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Trend indicator Real Estate Assets Investment Belgium 2012
Page 2 January 2012 Trend indicator: real estate assets investment Belgium 2012
Key findings for 2012
84% of the participants see Belgium as an attractive location.
The capital and transaction markets are viewed with moderate optimism
Prices in prime locations will stay stable
Strongest seller groups: Residential real estate companies, real estate corporations/REITs and banks
Strongest buyer groups: Real estate corporations/REITs
Office properties will have the highest focus for investors
Preferred regions: Brussels (offices), Leuven (retail) and Gent (residential)
Page 3 January 2012 Trend indicator: real estate assets investment Belgium 2012
Agenda
About the trend indicator 2012
Market outlook Belgium 2012
Investment strategy Belgium 2012
Trend Indicator real estate assets investment Belgium 2012
European outlook 2012
Trend indicator real estate assets investment
Belgium 2012
© euroluftbild.de
Page 5 January 2012 Trend indicator: real estate assets investment Belgium 2012
Our trend indicator covers a broad range of investor groups in Belgium…
Trend indicator: real estate assets investment
► Ernst & Young Real Estate has conducted this survey in Germany since 2006 and in Switzerland since 2010.
► This year it was extended to Belgium for the first time.
Background 1 Aims 2 ► The trend indicator is based on a survey
conducted by the Economist Intelligence Unit in November and December 2011.
► The feedback of the interviews forms the results of the trend indicator.
Method ► Assessment of the Belgian real estate
investment market in the year to come.
► Outlook on the strategy which Belgian investors will pursue in the coming year.
► Survey of about 25 companies and investors who have been active in the Belgian property market in recent years
► The survey looks at two topics:
► General assessment of the Belgian real estate investment market in 2012 by real estate investors
► Analysis of the strategy pursued by real estate investors in Belgium with respect to the development of the real estate market
3
Investor groups
Real estate services firm (30%)
Publicly listed company / REIT (14%)
Institutional investor / Pension fund (12%)
Other UK lending bank (8%)
Other debt provider (8%)
Private property company (8%)
Open-ended fund (8%)
Private equity / Opportunity / Hedge fund (4%)
Other, please specify (8%)
Page 6 January 2012 Trend indicator: real estate assets investment Belgium 2012
… the same survey was also executed in other European countries
► Austria
► Belgium
► France
► Germany
Participating Countries
► Spain
► Sweden
► Switzerland
► United Kingdom
► Luxembourg
► Netherlands
► Poland
► Russia
European trend indicator: real estate assets investment
► The survey includes for the first time 12 European countries
► All surveys took place in November and December 2011
► Across these countries, we have gathered feedback from a total of 550 companies who are active on the real estate market
Page 7 January 2012 Trend indicator: real estate assets investment Belgium 2012
84% of the participants see Belgium as an attractive location in 2012 …
Belgium’s attractiveness as a location for real estate investments Key messages
► A clear majority (84%) views Belgium as an attractive or very attractive real estate investment location in 2012
Original question – “How do you rate Belgium‟s overall attractiveness as a location for real estate investments in 2012?”
15%
69%
12%
4%0%
Very attractive Attractive Less attractive Neutral No response
Page 8 January 2012 Trend indicator: real estate assets investment Belgium 2012
… particularly compared with other European countries
Belgium’s attractiveness as a location for real estate investments compared to other countries
Original question – “How do you rate Belgium‟s overall attractiveness as a location for real estate investments in 2012 compared to other countries?”
Key messages
► The majority rated Belgium as attractive or very attractive compared to other countries (58%)
► 27% of the participants are neutral about the relative attractiveness of Belgium
15%
43%
15%
27%
0%
Very attractive Attractive Less attractive Neutral No response
Page 9 January 2012 Trend indicator: real estate assets investment Belgium 2012
Original question – “Which of the following statements about the real estate financial/capital market in 2012 do you agree with?”
The capital markets in 2012 are viewed with moderate optimism …
"The Basel III regulation will make real estate loans less attractive for banks and will lead to greater restraint in
the mortgage business."
"There will be an increase in M&A activity in the real estate sector in 2012.”
"There will be increased transaction activity in 2012, as a result of real estate assets coming to market out of
restructuring of secured debt facilities."
"Banks will reduce their exposure to commercial real estate holdings over the next 12 months.”
Due to the Solvency II regulation, insurance companies could increasingly act as debt providers for real estate
investments in the future.”
"The euro-zone sovereign debt crisis will significantly reduce activity in European real estate markets. “
"Fears of high inflation in the medium term will drive investors towards the real estate market."
