The London office market was hit hard and early by the global financial crisis, but it has been one of the first to bounce back in comparison with other leading financial centres, according to research from the leading commercial property consultant, CB Richard Ellis.
Their 'How Did They Fare?' report found London’s property market responded most rapidly to the onset of the crisis and has been the first to see rents turning back up. London and Hong Kong saw much stronger improvement in investment volumes and values. In London this was driven largely by overseas investors enhanced by Sterling’s depreciation. This is all despite London and New York offices saw a greater and earlier direct impact from contraction of demand in banking in finance when compared with cities in Asia. But pricing and activity was already rebounding over the second half of 2009, due to strong demand from overseas investors. Rental stabilisation was evident as early as the third quarter of 2009 in London
Comparing office markets in London, New York, Hong Kong and Tokyo – four top-ranking international financial centres (IFCs), the report noted that London’s office investment market was an early casualty of the credit crunch, with values and turnover dropping sharply from late 2007. Dr Peter Damesick, Head of UK Research for CB Richard Ellis, said: “Our report reveals key differences between these four IFCs in terms of the effects of the crisis and the trends that have emerged as signs of recovery have appeared.”
The report also found Tokyo’s market was hesitant in signs of recovery over the second half of 2009, while in both London and Manhattan there was a significant pick-up in office demand as financial market conditions improved. But Hong Kong has had an even larger rebound in office values in 2009 to near pre-crisis levels. Meanwhile New York's capital values were the worst affected with a drop of around 55%.
SMEs looking to expand into the American market may do well to snap up an office in the United States. The US office market is set to be hit by rising vacancy whilst rents continue to fall according to the National Association of Realtors.
Annual office rent is projected to decline 7.2 percent in 2010, following a drop of 12.7 percent last year. In 57 markets tracked, net absorption of office space, which includes the leasing of new space coming on the market as well as space in existing properties, should be a negative 27.3 million square feet in 2010.
With a lot of sublease space currently on the market, vacancy rates in the office sector are forecast to rise from 16.3 percent in the fourth quarter of 2009 to 17.6 percent in the fourth quarter of this year, with only a minor improvement in long-term outlooks which estimate 17.4 percent in 2011.
Although the economy had been growing commercial real estate sectors were negatively impacted by economic aftershocks in the fourth quarter of 2009. There is hope for some improvement next year, according to the Washington DC based National Association of Realtors.
Lawrence Yun, NAR chief economist, says commercial real estate will recover, but at a slower pace. "With the job market expected to turn for the better later this year, we'll see rising demand for office and warehouse space, but that isn't likely before 2011."
"At the same time, improved consumer confidence would help sustain the retail sector and encourage more people to enter the rental market."
Yun notes that commercial vacancy rates remain high in most market areas and are depressing rents, whilst also saying the American commercial real estate almost always lags the wider economy.
The Society of Industrial and Office Realtors, in its Commercial Real Estate Index, an attitudinal survey of more than 700 local market experts, suggests a flattening level of business activity in upcoming quarters with 55 percent of members expecting the market to improve in the second quarter. The SIOR index rose 0.2 percentage point to 35.5 in the fourth quarter, compared with a level of 100 that represents a balanced marketplace. This is the first gain following 11 consecutive quarterly declines.
According to the SIOR survey nearly 90% questioned said new commercial development is virtually non-existent in their market areas, and rent concessions are reported almost everywhere.
Cyprus' first property price index has been launched. It will monitor property prices and monthly rents across 46 locations including apartments, houses, high street retail, warehouses and offices in Cyprus. It's been developed through a partnership between the Royal Institution of Chartered Surveyors and its Cypriot counterpart SEEOKK.
The first results for Cyprus offices found the highest prices in the bigger urban centres of Nicosia and Limassol, but there is a major price gap between the two. Rents for office space are 68% higher in Limassol compared with Nicosia. The trend is more quietly followed by house rents which have a 13% difference between the two locations. RICS says the likely explanation is the presence of overseas companies in Limassol pushing prices high. The index also found Limassol warehouse rents are 78% higher due to the presence of the port. Nicosia has the lowest warehouse rental costs across Cyprus.
