Every year, the Switzerland-based Institute for Management Development (IMD) publishes the results of its annual World Competitiveness Scoreboard in which 60 economies are analyzed and ranked from most competitive to least competitive. For its 2014 scoreboard, the institute analyzed the world’s 60 most industrialized countries. IMD’s rankings are based on an analysis of 300 criteria of which two-thirds are statistically based and one-third are based on opinion polls.

The top 30 countries in the World Competitiveness Rankings for the 2013-to-2014 period were as follows:

Rank
Country 2014 2013 Change
United States 1 1
Switzerland 2 2
Singapore 3 5 +2
Hong Kong 4 3 –1
Sweden 5 4 –1
Germany 6 9 +3
Canada 7 7
United Arab Emirates 8 8
Denmark 9 12 +3
Norway 10 6 –4
Luxembourg 11 13 +2
Malaysia 12 15 +3
Taiwan 13 11 –2
Netherlands 14 14
Ireland 15 17 +2
United Kingdom 16 18 +2
Australia 17 16 –1
Finland 18 20 +2
Qatar 19 10 –9
New Zealand 20 25 +5
Japan 21 24 +3
Austria 22 23 +1
Mainland China 23 21 –2
Israel 24 19 –5
Iceland 25 29 +4
Korea 26 22 –4
France 27 28 +1
Belgium 28 26 –2
Thailand 29 27 –2
Estonia 30 36 +6

 

Overall, the survey shows the United States ranked first as its recovery from the recent Great Recession continues, propelled by strength in the financial services and technology sectors as well as rising earnings (and therefore prospects) for a wide array of companies in a number of industries. Europe holds five of the top ten positions as northern European countries finally start to see daylight after a long, cold winter; southern Europe still has a ways to go. The rankings of the Asia economies show surprising overall weakness, with only Malaysia and Japan showing improvement year over year.

This has nothing to do with real estate, other than to influence the flow of capital around the globe. Capital abhors a vacuum, and the lack of a stronger recovery in many parts of western and literally all of southern Europe and the majority of Asia is directing global investment capital flows to the United States, putting additional pressure on property pricing and yields. So, we guess it does have something to do with real estate. 

Monday’s Numbers

The Trepp survey for the week ended May 23, 2014, showed spreads widening approximately 4 basis points, with the implied ten-year commercial real estate mortgage rate for institutional properties remaining at +/-4 percent. All-in, a very quiet week with deals moving through lenders’ platforms, due diligence being completed, and closings scheduled—and occurring—as scheduled.

Asking Spreads over U.S. Ten-Year Treasury Bonds in Basis Points
(Ten-year commercial and multifamily mortgage loans
for properties with 50% to 59% loan-to-value ratios)

12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 5/23/14 Month earlier
 Office 342 214 210 210 162 149 150
 Retail 326 207 207 192 160 144 140
 Multifamily 318 188 202 182 157 139 133
 Industrial 333 201 205 191 159 141 138
 Averagespread 330 203 205 194 160 143 140
 10-yearTreasury 3.83% 3.29% 0.88% 1.64% 3.04% 2.54% 2.70%

 

The Cushman & Wakefield Equity, Debt, and Structured Finance Group’s monthly Capital Markets Update of commercial real estate mortgage spreads, dated May 9, 2014, showed spreads coming in 5 basis points across the board.

 

 Ten-Year Fixed-Rate Commercial Real Estate Mortgages (as of May 9, 2014)
Property Maximumloan-to-value Class A Class B
 Multifamily (agency) 75–80% T +165 T +170
 Multifamily (nonagency) 70–75% T +170 T +180
 Anchored retail 70–75% T +195 T +205
 Strip center 65–70% T +210 T +220
 Distribution/warehouse 65–70% T +195 T +205
 R&D/flex/industrial 65–70% T +205 T +215
 Office 65–75% T +190 T +200
 Full-service hotel 55–65% T +255 T +275
 Debt-service-coverage ratio assumed to be greater than 1.35 to 1.

 

Year-to-Date Public Equity Capital Markets

 

Dow Jones Industrial Average: +0.85 percent

Standard & Poor’s 500 Stock Index: +4.07 percent

NASD Composite Index (NASDAQ): +1.58 percent

Russell 2000: –2.50 percent

Morgan Stanley U.S. REIT Index: +11.80 percent

 

Year-to-Date Global CMBS Issuance(in $ billions as of May 30, 2014)
2014 2013
U.S. $29.5 $37.6
Non-U.S. 0.5 3.9
Total $30.0 $41.5
Source: Commercial Mortgage Alert.

 

Year-to-Date Public U.S. Treasury Yields

 

U.S. Treasury Yields
12/31/12 12/31/13 5/30/14
 3-month 0.08% 0.07% 0.04%
 6-month 0.12% 0.10% 0.05%
 2-year 0.27% 0.38% 0.38%
 5-year 0.76% 1.75% 1.54%
 7-year 1.25% 2.45% 2.07%
 10-year 1.86% 3.04% 2.48%