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OUTLOOK
2019
Executive
Summary
The coming 12-months will
see a shift in focus for property European Second tier Global Senior living Private rental
investors as they respond to a logistics office markets R&D hubs sector/Multifamily
The Global Cities Yes, the sector is already The likes of Madrid and Tight development The biggest global Where the US has led,
more uncertain global economy very popular with the past Warsaw, where occupier pipelines mean that demographic trend the UK and Europe have
Amsterdam and the rising cost of debt. Liam two years seeing record markets have been slower locations such as Boston, underpins this sector, which followed with burgeoning
investment volumes. However, to hit the expansion the San Francisco Bay is still embryonic in most pipelines of stock
Berlin Bailey, Knight Frank’s Global we believe key markets in phase offer a compelling Area, Amsterdam and markets. While most activity delivered in 2018. For
Beijing Head of Research, sets out ten mainland Europe are set to
benefit from rental growth. We
investment and
development opportunity.
London will deliver strong
future rental growth.
will be in suburban and ex-
urban locations, we believe
2019 we like Amsterdam,
Berlin, Dublin and Madrid
Bengaluru opportunities for the year ahead. favour core markets where the strongest returns will be for their employment
the barriers to entry are high captured by the operators growth and strong
Birmingham (such as Hamburg, Barcelona who deliver a true urban offer economic fundamentals.
Boston and Venlo) but also ultra large in major global centres.
opportunities with good labour
Brisbane pools that can still service
major conurbations.
Delhi
Dubai
Geneva
Hong Kong
make 2019 a challenging year for the
global economy.
We expect a moderate economic
areas for investors in 2019
Jakarta
Contents deceleration in worldwide GDP
6 7 8 9 10
growth, and the change in the economic
Kuala Lumpur
landscape will demand a response from
London property investors.
Los Angeles Executive Summary 02 Higher interest rates and the end of
quantitative easing means we are reaching
Madrid Key Opportunities 03 the end of the ‘everything bubble’. For the
Melbourne past decade it was enough for investors to
Chief Economist’s Outlook 04
Mexico City buy property in major gateway markets
Office Occupier Outlook 08 and the generosity of central banks would
Moscow
help ensure strong returns.
Mumbai Office Capital Markets Outlook 10
The shift towards a more normalised
New York City Industrial & Retail Outlook 12 monetary policy means that investment
Paris strategies will change as investors focus
Prime Office Yields vs on income, asset management, specialist Flexible offices Healthcare Hotels Retail True mixed-use
San Francisco Cost of Finance 14 sectors and development opportunities to Office occupiers from all Western European countries Hotel operators who can The rise of online has turned The retreat of retail from
Seoul secure outperformance as debt costs rise. sectors and of all sizes including the UK, France, leverage technological sentiment against retail CBDs demands a radical
Prime Residential Forecasts 16 are seeking product that Germany, Spain, The innovation, and capitalise and pricing has in many approach to mixed-
Shanghai In this report, we have set out
better aligns real estate Netherlands and the Nordics on data capture will deliver markets moved accordingly. use and place-making
Global Strategies 18 Knight Frank’s view on likely market to their disrupted, fast are expected to lead the way enhanced performance Many good (though not opportunities. The scale
Singapore
performance in 2019 and highlight moving operational reality. in terms of attracting capital and returns. Expect necessarily prime) assets of the issue will mean
Sydney Risk Radar 22 opportunities across commercial and Flexible space with high into healthcare in 2019. The increased investment in with strong fundamentals those developers who can
degrees of customer uniting key factors include London as well as UK and are mispriced. On the basis engage with city authorities
Tokyo residential markets globally. We have
Opportunities Radar 24 service and flexible rapidly ageing populations, European regional centres. of strong fundamentals, we and other stakeholders
considered the outlook for rents, yields, leases will be in demand formalised healthcare are leaning towards retail will win.
Vancouver
Contacts 27 transaction volumes, and have set out our particularly in tech infrastructure, significant warehousing in Australia,
Warsaw thinking on global debt markets and the dominated markets such GDP spend on health and flagship high street shops
as Berlin, London, Boston social care, and increasing in Madrid and Paris, and UK
Washington DC Note: All prices are in US dollars. outlook for property lending. and Singapore. privatisation of the sector. food-stores.
