Occupier insight navigating emerging markets 2013 #cre

2013
Occupier Insight
Navigating EMERGING
Markets
A Corporate Occupier & Investor Services Publication

Navigating
EMERGING Markets
INTRODUCTION
The potential for slow economic growth is expected to hamper expansion
in North America and the euro zone. As a result, multinationals are
consistently turning to emerging markets in search of revenue. Rapidly
growing populations, an increasingly educated workforce, expanding
middle-class incomes, and substantial foreign and domestic investment are
all compelling arguments for corporate expansion in these markets.
In our latest Occupier Insight Report, we discuss the risks associated with
occupancy and expansion in emerging economies. This report identifies
43 countries across Latin America, Africa, the Middle East, and Asia Pacific
where global companies are contemplating expansion. In this piece, we
discuss the key considerations for multinationals when assessing a market’s
suitability for occupancy, identify the economic indicators that should be
assessed in determining risk, and examine the current state and prospects
of the property market.
We hope you find this information useful and informative. Please do not
hesitate to contact Cushman & Wakefield’s Global Occupier Services
leadership, or the authors of this report should you require a deeper
assessment of the trends discussed in the piece.
Mark T. Wanic
Americas Head of Occupier Services
John C. Santora
President and CEO
Corporate Occupier & Investor Services
Michael Creamer
EMEA Head of Occupier Services
Richard Middleton
APAC Head of Occupier Services
CUSHMAN & WAKEFIELD 1

Navigating
EMERGING Markets
Economic Perspective
Emerging AND BRIC Markets are a Force in the Global Economy
Ken McCarthy, Chief Economist, Cushman & Wakefield
Over the past two decades emerging markets
have become an increasingly important part of the
global economy, first as manufacturing locations
for global corporations that sought to outsource
production to reduce costs, and now as markets
for goods in their own right as incomes have
increased and a middle class has emerged in many
of these countries.
For the past 22 years, a group of 54 nations
identified by Oxford Economics as Emerging
Markets and including countries like the BRIC
economies (Brazil, Russia, India, China) as well
as developing economies like Bangladesh, Egypt,
Namibia, Jamaica andVietnam to name just a
few, has grown much more rapidly than the rest of the world. Since 1990, GDP in these emerging markets as a group
has grown at an average annual rate of 9.9% while the rest of the world has grown at less than half that pace or roughly
4.2% per year. In 1990 the GDP of China, arguably the world’s first and leading emerging market economy, was roughly
$388 billion and represented approximately 1.7% of global GDP.Today China has the second largest economy in the
world and accounts for about 11.5% of global GDP.As a result, emerging markets now account for almost 35% of global
GDP and are a potent factor in the global economy that can no longer be ignored.
Trade with these nations has also grown rapidly.Their impact on the global economy can be seen in the growing share
of global trade in goods that these countries represent. According to the IMF, exports from emerging and developing
nations have grown at a compound annual rate of 15.5% since 2003, more than twice the rate of the rest of the
world. As a result, today these nations account for approximately 44.5% of total world exports. In 2003 these nations
accounted for only 26.7% of world exports.This increasing share of global trade means these nations are becoming
more and more integrated into the global economy.
Over the next several years, as the global economy becomes ever more integrated, corporations will need to be in
more locations than ever. Any business that ignores emerging markets will be missing out on the fastest growing part
of the global economy.
26.7%
28.4%
31.1%
33.0%
33.9%
36.6%
35.3%
37.4%
39.1%
40.7%
20%
25%
30%
35%
40%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Sources: World Trade Organization, International Monetary Fund
Emerging and Developing Nations’ Exports as
a Percent of World Exports

Navigating
EMERGING Markets
Assessing the RISKS OF CORPORATE EXPANSION
Given the juxtaposition of significant GDP growth and the high levels of instability and risk in
many foreign markets, corporations must weigh a variety of risks to determine the suitability of
each market. Below are some of the key issues that any real estate department must consider
when analyzing location opportunities.
impact on total occupancy costs
Given the limited supply of already built property, as well as the lack of infrastructure in many
remote markets to support new construction, rental rates for multinationals will be high relative
to their total portfolio. Some of the world’s highest rents can be found in São Paulo, Rio de
Janeiro, Luanda, and Abuja, where prime rental rates can top long-established and mature
markets such as New York, London, Paris and Tokyo. For real estate departments trying to
control expenses across their portfolios, the impact of the occupancy cost in these markets to
their broader portfolio should be examined.
quality of ownership
In many of these markets, it can be challenging to find property owners with the professional
experience, knowledge, and financial capital to serve the modern corporation. While REITs,
private equity investors, and other institutional owners have been investing in many of these
markets for some time, the percent of stock these organizations own and operate remains small
in relation to the broader inventory. In the more established growth markets, finding professional
ownership is less of a challenge. In many countries, ownership is held by families or individuals and
can be multi generational, making it challenging to negotiate leases and building improvements.
Transparency of property rights AND LAND USE
In some countries, corporations are not legally allowed to own real estate. In others, owners have
the right to negotiate rental rates annually over the course of a lease term. Knowing up-front the
legal framework for how the corporation is allowed to acquire and operate real estate is essential.
Investment in infrastructure
Assessing the state of the broader infrastructure is critical. In established markets the quality of the
infrastructure can be excellent, and in some cases even better than domestic markets. In others, there
can be issues with such basic things as roads, schools, hospitals, and the banking system. Corporations
need to know if there is adequate law enforcement, government spending and legal protection and
they should ask such basic questions as how will employees live and travel to and from work? The state
of the infrastructure determines how easy it will be to conduct daily business operations.
Health & safety of employees
From basic issues such as securing clean water and efficient energy, to complying with western and/
or corporate standards for materials, fire, safety, and security, multinationals can be challenged to
find facilities that provide acceptable work environments for their employees. Many corporations
have additional requirements related to social responsibility and sustainability, further increasing
costs and limiting the amount of available stock.
Level of corruption
Corruption makes it hard for corporations to operate and for economies to fully develop. It stifles
trade, investment, and economic development. From bribery, to taxation and the threat of
government overthrow, corruption can be a significant issue in some markets. The more mature
markets, such as China, India, and Saudi Arabia have made significant progress in reducing their
levels of corruption. In other markets, such as Sudan, Myanmar, Zimbabwe, Mexico, and Venezuela,
corruption makes it extremely difficult to operate a business with any level of assurance.
In many emerging markets,
it can be challenging to find
property owners with the
experience, knowledge and
capital to construct office
buildings that meet the needs
of today’s corporations.

Country overviews
Navigating
EMERGING Markets
As corporations explore new markets, an understanding of
risk must weigh into their expansion strategies. We have
identified a number of issues – from the level of corruption,
to the quality of infrastructure, transparency of property
rights, and class of ownership – that should be considered.
As real estate departments support corporate expansion
priorities, they face a daunting task in helping make sense of
these risks and opportunities.
In the following sections of this report, we provide an
overview of the key economic indicators, risk rankings
and property markets for the 43 countries noted below.
The global map below is interactive. By clicking on a specific
region, you will be led to an overview of the key trends for
that region, followed by a region map. On the map, click on
each country to receive a detailed description of the criteria
best used to determine the suitability of that country for
corporate expansion.
CENTRAL &
SOUTH AMERICA (7)
Argentina
Brazil
Chile
Colombia
Mexico
Peru
Venezuela
AFRICA & MIDDLE EAST (25)
Algeria
Angola
Botswana
Cote D’Ivoire
Democratic Republic
of Congo
Egypt
Ghana
Kenya
ASIA PACIFIC (11)
China
India
Indonesia
Philippines
Thailand
Vietnam
Bangladesh
Cambodia
Mongolia
Myanmar
Sri Lanka
Libya
Morocco
Nigeria
Senegal
South Africa
Tanzania
Tunisia
Uganda
Zambia
Zimbabwe
Bahrain
Jordan
Lebanon
Oman
Qatar
Saudi Arabia
UAE
INTERACTIVE GLOBAL MAP WITH HIGHLIGHTED REGIONS

Navigating
EMERGING Markets
Quantifying risk and opportunity across Latin America (LATAM) depends on the country and
market of interest. Cities such as Rio de Janeiro, Buenos Aires, and São Paulo have made
significant progress over the last decade in improving the quality of their infrastructure, which
in turn has attracted significant foreign capital to the real estate sector and put them on the list
of top markets for office demand. Parts of these cities remain underserved by utilities and the
quality of commercial construction can vary from building to building, even within the same
submarket. Outside these markets, the political, infrastructure, and economic risks for
corporate occupancy vary dramatically.
