“The global economic recovery has been hindered by a massive game of Old Maid.  Who will be forced to bear the losses generated during the downturn? Only when the losses are put behind us will the world be able to focus on creating new wealth,” said Dr. Linneman. “There is simply not enough European bank capital to cover the losses associated with Greece and any defaults by Spain, Portugal or Italy.”

On the U.S. economy, Dr. Linneman notes that “everyone, including bearish forecasters, has been shocked by the weakness of the recovery to date. Absent a predictable government, the U.S. has slipped into the abyss which has long punished countries such as Japan and Italy.”

The white paper addresses the future of the Euro, the rapid growth and rising vulnerabilities of the Chinese and Indian economies, and the potential for long-term economic malaise in the United States absent leadership from any branch of the U.S. government.

Global Economic Round-Up follows European Debt Crisis where Dr. Linneman analyses the European sovereign debt crises and the impact of a default on the Euro Zone countries and banks. NAI Global’s white papers and research resources are available for free download by clicking here.

C-III is led by CEO Andrew L. Farkas, who founded and was Chairman and CEO of Insignia Financial Group, Inc. (NYSE:IFS).

“The completion of this transaction represents a significant step forward in our strategy to build a fully diversified commercial real estate services company,” said Mr. Farkas. “With the NAI Global acquisition, we are gaining the world’s leading commercial real estate network and a tremendous foundation for future growth.  As we begin a new year, we look forward to partnering with the NAI team to provide enhanced services to the commercial and institutional real estate markets they serve as well as continuing to take advantage of other opportunities to grow and expand our platform.”

“We are thrilled to be joining forces with C-III and excited about the opportunity to deliver an even broader range of services to our members and add greater value to our collective corporate and investment clients. We look forward to tapping into their great resources and expertise to help C-III clients strategically optimize their commercial real estate assets,” said Jeffrey M. Finn, President and CEO of NAI Global.

NAI Global will continue to operate as a separate company under its current management. NAI manages a network of commercial real estate firms comprising 5,000 professionals and 350 offices in the US and 55 countries throughout the world.  NAI’s network members provide a full spectrum of corporate, financial, technology and project management services.

C-III commenced operations with the purchase of Centerline Capital Group’s institutional real estate debt fund management and commercial mortgage loan servicing businesses in March 2010.  Since that time, C-III has successfully launched mortgage origination, investment sales and title insurance businesses, and expanded its principal investment, loan origination, fund management and primary and special loan servicing businesses, including acquiring the special servicing and CDO management businesses of JER Partners in August 2011.  In November 2011, C-III acquired two affiliated multifamily property management businesses – U.S. Residential Group and Pacific West Management – which now operate on a combined basis under the U.S. Residential Group name.

Financial terms of the NAI Global acquisition were not disclosed.

About C-III Capital Partners

C-III Capital Partners LLC is a leading commercial real estate services company engaged in a broad range of activities, including primary and special loan servicing, loan origination, fund management, CDO management, principal investment, title services and multifamily property management.  Our principal place of business is located in Irving, TX, and we have additional offices in New York, NY, Greenville, SC, McLean, VA, Chicago, IL, Dallas, TX and Nashville, TN.

About NAI Global

NAI Global (www.naiglobal.com) is the largest network of independent commercial real estate firms worldwide, comprised of over 5,000 professionals in 55 countries in more than 350 offices. NAI advisors work in tandem with our global management team to ensure our clients strategically optimize their real estate assets. NAI offices complete over $45 billion in combined transactions annually and manage 300+ million square feet of commercial space.

The employment market in India has picked up for the IT/ITeS sector, pharmaceuticals, retail and hospitality sectors, whereas sectors such as real estate, infrastructure, manufacturing, engineering etc. remain subdued for 2011–2012. With inflation currently hovering above 12%, ever growing fuel prices and high lending rates, the general sentiment for both real estate investors and corporations is negative. Bank deposit rates were at an all time high of 10%+, discouraging real estate investors.

Office

The office market in Mumbai has witnessed oversupply. This, coupled with lower demand from corporations across all sectors, has negatively impacted rental values. Rental values have dipped in Andheri SBD by about 15-20% as compared to 2009-2010, while capital values are stable. This has resulted in lower yields. In certain pockets, such as Goregaon SBD and Thane SBD, both rental values and capital values have risen by about 10-15%.

The Pune office market remains active due to expansions by IT companies. Rental values have remained stable, as have capital values, effectively offering stable yields for investors. Pune remains one of the preferred options for IT companies due to the availability of a good talent pool and improving infrastructure. In spite of fresh supply hitting the market, there has been a drop in vacancy rates compared to year-end 2010.

Chennai has emerged as a preferred location for IT and manufacturing companies due to its political stability, attractive rental values and availability of good infrastructure. Chennai Class A rental values are the cheapest of all the major cities.

The Hyderabad market continues to see weak demand due to the ongoing political turmoil, coupled with oversupply and the global economic uncertainty. Rental and capital values have remained stagnant except for retail (both High Street and malls), where the rental values have increased by about 10-15% year-over-year.

