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Home > Background & Opinion
21-11-2008Plummeted property prices, decreasing financing costs and a mature market without a supply surplus. There's no better time than in the coming six months to enter into the British commercial real estate market. This was the message delivered to the European mainland by the real estate investment team of the British firm Threadneedle. The investment company wants to launch a leveraged closed-end property fund and is looking for £300 million (about €380 million) from European pension funds, amongst others.
21-11-2008Investing in residential property has never been sexy. In fact, on a pan-European basis, residential values look like they are going anywhere but north. Germany’s economy may be able to weather the upcoming global recession, mainly because it is driven by high value exports. While its commercial property market stays in the doldrums, a few investment companies have bet heavily on its residential sector. The reason? The fundamentals speak louder than words.
20-11-2008Jochen Dietrich Schäfer-Surén isn’t the happiest of people. The senior director head of Hotels and Leisure Fund Management for Invesco Real Estate is eager to do deals, but the market has been in his way all year. ‘Bank guarantees used to mean security but now when you mention bank guarantees people start laughing’, says Schäfer-Surén. ‘There are distressed sellers, huge volatility in the market, and not much of an investor appetite. We are all over the shop right now.’
20-11-2008According to Stephen Springham, retail research partner, at King Sturge in London, 2007 was the year of the credit crunch. 2008, the year of the bail-out after the crunch. 2009 will be the year of the squeeze, the real pain for the retail property market. Recovery is unlikely to take root until 2010. In short, things don’t look so hot for the European retail sector over the next couple of years.
20-11-2008The Dutch private property fund Redevco on the 22nd October opened the first redeveloped retail property in Europe to be granted BREEAM certification. With the opening of the Mainz branch of C&A, Redevco, and its sister company C&A, have set new standards for sustainable building management in the large city-centre retail sector. The building, with retail floor space of around 6,500 m2, was constructed in 1961 and has been undergoing a thorough overhaul for the past year or so.
19-11-20082008 is set to be another record year for shopping centre development, with over 15 million m2 of new schemes and extensions scheduled to open by the end of the year. According to Cushman & Wakefield in its latest edition of the annual European Shopping Centres Rapport, the first six months of the year saw the opening of around 3.9 million m2 of which the vast majority – over 95 percent – comprised new shopping centres. Total shopping centre GLA now stands just under 115 million m2 for the whole of Europe. With 140 new schemes opening across Europe in the six months up to June, the shopping centre development market showed no signs of slowing down. The pipeline for the coming eighteen months exceeds 26 million square metres of which a significant proportion is in Eastern Europe. The three countries with the largest development pipelines (Turkey, Russia and the Ukraine) account for 58 percent of the total.
19-11-2008The worldwide financial crisis is seriously affecting project developers all over. Even ECE, the largest developer and manager of shopping centres in Europe, currently has difficulty in finding financiers and investors for projects in Central and Eastern Europe. In the Ukraine the German real estate company is postponing all its projects. ‘However, the gold fever has fortunately blown over.’
19-11-2008The European retail market is internationalising at a rapid pace. Yet there are still major differences, even between the small neighbouring countries such as the Netherlands, Belgium and Luxembourg. Gerard Zandbergen, who is he managing director and owner of Locatus, the market leader in retail information in the Benelux, spells out the similarities and the differences, and talks about its expansion plans. ‘Germany is at the top of our short list of markets to be entered.’
18-11-2008In spite of the fact that the Netherlands showed a positive development in the last three quarters as far as investments in retail property are concerned, according to research of Jones Lang LaSalle a drop in volume is expected for the coming quarter as a result of the credit crisis. However, this drop will only be temporary as it is expected that a vast amount of retail property will be put on the market in nine to twelve months time, says Jones Lang LaSalle.
18-11-2008Who said life was fair? Unlike housing, commercial real estate wasn't overbuilt in recent years, but prices were bid up. Commercial real estate is backed by $3.5 trillion of debt, heavily owned by financial institutions. In today's climate, declining demand may be devastating. Shopping centres will suffer and tenants fold as consumers retrench. Warehouses will stand empty as consumers cut spending on both domestic and imported goods. Hotel occupancy will continue to slide and layoffs will hurt the office space market.
