Global Real Estate Market Review 2013 Mark Clacy-Jones, Vice President & Head of Core Research, IPD ©2014 Investment Property Databank Ltd. All rights reserved. ipd.com 1 Agenda Multi-Asset Context Real Estate Market Cycle Real Estate - 2013 ©2014 Investment Property Databank Ltd. All rights reserved. ipd.com 2 Multi-asset-class Allocations: 40:40:20 has Replaced 60:40, but Wide Variations Across Markets Asset Class Allocations Across Regions Global Regional AUM $tn % Note: Based on 138 asset owners in Survey Universe. Calculated on % of assets in each category, not number of asset owners. Sources: IPD; MSCI ©2013 Investment Property Databank Ltd. All rights reserved. ipd.com 3 Real Estate is the Favoured “Alternative” Asset Class, Globally and in all Markets Except USA Alternative Allocations Across Regions Global % Regional Note: Based on 138 asset owners in Survey Universe. Calculated on % of real estate assets in each category, not number of asset owners. Sources: IPD; MSCI ©2013 Investment Property Databank Ltd. All rights reserved. ipd.com 4 Home Bias Remains but Appetite for Non-Domestic is Growing Across all Markets Geographic exposure for real estate portfolios Global Regional Note: Based on 138 asset owners in Survey Universe. Calculated on % of real estate assets in each category, not number of asset owners. Sources: IPD; MSCI ©2013 Investment Property Databank Ltd. All rights reserved. ipd.com 5 Q3 2013: Private real estate versus other asset classes IPD Global Property Fund Index versus other asset classes Return (%) 25 23 20 15 15 9 10 7 5 3 2 1 0 0 IPD GPFI Equities Return (% q/q) ©2014 Investment Property Databank Ltd. All rights reserved. Property Equities Return (% y/y) ipd.com JP Morgan Bonds Source: IPD 6 Q3 2013: Private real estate versus other asset classes IPD Global Property Fund Index versus other asset classes Return (%) 25 23 ? 20 30% 8% -1% 15 15 9 10 7 5 3 2 1 0 0 IPD GPFI Equities Return (% q/q) ©2014 Investment Property Databank Ltd. All rights reserved. Property Equities Return (% y/y) ipd.com JP Morgan Bonds Source: IPD 7 Agenda Multi-Asset Context Real Estate Market Cycle Real Estate - 2013 ©2014 Investment Property Databank Ltd. All rights reserved. ipd.com 8 Global Real Estate Cycle % pa 40 30 20 10 0 -10 -20 -30 1980 1981 1982 1983 1984 1985 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 -40 Source: IPD, KTI ©2014 Investment Property Databank Ltd. All rights reserved. ipd.com 9 Global Real Estate Cycle % pa Capital growth Income return Total return 5-year annualised total return 20 14.1 15 14.0 10.9 10.7 9.5 10 7.4 9.7 7.9 8.8 7.3 6.8 6.8 5 2.4 0 -5.1 5 -8.0 10 Years 5 Years 3 Years 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 10 Source: IPD, KTI ©2014 Investment Property Databank Ltd. All rights reserved. ipd.com 10 Global Real Estate 2012 % pa Capital growth Income return Total return IPD Global Index 20 15.2 14.1 15 10.7 9.4 10 8.8 7.3 7.2 6.8 6.4 6.3 6.3 6.2 6.0 4.7 4.7 4.4 5 4.3 3.8 3.8 3.6 3.4 3.1 1.5 1.2 0.8 0 -1.9 -2.1 5 ©2014 Investment Property Databank Ltd. All rights reserved. ipd.com Spain Hungary Portugal Netherlands Italy Ireland UK Belgium Japan Denmark Pan-European Germany Czech Republic Norway Finland Austria France Poland Sweden Switzerland Korea IPD Global Index New Zealand Australia United States Canada South Africa 10 Source: IPD, KTI 11 Agenda Multi-Asset Context Real Estate Market Cycle Real Estate - 2013 ©2014 Investment Property Databank Ltd. All rights reserved. ipd.com 12 Q3 2013: GPFI Long-term performance trends Direct asset total returns (% q/q) for the three major regions Total Return (% q/q) • Q3 2013 YTD Total Return 2.9 % q/q 2.3 % q/q • Asia Pacific 6.4% 1.9 % q/q • North America 8.5% • Europe 5.1% 6 4 2 - (2) (4) • Improvements in UK and rest of Europe combine for