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11.45am – 1:15pm International . jointheconversation#NBSLive #Biz. Real Estate. Jeremy Kelly Global Research Jones Lang LaSalle 26 November 2013. A Tale of Two Emerging Real Estate Markets. China 50. Africa 40. joneslanglasalle.eu/EMEA/EN-GB/Pages/Africa-real-estate-property.

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jointheconversation#NBSLive #Biz

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  1. 11.45am – 1:15pm • International jointheconversation#NBSLive #Biz

  2. Real Estate Jeremy KellyGlobal Research Jones Lang LaSalle 26 November 2013 A Tale of Two EmergingReal Estate Markets

  3. China 50 Africa 40 joneslanglasalle.eu/EMEA/EN-GB/Pages/Africa-real-estate-property joneslanglasalle.com/China50cities Tracking the momentum Spotting the City Winners World Winning Cities Research Profiling the diversity Identifying the real estate potential

  4. China 50 Fifty real estate markets that matter

  5. Introducing the China50 The cities that will be making the headlines HEILONGJIANG Nantong Ningbo Qingdao Quanzhou Shantou Shaoxing Shenyang Shijiazhuang Suzhou Taiyuan Tangshan Tianjin Urumqi Weifang Wenzhou Wuhan Wuxi Xi'an Xiamen Xiangyang Xuzhou Yantai Zhengzhou Zhongshan Zhuhai Changchun Changsha Changzhou Chengdu Chongqing Dalian Dongguan Foshan Fuzhou Guiyang Haikou Hangzhou Harbin Hefei Hohhot Jiaxing Jilin Jinan Jinhua Kunming Lanzhou Luoyang Nanchang Nanjing Nanning Harbin JILIN Jilin Changchun Urumqi XINJIANG Shenyang INNER MONGOLIA HEBEI LIAONING Tangshan Hohhot Dalian Tianjin Yantai Shijiazhuang HEBEI NINGXIA Taiyuan SHANXI Weifang Jinan QINGHAI SHANDONG Qingdao Lanzhou GANSU Changzhou JIANGSU Luoyang Wuxi ANHUI Xuzhou HENAN Zhengzhou Xi’an Nantong SHAANXI TIBET Suzhou Nanjing Shanghai HUBEI Hefei Xiangyang CHONGQING Jiaxing Hangzhou Ningbo Wuhan Chengdu SICHUAN ZHEJIANG Shaoxing Chongqing Jinhua Wenzhou Nanchang GUIZHOU JIANGXI Changsha HUNAN FUJIAN Taipei Fuzhou Guiyang Quanzhou GUANGDONG GUANGXI T A I W A N Kunming YUNNAN Xiamen Shantou Dongguan Shenzhen Nanning Foshan Hong Kong Macau Haikou HAINAN Indicates levels of economic and property activity Tier 1 cities (not part of China50) Zhuhai Zhongshan 5 5

  6. Why are China50 important? A continental-sized market Economy of US$3trillion 5th largesteconomy 370 million consumers World’s 10fastest growing cities 12% of all global growth 6% of world’s output Over 100 millionsq m of prime commercial space

  7. MNCs active in China50 cities 7

  8. Consumer class is expanding Proportion of urban population with disposable income over $5,000 pa* 0% 25% 50%+ Source: EIU, *constant 2005 currency terms

  9. China - Retail Stock Evolution Four-fifths of China’s modern retail stock outside Tier 1 cities by 2020 2005 2008 2011 13.4 million sq m 2014 27 million sq m 2020 E UK Shopping Malls 41 million sq m 68 million sq m China50 Tier 1 17 million sqm 137 million sq m Source: Jones Lang LaSalle Real Estate Intelligence Service 9

  10. China’s Grade A Office Stock Evolution High quality stock is still small, but growing rapidly 2005 2008 2011 8.1 million sq m 2014 14 million sqm 2020 E Greater London 23 million sq m 37 million sq m China50 Tier 1 33 million 66 million sq m Source: Jones Lang LaSalle Real Estate Intelligence Service 10