Kolkata has experienced weaker demand as its suburban office market inventory has increased substantially, driving up vacancy levels and holding rental and capital values in check. However, there has been significant speculative office space investment transactions concluded in the past year. These investments have been done in the hope that demand will surge with the passage of time and improved political stability. The state policy initiatives promoting industry and investments are expected to be rolled out soon.

Chandigarh (Punjab) is witnessing strong demand from IT/BPO companies due to the robust telecom infrastructure and availability of skilled labor. Supply remains low in the medium term due to the levies introduced by the state government on new developments. This has led to an increase in rental rates, and has increased the capital values by about 12-15%. Industrial rental rates in Chandigarh are increasing due to strong demand from manufacturing and logistics companies.

The 2012 expectation across the aforementioned cities is that Class A rental rates will remain muted, especially in Mumbai and Hyderabad, due to large inventory and relatively weak demand. Class A rents in Pune and Chennai will rise marginally. Kolkata has no real demand growth and only speculative buying. Kolkata office market rent values will either remain stable or may drop slightly in the near to medium term.

Retail and Industrial

Since the beginning of 2011, the retail sector displayed stable to upward movement of rents across the aforementioned cities, largely due to the limited supply of quality retail spaces. The industrial sector exhibited an upward rental and capital value trend in Chandigarh, Pune and Kolkata on the back of robust demand. In other cities, there is a downward trend for 2012. The retail and industrial sectors are expected to have similar trends in 2012 as they had in 2011. The exception will be for Chennai, where plant announcements give a fillip to the sluggish demand pushing up the industrial land and warehouse rents and capital values.

The 2012 Global Market Report is a unique tool that reviews and summarizes the real estate activities of the past year on more than 200 property markets worldwide. As a reference tool, it reviews values, economies, social factors and other conditions that impact a market.

Each analysis was completed by the NAI Global Member representing the given market. These local professionals are expert at reviewing their markets, identifying trends and reporting market activity. The NAI Global Member making the analysis for each market is identified and may be contacted for additional information. Most of the data in the Global Market Report was collected during the fourth quarter of 2011.

Rental rates for Class A and Class B office space, retail and new construction are expressed in gross costs per unit area, indicating the landlord pays all expenses, except for Europe, where rental rates are reported as net. Industrial space rents are quoted in terms of net rental rates, meaning the tenant pays for most of the operating costs, such as utilities, maintenance, repairs and cleaning. On all charts, N/A means the information was not applicable or not available at press time.

For more information about this report, or to order your own copy for $695, please call 609 945 4000. Additional research reports and whitepapers are available at http://naiglobal.com. You can also download NAI Global’s 2012 Global Market Report Overview for free by clicking the link.

Visit the NAI Global blog for real time commentary on industry news and trends athttp://blogs.naiglobal.com

Based upon our statistical forecasts, we anticipate that about 1.8 million (~600,000 per year) single-family and about 800,000 (~270,000 per year) multifamily home starts will occur over the next three years. The net result will be that we burn through the excess inventory, even if household formation rates remain muted. Low single-family inventory levels will create strong upward pressure on home values, restoring some lost confidence in homes as an investment. In fact, a crazy but true research result is that many people use the past year’s home price increase to estimate future annual appreciation. This means that as home prices stabilize, so too will the belief in long-term appreciation.

At the outset of 2011, there was fear that strong growth in the region would lead to economic overheating, increased inflation and subsequently higher real estate values. Most likely due to the slow recovery in the US and economic “congestion” in Europe, these fears did not materialize. In fact, even the precipitous climb in Brazilian real estate values over the last three years slowed considerably. The region benefitted from a significant increase in property investment by domestic funds, which had previously been deploying capital overseas.

Although the Latin American countries grew in 2011, growth in the Caribbean region was mixed. Cuba, Anguila, Curaçao and the Cayman Islands experienced a strong tourism recovery with close to double digit growth rates, while many other island countries experienced zero or negative growth. The region failed to exceed an overall growth rate of 2% due to declines in remittances and tourism.

In South America and Mexico, real estate development saw a strong resurgence in all sectors, while Central America witnessed moderate development. Panama, in particular, has continued to experience strong construction activity even during the height of the financial crisis. New construction in the Caribbean region was minimal in 2011, with the exception of the Dominican Republic. During the 2009 financial crisis, the Dominican Republic registered a growth rate of 3.5% and experienced significant development activity in 2010, primarily in the residential sector.

Projections for the region in 2012 are optimistic, but tempered with latent concern for the USA’s and Europe’s potential negative influence. Latin America is expected to continue its healthy growth, while the Caribbean is expected to see a slow recovery. Both demand and supply will increase further in 2012, with a landlord’s market in most of the region’s cities. Nevertheless, lease and sale rates for office and industrial product are not expected to increase drastically. In Brazil, the growth trend has slowed significantly compared to when office rates were climbing by 15-25% per annum in major cities. The retail sector may see lease rates increase markedly for shopping malls and High Street locations in major markets (Brazil, Mexico, Colombia and Peru), due to continued strong consumer demand.