Below is a ranking of the key LATAM countries covered in this report according to their GDP
growth from 2011 to 2012.
ECONOMIC GROWTH – LATAM
Country Ranking per YOY Change in Real GDP
No. Country % Change in GDP
1. PERU 6.3
2. VENEZUELA 5.6
3. CHILE 5.5
4. COLOMBIA 4.0
5. MEXICO 3.9
6. ARGENTINA 1.9
7. BRAZIL 0.9
Source: Oxford Economics, 2012
Property Market Trends
While Brazil continues to be one of the most sought-after countries in LATAM, the nation’s
recent economic slowdown and political turmoil is expected to negatively impact demand in the
commercial office market. New office inventory delivered across Brazil’s major cities in 2013
will exceed 2011 and 2012 levels combined. The major markets of Rio de Janeiro and São Paulo
have already seen a pullback in corporate leasing activity and the market is expected to struggle
over the next few years to fill the new inventory scheduled to come on-line, which at this point
stands at only 30% pre-leased. That being said, these markets are not expected to cede ground
as the leaders in LATAM.
Peru is experiencing a significant increase in occupier interest. The country ranks as one of the
most business friendly global markets. According to The World Bank’s Ease of Doing Business
Ranking (EODB), Peru ranks 43 out of 185 and is near the top of C&W’s list in this report
(Thailand has the highest EODB ranking with 18/185). The long-term prospects for Peru are
positive and the country is expected to achieve GDP growth of 6.5% in 2013, on top of the
6.3% it generated in 2012. Although small, Colombia’s recent strong economic performance has
driven occupiers to this market over the last 12 months and C&W puts Colombia second to
Peru in its growth prospects for occupiers in LATAM.
Overview continued on the following page…
LATIN AMERICA
The issue most affecting
markets in Latin America
over the next five years
will be the completion of
the $5.2 billion Panama
Canal project.
GLOBAL
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REGION
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Navigating
EMERGING Markets
In contrast, Venezuela is one of the most challenging markets globally to conduct business. The
World Bank gives it an EODB ranking of 180 out of 185. Despite its vast oil reserves and the recent
death of Hugo Chavez, Venezuela is expected to remain challenging for corporate location. The
country recently de-valued its currency, which has eroded middle-class income and further
decreased the purchasing power of consumers.
Below is a ranking of the key LATAM cities in this report according to rental rates.
PRIME OFFICE RENT
No. City Country Prime Rental Rate Trend
1. RIO DE JANIERO Brazil 65 Stable
2. SÃO PAULO Brazil 61 Stable
3. CARACAS Venezuela 46 Stable
4. BOGOTÁ Colombia 34 Stable
5. BUENOS AIRES Argentina 29 Stable
6. MEXICO CITY Mexico 30 Stable
7. SANTIAGO Chile 26 Stable
8. LIMA Peru 19 Accelerating
9. QUITO Ecuador 15 Accelerating
Source: Cushman & Wakefield, Rent quoted as asking rent USD/sq. m/month
Perhaps the issue that will most affect LATAM in the next five years will be the expansion of the
Panama Canal. While Central American markets did not make C&W’s list this year, due to only
marginal interest from corporations for office space, the Panama Canal project will likely change
this. The $5.2 billion infrastructure project is scheduled to be completed by 2015 and will allow
ships that hold up to 13,000 twenty-foot containers to pass more quickly from east to west and
strengthen the already growing trade relationship between LATAM and China. Corporations should
take this project and its potential affect on the region into account when assessing location
opportunities in LATAM.
GLOBAL
MAP
REGION
MAP

Navigating
EMERGING Markets
The past five to ten years have seen the emerging markets of Africa and the Middle East (AME)
come to the fore in terms of future development and interest. While many of these markets
have already seen a wave of multinational corporations establish a presence in recent years, the
progression of infrastructure and transparency improvements have further opened up these
countries to receiving new business.
Occupancy risks within parts of AME are arguably higher than in any other part of the world.
A number of countries suffer from high levels of corruption, poor security, inadequate
infrastructure and a lack of transparency. While these issues pose important and restrictive
barriers to entry, how AME develops over the next five years will be a critical factor in
shaping global economic growth. As can be seen from the chart below, a majority of these
nations are growing economically, despite their risks. The key for multinationals will be how
to harness the opportunities that exist in the region, while simultaneously protecting the
business from downside risk.
Below is a ranking of the key AME countries covered in this report according to their GDP
ECONOMIC GROWTH – AME
No. Country
% Change
in GDP No. Country
% Change
in GDP
1. COTE D’IVOIRE 8.1 13. ZIMBABWE 4.5
2. ANGOLA 8.0 14. KENYA 4.3
3. ZAMBIA 7.3 15. TUNISIA 4.1
4. DEM REP OF CONGO 7.2 16. SENEGAL 3.4
5. GHANA 7.1 17. BAHRAIN 3.4
6. SAUDI ARABIA 6.8 18. UNITEDARAB EMIRATES 3.3
7 TANZANIA 6.6 19. MOROCCO 2.7
8. NIGERIA 6.5 20. JORDAN 2.7
9. BOTSWANA 6.1 21. ALGERIA 2.5
10 QATAR 6.0 22. SOUTH AFRICA 2.5
11. OMAN 5.5 23. EGYPT 2.2
12. UGANDA 4.5 24. LEBANON 1.0
The risks of locating in
markets across Africa
and the Middle East
are greater than in any
other part of the world.
However, the potential
business opportunities
are equally as great.
AFRICA & the MIDDLE EAST
GLOBAL
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REGION
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Navigating
EMERGING Markets
There is a discernible difference between the office locations of Africa and the Middle East, with
most of the countries in the Middle East and South Africa having relatively transparent markets.
The majority of African nations are rapidly developing and markets may consist of only a handful
of buildings in some instances, others can suffer from a lack of adequate supply and a lack of
responsive ownership.
Corporate occupiers are drawn to Africa and the Middle East for a variety of reasons, including
mineral wealth, oil, or an expanding middle class. The characteristics of these markets results in
situations where Luanda, the capital of Angola, is the most expensive location within the region.
The combination of significant demand from the extractive sector, and a lack of suitable quality
space has resulted in rents in Angola being some of the highest in the world. Furthermore,
markets in Nigeria have continued to expand due to notable domestic demand from a variety of
sectors to becoming the more expensive office locations in the region.
Below is a ranking of the top ten AME cities in this report according to rental rates.
PRIME OFFICE RENT
1. LUANDA Angola 120 Stable/Declining
2. LAGOS Nigeria 85 Stable
3. ABUJA Nigeria 65 Stable
4. DOHA Qatar 60 Stable
5. DUBAI UAE 45 Stable/Accelerating
6. ALGIERS Algeria 45 Stable
7. KINSHASA Democratic Republic of Congo 45 Stable
8. ABU DHABI UAE 41 Stable
9. CAIRO Egypt 40 Stable/Declining
10. ACCRA Ghana 40 Stable
GLOBAL
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EMERGING Markets
The Asia Pacific (APAC) economy in 2012 exhibited a divergence in growth rates, revealing
a split between the developed and developing economies in the region. While the externally
oriented, more developed economies of the Asian Tigers and Japan bore the brunt of the
pullback in external demand, APAC’s emerging nations were able to call on domestic
drivers to buffer economic growth.
While these countries remain susceptible to the global ebb and flow of hot capital, there is
little doubt that the diverse APAC region, with countries in various stages of development,
holds much of the potential that could drive global economic growth into the next decade.
Some of these countries, having only begun emerging from the clutches of crippling political
and social instability in this decade, were only able to kickstart their economic reform
recently; others, having embarked on such programs earlier, are refining economic policies
for further development.
Almost all countries will present challenges – including security and political risks, corruption,
and archaic land use systems – that are endemic in developing economies. Yet, all offer
favorable demographics, rapid urbanization, and growing incomes that are fuelling the need
for investments in infrastructure – and where demand for corporate real estate is escalating.
Below is a ranking of the key APAC countries covered in this report according to their GDP
ECONOMIC GROWTH- APAC
1. MONGOLIA 12.3
2. CHINA 7.8
3. THE PHILIPPINES 6.6
4. THAILAND 6.4
5. SRI LANKA 6.4
6. BANGLADESH 6.3
7. CAMBODIA 6.2
8 INDONESIA 6.2
9. MYANMAR 5.9
10. INDIA 5.0
11. VIETNAM 5.0
Source: Oxford Economics, GDP 2012
While the more developed
APAC nations bore the
brunt of the pull back in
global demand, APAC’s
emerging countries were
able to call on domestic
strengths to support growth.