  11. China50: Evolution Curve A city hierarchy is taking shape Tier 1 Tier 1.5 – Transitional Shenzhen Tier 1.5 - 2 Tier 2 – Growth Tier 3 Tier 3 – Emerging Tier 3 – Early Adopter Source: Jones Lang LaSalle

  12. Tier 1.5 Transitional Cities Nine cities fast-tracking to maturity HEILONGJIANG • Chengdu:China 50’s premier real estate market JILIN • Chongqing:The world’s fastest growing large city Shenyang • Tianjin:A key logistics and manufacturing hub, with aggressive financial service aspirations HEBEI LIAONING Beijing INNER MONGOLIA Dalian Tianjin • Shenyang:Retail centre of Northeast China and hub for heavy manufacturing SHANXI SHANDONG NINGXIA QINGHAI • Wuhan:Central China hub, with strong educational base GANSU JIANGSU HENAN SHAANXI ANHUI Suzhou Nanjing Shanghai • Nanjing:Historically important city, fast growing service sector, strong educational base HUBEI Hangzhou CHONGQING Chengdu Wuhan Chongqing ZHEJIANG SICHUAN • Hangzhou:Affluent city and major retail hub JiANGXI HUNAN FUJIAN GUIZHOU Taipei • Suzhou:Thriving export-driven economy YUNNAN TAIWAN GUANGXI GUANGDONG • Dalian:BPO and software hub, FDI magnet, tourist destination Shenzhen Guangzhou Hong Kong Macau Source: Jones Lang LaSalle HAINAN

  13. A Tale of Two Cities Chengdu and Chongqing Benefiting from ‘Go West Policy’ Regional centres with massive catchment populations Improving Connectivity Riding wave of shift in economic activity inland ChengduThe international player ChongqingThe domestic player • The world’s fastest growing city • Benefiting from municipal status • Strategic hub on Upper Yangtze • Strong growth momentum in offices and retail • Leading manufacturing hub • Legacy of self-sufficiency • China50’s top real estate market • Strong retail sector • Diversified economy • Pro-business government • Well-educated labour force • Large middle class • Quality of life • Tourism hot spot 13

  14. The Retail HierarchyChengdu, Hangzhou and Shenyang top the ranks Harbin ChengduHangzhouShenyang Shenyang Dalian Tianjin Tianjin, Nanjing, Wuhan, Chongqing Qingdao, Ningbo, Dalian, Suzhou, Wuxi Nanjing Qingdao Zhengzhou Wuxi Xi’an Suzhou Shanghai Hangzhou Wuhan Ningbo Chengdu Chongqing Changsha Taipei Kunming Xiamen Changsha, Xi’an, ZhengzhouHarbin, Xiamen, Kunming Shenzhen Hong Kong Macau Based in retailer concentration, retail stock, wealth, population Source: Jones Lang laSalle

  15. The Challenges Ahead The risks on the road to maturity Short-term supply-demand imbalances The challenge of liquidity Poor real estatetransparency Lack of professional property management City governance and policy shifts Local government debt and property taxation Homogeneous economic structures Environmental sustainability Vulnerability to global volatility 15

  16. Africa 40 Africa’s evolving urban network

  17. Africa’s Evolving Urban Network40 Cities – Our Watch List North Africa Casablanca, Rabat, Marrakesh, Tangier, Algiers, Tunis, Tripoli, Cairo, Alexandria, Khartoum East Africa West Africa Nairobi, Mombasa, Addis Ababa, Kampala, Dar es Salaam, Kigali, Port Louis Accra, Abidjan, Dakar, Lagos, Abuja, Port Harcourt, Kano, Ibadan, Douala, Libreville, Malabo, Kinshasa, Luanda, Brazzaville Southern Africa Lusaka, Harare, Maputo, Windhoek, Johannesburg, Cape Town, Durban, Port Elizabeth, Gaborone Source: Jones Lang LaSalle, 2013

  18. Africa’s Real Estate TransparencyOpportunities with Obstacles HighlyTransparent Transparent Semi- Transparent Low Transparency Opaque Source: Jones Lang LaSalle Global Real Estate Transparency Index, 2012