Strong growth in real estate supply will continue to occur in the larger economies such as Brazil, Chile, Peru, Panama, Mexico and Colombia. The smaller economies of Central America, such as Costa Rica and Guatemala, will experience lower growth recoveries. Growth in resort and hotel development will lag the other sectors. Greenfield development in the industrial and office sectors will continue, due to the lack of Class A product throughout the region (with the exception of Mexico). Class A office vacancy rates are expected to remain below 5% in Buenos Aires, Bogota, Rio de Janeiro and Sao Paulo. The notable exception to the regional vigor is Venezuela, which will continue to suffer inflation above 25% with stifled economic growth. The challenge remains for governments to provide adequate infrastructure to meet the ever-growing needs of industries and a prospering population that has a growing appetite for cars.

An interesting trend to note is the source of investment capital, since debt financing for development has been largely unavailable. For the first time in the last 40 years (and perhaps ever), a great deal of local capital was invested domestically instead of being expatriated. In addition, a significant amount of capital that had been previously invested in foreign markets was repatriated and directed to local development opportunities. This tendency is expected to continue through the coming year.

Argentina

In 2011, the economy showed healthy growth, which is expected to continue in 2012. The Argentine peso weakened from 3 ARS to the dollar to about 4.9, helping the country to maintain a strong export base. Global exports are expected to continue to increase in 2012, primarily in the agricultural, textile and service sectors, while inflation is expected to stay high, possibly hitting 20%.

There is a shortage of available Class A product in the office, industrial and retail sectors. Office, industrial and downtown vacancy rates all stand at 3-4%, with demand outpacing supply. Most industrial projects in the pipeline are build-to-suit, with lease rates expected to increase to keep pace with inflation. The market will see an increase in speculative construction over the next several years.

The Bahamas

Both the tourism and banking industries, the two key economic drivers, should see a stronger recovery in 2012, as US and European tourist travel to the islands increases. Construction of new hotel, resort and residential projects remain slow, except for the 1,000 acre, US $2 billion Baha Mar resort on New Providence Island. The projected slow and steady 2012 recovery in the US will help the country’s tourism growth.

Downtown retail and office market absorption is slow, but improving. Due to abundant parking and better access, suburban markets continue to be the most desirable for new construction and expansion. In 2011, robust demand kept vacancy rates low, stabilized suburban retail rents and spurred rare build-to-suit opportunities. Demand for industrial space and Class A office product in the suburban submarket is especially strong. Interest in residential development and hotels is expected to rebound slightly, with several new projects in the pipeline.

Brazil

Brazil has proven to be one of the world’s most active economies, experiencing a growth rate of about 5% in 2011. The expectations of a continued economic boom can be attributed to the country’s large offshore oil deposits, strong and growing domestic consumption, Brazil’s hosting of the World Cup in 2014 and of the Olympics in 2016 (causing public investment in infrastructure projects), alternative energy sources (e.g., ethanol) and continued policy and bureaucratic reforms. In the short term, high business loan rates and bureaucracy will limit the country’s growth, but risk perception among international investors is declining. The Brazilian real continues to strengthen against the US dollar, from its low of 2.16 in late 2008 to 1.75 in late 2011.

During 2011, the Brazilian real estate market grew at a faster pace than 2010. The country remains an attractive target for Greenfield Class A office, retail and particularly industrial development and speculative real estate acquisition. Lease rates for all product types increased while cap rates hover between 9-11%.

Colombia

Colombia was finally granted free trade status with the US, which will further benefit the economy. Several sectors including agriculture, retail, services and BPO will gain the most. Over the last 15 years, the country has steadily grown and improved its democratic credentials, and the peso has been relatively stable, with a government target of about 1,800 COP to the dollar.

Both real estate development and pricing were relatively strong in 2011, with demand exceeding supply. International investment funds have yet to venture strongly into Colombia, but the domestic capital sources are investing actively in Greenfield projects and are fueling development growth. Given the lack of a transparent investment market for existing product and a shortage of investment sales, cap rates are difficult to identify, but are estimated to be 12% or greater.

Chile

Chile continues to serve as a benchmark for most emerging economies in the region as the Chilean economy recorded another respectable year of growth. Inflation was stable, while the 7% unemployment rate is among the lowest in Latin America. The recovering prices for copper and other commodities, paired with an increase in global demand, helped the Chilean economy prosper in 2011. Continued attempts to decrease dependence on imports of natural gas, by developing hydroelectric projects in the Andes, has been hindered by ecological challenges. Therefore, Chile is currently building its first LNG terminal to secure a supply for existing and upcoming gas-fired thermal plants, and has engaged in the construction of several new hydropower and coal-fired thermal plants. Chilean companies, profiting from their strong domestic economy, have moved from the cautious international expansion mode to an aggressive one. Their targets are primarily Peru, Colombia, Argentina, and Brazil, with Costa Rica, Panama and the US also recently added to the list. Demand for quality commercial real estate continued to be strong, with vacancies remaining below 3%. Rental rates remained stable, with cap rates at about 8-10%.

Costa Rica

The market is now stable and almost fully recovered from the global financial crisis. Demand is increasing and existing supply is being absorbed. Developments that were on hold are now proceeding to construction. Real estate activity was strong during 2011 with resort, hotel, and second home sectors on the Pacific Coast still awaiting a rebound. In the municipal area of San José, leasing and sale activity increased in the office and industrial sectors, and rental rates were stable. The retail sector showed a stronger recovery in demand, with upward pressure on shopping malls and High Street rents.