ASIA PACIFIC
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Navigating
EMERGING Markets
The principal markets in APAC have seen a slowdown in occupier demand over the last year.
While Beijing remains the primary office market in the region (and has been considered a leading
global market for over a decade), secondary markets in China such as Chengdu, Nanjing, and
others are seeing increased occupier demand. These markets now offer competitive economies
and improved infrastructures. In China, many transnational corporations have relocated their
back-up functions, regional offices or even headquarters to second-tier cities. Manufacturers
such as Honeywell, Daimler, and General Motors have established their offices in Chengdu,
Tianjin, Wuhan, etc. and IT service corporations like IBM, Intel, and Microsoft have different
functions set up in Nanjing and Dalian.
Outside China, the markets garnering the most occupier attention include the Philippines,
where demand from the Business Process Outsourcing (BPO) industry in Manila has been a
significant driver and Yangon and Jakarta, which have seen rental rates climb to 82USD and
36USD per/sq. m/month.
Below is a ranking of the key APAC cities in this report according to rental rates.
PRIME OFFICE RENT
1. YANGON Myanmar 82 Accelerating
2. ULAAN BAATAR Mongolia 70 Accelerating
3. HO CHI MINH CITY Vietnam 49 Declining
4. HANOI Vietnam 38 Declining
5. JAKARTA Indonesia 36 Accelerating
6. NANJING China 32 Accelerating
7. CHENGDU China 25 Accelerating
8. DHAKA Bangladesh 24 Accelerating
9. MANILA (MAKATI) The Philippines 23 Accelerating
10. BANGKOK Thailand 21 Accelerating
11. COLOMBO Sri Lanka 20 Accelerating
12. PHNOM PENH Cambodia 19 Accelerating
13. MANILA (FORT BONIFACIO) The Philippines 16 Accelerating
14. CHANDIGARH India 9 Slowing
15. KOCHI India 7 Slowing
Source: Cushman & Wakefield, Rent quoted as asking rent USD/sq. meter/month
GLOBAL
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Navigating
EMERGING Markets
rEGIONAL
OVERVIEWS
The following are overviews of the key trends for
each region identified in this report. There is a
map at the end of each region overview—click on
each country to receive a detailed description of
the criteria best used to determine the suitability
of that country for corporate expansion.
Africa & Middle East
Global
Latin America
Asia Pacific

Navigating
EMERGING Markets
Quantifying risk and opportunity across Latin America (LATAM) depends on the country and
market of interest. Cities such as Rio de Janeiro, Buenos Aires, and São Paulo have made
significant progress over the last decade in improving the quality of their infrastructure, which
in turn has attracted significant foreign capital to the real estate sector and put them on the list
of top markets for office demand. Parts of these cities remain underserved by utilities and the
quality of commercial construction can vary from building to building, even within the same
submarket. Outside these markets, the political, infrastructure, and economic risks for
corporate occupancy vary dramatically.
Below is a ranking of the key LATAM countries covered in this report according to their GDP
ECONOMIC GROWTH – LATAM
Country Ranking per YOY Change in Real GDP
1. PERU 6.3
2. VENEZUELA 5.6
3. CHILE 5.5
4. COLOMBIA 4.0
5. MEXICO 3.9
6. ARGENTINA 1.9
7. BRAZIL 0.9
While Brazil continues to be one of the most sought-after countries in LATAM, the nation’s
recent economic slowdown and political turmoil is expected to negatively impact demand in the
commercial office market. New office inventory delivered across Brazil’s major cities in 2013
will exceed 2011 and 2012 levels combined. The major markets of Rio de Janeiro and São Paulo
have already seen a pullback in corporate leasing activity and the market is expected to struggle
over the next few years to fill the new inventory scheduled to come on-line, which at this point
stands at only 30% pre-leased. That being said, these markets are not expected to cede ground
as the leaders in LATAM.
Peru is experiencing a significant increase in occupier interest. The country ranks as one of the
most business friendly global markets. According to The World Bank’s Ease of Doing Business
Ranking (EODB), Peru ranks 43 out of 185 and is near the top of C&W’s list in this report
(Thailand has the highest EODB ranking with 18/185). The long-term prospects for Peru are
positive and the country is expected to achieve GDP growth of 6.5% in 2013, on top of the
6.3% it generated in 2012. Although small, Colombia’s recent strong economic performance has
driven occupiers to this market over the last 12 months and C&W puts Colombia second to
Peru in its growth prospects for occupiers in LATAM.
LATIN AMERICA
The issue most affecting
markets in Latin America
over the next five years
will be the completion of
the $5.2 billion Panama
Canal project.
GLOBAL
MAP
REGION
MAP

Navigating
EMERGING Markets
In contrast, Venezuela is one of the most challenging markets globally to conduct business. The
World Bank gives it an EODB ranking of 180 out of 185. Despite its vast oil reserves and the recent
death of Hugo Chavez, Venezuela is expected to remain challenging for corporate location. The
country recently de-valued its currency, which has eroded middle-class income and further
decreased the purchasing power of consumers.
Below is a ranking of the key LATAM cities in this report according to rental rates.
PRIME OFFICE RENT
1. RIO DE JANIERO Brazil 65 Stable
2. SÃO PAULO Brazil 61 Stable
3. CARACAS Venezuela 46 Stable
4. BOGOTÁ Colombia 34 Stable
5. BUENOS AIRES Argentina 29 Stable
6. MEXICO CITY Mexico 30 Stable
7. SANTIAGO Chile 26 Stable
8. LIMA Peru 19 Accelerating
9. QUITO Ecuador 15 Accelerating
Perhaps the issue that will most affect LATAM in the next five years will be the expansion of the
Panama Canal. While Central American markets did not make C&W’s list this year, due to only
marginal interest from corporations for office space, the Panama Canal project will likely change
this. The $5.2 billion infrastructure project is scheduled to be completed by 2015 and will allow
ships that hold up to 13,000 twenty-foot containers to pass more quickly from east to west and
strengthen the already growing trade relationship between LATAM and China. Corporations should
take this project and its potential affect on the region into account when assessing location
opportunities in LATAM.
GLOBAL
MAP
REGION
MAP

Navigating
EMERGING Markets
Click on each country for specific detail on its suitability, including an overview of its economic indicators,
risk profile, and commercial property market.
latin america
Mexico
Venezuela
Colombia
Peru
Brazil
ChilE
Argentina
Asia Pacific
Africa & Middle East
Global

latin america
latin america
C&W ranked the economic indicators and risk factors in each region to showcase how each country ranks within
its respective region. The rankings are as follows:
Top Quartile Second Quartile Third Quartile Bottom Quartile
SUITABILITY OVERVIEW
Argentina is the second largest country in Latin America by size. It benefits from rich natural resources, a highly literate population, an
export-oriented agricultural sector, and a diversified industrial base. During 2012, economic growth in Argentina was just under 2%.
Prospects for the region economically in 2013 appear brighter due to the high price of grain and the continued strong growth
prospects for Brazil. The Argentine government has pursued a strict policy with regards to the exchange rate of its currency, even
going so far as to ask for stated use of the dollars that are purchased. Occupiers will find it challenging to conduct business in
Argentina and four of the above five risk rankings for the country are in the bottom two quartiles within LATAM. While the country
is receiving more than its fair share of foreign investment, its extreme southern location and relatively small population may make
other countries more demographically compelling for occupier investment.
OFFICE MARKET OVERVIEW
Activity across the Argentine office market has been relatively consistent over the last several quarters. Buenos Aires, although
considered a global city, is not prone to the cycle swings of other more dynamic markets. Asking rental rates and office vacancy have
hovered around $30 USD/sqm/m and 10% since 2010. Many multinationals have reduced their footprint in the region and office
vacancy is expected to rise slightly in the coming quarters.