18-11-2008Exactly a year ago, ING Real Estate announced that it would research the possibilities of a new German Austrian Retail Fund intended for European institutional investors. The fund should extend to €1 billion with a leverage ratio of 50/50. When the fund was announced there was still very little evidence of the international financial crisis, which has had a firm grip on the entire world since the third quarter of this year. Buddy Roes, country manager, Investment Management Germany at ING Real Estate and responsible for the fund: ‘We've nevertheless succeeded in getting a number of European institutional investors to show an interest in this fund. We've just had the first closing.’
17-10-2008In September of this year, Linens 'n Things store No. 1204 in Sacramento closed. Within 48 hours, as if the store had never existed at all, its sign vanished. A simple note replaced it, typed on two standard sheets of white paper: ‘Sorry’, it told surprised shoppers at the front doors: ‘It's all gone.’ Empty stores like this – one at the Promenade in Natomas, California, and one of the state's largest non-mall shopping centers – are becoming an all-too common sight. No doubt, people still shop like there's no tomorrow. But the growing store closings and empty commercial spaces are an eerie echo of the housing downturn that has slammed the US. Mervyns is in bankruptcy proceedings and wants to close some stores; Sharper Image has shut its doors.
17-10-2008Given the state of the US debt capital markets, it is particularly apropos to read in the book Le Deal the account of an American expat who fled the country during the last credit seizure and made his fortune by introducing a new retail concept in Europe. Although J Byrne Murphy looks at Europe through a uniquely American perspective, he makes the common mistake of assuming all Europeans think alike and that culture shocks don’t occur when Italians try to do business in Scandinavia or that the French have any grasp of British culture. Murphy’s tale is therefore universal for anyone in the real estate world trying to do cross-border business. What’s more, by mixing business with friendship, passion and love, he makes a very human business seem even more human. Last month his book Le Deal was published in the US.
15-10-2008Something exciting is happening in the world of hotels. A new type of traveller is walking through the door. These modern travellers – let's call them ‘Mobile Citizens’ – are so important to a new Dutch hotel group; it named its hotel after them. It is hoping that the concept catches on worldwide and the new hotel chain, CitizenM, become the global standard in casual luxury accommodation.
15-10-2008Not only has America become the world’s biggest debtor, but with the nationalisation of Freddie Mac and Fannie May, it is now the world’s largest lender, as well. Furthermore, the loan and stakeholding it has in AIG makes it the world’s largest insurer and the holder of multi-billion dollar real estate portfolio it will be liquidating over the course of the next year.
15-10-2008In recent years the prices for residential property in Germany have not risen as much as in Spain, Ireland or the Netherlands. Nevertheless, private and institutional investors have bought extensive housing portfolios in Germany, often with the objective selling them off, piece-by-piece, to tenants. More and more investors are realising that there is a great advantage in acquiring residential portfolios with a view towards privatisation. To succeed, a high tenant buyout rate is the basis for success.
14-10-2008Aside from being in the domestic market in The Netherlands, SNS Property Finance (SNSPF) has been active in Germany for quite some time. ‘We combine sound financing and knowledge of property which gave us a good operational result in the first six months of 2008. Despite the credit crunch, we're still active in the market.’
14-10-2008The German-speaking countries in Europe, mainly Germany and Austria, have built up a substantial head start in energy-efficient building and renovations. The Netherlands is lagging behind: even though the technology is available, it's applied all too seldom. In the Netherlands there's no ‘price incentive’: Investments in sustainability cannot be discounted in the rental prices, nor are any substantial subsidies available. The architectural traditions in the Netherlands are also uncooperative in comparison with our easterly neighbours. This is causing stagnation in actual sustainable building and renovations. Joost Nieuwenhuijzen, the managing director of the international consortium, EFL (European Foundation for Living), which gears itself towards the development of sustainable living and housing environments, thinks that such stagnation must be modulated.
14-10-2008New investments by foreign investors in commercial real estate in the Netherlands dropped substantially in the period from August 2007 to the beginning of August this year by 28 percent to €3.7 billion. The decline particularly occurred in the first seven months of 2008. From August through December 2007 there was still a high degree of activity. After deducting the sales, the total value of foreign ownership in commercial real estate in the Netherlands increased from €20.8 billion to €24 billion. This was reported by Vastgoedmarkt – the top copy publication of VGM/Real Estate - who keep track of such data.
