DTZ In Situ 2014-15 - page 7

OIL — A VOLATILE
FUEL FOR GROWTH
As can be seen from the graph on the
right, the growth of those locations
linked to the performance of oil companies, and
by default the oil price and demand for related
products, comes at a price — primarily volatility.
The peaks and troughs are substantially higher or
lower than the global average and this has a knock
on effect on employment and real estate pricing in
all sectors. In some countries such as Russia and
Venezuela, this can lead to political and economic
turbulence and those locations that were heavily
exposed 20 years ago, such as Calgary, have worked
to diversify the overall make-up of their GDP.
70
50
30
10
%
-10
-30
-50
2006
2007
2008
2009
2010
2011
2012
2013
Globalaverage Houston Calgary Oslo Riyadh
GLOBAL OIL PRICES
SINGAPORE
Singapore is the most important
energy refining and trading hub in
the Asia Pacific region. Most of the
industrial processes, such as refining,
are located on Jurong Island, which
alone has 95 firms with operations
there — this concentration results
in Singapore being the third largest
export refining centre globally. In
addition to the industrial processes,
many oil companies site their regional
headquarters activities in Singapore,
including key decision-making for
exploration and production in their
regional businesses.
SHANGHAI
, CHINA
Despite Beijing being the political
centre of gravity with a number of
firms represented and headquartered
there, Shanghai is the centre of
gravity for the industry in China. With
China’s shale gas reserves estimated
to be some of the largest in the world,
the amount of interest in gaining
access to the market is huge.
ExxonMobil, Chevron and
ConocoPhillips of the US, and Royal
Dutch Shell, Total and Eni from
Europe, are among the international
oil companies that have signed deals
to explore shale resources in China.
The world’s largest private-sector
oil services companies such as
Schlumberger, Halliburton, Baker
Hughes and Weatherford, are all
increasing their presence in China,
and Shanghai is the hub of choice for
their operations.
RIYADH
, SAUDI ARABIA
The economy of Saudi Arabia is
petroleum based with roughly 75% of
budget revenues and 90% of export
earnings coming from the oil industry.
State owned Saudi Aramco is the
world’s largest oil exporter and as such
has huge economic and political sway.
Despite Saudi Arabia being such a
dominant regional and global oil
exporter, the property market is
relatively small as the population is
relatively small and the economy not
as diversified as either Norway or
Nigeria for instance. Interestingly,
despite the OPEC oil price increasing
in recent years, rents have fallen,
driven by supply side impact, but the
costs of occupation are increasing,
driven by the rise in the additional out
goings associated with renting office
accommodation.
70
2007
2008
2009
2010
2011
2012
2013
60
50
40
30
20
10
0
120
100
80
60
40
20
0
Annual rents (USD/sq ft) (LHS)
OPEC Basket Price (USD per barrel) (RHS)
OSLO
, NORWAY
Export revenues from oil and gas
constitute more than 20% of the
country’s GDP. As a result of sustained
energy price and an increase in
production, Norway is the wealthiest
country in the world in monetary value,
with the largest capital reserve per
capita of any nation. Norway’s huge
accumulated cash reserves, thanks to
a high percentage of state ownership
in Norwegian energy firms, meant that
the country was able to avoid the worst
of the recent global financial crisis.
Stavanger has traditionally been the
main oil town, but with a population
of only 125,000 Oslo has the talent
pool required to support the growing
number of firms tapping into Norway’s
increasing energy export push.
As an example, Statoil, Norway’s
largest oil firm, is headquartered in
Stavanger. It also has a 67,000 sq m,
2,600 employee, ‘non-headquarter’
location in Oslo. Most Norwegian and
international firms are focusing on
Oslo as their ‘front-of-house’.
5,000
1,000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2,000
3,000
4,000
0
900
100
300
500
700
0
Rent - SKK/sq m (Oslo)
Oil price
DTZ | In Situ
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