The prime yield compression stage of expected to tighten monetary policy next slow lending to the point of causing a be high in nearly all the key global cities,
Chief
the property investment cycle has either year and beyond. downturn. Policymakers look to curb due to years of constrained development
completed, or is close to the end, in the The risk for the global economy is excess while allowing sustained growth. and lots of pre-letting. A common theme
leading global cities. However, tight that policymakers may hike rates too The Bank of England steadily raised emerging when researching this report was
Economist’s
development pipelines over several years aggressively and derail growth. Moreover, interest rates from 2004 to 2007, but that vacancy rates are falling, partly due to
have created leasing supply crunches, the US is ready for higher rates, but is the commercial property yields hardened. the pipeline issues already mentioned, but
particularly for offices and logistics same true of those economies who peg This was because a buoyant occupier also thanks to rising demand.
Outlook property. This is coinciding with stronger their currencies to the dollar? After all, market, and the resulting rental growth
China’s economy appears to be slowing. gave property investors the confidence
occupier demand. We see the search War for talent
for returns pushing investors up the This creates a double risk for a number of to buy.
nations in the Middle East and Asia who Higher interest rates will cause money More investors will have the confidence
risk curve to pursue refurbishment
now have economies that are significantly to flow into banks, which they can earn to pursue strategies involving rental
and development opportunities; or
exposed to both the US and China. more income on by lending to the wider growth because, in the cities covered
diversifying into the specialist sectors.
The rollercoaster ride for equity and world than purchasing government by this report, so many of the necessary
In the coming years, investors will
“
bond markets are also symptomatic bonds. Under pressure from the finance ingredients for higher rents are in place.
adapt to a world with fewer certainties,
of wider concerns. Geo-political risks director to lend, origination teams Rapid expansion by technology firms and
but plenty of opportunities for those
abound, from the Brexit saga in the UK, coworking operators are a recurring
prepared to be more adventurous. will extend more finance to property
to the trade confrontation between the theme around the world. Typically they
investors in the coming years.
US and China, to fresh storm clouds are seeking high quality, well located
Improving expectations on rental
Volatile markets gathering over Italy. After years of
growth should give more investors the offices, as employers want wow-factor
Jitters over rate rises and When judging the outlook for global
buoyant expansion, the tech sector
We see the search confidence to make leveraged buys, offices that promote staff satisfaction and
faces widespread concerns over the
volatile financial markets property markets in the next few years,
sustainability of its rapid growth. for returns pushing particularly given the supply problems collaborative working.
the forecaster encounters contradictory found across global occupier markets. This reflects the fact that so many
should not deter property
signals. The International Monetary Fund
What will all this mean for real estate investors up the We see this being particularly the case major economies are either at or close
investors from focussing (IMF) is predicting worldwide GDP
in the coming years? risk curve to pursue in the coming years, as financial markets to full employment, creating a battle
on the opportunities in the growth to decelerate from 3.7% in 2018 refurbishment have often over-estimated the pace at among employers for the best workers.
Rate cycle
Global Cities. to 3.5% in 2019. This suggests a year of and development which monetary policy will tighten, while We see wage inflation picking up in 2019,
continued expansion, just at a slightly Often the property world views a rising the property world has under-estimated and alternative ways to retain staff, like
reduced pace. However, financial markets interest rate cycle with too much dread.
opportunities; or how quickly leasing supply is eroding. providing an exciting work environment,
James Roberts are currently volatile and concerned about Rate hikes will increase the cost of diversifying into The temptation to buy vacant properties will appeal more to corporations in
Chief Economist, Knight Frank the outlook, as leading central banks are debt, although no central bank wants to the alternatives .” for a quick refurbishment is likely to this context.
4 5
GLOBAL OUTLOOK 2019
Financial & Business Services Demographics are behind the growing cities in 2018, undaunted by the Trump
employment in the Global Cities staff shortages, and the political backlash presidency and Brexit.
