The US economy continued to chug along at a steady pace in December, adding 155,000 jobs and bringing the total increase in employment for the year to 1.8 million jobs, or roughly 150,000 per month. That’s almost identical to the job growth in 2011. Just as there was little employment impact from Hurricane Sandy in November, there appeared to be very little impact from the Fiscal Cliff debate in December. Revisions to previous months were minor, but positive, with November employment being revised up by 15,000 jobs.
For the real estate sector the final resolution of the US debt situation will have an important impact on market activity. Leasing and investment markets appear poised for healthy levels of activity this year, but how fast this occurs will depend critically on how and when all elements of the Fiscal Cliff are resolved.
The UK property investment market remains polarised, with occupiers, investors and financiers still selective and wary of a number of global macroeconomic issues, including slowing growth in China, impending fiscal retrenchment in the US and continued uncertainty in Europe. The third quarter of 2012 did see some improvement in the political situation in Europe as well as some
positive steps being taken towards resolving the debt crisis. Nevertheless, while this gave a much needed boost to confidence levels, it was short lived and doubts remain as to whether this will translate into higher levels of investment activity going forward.
The year 2012 started off with high hopes that the challenges faced by the global economy would be overcome and growth would accelerate. Instead, the difficulties intensified and the expected improvement got pushed back.
Nevertheless, the fundamental drivers continue to point to stronger growth. As solutions to the political-economic challenges are implemented and confidence returns, demand will build and lead to a much healthier economic climate.
Even though 2013 will get off to a slow start, Cushman & Wakefield is optimistic that the stage has been set for a significant turn-up late next year and a strong global rebound in 2014 and beyond. Read our Economic Pulse Forecast 2013 for global and regional analysis.
As Sigrid Zialcita, Managing Director, Research , Asia Pacific, explains, “Even though a number of countries will remain in recession through the first half of 2013, modest positive growth is forecast for the region overall. As well, the sluggish “average” of the region will hide some stronger areas of regional and sector growth.
For the office sector, sustained job gains will underpin steady improvement in leasing activity well into 2013, albeit strong increases are less likely. Grade A rents still have room to grow in most cities – with new records likely to be set in Shanghai, Beijing and Jakarta. A soft landing in China will also reinforce a growth slowdown in the region as it has evolved into a vital source of export demand for most Asian economies.
As David Hutchings, Partner and Head of the European Research Group, explains: “Europe’s problems are clearly deep and long lasting, but they are not universal across all markets and, while there is a long road left to travel and plenty of room for unpleasant surprises along the way, the first building blocks of a sustainable solution appear to have been put in place.
As David points out, “If we are right in our reading of the economy, the implications for the property market will be varied, with many occupiers remaining defensive, but some acting or preparing to release pent-up demand as confidence improves.”