"The commercial mortgage backed securities market will revive in 2012."
"Capital markets will become more attractive for real estate IPOs and equity capital increases."
► High inflation will drive investors
towards real estate (69%)
► Euro crisis will reduce activities in
the real estate market (65%)
► Insurance companies to increasingly
act as debt providers (58%)
► Increase in transactions (54%)
► Banks will reduce commercial real
estate holdings (53%)
► Restraints in mortgage availability
due to Basel III (46%)
► Increase in M&A activities (42%)
► CMBS will revive in 2012 (38%)
► IPOs and equity issuance will
increase (36%)
Strongly agree Agree Disagree Strongly Ddsagree Neutral
8%
12%
8%
12%
15%
8%
8%
8%
61%
53%
58%
46%
41%
31%
34%
30%
28%
19%
23%
23%
23%
35%
19%
27%
31%
24%
4%
8%
8%
4%
8%
12%
12%
19%
23%
8%
27%
23%
27%
32%
"Fears of high inflation in the medium term will drive investors towards the real estate market."
"The euro-zone sovereign debt crisis will significantly reduce activity in European real estate markets."
“Due to the Solvency II regulation, insurance companies could increasingly act as debt providers for real estate investments in the future.”
"There will be increased transaction activity in 2012, as a result of real estate assets coming to market out of restructuring of secured debt
facilities."
"Banks will reduce their exposure to commercial real estate holdings over the next 12 months."
"The Basel III regulation will make real estate loans less attractive for banks and will lead to greater restraint in the mortgage business."
"There will be an increase in M&A activity in the real estate sector in 2012."
"The commercial mortgage backed securities market will revive in 2012."
"Capital markets will become more attractive for real estate IPOs and equity capital increases."
Strongly agree Agree Disagree Strongly disagree Neutral No response
Page 10 January 2012 Trend indicator: real estate assets investment Belgium 2012
… and the transaction market is expected to be also moderate in 2012
Original question – “Which of the following statements about the real estate transaction market in 2012 do you agree with?”
► Green building standards will play a
more important role in the future
(76%)
► More project developments in
2012 (65%)
► International financial investors
increasingly attracted (54%)
► More portfolio deals (53%)
► Increased deal size (50%)
► Increased transaction volume
compared to 2011 (19%)
“There will be more new project developments in 2012.”
"‟Green‟ building standards will play a more important role in the real estate investment market in the future, also with
respect to investments in existing real estate."
“Overall, the transaction volume will continue to recover in 2012 and exceed the level seen in 2011.”
“On average, the size of real estate deals will increase in 2012 compared to 2011.”
“International financial investors will be more attracted to the real estate market in 2012.”
“There will be more real estate portfolio deals in 2012.”
Strongly agree Agree Disagree Strongly disagree Neutral
38%
8%
12%
12%
4%
38%
65%
46%
41%
38%
15%
12%
19%
23%
8%
35%
54%
4%
4%
4%
4%
4%
8%
12%
19%
35%
15%
23%
"‟Green‟ building standards will play a more important role in the real estate investment …
“There will be more new project developments in 2012.”
“International financial investors will be more attracted to the real estate market in 2012.”
“There will be more real estate portfolio deals in 2012.”
“On average, the size of real estate deals will increase in 2012 compared to 2011.”
“Overall, the transaction volume will continue to recover in 2012 and exceed the level seen in …
Strongly agree Agree Disagree Strongly disagree Neutral No response
Page 11 January 2012 Trend indicator: real estate assets investment Belgium 2012
Original question – “How do you expect purchase prices to develop in 2012 based on the type of use and location?”
Price trends will vary depending on location …
Key messages
► Prices for offices in prime locations will increase (35%) or stay stable (42%)
► Retail in prime locations will increase (38%) or stay stable (43%)
The figures on page 12,13,16,17,18,19 and 22 may not add up to 100% as the charts do not include cases of no response
Office Retail
Prime Secondary Periphery
35%
42%
23%
12%
35%
53%
19%
38%
43%
Increasing Stable Decreasing
38%
43%
19%
31%
38%
31%
35% 34%31%
Increasing Stable DecreasingIncreasing Stable Decreasing Increasing Stable Decreasing
Page 12 January 2012 Trend indicator: real estate assets investment Belgium 2012
… and type of use
Original question – “How do you expect purchase prices to develop in 2012 based on the type of use and location?”