For 2012, absorption in the commercial sectors is expected to increase, with a stronger uptake in retail. Rental rates are expected to be stable for the office and industrial sectors, but should experience a slight increase in the retail sector as absorption increases. Along the Pacific Coast, recovery and renewed investor interest should increase by mid-year 2012. Land prices are expected to remain weak as development activity remains very low and some owners try to cash out. Cap rates are above 9% and project IRRs are above 18%.

Dominican Republic

The Dominican Republic is the bright star among the sea of struggling economies in the Caribbean. It achieved a growth rate of 3.7% in 2010, 4.7% in 2011, and is expected to follow the trend in 2012. Real estate development in Santo Domingo, the country’s capital, has been strong, particularly in the residential sector, with numerous condominium towers now decorating the skyline. The retail and office sectors have also witnessed strong activity. Two office towers will be completed in 2012, as well as the Sambil Santo Domingo Shopping Center with 195,000 square meters of total retail area. Tourism development, although largely with smaller projects, is continuing primarily in Puerto Plata and other outlying cities. A major thoroughfare is currently under construction to connect the Samana area with Santo Domingo by year-end 2012.

Mexico

Mexico continued to recover during 2011, achieving growth rates above 3.5%. The Mexican peso to US dollar exchange rate increased throughout 2011 to about 13.5 pesos to the dollar at year-end 2011. The demand for maquiladora product continued to increase in response to rising labor and transport costs from Asian operations. Asian companies from Korea, Japan and China showed increased interest for installing manufacturing operations in northern Mexico.

As noted above, real estate activity was healthy across Mexico, with Mexico City faring the best. The office and industrial sectors experienced strengthening positive absorption, despite the negative news about the drug trafficking violence along the border. Leasing and sales demand increased in almost all asset classes, especially retail. Lease rates in Mexico City for all product types have been stable, in spite of some inflationary pressure, and should be stable in 2012 as concern for a prolonged US recovery shapes landlord sentiment. Sale prices across the country should also remain relatively stable, and cap rates will likely remain at about 9% for quality product, with IRRs in the 15-20% range.

Panama

The strong growth cycle in Panama continued unabated in 2011, with a GDP growth rate above 10%. Strong real estate development continued, primarily in the residential, office and business hotel sectors. Absorption for all product types remained very active with lease and sale prices for commercial properties relatively stable. For 2012, the country’s growth rate is expected to achieve 8%.

In the commercial real estate sector, both supply for the office and industrial markets will expand, but the office sector inventory is expected to increase by 35% (about 300,000 square meters of Class A product). However, given the stability of the office rates during 2011 and landlords’ increasing confidence in the economy, we do not expect office lease rates to decline during 2012.

Peru

Peru enjoyed another strong year with a growth rate of 6.7%, after achieving 8.7% in 2010. This occurred even with the election of a potentially worrisome left-wing presidential candidate, who caused investors and companies to largely halt projects for several months until they could determine the new president’s pragmatism (or lack thereof). Slowed real estate activity during Q2 2011 was quite strong overall, with rent and sale prices increasing by about 8%. For 2012, rental and sale activity should remain strong in all sectors, especially retail. Numerous retail projects are under construction and will be available in 2012, with many already significantly pre-leased. In the Lima office market, demand should remain active and vacancy rates are not expected to drop as new office product is delivered. Due to the expansion of the city’s core, industrial development is being pushed further out beyond the residential and commercial areas, primarily to Huachipa in the East zone, Lurin and Chilca in South Lima; and Ventanilla in West Lima.

Venezuela

2011 proved to be a difficult year again for Venezuela as the Chavez administration’s macro and microeconomic policies continued to chastise the domestic companies and markets. Additionally, lower oil prices and falling production reduced the government’s revenues, as the petroleum industry remains the most important and profitable economic engine. 2012 will continue to be difficult with shortages expected in many sectors, due to the administration’s nationalization of numerous companies and its continued threats to strategic industries, such as food processing and agriculture. Except for activity from political bedfellows such as Iran, China, Libya and Russia, there is virtually no new foreign investment in Venezuela outside of the petroleum industry, as the country’s administration and policy environment hamper recovery.

Vacancy rates are still near zero in the office, industrial and retail sectors, and rental rates are rising sharply due to high inflation rates and artificially low dollar-to-bolivar currency exchange rates. Landlords determine sale and rental rates based on the US dollar. Although investors and developers remain extremely cautious due to the lack of transparency and political risks, there is some new development and investment in real estate, particularly in retail. Firms operating in Venezuela cannot expatriate their earnings at a realistic dollar value, and are therefore looking for an alternative way to protect the value of their capital, which could bode well for commercial property markets.

The 2012 Global Market Report is a unique tool that reviews and summarizes the real estate activities of the past year on more than 200 property markets worldwide. As a reference tool, it reviews values, economies, social factors and other conditions that impact a market.

Each analysis was completed by the NAI Global Member representing the given market. These local professionals are expert at reviewing their markets, identifying trends and reporting market activity. The NAI Global Member making the analysis for each market is identified and may be contacted for additional information. Most of the data in the Global Market Report was collected during the fourth quarter of 2011.