Economic Indicators
Population, thousands 41,164
GDP, US$ millions 475,066
GDP per capita, US$ 11,540
CPI 10
Population Growth % y/y 0.9
FDI, US$ millions 7,006
GDP real % y/y 1.9
Prime Office Rent Q1 2013
(USD/sq. meter/month)
BUENOS AIRES 29
Key Industries
Food & agriculture, consumer
durables, textiles, chemicals, printing,
steel, auto manufacturing
Source: Cushman & Wakefield, Oxford Economics (2012), Rental rate as of Q1 2013
Risk Rankings
Ease of Doing Business Overall Ranking
(Out of 185) 124
Dealing with Construction Permits
(Out of 185) 171
Registering Property
(Out of 185) 135
Corruption Perceptions Ranking
(Out of 174) 102
Political Stability and Absence ofViolence
(100 = Most Stable) 53.77
Source:World Bank & Transparency International (2012)
ARGENTINA
Bottom QuartileThird QuartileTop Quartile
Second Quartile
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latin america
latin america
Economic Indicators
GDP, US$ millions 2,255,038
CPI 5.4
FDI, US$ millions 68.1
GDP real % y/y 0.9
RIO DE JANEIRO
SÃO PAULO
65
61
Key Industries
Power, mining, industrial production,
banking, consumer goods, oil & gas
Risk Rankings
(Out of 185) 130
(Out of 185) 131
(Out of 185) 109
(Out of 174) 69
Although still considered an emerging market, Brazil boasts one of the world’s leading economies by nominal GDP and is the largest
by far in Latin America. According to the World Economic Forum, Brazil was the top country in upward evolution of competitiveness
in 2009, overcoming Russia for the first time and closing the competitiveness gap with India and China. Together with Mexico, Brazil
has been the leader in Latin America in terms of multinational presence. While the country has long attracted the attention of
international banks, Brazil now possesses the second largest industrial sector in the Americas, is making inroads in pharmaceuticals
and life sciences, and has a strong housing sector. Home grown companies are also doing well. Petrobas, an oil & gas refiner, is ranked
number four in the world on the Forbes Global 4000, with 2011 total revenue of $138.0 billion.
Despite the improvements to its infrastructure and the significant capital that continues to pour into the country, many parts of Brazil are still
underdeveloped. Even in the major centers of Rio de Janeiro and São Paulo, neighborhoods can vary widely from one street to the next.
The sheer volume of new construction activity across Brazil far exceeds the new construction levels being posted by any other market
in Latin America. Brazil closed the first quarter with the delivery of new inventory totalling 219,000 sq. meter, up almost 30% over the
same period in 2012. For the balance of the year, inventory delivered in the major cities of São Paulo, Rio de Janeiro, Curitiba, Brasilia,
Salvador, Porto Alegre, Recife and Vitoria will exceed 1.3 million sq. meter, an increase of 62% over 2012 levels. Occupier demand is
expected to keep pace with the level of new construction, as there continues to be strong interest from multinationals seeking to
locate in Brazil and there is a shortage of modern and corporate compatible inventory.
Rental rates across class A markets in Brazil are up year over year. However, the rate of increase does appear to be slowing, as
quarter-over-quarter prime CBD rent is up only 0.3%. That being said, a slowdown in leasing or lower costs for occupiers are not in
anyone’s forecast for the near future. São Paulo boasts one of the highest rents in the global market, with prime office space leasing
for close to 61USD per/sq. meter/month. Brazil is home to a significant number of high-growth oriented companies and according to
IBGE, these companies are employing close to 20,000 more people each year.
BRAZIL
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latin america
latin america
Chile is one of the most stable marketd in LATAM, and one of the most effectively managed countries in the Americas. Chile has the
highest per capita GDP of any country in LATAM and presents one of the lowest risk opportunities for corporate expansion. Chilean
consumers continue to be optimistic abut the country’s prospects, despite what might be going on in other parts of LATAM. The
country is expected to see strong private consumption growth and robust gains in consumer and retail sales in 2013. The country’s
unemployment rate at the beginning of 2012 was 6.1%, the lowest it has been since December 2006. The most critical factor weighing
on economic growth for Chile will be the extent of the slowdown in China and its effect on Chilean exports. Should Chinese growth
in 2013 be stronger than anticipated, the Chilean exports economy will perform more strongly. Chile has one of the lowest inflations
rates in LATAM boosted by the current favorable exchange rates with the peso.
The Santiago office market is one of the smallest in LATAM. While extremely stable, the market witnesses only a handful of
transactions in a given quarter. Rentals rates have remained flat over the last 12-24 months and the ownership in the market is
held by REITS and pension funds, looking for stable and uneven annual returns. Despite the country’s impressive financial
performance, Santiago has not seen widespread occupier interest. Demographically, Chile is one of the slowest growing countries
in LATAM and multinationals seeking to capitalize on strong and increasing consumer demand are currently looking to other
markets for expansion opportunities.
Economic Indicators
CPI 3.0
GDP real % y/y 5.5
SANTIAGO 26
Key Industries
Mining & materials, wood,
wine, fish, textiles
Risk Rankings
(Out of 185) 37
(Out of 185) 84
(Out of 185) 55
(Out of 174) 20
CHILE
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latin america
latin america
Colombia recorded GDP growth of 4.0% in 2012, boosted by its growing service sector base. Forecasts for 2013 indicate that growth
could reach as high as 4.8-5.0%. Much like Peru, the government of Colombia has taken measures to control spending, boost private
consumption, and encourage competition. Although reductions in government spending have been unpopular with some industries, the
economic result has been largely positive. Corporations will find the business climate friendly in Colombia, particularly for US-based
corporations, and the barriers to entry lower than Brazil. In February, thousands of workers in the coffee industry went on strike in
Bogota, citing the need for further government subsidy and support in the wake of falling global commodity prices. While lower
commodity prices have devalued to Colombian Peso, this is expected to lead to an uptick in exports and boost the country’s
competitiveness.
Rental rates in Bogota are up 2.0% year-over-year, despite a near 50% increase in the overall supply to the market. Over the last two
years, net new absorption has outpaced new supply to the market; however, this trend does appear to be ending. While the Colombian
economy will continue to perform well, rental rates are are expected to stabilize as occupiers have reached a critical juncture where
they are weighing the price of occupancy and the necessity of being in the market. Given the slowdown and political unrest in Brazil,
and the lack of alternative space, it is expected that occupiers will continue to show strong interest in Colombia.
Economic Indicators
CPI 3.2
GDP real % y/y 4.0
BOGOTA 34
Key Industries Coffee, coal, petroleum, agriculture
Risk Rankings
(Out of 185) 45
(Out of 185) 27
(Out of 185) 52
(Out of 174) 94
COLOMBIA
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latin america
latin america
Mexico benefits from being the closest emerging economy to the United States and it has made great strides over the last five years
to become a more open and transparent country. Indeed, The World Bank gives Mexico an EODB ranking of 48 out of 185, placing it
in the top quartile for the Americas region. The election of President Enrique Pena Nieto has given hope to a potential decreases in
crime and corruption, as well as a more disciplined government with respect to trade and finance. Drug trafficking is a significant
barrier to economic growth in Mexico. According to Business Monitor International (BMI), Mexico’s continued “crime and drug
problem pose the biggest obstacle to growing the economy”. Drug cartels continue to escalate violence, even in previously peaceful
areas. This has bolstered the opinion that Mexico is an insecure nation. Despite this issue, a reform agenda is underway and
corporations continue to show interest in tapping into the nation’s key strengths—its manufacturing expertise, natural resources, and
various production capabilities. At the end of the first quarter of 2013, unemployment in Mexico stood at 5.8%, 50 basis points below
the same period one year earlier. GDP growth, although moderating due to a slowdown in global manufacturing, is still expected to
be above 3% by the end of the year.
Property market dynamics are improving in Mexico’s main market of Mexico City. Leasing activity in the first quarter increased
almost 15% from the comparable period in 2012, with the central business district witnessing the bulk of demand. Total leases signed
in the first quarter of 125,787 sq. meter represent the largest first quarter leasing number posted since 2008. Active occupiers in the
market include electronic and manufacturing distributor Samsung Electronics, international law firm Jones Day, India-based
technology and business consulting firm Infosys, and Boston Consulting Group. Outside of Mexico City, automotive lighting and
electronics manufacturer HELLA has started construction on a new 100 million USD facility in Guanajuato, providing an optimistic
outlook for supply manufacturing.
Economic Indicators
GDP, US$ millions 1,177,489
CPI 4.1
GDP real % y/y 3.9
MEXICO CITY 19.70
Key Industries
Oil & gas, manufacturing,
production, distribution
Risk Rankings
(Out of 185) 48
(Out of 185) 36
(Out of 185) 141
(Out of 174) 105
MEXICO
Bottom QuartileThird QuartileSecond QuartileTop Quartile
its respective region. The rankings are as follows: GLOBAL
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latin america
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Peru has rapidly made it to the top of the list for occupiers looking to expand in South America. The country’s business friendly
government has opened-up trade and supported foreign and domestic corporate expansion. The Peruvian economy is expected to
grow by 6.5% in 2013 on the back of the countries strengths in mining, services, construction and trade. This is up from 6.3%
growth in GDP recorded in 2012. Peru’s government has inceased trade with North America (i.e., the United States and Canada),
and the economy has benefitted from decreased exposure to the prolonged economic malaise in EMEA. Although small, the
country has strengthening demographics, willingness to be transparent and recent strong economic performance has made Peru
and force in the LATAM economy.
