JLL to cut carbon emissions by over two-thirds

Science Based Target initiative (SBTi) approves JLL’s ambitious plan

CHICAGO, Apr. 22, 2020 – To mark Earth Day (April 22, 2020) JLL is pleased to announce the approval of its science-based target by the Science Based Target initiative (SBTi) as aligned to the 1.5C ambition of the Paris Agreement.

The target commits JLL to reduce its scope 1 and 2 carbon emissions by 68% by 2034 from a 2018 base year. The target covers emissions from the more than 400 offices in over 40 countries occupied by JLL globally and JLL’s facilities management and engineering fleet, including company cars. JLL has also committed to reduce scope 3 emissions from the properties that it manages on behalf of clients by 53% per square foot over the same period.

“As the world navigates the coronavirus pandemic, responding to immediate needs and mapping a path to recovery, it is vital we also maintain focus on the long-term global risks posed by climate change.  Notwithstanding the current temporary falls in emissions, 2020 remains a critical year for climate action,” said Christian Ulbrich, JLL CEO. “JLL is determined to play its full part, working with our clients in shaping the future of real estate for a better world.  Our ambitious science-based target will cut carbon emissions from our own operations by almost 70%, and we are investing in scaling our specialist tools, skills and knowledge to help our clients drive down their emissions to deliver on their sustainability goals.”

The science-based target will be delivered by four main actions across Scope 1 and Scope 2:

• Taking on highly efficient office space and driving energy efficiency across JLL’s existing office portfolio
• Reducing emissions from vehicle fleets by moving to electric, low emissions and alternative fuel vehicles
• Using renewable energy in JLL’s office portfolio
• Where renewable energy is unavailable, purchasing renewable energy certificates

JLL will deliver the Scope 3 SBT by partnering with its top 50 clients, focusing on energy efficiency and emissions reduction programs.

Through Building a Better Tomorrow, JLL’s global sustainability program, the company has achieved – or is on track to meet – all existing sustainability targets across the four pillars of the program: Clients, People, Workplaces and Communities.

In 2019, our sustainability professionals worked with over 90% of our 50 largest clients to drive sustainability improvements in their portfolios.  

Last year, JLL achieved the world’s first double platinum building standards for its Shanghai office at HKRI Taikoo Hui. This was followed by JLL’s Hong Kong office at One Taikoo Place receiving the highest score for the city in energy and environmental design.

JLL continues to provide employees with healthy, sustainable workplaces, and is globally recognized as a top employer for diversity, particularly leadership in female representation and advancement.

Through Building a Better Tomorrow, JLL encourages employees to support causes that matter most to them, guided by the United Nations Sustainable Development Goals. In the UK, JLL has supported 1,200 homeless people into housing. In partnership with Feeding America, JLL is on track to provide one million meals for those in need in the United States. In India, JLL employees are providing skills training for 16 to 21-year-old women and enabling adolescents in rural communities to access vocational skills. By the end of 2020, JLL employees are on track to volunteer 15,000 days, a record contribution.

“We’ve already achieved much to be proud of through our Building a Better Tomorrow program. But to tackle the worst impacts of climate change, we need to be increasingly bold and ambitious,” said Richard Batten, JLL Global Chief Sustainability Officer. “With the validation of our science-based target by the SBTi, we are committing to far-reaching climate action. The successful delivery of our sustainability strategy will not only positively impact JLL and our clients, but also will bring significant benefits to all our stakeholders.”

JLL REACTION TO RBI’S ANNOUNCEMENT ON APRIL 17TH, 2020 attributed to RAMESH NAIR, CEO AND COUNTRY HE AD, JLL INDIA

RAMESH NAIR, CEO AND COUNTRY HEAD, JLL INDIA

“The steps undertaken by the Reserve Bank of India to ease the liquidity concern of Banks, NBFCs and other financial intermediaries is an acknowledgement of the liquidity issues faced by the financial system of the country as well as the industry.

Today’s announcement will give an initial fillip to the real estate sector. The Central Bank’s focus to provide credit flow to NBFCs is a key step. This will provide a boost to various real estate activities.

As per the latest data by RBI, NBFCs outstanding credit to the commercial real estate stood at INR 1,29,359 crore as of end September 2019. The relaxation of NPA classification norms and extension of one year for commencement of projects to real estate developers by NBFCs will provide the much needed relief to the sector.

The refinance facility to the extent of INR 10,000 crore to NHB is a welcome move to provide the much needed liquidity to Housing Finance Companies.”