Rental rates for Class A and Class B office space, retail and new construction are expressed in gross costs per unit area, indicating the landlord pays all expenses, except for Europe, where rental rates are reported as net. Industrial space rents are quoted in terms of net rental rates, meaning the tenant pays for most of the operating costs, such as utilities, maintenance, repairs and cleaning. On all charts, N/A means the information was not applicable or not available at press time.

For more information about this report, or to order your own copy for $695, please call 609 945 4000. Additional research reports and whitepapers are available at http://naiglobal.com. You can also download NAI Global’s 2012 Global Market Report Overview for free by clicking the link.

Visit the NAI Global blog for real time commentary on industry news and trends at http://blogs.naiglobal.com

The Canadian economy has gained back all the jobs lost during 2008 and 2009, but the unemployment rate remains stubbornly high at 7.1%, down 90 basis points from 8% at the same time last year. There is modest employment growth forecast for 2012, but also considerable slack in the economy. As we enter 2012, the supply-demand characteristics of the real estate sector appear balanced in most markets and asset classes. Liquidity has returned, as evidenced by REITs and other publicly traded real estate investors having raised substantial amounts of equity capital in 2011. There is increased investment and construction activity, which bodes well for a slow, but steady recovery continuing through 2012 and more robust growth in 2013.

The ownership of commercial real estate in Canada, especially the best located properties, is concentrated among pension funds, REITs and large domestic corporate investors. The best assets remain in relatively strong financial hands with conservative leverage employed. With the Canadian dollar close to par with the US, there is increasing interest by these investors in US real estate assets. In addition, these pools of capital are looking to Europe and Asia to satisfy the demand for high quality real estate.

Land prices firmed throughout 2011 in most markets across the country. Generally, cap rates and interest rates remained stable through the year. Transaction volumes are constrained only by lack of supply of good quality product.

Western Region (British Columbia, Alberta, Saskatchewan and Manitoba). The western region of the country possesses abundant natural resources and is performing well, driven by resource exports. Overall the British Columbia economy is forecast to grow by 2.3% in 2012. The Vancouver office market has a vacancy rate of 7%, but has little new product coming online in 2012-2013. Positive absorption is resulting in increasing net rents. The Victoria office market, which is heavily dependent on the provincial government, has seen increasing vacancies as fiscal deficits are addressed. But a recovery is evident.

Industrial real estate in Vancouver is stable, with an average vacancy rate of 4.5%, unchanged from year-end 2010. In Victoria, industrial vacancy stands at about 2%, and rents are stable due to a lack of new supply. Investment in commercial real estate in British Columbia has been resilient, with cap rates of 6-7% in the major urban centers. The Greater Vancouver investment market has normalized and is now characterized by shortages in supply of good quality product.

Alberta is home to Canada’s oil and gas industry, with Edmonton and Calgary serving as the two main business centers. Edmonton, the provincial capital, benefits from its proximity to the infrastructure related to tar-sands development. Meanwhile, Calgary is home to most of Canada’s energy companies. Alberta’s recovery will continue to be impaired by low natural gas prices which are projected to persist. Despite this, the Alberta economy has rebounded and is forecast to grow by 3.9% in 2012. The overall fundamentals of Alberta’s real estate market are solid and the prospects for 2012 look promising, with tightening vacancy rates, upward pressure on rental rates and continued positive absorption.

Saskatchewan and Manitoba are smaller, resource and agriculture based economies. Saskatchewan is the provincial leader in economic growth as its GDP is forecast to grow 4.3% in 2012. The two largest cities are Regina and Saskatoon, with a combined population over 500,000. The unemployment rate is below 5%, and as a result, industrial market vacancies remain at an all-time low, while rental rates continue to hold up due to limited new construction. Industrial land prices remain steady at $225,000 per acre.

The Regina office market is experiencing positive absorption, and vacancy rates remain extremely low at 2.0%, a 100-bp decrease from the same time last year. New office product totaling 200,000 square feet is expected to come online in 2012.

Finally, the Saskatchewan investment market remains strong with continued interest from local investors. Cap rates remain between 7.5–8.0% for well-located, well-tenanted projects.

Eastern Canada (Ontario, Quebec and Atlantic provinces). Eastern Canada is the country’s manufacturing base. Both the Ontario and Quebec economies are experiencing higher than normal unemployment (at 7.6% and 7.3%, respectively).

Toronto is Canada’s largest city and its financial and manufacturing center. The surrounding area in southwest Ontario is home to Canada’s auto manufacturing sector. Greater Toronto is a multi-cultural mega-city with 5.6 million residents and a broad economic base.

The Toronto office market has been healthy and active, absorbing over 5 million square feet of office product in 2011, compared to 3 million square feet in 2010. The vacancy rate in downtown Toronto is 5.5%, a 200-bp year-over-year decline. Most suburban markets now have high single-digit vacancy. More new office product is expected to come online in 2012.

Toronto’s industrial market has not made a full recovery and shadow vacancy abounds. There is little new supply coming to market, so we expect rental rates will firm up and vacancy rates will decline in 2012. Current vacancy rate is about 6.5%.