Millions of jobs against immigration across the world Office rental growth forecast in 2019 – the global Top 10
will deepen the problems of occupiers Buildings with beds
trying to recruit talent. If workers struggle
Around the globe, occupier and Melbourne 10.1%
40 to move geographically, the jobs must
go to them, and we see corporations investment demand are adjusting to the
becoming more global, plus venturing changing landscape of how we shop.
into tier two cities looking for staff. That E-commerce has boosted demand for
these locations can potentially offer staff a logistics property, but left many older
better quality of life, through lower house shopping centres with empty units Sydney 8.6%
35
prices and shorter commutes, will add to that can be hard to fill. This is a global
the appeal for firms expanding their phenomenon that requires property
office networks. investors to adapt fast. Developers
Oxford Economics are forecasting are seeking locations for suburban
financial and business services warehouses for local deliveries. Shopping Bengaluru 6.6%
30 centre owners are considering radical
employment in the cities covered by this
report to increase by 2.6 million jobs redevelopment plans to replace some of
between 2019 and 2021. This could mean their floor space with other uses. This has
office demand increases by 287 million moved beyond leisure uses, with hotels
sq ft; the equivalent of more than three and residential property entering the mix. Delhi 6.5%
25 times the office space found in Singapore. This is one reason why the expression
‘buildings with beds’ is rising in popularity
“
Fuelling tech in the real estate world, as the mix of
property uses evolves to reflect societal
Moreover, if workers are in short supply, needs and consumer lifestyles. Buildings
20 companies will use automation, artificial with beds come in many forms, with care
intelligence (AI) and machine learning homes and retirement living reflecting If workers are
to free up people for higher value tasks. in short supply,
millions of jobs
2.6m
security, to the battle to curtail fake news. Singapore 4.8%
0 proactively managed. This will allow the
Overall, we believe there is a investor to remain a step ahead of the rate
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
compelling global case for continued tightening cycle, whose pace we suspect
rental growth across the Global Cities. could be slower than many assume.
Source: Oxford Economics
This is equally true of those locations
Dublin 4.0%
Note: The global cities includes - Amsterdam, Beijing, Bengaluru, Rental growth due to thin development
Berlin, Birmingham, Boston, Brisbane, Delhi, Dubai, Dublin, Frankfurt, increase in jobs forecast by Oxford
Geneva, Hong Kong, Jakarta, Kuala Lumpur, London, Los Angeles, that face the political rollercoaster of pipelines and better-than-expected
Economics in the financial and
Madrid, Melbourne, Mexico City, Mumbai, New York, Paris, San populism, as office rental growth has occupier demand, are now central to the business services employment
Francisco, Seoul, Shanghai, Singapore, Sydney, Tokyo, Vancouver,
Warsaw, Washington DC. The figures are for the Metro area. been in evidence in some US and UK outlook for property investment markets. between 2019 and 2021. Source: Knight Frank, Newmark Knight Frank
Office
Three years to Dec 2021
Occupier
Outlook 10.6% 8.8% 10.7% 2.4% 10.5% 9.8% 15.4% 10.1% 13.2% -1.2% 2.7% 17.1% 17.3%
Boston Birmingham London (City) Paris Amsterdam Frankfurt Berlin Delhi Bengaluru Hong Kong Shanghai Melbourne Sydney
Tightening supply across
the Global Cities is set to
drive rental growth, in many
cases exceeding long-term
average levels. 9.8% 4.6% 11.5% 8.4% 4.6%
Madrid Warsaw Mumbai Singapore Brisbane
Tight supply
Forecast vacancy rate - 2018 vs 2021
8 9
GLOBAL OUTLOOK 2019
Capital
Markets $7.72
5.75%
$21.18
4.25%
$18.34
3.00%
$7.14
3.35%
$9.65
3.25%
$15.97
2.30%
$11.28
4.10%
$3.20
4.90%
$6.53
4.80%
Outlook Boston London Paris Amsterdam Frankfurt Hong Kong Shanghai Melbourne Sydney
$7.89
Change
4.50% from 2018
Source: Knight Frank, Newmark Knight Frank Note: London investment volume figure is Greater London; prime yield is the City of London (part of the CBD).