JLL India|Indian Residential Market Update |Developers sitting on unsold inventory worth INR 370,000 crore

·         The sales of residential units decreased by 29% in Q1 2020 over the same period last year 

·         Q1 2020 recorded new launches of 40,574 units, an increase of 3% compared to Q1 2019

·         Mumbai and Bengaluru continued to dominate new launches and formed nearly 60% of the overall launches during Q1

·         However, new launches in Mumbai witnessed a substantial decline of 18% compared to the same period last year

·         New launches remained largely unchanged in Bengaluru (increase of 3%) and Delhi NCR (decrease of 3%)

Mumbai, April 7, 2020 – A rebound in India’s residential property market will be influenced by the intensity, spread and duration of the COVID-19 pandemic. Government stimulus measures and monetary policy adjustments by the Reserve Bank of India (RBI) will further mitigate the adverse effects of the pandemic and help steady consumer confidence in the residential property market, according to   the ‘India Real Estate Market Update Q1-2020- Residential’ released today by JLL, India’s largest real estate consultancy firm today.

The homebuyer community deferred their purchase decisions due to the evolving COVID-19 outbreak, which led to sales declining by nearly 30% in Q1 2020 on a y-o-y basis. “The impact of the ongoing pandemic on business activities became more prominent since the beginning of March 2020 in the country” adds the report.

However, even though new project launches came to a standstill in March, Q1 2020 witnessed a rise of 3% in new launches as compared to the same period last year. Q1 2020 recorded new launches of 40,574 units compared to Q1 2019.

“The COVID-19 pandemic is expected to weaken GDP growth, which is expected to fall below 5% in FY 19-20 and potentially reach 2008-09 levels in FY 20-21. However, the residential real estate market appears to be at an advantageous position today as compared to the Global Financial Crisis, led by a series of structural reforms by the government in the past five-to-six years,” said Ramesh Nair, CEO & Country Head, JLL. “When the COVID-19 scenario stabilises, factors such as better-priced deals, enhanced financial health of banks and greater demand from end users will aid in improving buyer sentiment. Sales are expected to regain some traction towards the end of 2020 supported by the festive season during that period,” he added.

Owing to the economic slowdown as a result of the current situation, consumer confidence has also taken a massive hit, which is having a direct implication on the home buying decision process.

Lower mortgage rates, combined with other measures taken by the government to improve sentiment, is expected to arrest this declining trend. These factors will further aid in the recovery of the residential market in India.

Subdued sentiments weigh in on the offtake of home loans

                                                                                   

                                                                          

                                                                                       

Source: RBI, JLL Research

Note: Data pertains to housing loan disbursals by commercial banks

Developers have locked-in capital of INR 370,000 crore

The first quarter of 2020 witnessed an increase in unsold inventory as launches outpaced sales by a significant margin. Unsold inventory increased from 442,228 units in Q4 2019 to 455,351 units in Q1 2020. Moreover, Mumbai surpassed Delhi NCR to become the market with the maximum quantum as well as value of unsold inventory.

Mumbai accounts for majority of the locked-in capital

	2019 Q4		2020 Q1
Cities	Unsold Inventory	YTS	Unsold Inventory	YTS	Value (INR billion)
Bengaluru	81,732	3.0	89,122	3.3	640
Chennai	32,217	2.3	32,338	2.5	222
Delhi NCR	124,720	4.6	121,800	4.4	813
Hyderabad	24,125	1.7	24,047	1.6	192
Kolkata	28,716	4.1	29,555	4.2	153
Mumbai	119,173	4.0	124,059	4.2	1,379
Pune	31,545	1.6	34,430	1.7	252
India	442,228	3.2	455,351	3.3	3,651

Source:  Real Estate Intelligence Service (REIS), JLL Research                                                                             

Note: YTS (years to sell) denotes the number of years required to offload the unsold inventory

Across the top seven cities, developers are sitting on an unsold inventory worth INR 370,000 crore at the end of March 2020.

An assessment of years to sell (YTS) reveals that the expected time to liquidate this stock has increased marginally from 3.2 years in the last quarter of 2019 to 3.3 years in Q1 2020. With anticipated slower sales in the coming quarters, the time to sell is likely to increase significantly.

“Thus, the duration to monetise the existing inventory of around 455,000 units is expected to extend. Resultantly, developers will have to sit on this unsold inventory worth INR 370, 000 crore for a relatively longer duration. Having said this, the RBI’s intervention to provide a 3-month moratorium on all term loans by financial institutions will alleviate short-term liquidity concerns and help developers survive in these uncertain times,” the report notes.

New launches continued, developers focus on mid and affordable segments

The current quarter saw a modest increase of 3% in new launches of residential units on a y-o-y basis. The healthy streak in launches in the beginning of the quarter was dampened by the growing concerns of the impact of COVID 19 on the real estate business starting in early March. The market gradually slowed down in the beginning of March before it came to a standstill, on account of the nationwide lockdown.