13-10-2008All over the world former port areas are being given new designations. A fine example of this is HafenCity Hamburg, which is currently the biggest inner city redevelopment in Europe. It will expand the inner city of Hamburg by almost half. A German-Dutch consortium which includes Gross & Partners, ING Real Estate and SNS Property Finance is taking care of the Überseequartier, which is the lively heart of HafenCity, with many shops and places of entertainment.
13-10-2008September 18th, 2008, was the turning-point. That was the day that the highly leveraged UK property investment company, Dunedin, bowed to pressure from creditors and went into receivership. The £520 million commercial property vehicle was forced into receivership after failing to secure the emergency funding needed to address a breach of debt covenants.
13-10-2008The international activities of Dutch property investors, asset managers and project developers who publish their figures, have increased considerably, once again. This was reported by Vastgoedmarkt and VGM/Real Estate who keep track of such data. On 1 July 2008, Dutch asset managers / investors and their counterparts, had a portfolio which converted to at least €106 billion worth of direct foreign real estate, or almost 13 percent more than the €94 billion at 1st July 2007. The lion's share, €61 (58) billion is managed for foreign investors and €45 (38) billion for Dutch investors.
08-09-2008As a result of increasing tax competition from other countries and upcoming economies, the tax attractiveness of the Netherlands was under pressure. As a result, the Dutch participation exemption regime has been changed drastically. Together with the extensive tax treaty network, the participation exemption has always made the Netherlands an attractive jurisdiction for internal operating companies.
08-09-2008There has been much debate in recent years over the advantages and disadvantages of sector/geographic diversification compared against sector/geographic focus. The United States has a long tradition of Real Estate Investment Trusts (REITs) focusing on a specific sector or property type. In addition, the majority of US REITs are solely focused on the US market, and in some cases, one specific city. Of course, this type of focused approach offers investors the ability to over or underweight according to their preferences. In Europe and Asia, companies tend to own more diversified portfolios. These companies of course offer investors another set of opportunities.
08-09-2008Emerging markets are countries that are restructuring their economies along market-oriented lines and offer a previously unavailable set of opportunities in trade, technology transfers, and foreign direct investment. According to the World Bank, the five biggest emerging markets are China, India, Indonesia, Brazil and Russia. Other major countries that are also considered as emerging markets include Mexico, Argentina, South Africa, Poland, Turkey, and South Korea. These countries have made a critical step from a ‘developing’ country to an emerging market. While each of these countries is important as an individual market, the combined effect of the group as a whole will change the face of global economics and politics.
08-09-2008Boundless confidence changed to deep suspicion. Never before have the prospects for the financing market for real estate overturned so quickly and so radically. ‘So stay good friends with your bank’, advises Piet Eichholtz, a professor of Property Financing and the chairman of the day on the second day of the EPRA conference. His golden investment tip: buy CMBS bonds now for a song.
05-09-2008Don't sail too close to the wind and keep your powder dry, the slump in the listed real estate sector isn’t over yet. That’s the message that JP Morgan’s analyst, Harm Meijer, will give his audience at the EPRA conference in Stockholm.
05-09-2008The listed real estate sector is struggling against an adverse headwind. In these difficult times many real estate companies are reviewing their strategy and finances. ‘Back to Basics’ is therefore the theme of the EPRA Annual Conference Stockholm 2008. At the congress, real estate companies can learn from the best practices in top European companies. Over 300 leading real estate professionals will attend the EPRA conference in the Grand Hotel in Stockholm.
05-09-2008Anatole Kaletsky, the keynote speaker on the first day of the EPRA conference in Stockholm, is relatively upbeat about the medium and long-term prospects of the commercial property markets in Europe. He sees stabilisation in 2009 which could justify a bounce in property share market in the near future. This cautious – but far from disastrous – scenario seems to be what stockmarket investors are now discounting. In Kaletsky’s view, there is a fair chance that they are right.
03-09-2008There are clearly severe problems with the American economy at the moment. The picture is defined by worrisome inflation, a disastrous housing market, continuing write-offs and lack of liquidity in the credit markets, as well as low growth in our gross national income. In the real estate sector, times are also difficult, but some areas are doing clearly better than others.
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The Schloss-Arkaden Shopping Centre in the Lower Saxony town of Braunschweig, which was opened in March 2007, accommodates a shopping centre of 30,000 m2, cafés, restaurants, a library, a museum and a number of municipal services.
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