Seoul
10 11
Madrid 1,266,911,259 1,374,684,705 7
Amsterdam 1,590,231,598 1,302,453,566 8
GLOBAL OUTLOOK 2019
Shanghai 1,315,378,440 820,670,024 9
Brisbane 478,240,133 653,739,349 10
Industrial
Forecast sales volumes 2019 (compared with 2018)
& Retail
Outlook $1.37bn
($1.27bn)
$1.45bn
($1.42bn)
$1.38bn
($1.38bn)
$1.30bn
($1.59bn)
$2.14bn
($3.33bn)
$4.76bn
($5.63bn)
$0.82bn $1.45bn $1.97bn $0.65bn
($1.32bn) ($1.29bn) ($1.59bn) ($0.48bn)
Madrid London Paris Amsterdam Singapore Hong Kong Shanghai Melbourne Sydney Brisbane
Industrial & Logistics The attraction is furthered as a
shift towards automated warehouses
The ongoing e-commerce revolution requires sizeable capital investment by
has fuelled unprecedented occupier and the occupier, pushing them towards
investor demand for industrial and logistic longer leases or, at the very least, more
property. In the digital age, pure-play regular re-gearing of leases. Industrial
e-retailers or e-marketplaces, together with investment will increasingly become a
more traditional (and hence challenged) long-term income play.
bricks and mortar retailers, are busy trying
to create competitive advantage in a fast
changing operational landscape. Retail markets
To do so they increasingly look to
Young, urban, cosmopolitan, high
real estate, with the warehouse, both
growth and progressive – these are the
individually and collectively in the form
common denominators across the ten
of a distribution network or supply chain,
global cities in which we expect retail
being very much in focus. Increased global
investment volumes to be highest in
occupational demand for warehousing
2019. Interestingly, these demographics
has led to similar demand from real estate also lend themselves to e-commerce and
investors with some $130bn invested in online penetration is significantly higher-
global industrial property during 2018, than-average in all of these cities.
according to RCA – a volume some 55% This is proof that an online retailing
above the ten year average. The structural hotbed can still be a magnet for retail
challenge facing the occupier is not real estate investment, with growing
disappearing and hence there will be no recognition that stores increasingly work
let-up in this investor demand across key in harmony with e-commerce, rather than
global markets during 2019 and beyond in conflict. To what degree are investment
(see chart). markets consistent with occupational
ones? Hong Kong, London and New York
“
also feature in the Top 5 most expensive
trading locations globally, while Sydney
ranks in the Top 10 on both measures.
Macro-economic stability and a strong
occupational base obviously remain
central to investment decisions, but not to
the subordination of the very lifeblood of
anything retail-related – consumers.
Increased global San Francisco New York Madrid London Singapore Hong Kong Beijing Shanghai Melbourne Sydney
occupational demand $2.79bn $3.59bn $1.86bn $3.99bn $1.33bn $10.14bn $1.22bn $2.46bn $1.80bn $1.93bn
“
($2.88bn) ($3.69bn) ($1.73bn) ($5.11bn) ($1.77bn) ($10.97bn) ($1.21bn) ($2.32bn) ($1.63bn) ($2.79bn)
for warehousing has led
to similar demand from
real estate investors with
some $130bn invested
in global industrial
Hong Kong, London
property during 2018.” Industrial
and New York all also
55%
Retail
feature in the Top 5
most expensive trading
Change locations globally, while
from 2018 Sydney ranks in the Top
2018 Global industrial property investments
55% above the ten year average
Source: Knight Frank, Newmark Knight Frank
NB: Investment volume data is preliminary 2018 from RCA 2018 figures in brackets 10 on both measures. ”
12 13
GLOBAL OUTLOOK 2019
4.8%
3.3%
4.4%
3.0%
3.0%
4.0%
3.8%
3.8%
4.8%
4.8%
4.8%
4.5%
4.9%
3.3%
3.3%
3.4%
4.3%
3.4%
4.4%
2.3%
2.3%
1.6%
1.6%
1.9%
1.9%
4.1%
4.1%
4.1%
4%
Yields vs Cost
4.9%
Of Finance
3.0%
1.6%
1.4%
2.3%
Knight Frank and Newmark
3.8%
Knight Frank’s debt and finance
experts in New York City and
London comment on the 4.9%
4.0%
market outlook. Knight Frank Finance,
Debt Advisory
4.3%
Despite ongoing political uncertainty,
2.9% European debt markets remain in
% good shape.