Montreal has a diverse economy and a mature real estate sector. The greater Montreal area accounts for more than 21% of the Canadian office market. This market remains healthy with an office vacancy rate of 7.9%, a 140-bp decrease over the same time last year. Similarly, the industrial vacancy rate of 7% is also expected to decline during the coming year, as business confidence improves resulting in tenant expansions.

Like many centers of government, Ottawa remains a steady market even in these tough economic times. The federal government has ongoing space needs and continues to refurbish and redevelop its properties.

Halifax is the capital city of Nova Scotia and the economic center for Canada’s Atlantic provinces. The Halifax shipyard just received a $25 billion military contract, which will generate thousands of jobs and anchor the economic development for the region for years to come.

Overall, the Canadian economy is proving resilient in a challenging and volatile global environment, making Canadian cities a attractive place to do business or invest in the commercial real estate sector.

The 2012 Global Market Report is a unique tool that reviews and summarizes the real estate activities of the past year on more than 200 property markets worldwide. As a reference tool, it reviews values, economies, social factors and other conditions that impact a market.

Each analysis was completed by the NAI Global Member representing the given market. These local professionals are expert at reviewing their markets, identifying trends and reporting market activity. The NAI Global Member making the analysis for each market is identified and may be contacted for additional information. Most of the data in the Global Market Report was collected during the fourth quarter of 2011.

Rental rates for Class A and Class B office space, retail and new construction are expressed in gross costs per unit area, indicating the landlord pays all expenses, except for Europe, where rental rates are reported as net. Industrial space rents are quoted in terms of net rental rates, meaning the tenant pays for most of the operating costs, such as utilities, maintenance, repairs and cleaning. On all charts, N/A means the information was not applicable or not available at press time.

For more information about this report, or to order your own copy for $695, please call 609 945 4000. Additional research reports and whitepapers are available at www.naiglobal.com. You can also download NAI Global’s 2012 Global Market Report Overview for free by clicking the link.

Visit the NAI Global blog for real time commentary on industry news and trends at blogs.naiglobal.com

There have been some major governmental interventions through tighter property regulations over the last 12 months in places like Singapore, Hong Kong and China. These regulations have primarily been directed to control spiraling residential values and reduce speculation. Such policies include restrictions on the number of properties one family can own in one city, larger down payment requirements, higher stamp duty (tax) on the seller if the property is traded within three to five years of acquisition, as well as the introduction of annual property taxes. As a result, there has been some cooling on the transactional volumes of residential properties in all three markets. Anecdotally, there is some evidence of residential prices beginning to drop in China and there have been several cases of early buyers protesting developer price discounts to newer buyers. Hong Kong is beginning to see some softening in residential values, albeit after the last two years of major rises in value, and Singapore has been able to basically hold values to date. None of these government regulations have been directed toward the commercial property sector, which in markets like China, has residential developers moving into commercial development.

Aside from residential and commercial markets, key hotel markets in Asia have seen excellent growth. Best performing markets in Asia, which are projected to achieve double digit growth in RevPAR for 2011, include Singapore, Beijing and Hong Kong with continued but slower growth in 2012.

Singapore has seen some of the highest levels of supply growth in the region with a lot more in the pipeline. Beijing is forecasted to have the highest level of demand growth in 2011, whereas Hong Kong is expected to finish the year with the highest level of ADR growth. The ability to get debt financing for new hotel construction is becoming more difficult in China.

Office

As the eurozone sovereign debt crisis has evolved, rapid rental rate increases have ceased in Singapore and Hong Kong and are now in a downward mode, with these markets having clearly peaked. Tokyo, Kuala Lumpur, Seoul, Ho Chi Minh City and Taipei are at or approaching the bottom of declining rent phases and will start to see higher rates. Jakarta, Manila, Shanghai and Beijing have already seen healthy rental increases but are forecast to see slower growth in 2012.

Retail

There are early signs of rental growth in Singapore and Hong Kong. Tokyo, Jakarta and Shanghai have reached the bottom and should start to see stronger, rising rents. Manila, Kuala Lumpur and Beijing retail rents have already seen reduced growth in recent quarters, and we expect further slowing.

Industrial

Rental rates in Singapore and Hong Kong appear to have peaked, with a softening of rates forecast for 2012. In contrast, Tokyo industrial rates are close to the bottom with some increases anticipated over the coming quarters. Beijing and Shanghai have achieved some good rental growth and will likely see growth projection scale back in the coming period.

Investment

While the Americas and Europe still have higher annual transaction volumes for commercial property sales above US $10 million, there is a rising trend in commercial property transaction volumes in Asia and a sleeping giant (land sale transactions) that is not reflected in commercial building sales figures. The chart above displays transaction volumes in recent years. The high land transaction volumes in Asia reflect the high cost of land in major, developed, urban centers in Asia as well as the land sale activity to meet the urbanization of populations and the resulting huge demand for new real estate developments in growing, developing countries like China. In addition, Asia grabs 13 of the top 20 spots for the most active global property markets in the last 12 months (as of November 2011).

