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 | |||||||
| 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% |