Peru’s main office market is the country’s capital, Lima. The first quarter of 2013 saw Lima introduce new supply in its central
business district. The recent unrest in Brazil has benefitted the occupier market in Peru. As companies reassess their commitment to
São Paulo and Buenos Aires, they are looking to Peru’s governmentr. Asking rents in Lima hover around the $19 per sq.meter/month,
up almost 3% year-over-year. Rent growth is expected to continue over the next twelve months, even as the market introduces new
supply. In 2012, Lima saw 109,000 sq. meter of new supply hit the market, the most in the last six years. The primary submarket is San
Isidro, which has seen the bulk of occupier demand and absorption.
Economic Indicators
CPI 3.7
GDP real % y/y 6.3
LIMA 19
Key Industries Services, manufacturing, extraction
Risk Rankings
(Out of 185) 43
(Out of 185) 86
(Out of 185) 19
(Out of 174) 83
PERU
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latin america
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Venezuela is one of the more difficult countries to in which to conduct business in LATAM. Long ruled by President Hugo Chavez, who
died in March 2013, Venezuela has pursued strong government interventionist policies and it is widely believed that the new
government under a President Maduro will continue to follow Chavez’s social spending agenda. In February of this year the government
devalued the Bolivar by adjusting the official exchange rate of the currency. Government intervention in all aspects of fiscal, monetary
and business spending is only expected to increase. In late February, the government issued a 72-hour closure notice for Spanish-based
retailer Zara, citing the company’s increase in retail prices as the reason for closure. Occupiers will find it extremely challenging to
operate in this type of environment. Venezuela holds a World Bank Ease of Doing business ranking of 180 out of 185, making it one of
the most difficult nations globally for foreign expansion and foreign operated businesses. The country also ranks 165 out of 174 for
corruption. Currently, inflation is running in the low 20% range, which significantly cramps consumer spending, making it even less
compelling from an investment and occupancy perspective. All this being said, Venezuela has some of the largest oil reserves in the
world and offers significant opportunity for multinationals the oil, energy metals and mining.
Caracas is the main office market in Venezuela and it is mostly dependant on foreign occupiers in the oil and gas industry. There is little
new office construction in Caracas and the available inventory for occupiers seeking space in the market is thin. Prime rental rates can
range from a low of 44-50USD per sq. meter/month/year to as high as 87USD per sq. meter/year.
Economic Indicators
CPI 21.1
GDP real % y/y 5.6
Caracas 46
Key Industries
Oil, steel, aluminium,
cement, manufacturing
Risk Rankings
(Out of 185) 180
(Out of 185) 109
(Out of 185) 90
(Out of 174) 165
VenezuEla
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Navigating
EMERGING Markets
The past five to ten years have seen the emerging markets of Africa and the Middle East (AME)
come to the fore in terms of future development and interest. While many of these markets
have already seen a wave of multinational corporations establish a presence in recent years, the
progression of infrastructure and transparency improvements have further opened up these
countries to receiving new business.
Occupancy risks within parts of AME are arguably higher than in any other part of the world.
A number of countries suffer from high levels of corruption, poor security, inadequate
infrastructure and a lack of transparency. While these issues pose important and restrictive
barriers to entry, how AME develops over the next five years will be a critical factor in
shaping global economic growth. As can be seen from the chart below, a majority of these
nations are growing economically, despite their risks. The key for multinationals will be how
to harness the opportunities that exist in the region, while simultaneously protecting the
business from downside risk.
Below is a ranking of the key AME countries covered in this report according to their GDP
ECONOMIC GROWTH – AME
No. Country
% Change
in GDP No. Country
% Change
in GDP
1. COTE D’IVOIRE 8.1 13. ZIMBABWE 4.5
2. ANGOLA 8.0 14. KENYA 4.3
3. ZAMBIA 7.3 15. TUNISIA 4.1
4. DEM REP OF CONGO 7.2 16. SENEGAL 3.4
5. GHANA 7.1 17. BAHRAIN 3.4
6. SAUDI ARABIA 6.8 18. UNITEDARAB EMIRATES 3.3
7 TANZANIA 6.6 19. MOROCCO 2.7
8. NIGERIA 6.5 20. JORDAN 2.7
9. BOTSWANA 6.1 21. ALGERIA 2.5
10 QATAR 6.0 22. SOUTH AFRICA 2.5
11. OMAN 5.5 23. EGYPT 2.2
12. UGANDA 4.5 24. LEBANON 1.0
The risks of locating in
markets across Africa
and the Middle East
are greater than in any
other part of the world.
However, the potential
business opportunities
are equally as great.
GLOBAL
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Navigating
EMERGING Markets
There is a discernible difference between the office locations of Africa and the Middle East, with
most of the countries in the Middle East and South Africa having relatively transparent markets.
The majority of African nations are rapidly developing and markets may consist of only a handful
of buildings in some instances, others can suffer from a lack of adequate supply and a lack of
responsive ownership.
Corporate occupiers are drawn to Africa and the Middle East for a variety of reasons, including
mineral wealth, oil, or an expanding middle class. The characteristics of these markets results in
situations where Luanda, the capital of Angola, is the most expensive location within the region.
The combination of significant demand from the extractive sector, and a lack of suitable quality
space has resulted in rents in Angola being some of the highest in the world. Furthermore,
markets in Nigeria have continued to expand due to notable domestic demand from a variety of
sectors to becoming the more expensive office locations in the region.
Below is a ranking of the top ten AME cities in this report according to rental rates.
PRIME OFFICE RENT
1. LUANDA Angola 120 Stable/Declining
2. LAGOS Nigeria 85 Stable
3. ABUJA Nigeria 65 Stable
4. DOHA Qatar 60 Stable
5. DUBAI UAE 45 Stable/Accelerating
6. ALGIERS Algeria 45 Stable
7. KINSHASA Democratic Republic of Congo 45 Stable
8. ABU DHABI UAE 41 Stable
9. CAIRO Egypt 40 Stable/Declining
10. ACCRA Ghana 40 Stable
GLOBAL
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Navigating
EMERGING Markets
Morocco
Algeria
Tunisia
Libya
Egypt
Lebanon
Saudi
Arabia
Oman
Jordan
United Arab
Emirates
Qatar
Bahrain
Senegal
CÔTE
D’IVOIRE
Ghana
Nigeria
DR Congo
Kenya
Uganda
Tanzania
Zambia
Zimbabwe
Botswana
Angola
South
Africa
Latin America
Asia Pacific
Global

africa & the middle east
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Algeria has historically maintained a strong reliance on hydrocarbon and oil exports, although the government has taken steps to
diversify the economy as a way to boost foreign direct investment. Additionally, a few large-scale infrastructure projects are now
underway in hopes to stimulate international investment interest even further, with projects including the construction of new roads
and railway improvement. Algeria’s GDP growth has been positive over the past few years, with 2011 seeing a growth rate of 2.6%.
This was largely driven by the construction and public sectors as well as increased internal demand. However, recently Algeria has
struggled to stimulate economic expansion, as the slowdown within Europe as well as the protests of early 2011 have both hampered
financial services and delayed any planned infrastructure development. That said, going forward, the anticipated high price of oil should
help to sustain further economic growth in the medium- to long term. Furthermore, the next few years will see an intensification of
political, economic and social reform in response to pressing social demand, with changes intended to both strengthen the democratic
process and improve living conditions.
The primary office submarkets within Algiers are Hydra, Pins Maritime, and Bab Ezzouar, with the former reaching the southern areas
of the city centre and the latter two markets located close to the main international airport. In particular, Bab Ezzour’s high-quality
infrastructure and building availability as well as its proximity to the airport have seen its prominence as a business centre emerge,
while Pins Maritime is home to the newly completed Algeria Business Centre. However, as a whole the market suffers from an
oversupply, exacerbated by several developments with large floorplates that are in progress or near completion. Indeed, with this
large amount of new construction – particularly in the Hydra and Pins Maritime submarkets – rental levels have eased under the
pressure of high availability. Consequently, future market demand is less likely to drive from new entrants to the market but more
from consolidations from existing companies into better-quality space. Traffic congestion also remains a concern within Algiers’s city
centre, which has seen prime or high-quality developments targeted in the more suburban areas of the city.