Major Trends in China

China now has the highest annual GDP growth rate of any major global economy (9.1%), the largest foreign currency reserves in the world (US $3.2 trillion), the second largest economy in the world (almost US $7 trillion), the largest standing military in the world (2.25 million), the largest population in the world (almost 1.34 billion) and was the winner of the most gold medals in the 2008 Olympics (51 gold medals).

European financial ministers must now kowtow to China for Chinese financial support to invest in the €1 trillion European Financial Stability Fund (EFSF) bond fund, needed to rescue Greece and the eurozone. US Treasury Secretary Timothy Geithner traveled to China to encourage the Chinese government to purchase US debt. It is difficult to miss how dramatically the global economic cards have turned in favor of the Chinese in the last few years.

The Chinese economy is predicted to grow 8.5% in 2012, the slowest growth rate in a decade. The world’s second biggest economy is cooling as weakness in developed nations softens exports, the property market cools and smaller businesses experience a credit squeeze. Unrest in the eurozone spells trouble for China, as Europe is now China’s largest overseas export market.

The 2012 Global Market Report is a unique tool that reviews and summarizes the real estate activities of the past year on more than 200 property markets worldwide. As a reference tool, it reviews values, economies, social factors and other conditions that impact a market.

Each analysis was completed by the NAI Global Member representing the given market. These local professionals are expert at reviewing their markets, identifying trends and reporting market activity. The NAI Global Member making the analysis for each market is identified and may be contacted for additional information. Most of the data in the Global Market Report was collected during the fourth quarter of 2011.

Rental rates for Class A and Class B office space, retail and new construction are expressed in gross costs per unit area, indicating the landlord pays all expenses, except for Europe, where rental rates are reported as net. Industrial space rents are quoted in terms of net rental rates, meaning the tenant pays for most of the operating costs, such as utilities, maintenance, repairs and cleaning. On all charts, N/A means the information was not applicable or not available at press time.

For more information about this report, or to order your own copy for $695, please call 609 945 4000. Additional research reports and whitepapers are available at www.naiglobal.com. You can also download NAI Global’s 2012 Global Market Report Overview for free by clicking the link.

Visit the NAI Global blog for real time commentary on industry news and trends at blogs.naiglobal.com

Economic forecasting against this background is challenging at best. The Economist’s poll of forecasters currently shows growth of 1.6% in the eurozone area for 2011, and 0.6% for 2012. Growth in the two largest economies is expected to decline sharply in 2012 (Germany from 2.8% in 2011 to 1% in 2012, France from 1.6% to 0.8%) with the UK effectively flat-lining (1% in 2011 to 1.3% in 2012). Inflation continues to increase (eurozone 2010: 1.9%; 2011: 2.6%; current UK figure: 5.2%) and unemployment has risen to 10% across the eurozone. On a more positive note, the latest industrial production figures for the eurozone show a year-over-year increase of 5.3% (August 2011). Interest rates remain low, with the European repo rate of 1.25%. The UK base rate is 0.5%, but quantitative easing is still deemed necessary by the UK, even after £200 billion has been ‘printed.’

The property investment markets in Europe, with few exceptions, reflect the macro economic uncertainties. The damaging affect of inflation remains a concern across the eurozone with many investors worried that, on average, property rents will be unable to exceed inflation rates over the next five years. Generally, investors have sought security, and activity has focused on prime properties (i.e. the best buildings in the best locations with long-term leases to financially strong tenants). Such assets are in short supply while the weight of money has led to pricing at boom levels. Europe’s secondary and tertiary markets remain weak with low levels of activity. However, generally raising new equity remains a concern and challenge for many investors.

Investment activity across the continent has remained broadly flat in EMEA on a year-year basis despite significant increases in Germany and Scandinavia. Yields have been stable reflecting the strong German and Nordic volume combined with select UK trophy acquisitions. Central and Eastern Europe has attracted yield-seeking investment. The most popular targets for cross-border investment are London and Paris where prime yields are 4% and 4.75%, respectively.

Office

The sovereign debt crisis and the resultant uncertainty in the investment markets, coupled with the sharp distinction between prime and secondary property, are reflected in Europe’s office occupational markets. Not surprisingly, Europe’s office tenants are reluctant to commit to new space at a time of such turbulence. Take-up in the first half of 2011 was slightly (approximately 5%) lower than in the same period in 2010 and 10% lower than in the second half of 2010. Those deals which have occurred were for higher quality (well located, well specified) stock which, due to very restricted new development, meaning that the quality and location of vacant space is increasingly secondary.

Rents are generally either static or falling. London and Paris continue to be most popular with investors due to strong tenant demand, low vacancy rates and high investment liquidity. Outside of these key areas, demand in Germany, particularly in Hamburg and Frankfurt, remained strong. Otherwise few European cities are seeing significant development starts likely subduing the supply of new accommodation for the next two to three years. The shortage of development finance will exacerbate this trend. Exceptions to the rule include Moscow and Oslo, which have seen rental increases while rents in Athens, Dublin and Madrid have continued to fall. Tenants are generally opting to negotiate with existing landlords rather than incur the costs of moving. The continued uncertainties overhanging the markets, coupled with fears of a double-dip recession, will lead to expansion plans being put on hold until some clarity emerges.