Marginal growth in new launches        

	Q1 2016 (in units)	Q1 2017 (in units)	Q1 2018 (in units)	Q1 2019 (in units)	Q1 2020 (in units)	Y-o-Y Growth 2019 (%)
Launches	42,025	25,569	39,318	39,330	40,574	3%

Note: Top 7 cities include Delhi NCR, Mumbai, Bengaluru, Chennai, Hyderabad, Pune and Kolkata                       

Source:  Real Estate Intelligence Service (REIS), JLL Research

Mumbai and Bengaluru continued to dominate new launches and formed nearly 60% of the overall launches during the quarter. The overall increase in new launches was driven by smaller markets like Pune, Kolkata and Chennai. While new launches in Mumbai witnessed a substantial decline of 18%, as compared to the same period last year, it remained largely unchanged in Bengaluru (increase of 3%) and Delhi NCR (decrease of 3%), according to the report.

“New launches witnessed a modest 3% increase in Q1 2020 y-o-y, even though businesses hit a grinding halt in March 2020. Homebuyers deferred their purchase decisions in light of the current situation, resulting in an almost 30% y-o-y dip in sales during the first quarter of 2020. With the anticipated slowdown in economic activity, the real estate sector, which contributes 8% to the Gross Domestic Product of the nation, is poised for some immediate challenges,” said Samantak Das, Executive Director and Head of Research, REIS, JLL.

The crisis is likely to aggravate the liquidity crisis faced by developers and restrict new launch to a minimum even after normal business conditions are restored. In the subsequent quarters, developers are expected to focus on completion of under-construction projects and clearing their unsold inventory. Moreover, consolidation in the residential market, with an increasing number of joint developments, will continue to be a major trend with the size of pie belonging to reputed developers increasing consistently.

Development focus on mid and affordable segments continued in Q1 2020, as developers continued to capitalise on the demand and supply side incentives of the government, to cater to the unmet demand in the lower and mid income groups and target first time homebuyers. A closer analysis of launches during the first quarter of 2020 shows a sizeable proportion of 62% in the affordable and mid-priced segments

Looking back to look ahead

In the first half of the month, walk-ins reduced by 50% and buying discussions at advanced stages were being deferred. At present, with a nationwide lockdown imposed, launches and sales have come to a standstill. The economy is facing a slowdown and the uncertainty regarding the future is increasing. In such a scenario, it is difficult to provide a detailed, quantitative assessment of the COVID-19 impact on the future of residential real estate market. However, a look back at some past unprecedented disruptions to the economy could provide an indication of the expected outcomes. 

The Global Financial Crisis and the announcement of demonetization were a drag on the Indian economy. While the GDP growth toppled from 7.7% in FY 2007-08 to 3.1% in FY 2008-09, it has been on a declining trend since the demonetization move in 2016-17 (Figure IV). These events impaired economic growth and had far-reaching effects across key industries including real estate.

GDP growth has been on a declining trend since demonetization

Source: RBI, JLL Research

Note: FY 2019-20 is expected to register a lower than 5% growth due to the Covid-19 pandemic

The COVID-19 pandemic will have a similar impact on GDP growth, which is expected to fall below 5% in FY 19-20 and could even reach 2008-09 levels in FY 20-21. However, following a series of structural reforms by the government, the residential real estate market appears to be at an advantageous position today as compared to the 2007-08 Global Financial Crisis

Residential market scenario

	Global Financial Crisis	COVID-19
Valuation of residential properties	Overheated	Realistic
Nature of the market	Sellers’ market	Buyers’ market
Home loan rates	High	Lower
Ability of banks to lend	Low	Higher due to sound financial position and presence of security as well as RBI’s efforts to infuse liquidity
Tax benefits	Less	More tax benefits for developers as well as buyers introduced by the government in the last 4-5 years
Speculative fear	More	Relatively less because of lower demand from investors
Project portfolio	Across different price segments, with focus on            high-end to luxury	Affordable and mid-segment housing, which is more in sync with demand

Source: JLL Research

Unlike in the past, the government has also been prompt in announcing various stimulus packages. The RBI has also played a vital role by slashing repo rate by 75 bps, bringing down the current rate to 4.4% in addition to other measures to infuse liquidity.

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management, headquartered out of Chicago. A Fortune 500 company with annual revenue of $16.3 billion, JLL operates in over 80 countries and a global workforce of more than 93,000 as of September 30, 2019. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, please visit jll.com.

In India, JLL has an extensive presence across 10 major cities (Mumbai, Delhi NCR, Bengaluru, Pune, Chennai, Hyderabad, Kolkata, Ahmedabad, Kochi and Coimbatore) and over 130 tier II & III markets with a cumulative strength of close to 12,000 professionals. Headquartered out of Mumbai, we are India’s premier and largest professional services firm specializing in real estate. Our services cover various asset classes such as commercial, residential, industrial, retail, warehouse and logistics, hospitality, healthcare, senior living, data centre and education. For further information, please visit jll.co.in