The firm’s Global Market Perspective Report for the fourth quarter of 2013 says that virtually all major markets are recording sales volume growth and the weight of money, combined with an improving lending environment and heightened risk appetite, point to further uplift over the coming year.
It predicts that global markets are on track to surpass US$500 billion for full year of 2013 with a further 10% growth in 2014 and increasing shortages of quality stock means that high structural vacancy is set to persist in the developed markets.
The report also says that office rental growth is expected to gain momentum, increasing from 1% year on year currently to 3.5% in 2014. The top performers are likely to be Jakarta, Tokyo, San Francisco and Dubai and strong demand from the luxury retail sector will boost values in key international retail hubs.
It also points out that liquidity is improving across a broad spectrum of markets and sectors and, barring external shocks, JLL expects that 2014 global sales volumes will be potentially only 20 to 25% lower than the boom years of 2006/2007.
However, global leasing markets are less exuberant, according to the report. While corporate occupier sentiment has improved markedly over the last quarter, companies remain vigilant and sentiment is still prone to external shocks.
Nonetheless, momentum is building in the United State where the office leasing market has the potential to pick up substantial speed in 2014 and 2015, the report says. London, a bellwether market, is also showing renewed dynamism.
Meanwhile, much of Continental Europe and Asia Pacific is still subdued, though leasing activity is expected to gradually improve in both regions.
In local markets, the report found that Australia’s medium term outlook for office markets as well as retail and industrial, is set for a measured recovery, with rental growth strengthening.
According to JLL, the September 2013 quarter was characterised by strong institutional demand, both domestic and offshore, which continues to support core valuations.
JLL also says that on the basis of information on future transactions as well as long term indicators such as residential construction, the September quarter marked the stabilisation of office space demand.
Despite this, however, JLL says vacancy rates will likely remain elevated throughout 2014. The medium term outlook for office markets, as for retail and industrial sectors, however, is for a measured recovery, with rental growth strengthening.
‘Commercial real estate is now being utilised more efficiently, leading us to the view that the upswing in occupier demand is likely to be less pronounced than in previous cycles. Even so, the majority of major leasing markets should be on a more solid footing in 2014,’ the report says.