Key messages
► The majority expects prices of residential properties to remain stable in all locations
► Many expect attractiveness of hotel investments, especially in prime locations to increase (43%), other locations are considered to be stable
Residential Hotel
Prime Secondary Periphery
Increasing Stable Decreasing Increasing Stable Decreasing
32%
48%
20%
12%
60%
28%28%
48%
24%
Increasing Stable Decreasing
43%
19%
38%
12%
48%
40%
19%
43%38%
Increasing Stable Decreasing
Page 13 January 2012 Trend indicator: real estate assets investment Belgium 2012
Who will be the most active seller groups in Belgium in 2012 …
Seller groups
Original question – “How active do you think the following seller groups will be in the Belgian real estate market in 2012?”
Key messages
► In addition to the residential real estate companies (88%), real estate corporations/REITs (85%) and banks (81%) will be the most active seller groups in 2012
► Banks in surrounding countries in top three sellers
► Open-ended funds and public sector will be slightly less active sellers groups
► Closed-ended funds and PE-funds are seen as the most moderate seller groups
Residential real estate companies
Real estate corporations/REITs
Banks
Open-ended funds
Public sector
Insurance companies
Corporates (non-property)
Other international funds
Closed-ended funds
Opportunity-/PE-funds
Active Moderately active Cautious No response
53%
19%
8%
27%
12%
19%
31%
12%
4%
35%
66%
73%
42%
57%
46%
34%
46%
54%
46%
12%
15%
19%
31%
31%
35%
35%
42%
38%
54%
4%
Residential real estate companies
Real estate corporations/REITs
Banks
Open-ended Funds
Public sector
Insurance companies
Corporates (Non-Property)
Other international Funds
Opportunity-/PE-Funds
Closed-end Funds
Active Moderately active Cautious No response
Page 14 January 2012 Trend indicator: real estate assets investment Belgium 2012
… and who will be the buyers in Belgium?
Buyer groups
Original question – “How active do you think the following buyer groups will be in the Belgian real estate market in 2012?”
Key messages
► Real estate corporations/REITs (81%) will be the most active group of buyers
► All other types of buyers seem to be equally active on the market
► Only opportunity/PE-Funds are expected to be less active
Real estate corporations/REITs
Insurance companies
Other international funds
Open-ended funds
Residential real estate companies
Banks
Closed-end funds
Private/Family office
Sovereign wealth funds
Opportunity-/PE-funds
Active Moderately active Cautious No response
31%
27%
19%
19%
8%
12%
34%
19%
15%
12%
50%
46%
54%
54%
61%
57%
35%
46%
50%
38%
19%
27%
27%
27%
31%
31%
31%
35%
31%
46%
4%
4%
Real estate corporations/REITs
Insurance companies
Other international funds
Open-ended Funds
Residential real estate companies
Banks
Closed-end Funds
Private/Family Office
Sovereign wealth funds
Opportunity-/PE-Funds
Active Moderately active Cautious No response
Page 15 January 2012 Trend indicator: real estate assets investment Belgium 2012
The following use types will be popular …
Strong or moderate investment focus
Original question – “Compared to 2011, what kind of focus do you intend to give to the following real estate use types in your investment strategy for 2012?”
Key messages
► Office properties will have the highest focus for investors (27%)
► Generally all use types will have a more moderate investment focus
27%
53%
19%
42%
19%
43%
4%
31%
8%
53%
Strong Moderate
Office Retail Residential Logistics HotelOffice Retail Residential Logistics Hotel
Page 16 January 2012 Trend indicator: real estate assets investment Belgium 2012
… and not so popular with investors in 2012
Lower or no investment focus
Original question – “Compared to 2011, what kind of focus do you intend to give to the following real estate use types in your investment strategy for 2012?”
Key messages
► Logistic investments are in a low investment focus
Office Retail Residential Logistics Hotel
12%
8%
12%
27%
15%
23%
42%
23%
12%
19%
Low No focus
Office Retail Residential Logistics Hotel
Page 17 January 2012 Trend indicator: real estate assets investment Belgium 2012
Investors prefer Brussels and Antwerpen for office investments, for retail investments Leuven-Gent-Antwerp are more in the focus …
Original question – “Which Top-City-Locations will you be focusing your investments on in 2012?”
Key messages
► Brussels (58%) and Antwerp (34%) will be the most attractive locations for offices
► Retail investments are expected to be stronger in Leuven (30%), Antwerp (27%) and Gent (27%)
Office and Retail focus
58%
15%
34%
27%
19%
27%
12%
30%
12% 12%
4%
12%8%
15%
Office Retail
Brussel Antwerpen Gent Leuven Namen Luik KortrijkBrussels Antwerp Gent Leuven Namen Luik Kortrijk
Page 18 January 2012 Trend indicator: real estate assets investment Belgium 2012
… residential investments are preferred in Flanders
Original question – “Which Top-City-Locations will you be focusing your investments on in 2012?”