Economic Indicators
CPI 8.9
GDP real % y/y 2.5
(USD/sq. meter/year)
ALGIERS (Asking Rent) 540
Key Industries
Petroleum, natural gas, light
industries, mining, food processing
Risk Rankings
(Out of 185) 152
(Out of 185) 138
(Out of 185) 172
(Out of 174) 105
C&W ranked the economic indicators and risk factors in each region to showcase how each country ranks
within its respective region. The rankings are as follows:
THE PEOPLES DEMOCRATIC REPUBLIC OF ALGERIA
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Angola’s economy is heavily dependent on the oil industry. As a member of OPEC since 2006, this sector accounts for over half of the
country’s GDP. Furthermore, Angola has sustained multiple years of positive GDP growth since 2010, bolstered primarily by rising oil
prices as well as strong expansion in non-oil related industries. Angola’s oil production is expected to continue unabated amidst climbing
oil prices, and consequently Angola’s economy is expected to go from strength to strength. Another important component of Angola’s
economy is the diamond industry: the country remains one of the largest producers of rough diamonds in the world. Much like the oil
industry, diamond and other commodity production is expected to see prices continue to rise for the foreseeable future, which not only
will fuel Angola’s economic development but will ensure the extractive industries remain the largest constituents of the local economy.
That said, like many other African nations, concerns over corruption and inadequate legislation prevent increased investment activity
within Angola, and these issues are expected to remain pertinent barriers to greater investment interest in the long term.
Angola’s major economic centre and thus primary office market is within Luanda, with the Marginal and developing Luanda Sul submarkets
serving as the prime office areas of the city. Angola is well known for its high-profile oil and diamond industries, which have bolstered an
increasing number of international businesses establishing a presence within Luanda, particularly from the banking and energy sectors.
Recent years saw Luanda characterised by a lack of high-quality supply amidst robust demand, particularly from prominent extractive
companies, which drove rents to significant levels. This made Angola not only the most expensive office market in Africa but a contender
to some of the most expensive global office locations. However, this year has seen early signs of waning growth, a consequence of the
substantial office and infrastructure development that followed the demand boom. It is now anticipated that rental expansion will begin to
abate by the second half of 2013. In terms of supply levels, office stock in Luanda is estimated to be around 850,000 sq. meter with the
majority of space concentrated in the city centre. Vacancy is expected to exceed 8% as the year progresses.
Economic Indicators
CPI 10.3
FDI, US$ millions N/A
GDP real % y/y 8.0
LUANDA (Asking Rent) 1,440
Key Industries
Petroleum and oil, diamonds,
iron ore, uranium, gold, cements
Risk Rankings
(Out of 185) 172
(Out of 185) 124
(Out of 185) 131
(Out of 174) 157
THE REPUBLIC OF ANGOLA
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The perceived political unrest in Bahrain over the last few years has caused apprehension in relation to international firms from
relocating to the Island. At the current time, Dhaka has benefited from this perception, as companies that are looking to establish a
Middle East presence are choosing the Emirates over Bahrain. The economy is based primarily around the oil & gas sector and it remains
the principal constituent of GDP growth with companies such as Bapco and Tatweer prominent. The well regulated banking sector
continues to underline the Kingdom’s commitment to ensuring Bahrain remains a business friendly location, and also supports
diversification of the domestic economy. Consequently, some of the more prominent multinational occupiers are from the banking and
financial services sector, such as BNP Paribas, KPMG, and Ernst & Young. An ongoing concern and a factor in the shift in demand from
the Diplomatic Area to the Al Seef District is in part due to the congestion and lack of parking in the old CBD. Therefore, one of the key
long term infrastructure aims will be to try to alleviate the congestion within Manama and improve the attractiveness of the old CBD.
Within the capital Manama, the last three years have seen a shift in demand away from the Diplomatic Area, the historical commercial
and financial district on the Island, toward the Al Seef District, which is establishing itself as the premier commercial hub. Since the
beginning of 2009, the market has been characterised by an oversupply of space. During this time, demand has fallen due to the
continued global financial downturn and perceived political unrest within the Kingdom of Bahrain. This has resulted in four years of
successive falls in rental rates. However, it is felt that rental rates have now bottomed out although they are expected to remain
stable through to the end of 2013. The outlook for 2013 remains more positive than previous years, although continued high rates of
supply will mean that rental rates are unlikely to rise. The majority of demand will be from smaller firms looking for fitted out office
space in high profile, easily accessible areas, with ample parking. Many of these smaller firms represent an rise in internal movement
for established companies, as opposed to new firms entering the Bahraini market. Larger requirements will predominantly be coming
from government entities, as was the case in previous years. Additionally, large, international firms who signed lease agreements in
the landmark buildings at the height of the market, now have their leases coming to an end and they are looking to relocate to the
much sought after Seef District, which offers much more competitive rates.
Economic Indicators
CPI 2.8
FDI, US$ millions 913
GDP real % y/y 3.4
(BHD/sq. meter/month)
MANAMA – FINANCIAL HARBOUR
(Asking rent) 8
Key Industries
Banking, oil and gas,
aluminium smelting, shipping
Risk Rankings
(Out of 185) 42
(Out of 185) 7
(Out of 185) 29
(Out of 174) 53
THE KINGDOM OF BAHRAIN
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The mining and agriculture industries are the main constituents of Botswana’s economy, where mining – particularly of diamonds
and, to a lesser extent, copper – comprises the majority of resource-based income. On the other hand, the agricultural sector
provides the greatest employment for the country. Botswana stands as one of the most economically viable markets within Africa
and is firmly established as a middle-income country. The country has seen steady economic expansion over the past few years, with
growth rates forecast to steadily rise in 2012 and 2013. Going forward, Botswana’s economy is anticipated to see further positive
growth, supported by the mining sector. Further, enhanced growth may come from the potential opportunity to develop the copper
and uranium extractive industries. Botswana’s inflation rate at December 2011 stood at a high 9.2%, a figure well above the target
range set by the Bank of Botswana. Nevertheless, the rate came down in 2012 and is expected to see further easing in 2013, largely
as a result of subdued demand and thus output in the mining industry as well as reduced public expenditure.
Botswana’s primary office markets are the capital Gaborone and, to a lesser extent, Francistown. In Gaborone, significant
developments are underway that are anticipated, once completed, to change the face of the city’s office market. The delivery of
multiple large-scale projects – such as the Fairscape Precinct – is expected to see the creation of a new CBD area in the heart of
the city and significantly expand the availability of high-quality office supply to unprecedented amounts. With this wide choice of
modern, centrally located office buildings, occupier demand is anticipated to come under increasing pressure. This is exacerbated
further by the large amount of speculative development included in this great wealth of construction activity. As a result, rental
growth in Gaborone is expected to wane as more space is delivered onto market. This comes at a time when governmental and
other public sector occupiers – the current drivers of occupier demand – have been forced to freeze requirements in light of
austerity measures. Furthermore, this rapid increase in high-quality space could instigate a two tier market, with secondary space
struggling to attract occupier interest.
Economic Indicators
CPI 7.5
GDP real % y/y 6.1
GABORONE (Asking Rent) 198
Key Industries
Diamond mining, minerals,
agriculture, livestock, tourism, textiles
Risk Rankings
(Out of 185) 59
(Out of 185) 132
(Out of 185) 51
(Out of 174) 30
THE REPUBLIC OF BOTSWANA
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The Côte D’Ivoire saw an end to its civil war in 2011, which left a fragile political environment following the election of a coalition
government. However, stability has ever since been slowly recovering, and consequently the economy saw a slight improvement in
2012. Indeed, last year saw a 8.1% rise in GDP, albeit this rate was coming from a low base in 2011. The economy remains dominated
by the agricultural sector – most notably cocoa production, which continues to employ a large percentage of the workforce within
Côte D’Ivoire. However, oil and cocoa production remain the key constituents of the economy in terms of export revenues, with oil
extraction expected to rise over the next few years. That said, the number of multinational occupiers remains low, largely a result of
the civil war in 2011, with the majority of businesses based in the principal commercial centre, Abidjan. Although political tensions are
easing, many companies are awaiting prolonged stability before looking to expand or resume operations within the Côte D’Ivoire.
The outlook for the economy will depend largely on an extended period of political stability that will increase business confidence
both domestically and in terms of international investment. With agriculture accounting for the majority of activity within the labour
market, it is clear that the economy needs to diversify. It is hoped that oil production may create the important stimulus to enable
this change over the next few years.
Although the capital city in Côte D’Ivoire is Yamoussoukro, the principal business and commercial centre of Côte D’Ivoire is the port
city of Abidjan. The Plateau area of the city is the key location for most multinational occupiers as well as for many embassies and
consulates that have remained in Abidjan. However, a number of occupiers are looking for space in quieter, less congested parts of
the city, which are both major concerns within the Plateau submarket. As a result, the Cocody and Zone 4 parts of the city have
gained momentum as alternative business locations, with a number of occupiers choosing to relocate to these areas. That said, overall
demand levels are low, especially from multinational occupiers – a consequence of the ongoing political uncertainty within Côte
D’Ivoire. Indeed, as many international tenants have been deterred from operating within Abidjan market: domestic companies are
the most active within the market. This has had a stalling effect on the office development pipeline, which was already relatively
limited before the conflict in 2011. Nevertheless, a few of the infrastructure and administrative buildings in the large scale Prevoyance
scheme have reached completion, which has added a good deal of Grade A space onto market.