“
Senior margins have been squeezed by
4.4% Newmark Knight Frank, heightened competition resulting from
4.5% Debt & Structured Finance an increasing supply of debt providers
Recent equity market volatility have across Europe. In late 2018, one prime
weighed on capital market executions, office deal in London attracted a margin
3.0% as well as both fixed rate CMBS and of 105 bps, the lowest we have seen in
2.9% floating rate CLOs. some time. The UK and Ireland saw
However, we think that the impact senior margin reductions of 25 bps
is ultimately short-lived. Debt players throughout 2018, and Spain (-75 bps)
remain optimistic about capital
4.7% benefitted from a recovering residential
4.3% markets early on in 2019 with cash market, hence renewed interest from
accumulating on the sidelines from lenders who struggled to achieve
patient investors attempting to wait out desired returns in more established
4.1% the volatility. European markets.
While some lenders are using a wait- As political uncertainty grows, swap
5.0%
and-see approach in the short-term, no rates have come down, signalling a
“
major groups have indicated that they reduction in the overall cost of debt.
will rethink their long-term lending In 2019, we expect development 1.3% 1.4%
3.3% strategy. In fact, lenders have continued finance to become more readily In 2019, we expect
3.6% to enter the debt space throughout available, with certain lenders open development finance
2018, with several groups accelerating to providing speculative commercial
their debt platforms with a focus finance (albeit reserved for strong,
to become more
4.8%
on 2019. experienced and well capitalised readily available,
Berlin
Birmingham
While some lenders 4.0% Traditional equity players have sponsors). The European CMBS market 1.4% 0.4% 2.6% 1.6% -1.09% 1.2% 0.3% 0.26% 0.68% 0.62% 2.2% -0.09% 1.03% with certain lenders
are using a wait- found the risk/return profile of the will gain importance for investment open to providing
debt space even more palatable as the banks looking to manage their exposure
and-see approach speculative
Hong Kong
Melbourne
London
Paris
San Francisco
Shanghai
Singapore
Sydney
New York City
Berlin
Birmingham
Beijing
Frankfurt
cycle continues, and have been able to to commercial real estate.
in the short-term, no leverage their own expertise to succeed. On the whole, this year will be a commercial finance
major groups have Overall, despite more entrants to the good time to borrow with both margin (albeit reserved for
indicated that they debt space, lenders remain disciplined and cost of funds reducing, generating
strong, experienced
and have opted to compete on pricing enhanced returns for leveraged buyers.
will rethink long-term instead of offering more leverage or Lenders continue to be selective, but Source: Knight Frank, Newmark Knight Frank, Macrobond. Note: The cost of finance equates to the relevant 10 year swap
and well capitalised
lending strategy.” accepting poor credit. appetite will remain strong. rate, plus an estimated lending margin compiled by Knight Frank and Newmark Knight Frank in early December 2018. sponsors).”
Source: Knight Frank, Newmark Knight Frank, Macrobond. Note: The cost of finance equates to the relevant 10 year swap
1.37 rate, plus an estimated lending margin compiled by Knight Frank and Newmark Knight in early December 2018.