Investment yield (rental income/price) is a term rarely used in Cyprus as most companies own their real estate instead of leasing it. Initial yields on commercial property stand at 6,1% for retail, 4,7% for offices, and 4,8% for warehouses. These low yields may show that rents are being kept artificially low by the tendency of companies to occupy properties with alternative uses (mainly residential) in order to minimise their costs. An alternative explanation is that property prices are too high due to the lack of land supply and the price boom of the past few years.
President of RICS Cyprus, Petros Stylianou, says the significance of the index in bringing an identifiable measure of property prices and returns. Experts at the University of Reading in the UK were commissioned by RICS Cyprus to develop the methodology for the Index.
A pocket-size virtual office which converts into full-size desktop is on its way. Open Kernel Labs (OK Labs), the leading global provider of embedded virtualisation software for mobile phones, and Citrix Systems have announced the “nirvana phone”, a fully integrated virtual office system that looks like a mobile phone, and is one too.
OK Labs technology is already in 500 million mobile phones worldwide, but the nirvana phone concept goes beyond traditional smart phones by allowing users to access their corporate virtual desktop and applications from a single device. It can then be docked to full-sized displays, keyboards, mice and other PC-type peripherals offering mobile workers a complete pocket virtual office. The developers claim it will make laptops a thing of the past.
The design builds on Mobile-to-Enterprise (M2E) virtualisation and cloud computing but the nirvana phone reference architecture also incorporates emerging capabilities in mobile handsets like full resolution video and HD output.
Chris Fleck of Citrix says the nirvana phone takes smartphones to the next level while OK Labs' CEO Steve Subar says it will provide groundbreaking capabilities without breaking IT budgets with exotic technology. “The nirvana phone represents a near-term paradigm shift – OK Labs, Citrix, and our ecosystem partners envision real-world converged nirvana devices enabled for both mobility and desktop productivity entering the market within 12 to 18 months.”
Citrix Systems is both working as strategic investor and a key partner for OK Labs, w to provide solutions for delivering enterprise applications to mobile with M2E virtualisation. The companies’ combined technologies, including Citrix desktop and the OKL4 mobile virtualisation solutions, will claim easily-deployed and securely-managed access to enterprise and desktop applications, bridging corporate and personal worlds without risk of compromising company data, applications, or networks.
Virtual businesses need to think virtual when it comes to advertising, and there is no bigger developing market than the mobile advertising platform.
Whilst some see mobile advertising as closely related if not smaller (and perhaps more annoying) than online platforms, the reality couldn't be further away. The reach of mobile advertising is far greater – with an estimated global total of 4.6 billion phones as of 2009. Notably computers, including desktops and laptops, are currently estimated at 1.1 billion globally. Mobile phones now outnumber the television three to one.
It is probable that advertisers and media industry will increasingly take account of a bigger and fast-growing mobile market, though it currently only amounts to one percent of global advertising spend.
One company which is riding the wave of expansion is the internationally growing Austrian firm Out There Media, with its head offices in Vienna. It's just announced a mobile advertising reach now encompasses over 150 million subscribers with an expected 100% explosion, reaching 300 million by the end of Q2 2010. In addition, Out There Media has continued its international expansion with new offices in Asia and Europe and has recently opened an office in Singapore.
At Mobile World Congress 2010 in Barcelona, the global conference for mobile technology, Out There Media announced its partnership with VimpelCom, a leading mobile operator in Russia with a subscriber base of 64 million users. By comparison, Out There Media is currently small active in only 15 countries, whilst big players like 12snap are active in 53.
Kerstin Trikalitis, CEO of Out There Media, said: "Despite the global economic climate, there is a clear shift towards mobile advertising, as all stakeholders now realize its advantages and revenue-generating potential. I strongly believe that 2010 is the year of mobile advertising, and Out There Media will continue to be at the forefront of this historical paradigm shift".