Economic Indicators
CPI 2.1
GDP real % y/y 8.1
ABIDJAN (Asking Rent) 264
Key Industries
Agriculture, food stuffs, oil
refining, wood products, textiles
Risk Rankings
(Out of 185) 177
(Out of 185) 169
(Out of 185) 159
(Out of 174) 130
THE REPUBLIC OF CÔTE D’IVOIRE
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The Democratic Republic of the Congo (DRC) is recovering slowly from many years of social, economic and industrial upheaval.
Although it is a particularly rich country in terms of potential mineral wealth, it is also one of the poorest countries on the continent.
DRC is also considered one of the most difficult locations in which to undertake business. Consequently, the presence of
multinational occupiers is fairly low for a country of its size. However, there are a number of foreign mining companies active within
the DRC, including Xstrata plc and Banro Resources Corporation. Indeed, the vast majority of export income originates from the
mining industry, and despite a 7.2% rise in GDP in 2012, the economy remains highly reliant on the fluctuations of global commodity
prices. These revenues from mining have helped to try and bring improvements to infrastructure quality and economic growth, but
ongoing political uncertainty has delayed or postponed a number of these crucial schemes. For example, the DRC faces a major
challenge in considerations such as youth employment. More than 70% of those aged 15 to 24 have no jobs, with urban areas
particularly affected.
The principal office market within the DRC is the capital city and commercial centre, Kinshasa. The CBD in Kinshasa is located in the
Gombe part of the city, with the key office submarket found along the Boulevard du 30 Juin. However, other parts of the city have
begun to witness increasing occupier demand on the back of a limited availability of modern space and poor infrastructure quality
within the traditional CBD. Furthermore, although modern and high quality space within the city is scarce, this is not an issue for
demand levels, which are considerably low due to the lack of multinational occupiers active within the market. Indeed, demand is
primarily propelled by domestic occupiers. Any demand is largely derived from the developing telecommunications, oil and mining
sectors, and these industries are anticipated to continue driving tenant interest over the next year or so. Although demand is weak,
the lack of high quality supply has helped to sustain higher rental levels. Concerning development, there are a number of new city
centre projects currently under construction, including Gare Centrale by Rakeen Congo. This scheme will be a mixed-use
development comprising offices and apartments in two twin towers as well as incorporating retail space and underground parking.
Economic Indicators
GDP per capita, US$ 274
CPI 10.9
FDI, US$ millions N/A
GDP real % y/y 7.2
KINSHASA (Asking Rent) 540
Key Industries
Mining, oil refining, mineral
processing, agriculture, cement, textiles
Risk Rankings
(Out of 185) 181
(Out of 185) 81
(Out of 185) 106
(Out of 174) 144
THE DEMOCRATIC REPUBLIC OF THE CONGO
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Egypt has suffered from ongoing political uncertainty over the past few years, and this has had a halting effect on the Egyptian economy.
Indeed, GDP growth has eased and foreign direct investment (FDI) levels are noticeably reduced as both occupiers and investors alike
remain cautious to enter the fragile Egyptian market. The outlook for the economy is also negative, stemming from the election due
towards the end of this year as well as the lack of conclusion reached with the IMF regarding an important loan agreement, both of
which are anticipated to hamper economic growth. This loan is particularly crucial for Egypt as, when finalised, it is expected to boost
the domestic economy and help to attract further assistance. Furthermore, one of the largest and most important constituents of the
economy, tourism, has witnessed declining visitor numbers of the past year or so. Consequently, important revenues and employment
from this sector have been negatively affected. That said, there remain a number of multinational occupiers within Cairo, primarily in the
manufacturing sector (transport and textiles) which is still the most prominent within Egypt.
Cairo is by far the largest city in Egypt and is the key location for business generation and operations. In addition, as the capital city,
virtually all government functions and administration are undertaken here. As a result of the ongoing political protests in the centre of
Cairo, the trend of most occupiers to look toward the more peripheral areas of the city has continued into this year. Within central
Cairo, the main office markets are mostly located within Downtown Cairo, where the Nile City development provides a significant
proportion of space within the submarket. However, it is locations such as New Cairo, 6th October City, and Pyramid Heights in
particular that continue to attract occupier attention. These areas can offer a higher quality of space than the majority of buildings within
Downtown Cairo and also enhanced security. Despite the political protests over the past few years, demand has largely held up, although
rents in the peripheral areas of the city remain higher than those in the city centre. However – and also as a result of the recent unrest in
the city centre – rental levels have fluctuated from 2010 onwards but have settled at around 40USD/sq. meter/month.
Economic Indicators
CPI 7.1
GDP real % y/y 2.2
CAIRO (Asking Rent) 480
Key Industries
Textiles, agriculture, tourism, chemicals,
pharmaceuticals, manufacturing,
construction, cement, metals
Risk Rankings
(Out of 185) 109
(Out of 185) 165
(Out of 185) 95
(Out of 174) 118
THE ARAB REPUBLIC OF EGYPT
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Ghana is seen as a stable business-friendly location within Africa, bolstered by its strong economic growth including a 7% rise in GDP
in 2012. Consequently, it remains an attractive location for many international occupiers. Ghana is traditionally known for its cocoa
production, and this industry continues to be a important constituent of the economy. However, the mining sector and an emergent
oil production are driving growth at the moment, with multinational companies such as Alcoa and Chevron active within the market.
Another developing sector within Ghana is telecommunications, where companies like Vodafone are already present. Economic
growth is expected to be driven by these key sectors in the future as the government looks to keep the economy moving forward by
focusing on industrial development. Although agriculture accounts for a large proportion of the workforce, industries such as mining,
oil production and telecommunications are anticipated to become more prominent in the future. It is hoped that this will enable the
government to improve infrastructure levels across the country, which should in turn help improve per capita GDP and sustain
Ghana’s position as one of the more business friendly locations within Africa.
The capital city of Ghana, Accra, serves as both the commercial and administrative centre of the country. Accra possesses a well
developed office market, with the CBD concentrated around the city’s main high street. However, this location suffers from a poor
level of infrastructure as well as particularly severe traffic congestion. There remains a lack of modern, high quality space within the
CBD, and consequently, a number of occupiers are looking at the more decentralised parts of Accra – such as close to the airport –
in order to secure space. As a result, schemes such as One Airport Square are being developed with an estimated 30,000 sq. meter
of high quality space expected to come onto market within the next 24 months. Going forward it is anticipated that further office
development will take place in the more decentralised parts of the city in preference to the traditional CBD. Demand from occupiers
for high quality space has increased over the past year or so, and this has resulted in sustained rises in rental levels. Both domestic
and international occupiers have been active from a number of industries – not just from the more traditional cocoa and mining
businesses but, most significantly, from the financial services sector and the rapidly developing telecommunications sector.
Economic Indicators
CPI 9.2
GDP real % y/y 7.1
ACCRA (Asking Rent) 480
Key Industries
Cocoa production, mining, lumber,
light manufacturing, aluminium smelting,
cement, commercial ship building
Risk Rankings
(Out of 185) 64
(Out of 185) 162
(Out of 185) 45
(Out of 174) 64
THE REPUBLIC OF GHANA
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Jordan is one of the smaller economies within the Middle East, where GDP has grown by just 2.7% in 2012. Output from the economy’s
main constituents, including agriculture and phosphate mining, decreased over the year due to disruption from transport networks and
labour disputes. Multinational occupiers are present within Jordan mostly in the financial services, pharmaceutical, and IT sectors, with
companies such as Microsoft, Hewlett Packard, and Ericsson operating domestically. However, the regional political unrest has affected
economic growth, with tourism revenues noticeably reduced and oil and gas pipelines sporadically interrupted. More specifically, the civil
conflict in Syria has increased the strain on both the domestic economy and infrastructure, with an estimated 500,000 refugees currently
residing within Jordan. Although the outlook for the economy is more positive in the years ahead, this is largely a result of an anticipated
recovery in the global economy supporting a rise in exports. Jordan possesses an expanding manufacturing sector, and with some mineral
wealth available (predominately phosphates), this is anticipated to be the main source of the country’s revenues. However, the risk
remains that the conflict in neighbouring Syria may escalate further or may even erupt within Jordan itself, and any sustained recovery in
Jordan is dependent on the subsequent easing of these regional uncertainties.