largest improvement (6) (8) (10) Mar 08 Jun 08 Sep 08 Dec 08 Mar 09 Jun 09 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Dec 11 Mar 12 Jun 12 Sep 12 Dec 12 Mar 13 Jun 13 Sep 13 (12) APAC Europe Nth. America • North America still leads the way and remains steady Source: IPD ©2014 Investment Property Databank Ltd. All rights reserved. ipd.com 13 How is 2013 shaping up? The IPD Global Annual Property Index versus a quarterly composite of applicable countries Total Return (% y/y) % of total sample 100% 80% 60% 40% 20% 0% Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q1 Q2 Q3 06 07 08 09 10 11 12 13 13 13 Available weighting 20 15 10 5 0 -5 Countries included in the indicative global -10 -15 Q4 Q4 Q4 Q4 Q4 Q4 Q4 Q1 Q2 Q3 06 07 08 09 10 11 12 13 13 13 Indicative Global Global ©2014 Investment Property Databank Ltd. All rights reserved. Australia Canada Ireland Netherlands New Zealand UK US ipd.com Source: IPD 14 2013: Quarterly reported annual returns Australia, Canada, Ireland, Japan, Netherlands, New Zealand, UK, US % pa 15 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 13 11 9 7 5 3 1 -1 Canada New Zealand US Australia Japan Ireland UK Netherlands Source: IPD ©2014 Investment Property Databank Ltd. All rights reserved. ipd.com 15 2013 Annual returns % pa 14 Capital growth Income return 12.7 11.6 12 Total return 11.6 10.7 10.5 9.6 10 8 6.8 5.6 6 4.4 3.5 4 2 0.5 0 2 4 ©2014 Investment Property Databank Ltd. All rights reserved. Netherlands Denmark Finland Norway Sweden Australia UK Canada New Zealand United States Ireland 6 Source: IPD, KTI ipd.com 16 Global Real Estate Cycle Resilient markets Recovering markets Lagging markets up more than 15% from trough (or no decline) up 5-15% from trough up less than 5% from trough (or stalling) 2007 = 100 2007 = 100 2007 = 100 Denmark 120 Canada 120 120 110 110 Finland France South Africa 110 Switzerland Korea 100 Global Index Austria 90 80 Australia 100 UK Ireland 100 Italy Sweden 90 USA Global Index 80 90 Netherlands New Zealand 80 Norway 70 70 70 60 60 60 50 50 50 Czech Republic Hungary Poland Germany Portugal Belgium 2013 2012 2011 2010 2009 2008 Spain 2007 2013 2012 2011 2010 2009 2008 2007 2013 2012 30 2011 30 2010 30 2009 40 2008 40 2007 40 Japan Global Index Source: IPD, KTI ©2014 Investment Property Databank Ltd. All rights reserved. ipd.com 17 Income Returns over time 11pa % 10 Range of income returns since 2000* 2012/13 income return 9 8 7 6 5 4 * Or since index inception if after 2000 ©2014 Investment Property Databank Ltd. All rights reserved. ipd.com Switzerland Denmark Austria Sweden Germany Japan Netherlands France IPD Global Index Spain Hungary United States UK Norway Portugal Belgium Italy Canada Korea Finland Czech Republic Poland Australia New Zealand South Africa Ireland 3 Source: IPD, KTI 18 Global Real Estate Summary • European markets divided – Austerity working in UK & Ireland – Slow growth in rump of Euro zone – Historically low income return suggests weak income – Sweden & Denmark continue at similar pace to 2012, Finland slows • North America mixed – US continues to grow strongly – Canada weakening • Asia-Pacific relatively stable – Japan improving – Australia & New Zealand resilient ©2014 Investment Property Databank Ltd. All rights reserved. ipd.com 19 IPD support throughout the investment process IPD data, services, and research to ensure objectives are aligned, measurable and reportable Board of Trustees CIO Office Managers Allocation Strategy Analysis Allocating to real estate Choosing a benchmark Fund, portfolio, and asset performance Barra Private Real Estate Model IPD Benchmarks and Global Intel IPD Portfolio Analysis Service $ Source: IPD ©2014 Investment Property Databank Ltd. All rights reserved. ipd.com 20
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