Industrial

While leasing activity in the industrial market picked up during 2010, the overall European take-up in the first quarter of 2011 was down 23% compared to the fourth quarter of 2010. Take-up improved as the year progressed though market conditions remain challenging. The economic climate has led to markedly reduced development activity which, in turn, is leading to a relative shortage of new or modern warehouse space across Europe. Vacancy rates in Q1 2011 were generally lower. In those locations where vacancy rates remain high, there is generally an oversupply of secondary property. Major international developers remain cautious with few speculative starts, though development activity has resumed in locations where a firm commitment from an occupier has been secured. The trend for occupiers, developers and investors to focus their activities on the established and more traditional distribution locations that have excellent connectivity and good access to labor has continued. Despite the recession demand from retailers, food retailers and internet business suppliers continue to dominate the market.

Retail

The latest (July/August) retail sales figures from The Economist show retail sales in the eurozone down 1% from the same period last year. There are some variations within this average – e.g. Greece and Spain at -4.3% and -4.6%, respectively, but Norway at +3.6%. While wage growth across the eurozone remained above the inflation rate in the first two quarters, additional fiscal restraints are likely to adversely affect these markets in 2012. Nevertheless, strong demand from international retailers has led to rental increases in prime locations in London and major German cities. Rents in Paris have remained flat while rents in Madrid continue to fall. While prime locations in London have performed well, this is not true for the rest of the UK with a number of major household names going  bankrupt. Large retailers continue to close significant numbers of stores nationwide due to current and forecasted consumer sentiment.

The 2012 Global Market Report is a unique tool that reviews and summarizes the real estate activities of the past year on more than 200 property markets worldwide. As a reference tool, it reviews values, economies, social factors and other conditions that impact a market.

Each analysis was completed by the NAI Global Member representing the given market. These local professionals are expert at reviewing their markets, identifying trends and reporting market activity. The NAI Global Member making the analysis for each market is identified and may be contacted for additional information. Most of the data in the Global Market Report was collected during the fourth quarter of 2011.

Rental rates for Class A and Class B office space, retail and new construction are expressed in gross costs per unit area, indicating the landlord pays all expenses, except for Europe, where rental rates are reported as net. Industrial space rents are quoted in terms of net rental rates, meaning the tenant pays for most of the operating costs, such as utilities, maintenance, repairs and cleaning. On all charts, N/A means the information was not applicable or not available at press time.

For more information about this report, or to order your own copy for $695, please call 609 945 4000. Additional research reports and whitepapers are available at www.naiglobal.com. You can also download NAI Global’s 2012 Global Market Report Overview for free by clicking the link.

Visit the NAI Global blog for real time commentary on industry news and trends at blogs.naiglobal.com

NAI Global Issues 2012 Global Market Report; 26^th Annual Volume Provides Review/Forecast for 217 Commercial Property Markets Worldwide

The commercial real estate industry demonstrated positive signs of growth of in the first half of 2011, but by year’s end many markets worldwide were coping with the impact of financial uncertainty in Europe and the United States, according to the 26^th annual Global Market Report released today by NAI Global.

Activity was strong in the first half of 2011, as corporate space users took advantage of a global tenant’s market to reduce overall occupancy costs through consolidation and locking in low effective rental rates. However, commercial real estate markets across the globe were weighed down by the global financial crisis in the second half of the year. Most markets are continuing to show signs of improvement, but at a slower pace. However, with limited new construction, markets could tighten quickly should the pace of the economic recovery pick up.

“While the level of optimism varies from market to market, commercial real estate market fundamentals are generally improving,” said Jeffrey M. Finn, President and CEO of NAI Global. “Corporations once again are moving forward on plans, taking advantage of a tenants’ market worldwide to reduce their overall occupancy costs. Investors are beginning to chase yield as they move beyond core trophy assets to the quality opportunistic plays in strong secondary markets. With a tremendous amount of capital amassed on the sidelines, we expect more assets to transact as pricing continues to hold steady.”

Capital markets showed clear signs of improvement as historically low interest rates and high investor demand resulted in significant increases in global investment sales volumes. Cap rates compressed in most primary and secondary markets, as well-capitalized REITs, private equity and institutional investors aggressively pursue yield. With a relative shortage of quality assets on the market, this trend is likely to continue into 2012. Investors are also acquiring large portfolios of loans and REO as financial institutions are placing more product on the market.

While the level of real estate recovery varies from market to market, many markets across the U.S. are showing signs of recovery, as are parts of Asia, Europe and Latin America. However, the continuing uncertainty in the euro zone and the United States is creating a highly volatile global market that is impacting economic recovery in markets worldwide.

“The US economy is well over two years into the most anemic recovery in post-WWII history,” added Dr. Peter Linneman, NAI Global Chief Economist and Principal at Linneman Associates. “With the exception of home prices, all of the key economic indicators are on the ascent from their respective low points, but are at multiple standard deviations from historical norms. Job growth will be crucial for recovery in real estate markets, as jobs are needed to fill vacant space.”

Now in its 26^th year, NAI’s Global Market Report offers insider insight and perspective on market conditions reported by NAI experts on the ground in over 200 property markets worldwide. To obtain a copy of the full report, click here.