By contrast the UK economy continues to perform relatively well, although 2005 marked a slight downturn in output growth with GDP totaling 1.8%. The UK economy has continued to outperform the Eurozone as a whole, and in particular the other large and established European nations.Growth in Asia’s emerging economies remains strong, although in 2005 output growth fell to 7.3% and is expected to fall back further in 2006 to 6.9%. The downturn in the rate of growth is primarily due to the planned tightening of fiscal policy in China and a potential slowdown in global demand. Regional disparities have continued to widen, as growth in China and India continues to forge ahead, while expansion in other parts of the region remains relatively muted.
Growth in India has remained robust, partly due to the continued expansion of the service sector bolstered by outsourcing from Europe and North America. Economic activity in India is expected to moderate from the strong pace experienced over the previous two years to growth of 6.3% in 2006.The expansion of China has continued to exceed expectations and boost output for the region, with GDP growth expected to reach 9.0% in 2005, and forecast to ease moderately to 8.2% in 2006.
The continuing recovery of the Japanese economy also provides encouraging news for the region, driven by an upturn in domestic demand. Recent surveys suggest that this will continue with signals of growing business confidence and investment. The latest forecasts for the region as a whole project solid growth, aided by strong exports and domestic demand.GDP growth in sub-Saharan Africa is expected to have totalled 4.8% in 2005, marginally below previous IMF forecasts. Rising oil prices have impacted upon the oil importing countries, although overall the effect on output has not been considerable.
More positively, there appear to have been improvements in the region’s macroeconomic stability, aided by ongoing structural reforms. Growth is forecast to accelerate to 5.9% in 2006 which, if achieved, would be the strongest expansion since the early 1970s.The office property sector enjoyed solid performance in 2005 in most of the North American regional markets. Vacancy rates declined and rental rates began to move higher. Of course, the pace of improvement was not uniform across all of the regional markets.
This technique for business valuation amount of improvement mirrored, to a substantial degree, the basic economic conditions in the respective markets. The markets situated along the Atlantic and Pacific coasts of the US continued to experience robust absorption of office space, which in some cases exceeded expectations. In the interior of the continent, regional markets that had languished since 2001 finally began to show improvement.
The overall US national office vacancy rate ended 2005 at an estimated 12.1%, down from 13.5% at the end of 2004. Again, for the nation as a whole, average quoted rents were up about 2%. These averages mask a wide divergence of performance at the regional level. In New York City, for example, the vacancy rate declined by three percentage points in 2005, ending the year with a vacancy rate that is well below 10%. In contrast, the vacancy rate in Detroit remained nearly four percentage points above the national average, with few signs of improvement on the horizon. At the national level, approximately 125 million sq ft of office space was absorbed.