pbb Deutsche Pfandbriefbank and Landesbank Baden-Württemberg refinance MesseTurm in Frankfurt with € 155 Million

As Joint Arrangers, pbb Deutsche Pfandbriefbank and Landesbank BadenWürttemberg (LBBW) have arranged funding of € 155 million for GLL MesseTurm KG – a Fund which is managed by GLL Real Estate Partners GmbH.

 

Walter Allwicher for Deutsche Pfandbriefbank AG

 

The loan serves to refinance the MesseTurm in Frankfurt. The transaction was closed in December 2011. pbb will also act as Facility and Security Agent for the term of the credit.

The MesseTurm is one of Frankfurt’s most exceptional buildings. It was designed by the world renowned Chicago architects bureau Murphy Jahn, and was completed in 1990 with a height of 265 meters. The high rise building has 52 floors of rental office space, a total area of 62,135 sqm and 925 underground parking spaces. The majority of the property’s tenants are prestigious companies, including the Bank of New York Mellon and the press agency Thomson Reuters.

THProjektmanagement, makon and Global Assessment merge to form VALTEQ GmbH

Dr. Thomas Herr, Jürgen Scheins and Dr. Gabriele Lüft will assume the management of the joint company.

Rilana Mahler for VALTEQ

With immediate effect, THProjektmanagement GmbH, makon GmbH & Co. KG and Global Assessment GmbH will operate together as VALTEQ GmbH. Dr. Thomas Herr, Jürgen Scheins and Dr. Gabriele Lüft announced the fusion today in Berlin. With the merger VALTEQ GmbH will develope into a market-leading technical consulting firm at the interface between the real estate industry, finance industry, design and construction industry, users and operators.

“With the fusion of our companies, we will not only be improving our future market coverage from a geographical viewpoint, but also in terms of expertise and personnel. Thanks to the know-how and experience of all three companies, VALTEQ has unequalled market experience in the fields of technical and environmental due diligence, project management, technical asset management, facility management, energy-efficiency and sustainability consulting,” says THP founder and Principal Director, Dr. Thomas Herr, explaining the expansion move. Since its foundation in 2002, THProjektmanagement GmbH has cemented its place on the market as an independent specialist consultant for the analysis of costs and risks in real estate portfolios. Together with Jürgen Scheins and Dr. Gabriele Lüft, Dr. Herr will assume the management of VALTEQ.

“As of now, we will be operating jointly with around 50 employees from our VALTEQ locations in Berlin, Munich, Stuttgart, Nuremberg and Frankfurt am Main. This broad base will allow us to be even closer to our customers to fulfil our mandates for banks and insurance firms, private equity companies, funds and real estate companies, as well as public-sector corporations and major concerns whose core business lies outside the scope of the real estate industry,” says Jürgen Scheins, who, since 2005 – as the Principal Director of makon which was founded in 1996 – was instrumental in expanding the firm’s consulting and services offering across the board of construction and real estate-related matters and, at the end of 2011, assumed all company shares in makon.

“Apart from expanding our market position in Germany, we are also aiming at further growth impetus by tapping into international real estate markets with this merger. In doing so, we want to utilise our strength as a consulting firm for technical real estate matters,” adds Dr. Gabriele Lüft, who founded Global Assessment GmbH in Frankfurt am Main, following the takeover of LandAmerica Assessment GmbH in 2009. In this respect, particular importance is placed on international networking in the GRS Group with partners in the USA, Japan and Europe.

VALTEQ’s service spectrum encompasses all forms of real estate, from housing, offices and retail, through operator properties, such as hotels and healthcare facilities, right up to logistics and industrial real estate. The services provided for these property types include technical and environmental due diligence, environmental and environmental-compliance consulting, technical asset management and project management. In addition to this, VALTEQ provides services in facility management and corporate real estate management consulting, as well as sustainability and energy-efficiency consulting, including Green Building certification and sustainability reporting.