Key messages
► For residential investments, investors prefer Flanders i.e. Gent (30%) and Leuven (23%)
Residential and no focus
Brussels Antwerpen Gent Leuven Namen Luik Kortrijk
19%
0%
4% 4%
30%
8%
23%
12%12%10%
19%
8%
19%
12%
Residential Other
Brussel Antwerpen Gent Leuven Namen Luik Kortrijk
Page 19 January 2012 Trend indicator: real estate assets investment Belgium 2012
The greatest impediments to deal flow in 2012 will be…
Original question – “Do you agree or disagree that the following will be impediments to deal flow in 2012?”
Key messages
► The availability of senior debt funds (72%) and availability of junior debt funding (50%) are the greatest impediments for deal flows
► Price mismatch between buyers & sellers is an additional hurdle (46%)
► Need for capital injection (42%) becomes important
Impediments to deal flow
Availability of senior debt funding
Availability of junior debt funding
Level of capital injection required
Price mismatch between buyers and sellers
12%
19%
8%
23%
60%
31%
38%
19%
12%
19%
23%
23%
4%
8%
4%
12%
12%
23%
27%
23%
Availability of senior debt funding
Availability of junior debt funding
Price mismatch between buyers and
sellers
Level of Capital Injection required
Strongly agree Agree Disagree
Strongly agree Agree Disagree Strongly disagree Neutral
Page 20 January 2012 Trend indicator: real estate assets investment Belgium 2012
… and the following bank actions are expected for problem loans
Original question – “Please indicate whether you agree or disagree with the following statements.”
Key messages
► Extension of loan repayment period is considered to be the most effective action to handle problem loans (65%)
► Debt-for-equity swaps are increasing (58%)
Bank actions to handle problem loans
Banks will extend loan repayment period
Banks will increase debt-for-equity swaps
Banks will increase consensual restructuring deals
Banks will increasingly replace asset managers
Banks will increase enforcement of repayment terms and conditions
8%
8%
19%
12%
8%
57%
50%
27%
23%
23%
23%
15%
31%
34%
19%
8%
8%
4%
12%
4%
19%
19%
31%
38%
Banks will extend loan repayment period
Banks will increase debt-for-equity swaps
Banks will increase consensual restructuring
deals
Banks will increasingly replace asset managers
Banks will increase enforcement of
repayment terms and conditions
Strongly agree Agree Disagree Strongly Disagree Neutral No response
Strongly agree Agree Disagree Strongly disagree Neutral
Page 21 January 2012 Trend indicator: real estate assets investment Belgium 2012
Which exit options will play a role?
Original question – “What exit strategies do you have planned?”
Key messages
► Mutual funds (46%) is the preferred exit option
► REOC/REIT (42%) and closed-ended funds (35%) will also play a large role
Planned exit strategies
42%
46%
27%
35%
23%
0%
REOC/REIT Mutual funds IPO Closed-end funds Trade Sale OtherREOC/REIT Mutual funds IPO Closed-end funds Trade sale Other
Page 22 January 2012 Trend indicator: real estate assets investment Belgium 2012
Trend indicator real estate assets investment
Europe 2012
© euroluftbild.de
Page 23 January 2012 Trend indicator: real estate assets investment Belgium 2012
Page 24 January 2012 Trend indicator: real estate assets investment Belgium 2012
The perceived attractiveness of property markets varies from country to country.
Attractiveness (absolute)
Original question – “How do you rate your attractiveness as a location for real estate investments in 2012? And compared to other locations worldwide?”