1.44
-0.47
1.57
-1.52
0.89 14 15
1.39
3.0%
VANCOUVER
GLOBAL OUTLOOK 2019
2.0%
LOS ANGELES
6.0%
MIAMI
2.0%
SYDNEY
-5.0% 1.0%
NEW YORK
MELBOURNE
6.0% Prime residential price growth forecast
BERLIN 1.0%
Prime
GENEVA
6.0%
MADRID
Residential
6.0%
Paris
3.0%
Forecasts
Vancouver
1.0%
London
0.0%
New York
Luxury residential price growth is slowing. Global economy in good shape… …and is supporting wealth creation espite higher cost of finance and
D 2.0% 6.0%
Not everywhere, and it is not plunging; this Los Angeles Berlin
Global GDP (%) No. of individuals with $5m+ lower price growth, cross-border
is not 2008, but our Prime Global Cities
capital flows continue to rise
Index, which tracks the movement in prime
prices across 43 cities worldwide, although
Global investment volumes ($) 1.0%
Excluding developments Geneva
still rising, is doing so at its slowest rate since 3.7% 3.7% 3.7% 3.6m 3.7% 3.7% 3.7%
3.6m
2012. The proliferation of property market 3.6% 3.6% 6.0%
regulations, the rising cost of finance, 3.5% 3.5% Madrid
2,000
uncertainty surrounding2.5m Brexit and in 3.3%
2.5m 3.3%
2.3m 2.3m
some markets, a high volume of new prime 2.1m Cross border Domestic Unknown
2.1m
supply, is weighing on prime prices.
2012 More muted growth
2016 2017 is the main
2023 story for 2015 2016 2017 2018 2019 2023 2012 2016 2017 2023 2015 2016 2017 2018 2019 2023
-10.0%
2019 forecast. Of the 15 cities monitored, Hong Hong
Source: IMF World Economic Outlook Oct 2018 Source: Wealth-X
the key European cities of Madrid, Berlin
and Paris, lead our forecast for 2019 with 0.0%
growth of 6%. Still positive, but marginally But the rising cost of finance and more property regulations… Singapore
110 5
as a viable alternative to government bonds. Geneva 1.0%
However, luxury housing has become 4 Melbourne 1.0%
more homogenised over the last decade 90 London 1.0%
which has led to greater synchronicity 3
HONG KONG Singapore 0.0%
when it comes to market cycles. Local
2 New York City 0.0%
policy interventions and economic shifts 70
have the capacity to disrupt these ties but Dubai -2.4%
1
broader macro themes from the rising cost SINGAPORE 0
Mumbai -5.0%
of finance to wealth creation, not to mention 50 0 Hong Kong -10.0%
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
the desire to have a foothold in some of the 2013 2014 2015 2016 2017 2018
Average 1.0%
world’s most transparent and prestigious
neighbourhoods, will keep them in check. Source: Knight Frank *Tracks the movement in prime prices across 43 cities worldwide. Source: RCA Source: Knight Frank
16 17
GLOBAL OUTLOOK 2019
Occupier markets Real estate capital markets for global investment, albeit one that will
see a further evolution in the characteristics
Dr Lee Elliott, Will Matthews, of purchases.
Global Head of Occupier Research Head of Commercial Research
18 19
GLOBAL OUTLOOK 2019
“
Multihousing Student accommodation see investment in Asia-Pacific increasing,
particularly in Australia.
Gráinne Gilmore, Matthew Bowen,
Head of UK Residential Research Partner, Residential Research
Healthcare
Mandip Bhogal, Associate, Healthcare
20 21
GLOBAL OUTLOOK 2019
Risk Brexit
Radar US-China
trade war Rising
interest rates
Tech sector UK politics is presently in an
uncharacteristic period of volatility
22 23
GLOBAL OUTLOOK 2019
Opportunities
Radar Despite the huge focus on
millennials, in many Global Cities,
People in
Coworking has had a
transformational impact on office
markets all over the globe in
2018, and while some markets are
job creation in recent years has in
some locations been faster for the
finance approaching maturity, on a global
level we expect to see continued
older demographics. In the UK, momentum in 2019. Traditional
since January 2017 employment of landlords are rapidly entering the
people aged 50+ has increased by market, while economic uncertainty
4.1%, compared to just 1.3% growth in some regions in 2019 will
for 16-34 year-olds. Ageing societies encourage more occupiers to seek
5G
around the world mean that more flexible office options. Some large
employers are encouraging staff corporations use coworking as a
to delay retirement, or become launch pad for getting staff to work
independent consultants. Those who in new ways.
left the workforce to start families are It will also be interesting to see
now finding more opportunities to how much progress is made on
return to their careers. extending the concept beyond offices.
