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Opportunities – The Property Qatar’s Transformation Perspective 2 June 2009 From US Credit Crunch to Global Economic Crisis 2 Economic Crisis Synopsis IMMEDIATE IMPACT LONG TERM IMPLICATIONS Fluctuation in commodity prices Fears of a significant global recession Nationalization of Banks Consumer confidence affected Stock markets are taking a plunge Investor pessimism Sharp increase in corporate defaults Weakening of the traditional western corporate leaders Shift from Mature to Emerging markets Stronger emerging market giants from the Middle East and BRIC countries Increasing role for Gulf states on global stage Opportunity for emerging countries to enter new markets and geographies Move to polarized global economy 3 Impact of Financial Crisis on Real Estate Markets Pre-Crisis Post-Crisis Robust Demand Rents Rising Increasingly International Market Cheap & Plentiful Debt More Buyers than Sellers Cap Rates Falling Prime = Secondary Traded Volumes High 4 Middle East Less Impacted World Economic Outlook Q1, 2009 7 GDP Growth (%) 6 5 4 3 2 1 0 2006 2007 World 2008 Adv anced economies 2009 Middle East Source: IMF, Word Economic Outlook, March 2009 5 Stages in Market Maturity Transparency Required Returns (Hurdle Rates) Market Volatility Catalyst Time Growth Cairo Muscat Doha Abu Dhabi Dubai Maturing Core Moscow Shanghai London New York Source: Jones Lang LaSalle – World Winning Cities 2008 6 MENA Transparency Highly Transparent Tier 1 Transparent Tier 2 Semi-Transparent Tier 3 Low-Transparent Tier 4 Opaque Tier 5 Dubai Bahrain Abu Dhabi Saudi Arabia, Morocco, Egypt Oman, Qatar, Kuwait Pakistan, UAE (Other Emirates) Sudan, Algeria, Syria 7 Investor Sentiment – Global Asia Pacific 26% North America 10% South America 8% Eastern Europe 3% Western Europe 7% Africa 10% Middle East still seen as strongest performing market globally (36%) although this has fallen from 56% back in September Asia Pacific is seen as second strongest increased from 20% since last survey Improvement in expected performance in North America from 5% since last survey Middle East 36% Improvement in expected performance in Western Europe from 2% since last survey Source: Jones Lang LaSalle ISS, March 2009 8 Investor Sentiment - MENA Saudi Arabia offers strong potential – large and rapidly growing market continues to open up and offer new opportunities Bahrain 6% North Africa 4% Levant 5% UAE - Abu Dhabi 26% Kuw ait 2% Oman 2% Qatar 19% Qatar expected to offer strong performance building upon its reputation as the next emerging GCC real estate market and its gas wealth Investors still remain bullish towards the UAE, especially Abu Dhabi UAE - Dubai 11% Saudi Arabia 25% Source: Jones Lang LaSalle ISS, March 2009 9 Key Strengths of Qatar 1 Growing population 2 Opportunity for infrastructure led investment 3 Strong government support 4 Highest GDP per capita in the world 35 Ample off-balance sheet income to support growth 46 Gas based economy (less fluctuating prices) 37 Regional influence 4 10 Qatar – World’s Highest GDP 120,000.00 Domestic and regional infrastructure investment Securing the future through an active global agenda 100,000.00 80,000.00 60,000.00 40,000.00 20,000.00 ina Ch zil Br a ss ia Ru bia Ar a n Sa u di Om a in Ba h ra in Sp a an Ja p ly It a m do ait Kin g Un ite d Ku w ny ma es Ge r St at ce Un ite d Fr an UA E Qa ta r 0.00 GDP per Capita Source: IMF November 2008 11 Growth Estimates (2009) Real Annualized GDP Growth Rate 2008-2011 Qatar 10.0% United Arab Emirates 2.0% Saudi Arabia 1.5% India 6.0% China 8.0% EuroZone -2.0% -4% -2% 0% 2% 4% 6% 8% 10% 12% Source: Various 12 Requirements to Recovery Dec 2008 May 2009 Dec 2008 May 2009 Macro Economic Real Estate Global economic stability Increased occupier demand Recovery in oil prices Reduction of Future supply pipeline Stability in employment levels Stabilisation of pricing levels Financial / Liquidity Increasing transaction levels Decline in cost of capital (interest rates) Consolidation of real estate participants Recovery in equity markets Implementation of new investment paradigm Recapitalization of banking sector Supporting Factors Increased funding available to real estate sector Recovery in tourism Improved brand perception Required Underway Improvement in corporate governance Achieved Concerted government action Source: Jones Lang LaSalle 13 Emerging World Winning Cities Moscow Prague Budapest Warsaw Beijing Doha Mexico City Abu Dhabi Delhi Shanghai Mumbai Bangkok Bangalore Kuala Lumpur Sao Paulo Johannesburg Buenos Aires Santiago Source: Jones Lang LaSalle World Winning Cities, 2009 14 Doha: A Destination in the Making 1. Performance 2. Planning 3. Population 4. Place Making 5. Power 6. People 7. Purity 8. Process 9. Property 10. Physical Source: Jones Lang LaSalle World Winning Cities, 2009 15 Thank You Avik Rakhit Head of Northern Gulf Jones Lang LaSalle [email protected] www.joneslanglasalle-mena.com