Key Message
► All countries were rated positively
► Economic stability makes Germany Sweden and Switzerland most attractive to investors who are active there
► Some other countries are viewed with caution. Reasons include a lack of transaction opportunities at attractive prices and uncertainty regarding economic stability
Very attractive Attractive Less attractive Neutral No response
… compared to other locations Germany
Sweden
Luxembourg
Switzerland
Poland
Belgium
France
The Netherlands
UK
52%
21%
14%
18%
15%
50%
28%
15%
19%
22%
12%
31%
47%
57%
51%
54%
59%
38%
36%
43%
64%
48%
57%
30%
11%
14%
7%
13%
9%
9%
15%
13%
8%
10%
26%
7%
21%
21%
13%
25%
27%
4%
22%
21%
13%
1%
4%
3%
2%
Germany
Sweden
Austria
Luxembourg
Russia
Swiss
Spain
Belgium
Poland
Netherlands
France
UK
Very attractive Attractive Less attractive
Neutral No response
Austria
Russia
Spain
1%
6%
4%
4%
4%
4%
11%
6%
2%
15%
4%
4%
7%
8%
9%
15%
12%
6%
14%
21%
11%
61%
64%
71%
82%
53%
44%
60%
69%
53%
68%
65%
57%
38%
32%
21%
7%
35%
41%
25%
15%
30%
12%
12%
17%
Germany
Sweden
Austria
Luxembourg
Russia
Swiss
Spain
Belgium
Poland
Netherlands
France
UK
No response Neutral Less attractive
Attractive Very attractive
Page 25 January 2012 Trend indicator: real estate assets investment Belgium 2012
35%
24%
25%
8%
9%
20%
21%
15%
8%
7%
4%
9%
53%
64%
44%
61%
59%
46%
43%
48%
53%
50%
50%
43%
9%
12%
15%
19%
15%
22%
18%
17%
27%
25%
32%
26%
4%
2%
4%
7%
7%
4%
4%
7%
11%
12%
12%
15%
8%
11%
13%
8%
14%
7%
11%
3%Swiss
Germany
France
Belgium
UK
Russia
Luxembourg
Poland
Netherlands
Austria
Sweden
Spain
Strongly agree Agree Disagree Strongly disagree Neutral No response
Fear of inflation in the medium term is driving more investors toward real estate …
Original question – “Do you agree with the following statement: „Fears of high inflation in the medium term will drive investors towards the real estate market.‟?”
Key Message
► In all countries surveyed, a majority of respondents agree that concern over inflation is fueling interest in real estate
► The majority is particularly overwhelming in Switzerland and Germany (88 % in each)
Fear inflation will drive real estate investment
Strongly Agree Agree Disagree Strongly Disagree No reponse Neutral
Germany
Sweden
Luxembourg
Austria
Switzerland
Poland
Belgium
Spain
France
The Netherlands
UK
Russia
Page 26 January 2012 Trend indicator: real estate assets investment Belgium 2012
… and the Euro crisis is linked with a decline in real estate activity in the European markets.
Original question: „Do you agree with the following statement: „The euro-zone sovereign debt crisis will significantly reduce activity in European real estate markets.‟?”
Key Message Key Message
► A majority in all countries surveyed associates the Euro crisis with a decline in real estate investment activity
► In Switzerland, Germany and Belgium, fear of inflation appears to be overriding skepticism toward the Euro
Perceptions of the Euro crisis
25%
17%
26%
22%
29%
14%
25%
15%
14%
12%
14%
12%
61%
66%
57%
57%
49%
61%
47%
56%
57%
53%
38%
38%
14%
11%
13%
13%
12%
18%
14%
23%
27%
23%
30%
38%
2%
2%
8%
7%
7%
2%
2%
18%
12%
6%
2%
6%
2%
7%
4%
12%
Schweden
Polen
Spanien
Großbritannien
Frankreich
Österreich
Luxemburg
Russland
Niederlande
Belgien
Deutschland
Schweiz
Strongly agree Agree Disagree Strongly disagree Neutral No responseStrongly Agree Agree Disagree Strongly Disagree No reponse Neutral
Germany
Sweden
Luxembourg
Austria
Switzerland
Russia
Poland
Belgium
France
The Netherlands
UK
Spain
Page 27 January 2012 Trend indicator: real estate assets investment Belgium 2012
Some respondents anticipate increased lending by insurance companies as a result of Solvency II …
Original question – “Do you agree: „Due to the Solvency II regulation, insurance companies could increasingly act as debt providers for real estate investments in the future.‟?”
Key Message
► Respondents in half the countries surveyed agree that insurance companies will become more active as lenders as a result of Solvency II
► Agreement is strongest in Germany (85%), while just over a third of respondents in Austria share this view
Opinion of insurance companies as debt providers
31%
14%
13%
11%
9%
21%
10%
18%
18%
13%
11%
54%
58%
41%
41%
43%
44%
30%
39%
29%
29%
29%
25%
14%
23%
18%
19%
25%
38%
17%
37%
18%
25%
12%
25%
1%
2%
6%
4%
4%
4%
7%
19%
19%
25%
21%
17%
32%
10%
31%
21%
39%
9%
Deutschland
Belgien
Niederlande
Großbritannien
Polen
Schweiz
Spanien
Russland
Schweden
Luxemburg
Frankreich
Österreich
Strongly agree Agree Disagree Strongly disagree Neutral No responseStrongly Agree Agree Disagree Strongly Disagree No reponse Neutral
Germany
Sweden
Luxembourg
Austria
Switzerland
Russia
Poland
Belgium
Spain
France
The Netherlands
UK
Page 28 January 2012 Trend indicator: real estate assets investment Belgium 2012
… and expectations of transaction volume in 2012 are generally lukewarm.