Since the end of the conflict in Iraq, the office market in Jordan – principally the capital city and business hub, Amman – has witnessed
a construction boom. Developers have built space with the expectation that companies will relocate from Iraq and other affected
locations to Amman, Jordan’s key office market. Within Amman, the principal office submarkets are located in the 5th and 6th Circles
and include the Sweifieh, Chmeissani, Mecca Street and Deir Ghabar districts. A number of corporate occupiers are located in these
areas as well as the more prominent financial districts of Shmeisani and Abdali. Although Amman has experienced the development
boom, Grade A space remains relatively scarce and the market is characterised by an oversupply of Grade B space. However, the
growth in the development pipeline has resulted in the increased availability of larger floor-plates (circa 1,500 sq. meter). which were
previously limited in availability. Furthermore, the recent social and political upheaval within Syria has supported significant demand
from relatively wealthy Syrian migrants seeking residential premises. As a result, some of the abundant Grade B space is being
transformed into residential space in response to the soaring residential demand levels. This high amount of supply conversion may
also help to somewhat alleviate the oversupply of Grade B stock available in the market.
Economic Indicators
CPI 4.7
GDP real % y/y 2.7
AMMAN (Asking Rent) 190
Key Industries
Petroleum, petrochemicals, textiles,
furniture, food processing, fertilizers
Risk Rankings
(Out of 185) 106
(Out of 185) 102
(Out of 185) 102
(Out of 174) 58
THE HASHEMITE KINGDOM OF JORDAN
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The Kenyan economy has been slowly but steadily advancing in recent years, leading to a GDP growth of over 4% in 2012. The
economy is dominated by agriculture and tourism, with the agricultural sector employing the vast majority of the Kenyan workforce.
However, growth in the banking and telecommunications industries has expanded over the past few years and may help to diversify
the economy away its dependence on the traditional industries. For example, recent multinational entrants to Kenya include Google
and Cisco Systems, with the capital city, Nairobi, the most sought after location. Inflation and youth unemployment will remain the
primary short term concerns within the economy, as food prices may rise further if agricultural output fluctuates. Because agriculture
is heavily dependent on harvest yields and global commodity prices – which can often be unstable – the government is looking
towards financial services and telecommunications to move the economy forwards. In the longer term, much-needed infrastructural
improvements, as well as the continuing famine in the north, may prove to be major concerns for both business confidence and the
improvement of living standards, particularly if resolutions are not found quickly.
Nairobi is both the capital city and commercial centre of Kenya. It is also one of the more mature office markets within Africa, with
an established CBD and a good supply of modern space. Nairobi is increasingly sought after as a destination for multinational
occupiers and is growing in notability as one of Sub Saharan Africa’s key commercial hubs. Indeed, business prominence has supported
a large number of multinational companies from a variety of sectors establishing a presence in Nairobi, mostly as a base for their east
African operations. Away from the CBD, Nairobi’s key office locations are Waiyaki Way, Riverside Drive, Mombasa Road, Upperhill,
and Gigiri. Tenant preference is for modern high quality space in the core submarkets, particularly in the submarkets away from the
CBD which continues to suffer from severe traffic congestion. Indeed, recent demand has largely been driven by local tenants
relocating out of the CBD. Office supply in the decentralised submarkets of Nairobi has continued to rise over the past few years,
with approximately half of it located in the Westlands part of the city. The steady development pipeline of prime space is beginning to
keep pace with recent demand levels, and as a result, rents have recently stabilized. With demand levels expected to remain steady
over the next year or so, rents for high quality space should remain under pressure.
Economic Indicators
GDP per capita, US$ 986
CPI 9.4
GDP real % y/y 4.3
NAIROBI (Asking Rent) 180
Key Industries
Tourism, agriculture,
forestry, fishing, financial services
Risk Rankings
(Out of 185) 121
(Out of 185) 45
(Out of 185) 161
(Out of 174) 139
THE REPUBLIC OF KENYA
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Lebanon’s economy has slowed noticeably over the last year or so, with GDP growth slipping to only 1% in 2012 as export levels
declined and tourist numbers were significantly reduced. Political uncertainty within Lebanon has been exacerbated by the ongoing
difficulties within neighbouring Syria, and this has had a halting effect on economic activity. The majority of multinational occupiers
present within Lebanon derive from the banking and financial services sectors, including companies such as HSBC and Standard
Chartered. Other prominent sectors include IT and pharmaceuticals, where multinationals such as Metlife Alico, GE, Ericsson, Nokia,
and Sanofi Aventis are operating within Lebanon. The outlook for the economy remains uncertain, and therefore the expectation is
that GDP growth will remain subdued. Any improvement in the economy is dependent on any noticeable progress in terms of
resolving the political uncertainty within Lebanon – notwithstanding the ongoing conflict in neighbouring Syria, which also currently is
without resolution. However, any long-term recovery is expected to be driven by the dominant construction and banking sectors, as
infrastructure levels need to be improved or redeveloped in order to sustain business activity growth.
The key office market within Lebanon is located in Beirut, the capital city. At the current time, the market is strong, with relatively
high demand for Grade A office space and larger floorplates of a minimum of 1,000 sq. meter. The supply of this space type is most
sought after by multinational occupiers and is largely limited to the Beirut Central District (BCD) where safety and security measures
are implemented for sustained business activity. However, the lack of modern, good quality space within both the BCD and the
suburbs of Beirut combined with consistent occupier demand are together eroding Grade A supply levels. Pre-lets strategies are
becoming paramount for developers and occupiers looking to secure high quality space at relatively competitive rental prices. As a
result, multinational occupiers are starting to relocate to the suburban locations within Beirut in order to reduce rental levels and
find space befitting of their interest. Furthermore, the unstable political situation within the region is increasing the cautious outlook
of many occupiers, with most reluctant to commit to expansion plans or to larger capital-expenditure-based projects. Consequently,
a number of plans are either on hold or the tenant has opted for an annual lease until the disruption eases.
Economic Indicators
CPI 6.6
GDP real % y/y 1.0
BEIRUT (Asking Rent) 450
Key Industries
Banking, tourism, food, agriculture,
textiles, mineral & chemical products
Risk Rankings
(Out of 185) 115
(Out of 185) 172
(Out of 185) 108
(Out of 174) 128
THE REBUBLIC OF LEBANON
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The Libyan economy remains dominated by the oil industry which currently represents 90% of the country’s total budget. Although
the industry experienced a decline in 2011, a swift rebound has resulted in GDP levels recovering appreciably. The quick resumption
in oil production was largely due to the expertise of a number of multinational operators. The recent upturn has also seen companies
such as Shell, Exxon, Total, Repsol, BP, and Occidental establish operations within Libya. Although the political landscape has
dramatically changed over the past two years, public protests and political uncertainty remain significant. However, the quick
recovery in oil production has enabled public finances to improve, and consequently a surplus is accumulating, prompting business
confidence to recover. Furthermore, with oil production expected to return to full capacity around 2014, the government should be
able to use the budget surplus in order to undertake a considerable and rapid infrastructure program, bringing much needed
improvements to ageing networks. This should help to stimulate FDI levels not only from the oil sector but from those companies
that can provide crucial expertise in updating and overhauling large systems and facilities.
After the recent political upheaval within Libya, the country is gradually coming to terms with the post al-Qadhafi regime, although
there still remain periodic episodes of protest and aggression. Concerning Libya’s property market, most of the existing high quality
office buildings are clustered to the west of the Medina and the centre of Tripoli, as well as in the more residential Gargaresh district.
Demand is largely derived from the re-emergent oil sector, which largely re-entered the country following the cessation of the
internal uprising. Therefore, it is primarily energy based companies that have instigated the building of Energy City – a mixed-use
commercial centre specifically for energy companies – on the outskirts of Tripoli, around 70km from the city centre. Regarding office
developments, the Al-Tadamom Twin Towers was completed in 2010, adding over 50,000 sq. meter of office space to the market. It is
the fourth major office high-rise in Tripoli, joining the Al Fateh Tower (now called the Tripoli Tower), Corinthia and Five Towers.
Additionally, the recently completed Burj Al Baher complex has seen impressive occupancy rates, although Tower 69 is still ongoing
and due for completion in the next few year or so.
Economic Indicators
CPI 6.1
GDP real % y/y 104
TRIPOLI (Asking Rent) 480
Key Industries
Oil and gas production, metals,
food processing, textiles, cement
Risk Rankings
(Out of 185) N/A
(Out of 185) N/A
(Out of 185) N/A
(Out of 174) 160
THE STATE OF LIBYA
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