Moscow Office Prices to Surge: JLL - Analyst Blog

According to a report published by Jones Lang LaSalle Incorporated (JLL), a leading real estate investment trust (REIT), global office property prices will increase the most in Moscow as investors vie for premium assets. The report anticipates that office properties in Moscow will increase by more than 20% in 2011, while those in Tokyo, Hong Kong, Singapore, London, Paris, Sao Paulo, Shanghai, New York, San Francisco, Toronto and Washington DC are expected to rise by 10% to 20%.

The Jones Lang report further expects that direct investment in global commercial real estate (CRE) prices will surge by 25% to 35% year over year to over $350 billion in 2011 – the highest such levels recorded since 2008. The recovery is anticipated to be driven by growth in the Asia-Pacific Region. Jones Lang had earlier predicted in its report that global CRE sales would total about $300 billion in 2010, representing a 50% improvement from 2009. During the first half of 2010, global CRE sales had totaled approximately $130 billion.

The report revealed that office rentals in Asiaare increasing gradually with net absorption or change in occupied office space in Tier I cities. Rents in Grade A office properties spiked 1.8% during third quarter 2010 compared to the year-ago period. The surge in office rentals was lead by Greater China, with rents rising by 10.9% in Beijing's central business district, 8.6% in Hong Kong and 5.1% in Shanghai.

Jones Lang provides corporate, financial and investment management services to corporations and other real estate owners, users and investors worldwide. The company operates as a single-source provider of real estate solutions with a broad range of real estate product and services, and an extensive knowledge of domestic and international real estate markets.

Jones Lang faces stiff competition from international, regional and local players in the market due to which it has to continually invest in value drivers that act as key differentiators. Consequently, the company is under severe stress to maintain its profitability. We maintain our Neutral rating on Jones Lang, which presently has a Zacks #4 Rank translating into a short-term ‘Sell' recommendation. However, we currently have an Outperform rating and a Zacks #2 Rank (Buy recommendation) on NorthStar Realty Finance Corp. (NRF), one of the peers of Jones Lang.

 
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