Expectations of transaction volume
Original question – “Do you agree with the following statement: „Overall, the transaction volume will continue to recover in 2012 and exceed the level seen in 2011‟?”
Key Message
► Germany and France are the only countries surveyed in which a majority of respondents (56% and 54%) expect higher transaction volume in 2012 than in 2011
► In most countries, respondents anticipate a stable or declining volume of transactions
8%
33%
11%
13%
3%
7%
8%
6%
12%
7%
4%
48%
21%
42%
33%
38%
34%
30%
27%
21%
18%
21%
15%
39%
17%
29%
30%
47%
22%
25%
24%
42%
25%
40%
54%
4%
6%
4%
15%
12%
11%
11%
16%
12%
11%
7%
4%
23%
14%
9%
26%
26%
27%
13%
39%
32%
23%
1%Deutschland
Frankreich
Luxemburg
Polen
Schweiz
Großbritannien
Spanien
Niederlande
Russland
Österreich
Schweden
Belgien
Ich stimme zu Ich stimme eher zu Ich stimme eher nicht zu Ich stimme nicht zu Neutral keine Angabe
Strongly Agree Agree Disagree Strongly Disagree No reponse Neutral
Germany
Sweden
Luxembourg
Austria
Switzerland
Russia
Poland
Belgium
Spain
France
The Netherlands
UK
Page 29 January 2012 Trend indicator: real estate assets investment Belgium 2012
Original question – “How do you expect purchase prices to develop in 2012 based on the type of use and location?”
Key Message
► In almost all countries surveyed, office property prices in prime (1a) locations are expected to remain stable or grow
► Growth potential is especially evident in those countries in which office property had been under price pressure
► Prices in peripheral locations are largely viewed as stable; Germany and Switzerland are the exceptions
Price trends for office property are expected to vary from country to country and according to location …
Increasing stable decreasing
Legend Prime Periphery
(percentage results) )
39
1150
19
44
37
UK
SP
F
RUS
SWE
PL
GER
AT
CH
NL
BEL
LUX
Price trends office property
39
50
11 19
3744
19
3843
35
42
23
8
46466025
15
5732
1136
32
32
6416
20 22
48
30
4728
25 26
44
30
6131
8
5428
18
7117
1232
38
30
39
47
14 14
47
39
5926
15 18
43
39
27
65
8 19
81
18
58
24 15
85
Page 30 January 2012 Trend indicator: real estate assets investment Belgium 2012
… as are price trends for retail property ...
Original question – “How do you expect purchase prices to develop in 2012 based on the type of use and location?”
Key Message
► In most countries, a majority of respondents expect prices for retail property in prime locations to remain stable or even climb
► Expectations of rising prices in top locations are strongest in Germany and Luxembourg
Increasing stable decreasing
Legend Prime Periphery
(percentage results) )
39
1150
19
44
37
Price trends retail property
UK
SP
F
RUS
SWE
PL
GER
AT
CH
NL
BEL
LUX
4749
4 1
4257
6
82
12 18
82
32
56
12 30
44
26
38
43
1935
34
31
38
45
17 33
52
15
4739
14 22
56
22
20
56
24 27
2944
42
28
30 35
44
21
18
64
18 21
66
13
8
73
19 25
46
29
4353
432
36
32
33
50
1730
28
42
Page 31 January 2012 Trend indicator: real estate assets investment Belgium 2012
… and residential property…
Original question – “How do you expect purchase prices to develop in 2012 based on the type of use and location?”
Key Message
► Throughout Europe, residential property prices are robust in top locations
► This is expecially true in Germany, Switzerland and Great Britain
► Even in peripheral locations, residential real estate prices are generally viewed as stable
Increasing stable decreasing
Legend Prime Periphery
(percentage results) )
39
1150
19
44
37
Price trends residential property
UK
SP
F
RUS
SWE
PL
AT
CH
NL
BEL
LUX
75
241 7
66
27
6
70
2465
323
GER
36
46
18 30
37
33
32
48
2028
48
24
4145
14 25
37
38
3947
14 25
54
21
43
35
22 20
46
34
37
35
28 22
3543
5231
1733
49
18
4530
2540
23
37
5439
7 25
54
21
6421
15 14
4046
Page 32 January 2012 Trend indicator: real estate assets investment Belgium 2012
… whereby the most active seller and buyer groups are identified as follows:
Original question – “How active do you think the following seller/buyer groups will be in the real estate market in 2012?”
