ ((Billion)
200.0
129 4
129.4
112.5
100.0
50 0
50.0
Gurgaon-Manesar
10%
NH 4 (Chennai
NH-4
(Chennai-Bengaluru)
Bengaluru)
10%
6%
NH-4 (Pune-Mumbai)
6%
NH-6 (Dhulagarh)
6%
NH-3 (Bhiwandi)
NH 2 (D
NH-2
(Dankuni-Old
k i Old D
Delhi)
lhi)
NH-7 (Hyderabad)
0.0
2013
2014
2015e
2016e
Time ((Years))
2017e
4%
3%
2%
2018e
Y-o-Y rental growth (%)
Source: Content sourced from proprietary information of Jones Lang LaSalle India
264
Logistics spaces have continued to be affected by slow economic growth in 2014 and lack
of clarity regarding GST implementation.
Market Factors
FY14-15
FY14
15 Growth Trend
Reason
With e-commerce booming in India, the demand for warehousing space near
large local markets has increased significantly
Demand
Rising domestic consumption have also led to demand for warehousing space
Supply
Noticeable Trends
Difficultly to setup 100% export based SEZ units due to locational and other
regulations is enabling demand for domestic based SEZ spaces.
Demand of temperature
controlled warehouses
DMIC to increase
warehousing supply
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
265
Travel and tourism industry is growing steadily but requires quality infrastructure support to
be competitive globally .
Indias Position in the World
By Industry
Competitiveness
65th
By Hotel
Infrastructure
By Foreign Tourist
Arrivals
67th
42nd
20
1,152
1,200
1,036
1,000
864
753
800
674
600
18
Nu
umber of touris
st arrivals (millions)
Nu
umber of touris
sts arrivals (millions)
1,400
532
568
400
200
18
16
16
14
13
12
11
10
8
2007
2008
2009
2010
2011
Ti
Time
(Years)
(Y
)
Tourist arrivals
2012
2013
5
4
3
2
2
0
0
NCR
Mumbai
Chennai Bengaluru Kolkata
Major Tourist Destinations
Total
Domestic
Hyderabad
Foreign
266
Hospitality space inventory is set to grow steadily in future as occupancy rate is getting
stabilized.
Hospitality Space - Supply and Demand Trends
140,000.0
62%
120,000.0
60%
Number of roo
N
oms
56%
80 000 0
80,000.0
54%
60,000.0
52%
40 000 0
40,000.0
50%
20,000.0
Average Oc
ccupancy Rate (%)
58%
100,000.0
48%
0.0
46%
2013
2014
No. of rooms
2015e
2016e
2017e
Occupancy Rate
Note: Figures represent aggregated numbers of Top 8 cities : Mumbai, Delhi-NCR, Kolkata, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad | Numbers are forecasted for 2015, 2016 and 2017
Source: Cushman and Wakefield
CopyrightC Nomura Research Institute, Ltd. All rights reserved.
267
FY14-15
FY14
15 Growth Trend
Reason
Domestic tourism increased by 10% and international by 5.9% over previous
year
Demand
Top 8 cities are expected to add over 44,000 new keys by 2018 end, with Delhi
and Mumbai accounting for 51% of new supply
Supply
Overall, the supply stock across all major cities have grown, with Delhi having
highest y-o-y growth of 16.5% in supply.
Average room rates across most metro cities have not increased considerably
over last year, since increased supply amplified competition and quest for
maintaining occupancy.
Noticeable Trends
268
Authors
Tomohiko TANIYAMA
Author of Real Estate Investment
Products
Taniyama is engaged in consulting and research
projects. His resent research theme is the analysis
of alternative investment market including real
estates and infrastructures, and the development
of new financial instruments and new real estate
economic models.
Keita KAMEI
Author of Logistics Property Market
Kamei is engaged in consulting and research
projects, undertaking real estate, housing , housing
infrastructure-related
loan, and infrastructure
related survey/research,
as well as business strategy planning.
Yue KANG
Author of China
As a Consultant at NRI Shanghai, Kang is
engaged in consulting and research projects such
as urban and regional development, and planning
of real estate business strategy.
YoonJi BAE
Author of Household Economy and
Housing market trends, Indirect
Investment Market Trends in Korea
As a Consultant of Real Estate,, Retail,, Service
Division at NRI Seoul, Bae is engaged in
consulting projects related to Housing/Real estate
business strategy, Making business plan.
Akira DAIDO
Author of Population Movements in
Japan and Residential Property Market
Daido is engaged in consulting and research
projects such as real estate and housing, electric
industry, and planning of business strategies.
Seiya HARIMA
Author of Macro Fundamentals of
Japan
Harima is engaged in consulting and research
projects such as real estate/infrastructure-related
survey/research, and planning of business
strategies.
JaRyoung CHOI
Lead Author of Korea
As a Executive Director of Real Estate, Retail,
Service Division at NRI Seoul, Choi is engaged in
consulting and research projects such as urban
and regional development, real estate business
strategy and real estate investment strategy,
business strategy planning.
KangTae PARK
Author of Office Market Trends in
Korea
As a Consultant of Real Estate, Retail, Service
Division at NRI Seoul
Seoul, Park is engaged in
consulting projects related to Distribution strategy,
Plan of operation/ Execution support.
Hirokazu SAO
Author of Retail Property Market
Sao is engaged in consulting and research
projects, mainly on real estate, housing and
infrastructure-related cases. Sao undertakes
survey/research as well as business strategy
planning.
JunWon SEO
Author of Hotel Market Trend in Korea
As a Senior Consultant of Infra Business develop
Division at NRI Seoul, Seo is engaged in
consulting projects related to Real estate business
strategy and development, Urban Development.
DongHyun LEE
Author of Business Trends in Korea
As a Consultant of Real Estate, Retail, Service
Division at NRI Seoul, Lee is engaged in consulting
projects related to Distribution/Analysis of
consumer's market and marketing.
269
Authors
Michihiro KONAGAI
Lead Author of Taiwan
Konagai is engaged in consulting and research
projects such as infrastructure development and
business strategy planning in infrastructure market.
Amit KUMAR
Lead Author of India
Yasuyuki ARAKI
Author of Singapore
Araki is engaged in consulting and research
projects such as investment environment analysis
in real estate and infrastructure market, and
planning the business strategies and overseas
market strategy.
Wataru KADOBAYASHI
Author of Real Estate Market India
Anoop KUBBA
Toshiro TAKEKOSHI
Aya IMAI
Kazuya SAITO
Editor
Editorial assistant
Arpit MARTHUR
Author of Real Estate Market India
As a Consultant in Business Strategy Consulting
Division at NRI India, Mathur is engaged in
consulting and research projects such as
infrastructure related business strategy and
infrastructure-related
alliances.
Kengo MIZUNO
Managing Director
NRI Thailand
Mizuno specializes in real estate and housing
industry in Thailand.
270