Jones Lang LaSalle Inc. released a global market perspective report recently that is cracking a hesitant smile for most of the world’s property market and nearly grinning when it comes to the Middle East.
According the firm’s estimations, the Middle East remains one of few global regions where positive economic growth is forecast for 2009, with the IMF forecasting growth of 2.5 percent in its April Global Economic Update. After regional declines in the past six months, initial signs of stabilization have begun to emerge. Oil and gas prices have stabilized, although cuts in production levels have reduced revenue inflows. The banking sector has been refinanced, and there are early signs of increased liquidity flowing to the real estate sector. Additionally, plans for new office and residential supply in the Dubai market between 2009 and 2012 have been cut in half since mid-2008. Regulation and transparency have improved, and lower property prices have resulted in renewed investor interest.
Almost US$520 million of mostly residential real estate sales were recorded in Dubai in February, more than double the previous month. Local and overseas opportunistic funds are showing more interest, which should translate into increased commercial real estate transactions in the fourth quarter of 2009. While the regionâ€™s property markets have adjusted much more quickly than other regions, 2009 will be a year of correction. Markets will stabilize in 2010 ahead of a recovery in prices in 2011. Although more Middle Eastern capital is being redirected within the region, a net outflow of capital is expected to continue as both sovereign and private funds seek opportunities in overseas markets at both the strategic and asset level.
Global commercial real estate firm Jones Lang LaSalle Inc. also announced last week a first-quarter 2009 net loss of $61 million, due to expenses relating to its 2008 acquisition of Dallas-based The Staubach Co. and the German retail real estate group, Kemper’s. Those expenses include $17 million in restructuring charges and severance expenses, $29 million in co-investment charges–most of which were impairments–and $7 million in intangible amortization.
The Chicago-based firm’s loss of $61 million, or $1.78 a share, is down from earnings of $2.8 million, or 9 cents a share, the previous year.
Revenue for the first quarter of 2009 fell 12 percent to $494 million.
Jones Lang LaSalle (NYSE: JLL) said it showed revenue growth in the Americas region due to the company’s merger with The Staubach Co. The tenant-representation firm was sold to Jones Lang LaSalle last year by founder Roger Staubach.