Key Message
► Throughout Europe, banks and property companies /REITs are expected to be among the most active sellers in 2012
► In a majority of the countries surveyed, residential real estate companies will become more active as sellers
► On the buyer side, residential real estate companies are expected to be most active in 2012
TOP seller groups TOP buyer groups
Residential RE Corp. (88 %),
RE Corp./REITs (85 %), Banks (81 %)Belgium
RE Corp./REITs (81 %), Insurance Corp. (73 %),
Other intl. funds (73 %)
Open-ended funds (91 %),
Opportunity-/PE-Funds (89 %), Banks (88 %)Germany
Privat/Family Office (94 %), Insurance Corp. (92 %),
Other intl. funds (89 %)
RE Corp./REITs (92 %), Banks (92 %),
Residential RE Corp. (85 %)France
Residential RE Corp. (85 %),
Open-ended funds (85 %), Banks (85 %)
Banks (89 %), Opportunity-/PE-Funds (83 %),
Residential RE Corp. (79 %)UK
Residential RE Corp. (80 %),
Opportunity-/PE-Funds (79 %), Open-ended funds (78
%)RE Corp./REITs (88 %),
Residential RE Corp. (86 %), Banks (79 %)Luxembourg
Residential RE Corp. (89 %),
Open-ended funds (82 %), Other intl. funds (80 %)
RE Corp./REITs (88 %), Banks (84 %),
Residential RE Corp. (75 %)The Netherlands
Residential RE Corp. (80 %),
Banks (74 %), RE Corp./REITs (73 %)
RE Corp./REITs (79 %),
Open-ended funds (75 %), Banks (75 %)Austria
Sovereign wealth funds (75 %),
Open-ended funds (75 %), Banks (64 %)
Banks (80 %), Residential RE Corp. (79 %),
RE Corp./REITs (78 %)Poland
Banks (79 %), Residential RE Corp. (77 %),
Open-ended funds (74 %)
RE Corp./REITs (87 %), Open-ended funds (86 %),
Opportunity-/PE-Funds (84 %)Russia
Banks (85 %), Residential RE Corp. (83 %),
RE Corp./REITs (83 %)
Open-ended funds (89 %), RE Corp./REITs (86 %),
Residential RE Corp. (82 %)Sweden
Residential RE Corp. (89 %),
Open-ended funds (82 %), Other intl. funds (80 %)
Opportunity-/PE-Funds (75 %),
Corporates (Non-Property) (74 %), Banks (73 %)Swiss
Real estate funds (100 %),
Privat/Family Office (97 %), Insurance Corp. (91 %)
Banks (91 %), RE Corp./REITs (81 %),
Opportunity-/PE-Funds (77 %)Spain
Residential RE Corp. (83 %),
Banks (83 %), Open-ended funds (76 %)
Page 33 January 2012 Trend indicator: real estate assets investment Belgium 2012
Investment focus on office property, in comparison with other uses, is anticipated as follows:
Original question – “Compared to 2011, what kind of focus do you intend to give to the following real estate use types in your investment strategy for 2012?”
Key Message
► Investors in countries where office property prices are expected to rise have office property at the top of their shopping lists
► Investors in France and Russia report the strongest focus on office property for 2012
strong moderate low
Legend
(percentage results)
21
4421
14no focus
Investment focus office property
UK
SP
F
RUS
SWE
PL GER
AT
CH
NL
BEL
LUX
21
4421
14
27
53
128
5731
12
36
39
1114
5129
128
28
40
1715
5638
4 2
38
42
911
32
47
147
40
40
911
14
5121
14
17
61
22
Page 34 January 2012 Trend indicator: real estate assets investment Belgium 2012
Focus on retail properties will also vary in 2012 …
Original question – “Compared to 2011, what kind of focus do you intend to give to the following real estate use types in your investment strategy for 2012?”
Investment focus retail property
UK
SP
F
RUS
SWE
PL GER
AT
CH
NL
BEL
LUX
29
2514
32
19
4212
27
4625
1910
4332
1411
20
1833
29
36
2621
17
33
35
2210
31
2628
15
25
2136
18
17
3826
19
5124
817
336
58
3
Key Message
► Most investors focus to some extent also on retail property (exception: Switzerland)
► Investors in Germany, France, Luxembourg and Poland favor the retail sector most strongly
strong moderate low
Legend
(percentage results)
21
4421
14no focus
Page 35 January 2012 Trend indicator: real estate assets investment Belgium 2012
… while investor focus on European residential property is expected to vary as follows :
Original question – “Compared to 2011, what kind of focus do you intend to give to the following real estate use types in your investment strategy for 2012?”