What are the potential As older age groups account for WeWork already has its offshoots,
a bigger share of the workforce, we namely WeLive (shared housing) and
opportunities emerging now
see retailers and the leisure industry Since the global financial crisis, there WeGrow (education). This could
that could drive new growth in adapting in response. This could has been a surge of money flowing create additional opportunities for
the future? lead to new types of stores and into index-tracking funds. Also, the real estate sector.
entertainment appearing in city more trading decisions are made by
centres, aimed at a more discerning computers. JP Morgan estimate that
James Roberts
clientele with deeper pockets. 60% of US share deals now source
Chief Economist, Knight Frank In May 2018, certain districts of the from passive funds or automated
Qatari city of Doha became the first trading, leaving humans making fewer
At times like the present, when in the world to receive a 5G mobile decisions. However, recent market
“
downside risks are numerous, it is easy telephone service. For most of the volatility could encourage investors
to overlook the fact that there are always world, roll-out is expected to occur in to rethink, as index-trackers follow
upside opportunities. In 2008-2009, 2019 and 2020. 5G will deliver much the markets lower and algorithms
the banking crisis was reaching its faster broadband speeds, provide struggle with volatility.
peak, which dominated our attention. the means by which autonomous Another wave of Consequently, we may see the
However, the digital revolution, sharing vehicles communicate with each the digital revolution financial sector bring more people
economy and the emergence of the other, and facilitate the ‘internet of will maintain growth back into the process, to sense
Chinese consumer, which have led things’ where devices around a home, check the decisions of machines,
economic growth in the last decade, were momentum for office
office or factory interact. and decide when it is time to deviate
also there as overlooked trends. Another wave of the digital
demand in the tech- from index tracking. A movement
This beckons the question: what are revolution will maintain growth oriented Global back to managed funds could see
the germinating opportunities today momentum for office demand in Cities, like Amsterdam, increased demand for office space
that deserve more analysis from the tech-oriented Global Cities, like Berlin, Bengaluru in key financial districts around the
investors? Here are four we believe Amsterdam, Berlin, Bengaluru, and world, like New York City, London
deserve your attention. San Francisco.
and San Francisco.” and Hong Kong.
24 25
GLOBAL OUTLOOK 2019
Contacts
Knight Frank Global Newmark Knight Frank
Research Research
Liam Bailey Jonathan Mazur
Global Head of Research Senior Managing Director
liam.bailey@knightfrank.com National Research
jmazur@ngkf.com
James Roberts
Chief Economist Alexander Paul
james.roberts@knightfrank.com Senior Managing Director
National Research
Sherin Gooi
apaul@ngkf.com
Assistant Economist
sherin.gooi@knightfrank.com
Global Property Services
William Matthews
Andrew Sim
Head of Commercial Research
Capital Markets
william.matthews@knightfrank.com
andrew.sim@knightfrank.com
Dr Lee Elliott
William Beardmore-Gray
Head of Occupier Research
Occupier Services & Commercial Agency
lee.elliott@knighfrank.com
william.beardmore@knightfrank.com
Nicholas Holt
Lord Andrew Hay
Head of Asia-Pacific Research
Residential
nicholas.holt@asia.knightfrank.com
andrew.hay@knightfrank.com
Kate Everett-Allen
Rupert Johnson
Partner Residential Research
Valuation & Advisory
kate.everett-allen@knightfrank.com
rupert.johnson@knightfrank.com
Anthony Duggan
Consultancy
anthony.duggan@knightfrank.com
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properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank LLP to the form and content within which it appears. Knight
Frank LLP is a limited liability partnership registered in England with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a
list of members’ names. This report was compiled and written during November and early December of 2018, based on data and evidence available to Knight Frank LLP at the time. Rents
and investment transaction volumes are in US dollars, but growth rates are at constant exchange rates. Americas rents are grade A average asking, whereas rents in other geographies
are quoted normal prime achieved.
Please note that this report has been published at a time of heightened geo-political and financial markets risks. These risks include the trade confrontation between the US and China,
evidence that the Chinese economy may be slowing, the move towards Brexit in the UK, the Italian government’s budget, volatile equity markets, and the expectation that many leading
developed economies could see rate hikes in the future. A future deterioration in any of these factors could adversely impact the forecasts published in this report.
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