  19. Africa’s Commercial Real Estate Stock North Africa Sub-Saharan Africa* South Africa 4 million sq m2 15 million m2 Offices 2 million m2 Shopping malls 21 million m2 1 million m2 0.5 million m2 210 million Population 830 million 52 million Excluding South Africa. Relates to modern offices and shopping malls Source: Jones Lang LaSalle, Emerging Markets Consultants, SACSC, IHS Global Insight

  20. Grade A Office Rents, Q3 2013African markets are among the world’s most expensive Rents US$/m2/pa Based on local definitions of prime Grade A rents. Source: Jones Lang LaSalle, October 2013

  21. Rents Falling Rental Growth Slowing Rental Growth Accelerating RentsBottoming Out African Office Rental Clock – A Diverse Continent Casablanca, Port Louis Luanda Lagos, Rabat Dar es Salaam Kampala Johannesburg Maputo, Abuja Nairobi Algiers, Lusaka Accra Harare Gaborone Cairo, Abidjan, Dakar Addis Ababa, Kinshasa Tunis Source: Jones Lang LaSalle , Emerging Markets,Consultants, October 2013

  22. Sub-Saharan Africa GDP growth compares favourably with other major emerging markets GDP 2013-2017 % pa Source: IHS Global Insight, September 2013 22

  23. Twelve Pillars of Africa’s Future Success Favourable Demographics Sustained Economic Growth Rapid Urbanisation Expanding Middle Classes Commodity and Energy Resources Innovation and Technology FDI and Expanding Corporate Footprints Offshoring Destination Finance and Business Services Improving Economic Management Infrastructure Investment RAPIDLY EVOLVING COMMERCIAL REAL ESTATE MARKET Source: Jones Lang LaSalle, 2013

  24. In Search of Excellence: Africa’s Top Technology Hubs Pockets of Excellence Emerging in Sub-Saharan Africa Presence of International ITC Companies Dakar Lagos Yaba Addis Ababa Accra Hope City Nairobi Kampala Presence of Hewlett Packard, IBM, Intel, Microsoft, Siemens, Vodafone, Huawei and Cisco

  25. The Risk v Opportunity Trade Off Lowest Jo’burg, Cape Town Port Louis Gaborone Tunis, Algiers Dakar Casablanca Accra, Lusaka Dar es Salaam Maputo Risk Cairo Nairobi, Kampala Addis Ababa Luanda Tripoli Khartoum Harare Abidjan Lagos, Abuja Kinshasa Highest Growth Lowest Highest Risk: Country Risk, IHS Global Insight, September 2013; GDP Change 2011-13, IHS Global Insight, September 2013 Source: Jones Lang LaSalle, September 2013

  26. 10 African Cities on the International Radar Casablanca Cairo Emerging Addis Ababa Lagos Accra Early Adopter Nairobi Luanda Johannesburg Mature Durban Source: Jones Lang LaSalle, 2013 Cape Town

  27. Africa’s Evolving Cities Hierarchy Global / Super-Regional Johannesburg Cairo Lagos, Nairobi, Casablanca Cape Town, Accra Regional Addis Ababa, Luanda, Durban Maputo Dar es Salaam Kampala, Lusaka Abuja, Dakar, Algiers Rising Stars Rabat, Marrakech Tangiers, Tunis Gaborone, Port Louis Alexandria Tripoli Khartoum Abidjan, Kinshasa Douala Port Harcourt, Ibadan Malabo, Brazzaville, Libreville Kano Harare, Mombasa Kigali, Windhoek Port Elizabeth Watch List Source: Jones Lang LaSalle, 2013

  28. The Tale of Two Emerging Real Estate Markets Africa China Transitioning to Lower Growth Moving to Lift Off Favourable Demographics Demographic Crisis Effective Government Policy Fragmented and Weak Governance Speed and Scale of Real Estate Delivery Severe Shortages of Quality Real Estate

  29. For more information on Jones Lang LaSalle’s Cities Research Programme Jeremy Kelly Director, Global Research +44 (0)20 3147 1199 jeremy.kelly@eu.jll.com

  30. 11.45am – 1:15pm • International jointheconversation#NBSLive #Biz

  31. 11.45am – 1:15pm • International jointheconversation#NBSLive #Biz

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