Key Message
► As an asset class, residential property is in demand in most of the countries surveyed (exception: Switzerland)
► In Germany, it appears that the massive demand for residential real estate will be sustained in 2012
Investment focus residential property
UK
SP
F
RUS
SWE
PL GER
AT
CH
NL
BEL
LUX
18
3518
29
19
4315
23
21
53
1313
4332
1114
33
2518
24
24
3024
22
29
44
234
27
3720
16
14
4021
25
25
2817
30
6910615
14
80
6
strong moderate low
Legend
(percentage results)
21
4421
14no focus
Page 36 January 2012 Trend indicator: real estate assets investment Belgium 2012
Summary
Page 37 January 2012 Trend indicator: real estate assets investment Belgium 2012
This is how the survey participants see the Belgian real estate market …
Outlook Belgium Attractiveness
► A clear majority (84%) views Belgium as an attractive or very attractive real estate investment location in 2012
► The majority rated Belgium as attractive or very attractive compared to other countries (58%)
Real estate financial/capital market
► High inflation will drive investors towards real estate (69%)
► Euro crisis will reduce activities in the real estate market
(65%)
Real estate transaction market
► International financial investors increasingly attracted (54%)
► More project developments in 2012 (65%)
Purchase price expectations
► Prices for offices in prime locations will increase (35%) or stay stable (42%)
► Retail in prime locations will increase (38%) or stay stable (43%)
► The majority expects prices of residential properties to remain stable in all locations
Seller/buyer groups
► In addition to the residential real estate companies (88%), real estate corporations/REITs (85%) and banks (81%) will be the most active seller groups in 2012
► Real estate corporations/REITs (81%) will be the most active group of buyers
► All other types of buyers seem to be equally active on the market
Real estate use types
► Office properties will have the highest focus for investors (27%)
► Residential investments are in a low investment focus
Preferred regions
► Brussels (58%) and Antwerpen (34%) will be the most attractive locations for offices
► For residential investments, investors prefer Gent (30%) and Leuven (23%)
Page 38 January 2012 Trend indicator: real estate assets investment Belgium 2012
This is how the survey participants see the Belgian real estate market …
Outlook Belgium Greatest impediments for deals
► The availability of senior debt funds (72%) and availability of junior debt funding (50%) are the greatest impediments for deal flows
► Price mismatch between buyers & sellers is an additional hurdle (46%)
Bank actions to handle problem loans
► Extension of loan repayment period is considered to be the most effective action to handle problem loans (65%)
► Debt-for-equity swaps are increasing (58%)
Exit strategies
► Mutual funds (46%) is the preferred exit option
Page 39 January 2012 Trend indicator: real estate assets investment Belgium 2012
… while investors throughout Europe express the following views:
Outlook Europe Attractiveness ► All countries were rated positively ► Economic stability makes Germany, Sweden and
Switzerland most attractive to investors who are active there
► Some other countries are viewed with caution. Reasons include a lack of transaction opportunities at attractive prices and uncertainty regarding economic stability
Real estate capital market ► In all countries surveyed, a majority of respondents
agrees that concern over inflation is fueling interest in real estate
► A majority in all countries surveyed associates the Euro crisis with a decline in real estate investment activity
► Respondents in half the countries surveyed agree that insurance companies will become more active as lenders as a result of Solvency II
Real estate transaction market ► Germany and France are the only countries surveyed in
which a majority of respondents (56% and 54%) expect higher transaction volume in 2012 than in 2011
► In most countries, respondents anticipate a stable or declining volume of transactions
Purchase price expectations ► In almost all countries surveyed, office and retail prices in
prime (1a) locations are expected to remain stable or grow ► Throughout Europe, residential prices are robust in top
locations Seller and buyer groups ► Banks and real estate companies/ REITs are expected to be
among the most active sellers in 2012 ► On the buyer side, residential real estate companies are
expected to be most active in 2012 Regional focus ► Investors in countries where office prices are expected to
rise have office property at the top of their shopping lists ► Most investors focus to some extent also on retail property ► As an asset class, residential property is in demand in most
of the countries surveyed
Marc Guns Tel.: +32 2 774 94 19 Mobile: +32 476 324 035 Email: [email protected]
Ernst & Young
Assurance | Tax | Transactions | Advisory
2012 Ernst & Young Transaction Advisory Services- all rights reserved.
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Tristan Dhondt Tel.: +32 2 774 60 17 Mobile: +32 497 480 486 Email: [email protected]