“In the future, our day-to-day work will also focus on providing personal support for our customers. Therefore, old contacts will remain intact. In the past our companies already shared the moral concepts of good and high-quality technical real estate consulting; now, our name, VALTEQ represents these common principals ,” say the three Managing Directors. “In the past, all companies were equally characterised by a company culture based on partnerships; we are therefore certain that we can realise this merger swiftly.”

pbb Deutsche Pfandbriefbank provides a € 61 million facility to the Pillar Retail Europark Fund (PREF)

pbb Deutsche Pfandbriefbank announces the completion of the € 61 million financing of two retail and leisure parks located in Spain for subsidiaries of PREF. The Fund is managed by BL European Fund Management LLP and part-owned by The British Land Company PLC. The transaction closed in December 2011.

Oliver Gruss for Deutsche Pfandbriefbank AG

pbb Deutsche Pfandbriefbank acted as Arranger, Agent and Sole Lender on the facility.

Nassica Retail and Leisure Park is a major regional mixed retail and leisure park located in Getafe in the southern outskirts of Madrid and was built in 2002. The centre benefits from the mix of leisure operators (anchored by a Cinesa cinema), a wide range of restaurant chains, as well as a Carrefour hypermarket and leading retailers such as Conforama, Worten, Toys R Us and Merkal.

Vista Alegre Retail Park is a retail warehouse park located in Zamora and was built in 2002/2003. The centre is let to 14 operators including anchors AKI, Froiz and El Corte Inglés Oportunidades. Harin Thaker, Head of Real Estate Finance International, pbb Deutsche Pfandbriefbank, commented: “We are delighted to have been able to support PREF and British Land in the financing of these Spanish assets demonstrating our ongoing commitment to our core customers and select projects.”

EBS REMI and CORESTATE Capital AG Launch “Distressed Real Estate Debt” Research Cooperation

Corestate Founder & Chairman Ralph Winter: “Innovative solutions are needed to cope with the imminent financing freeze.”

Birte Wachsmuth for CORESTATE Capital AG

Approximately 1.4 trillion Euros worth of global distressed assets are being marketed, while another 1.2 trillion Euros of commercial real estate mortgages worldwide are due to mature over the next four years, with approximately 500 billion Euros in Europe and 125 billion Euros in Germany alone. “Banks have severely cut back on credit financings and focus, if any, on low-risk lending. This trend is set to accelerate further and will lead to a sharp increase of non-performing real estate assets. Banks are not capable of covering financing demand due to the capital requirements they are facing. Real estate debt, as we know it, is in the past and no one knows what implications this has for the real estate market (The New Normal),” said Ralph Winter, Founder and Chairman of Corestate Capital AG. These developments have been driven by lending restrictions of banks who, in order to ensure their own economic survival, are either avoiding loan extensions or are making them subject to increased equity contributions or much higher risk premiums. “The main aim of our research cooperation is to analyse the upcoming wave of distressed real estate debt and to provide transparency which will help the real estate industry cope with the greatest financial crisis since World War II.”

“The “Distressed Real Estate Debt” research cooperation went live on 1 November 2011, in order to analyse the parameters of the market for distressed real estate assets and non-performing loans, to predict future developments, and to investigate the problems emerging on the ground,” stated Prof. Dr. Nico B. Rottke, Founder and Head of the Real Estate Management Institute at the EBS University of Economics and Law. He went on to announce the delivery of the first results in the first quarter of 2012. “Incipient approaches toward a solution that have crystallised so far include the formation of a transparency culture, the development of internal stabilisation programmes, and the endorsement of a pro-active value added approach.”

Experts attribute the current situation to the low interest rate financing that was available in investment markets for many years. For instance, the major central banks boosted private consumption and investments in their respective national economies by keeping interest rates low, and facilitated the net debt of private households to soar as a result. Moreover, the bursting of the US real estate bubble in 2007 triggered a successive shift of private to public debt. “Many countries on the periphery of the European economy such as Greece, Portugal or Ireland proved unable to cover this debt load, thereby causing the sovereign debt crisis in the Eurozone. This has resulted in the fundamental restructuring of the global capital markets through regulatory measures such as Basel III, Solvency II or the Tobin tax currently under discussion that will impose higher capital requirements for financial institutions and insurance companies,” observes Rottke. “As a result, these institutions are forced to raise additional equity through asset sales, whereas governments are in turn trying to reduce their debt by selling assets. Distressed assets are the consequence of these trends, and they will shape the real estate investment environment for the foreseeable future.”

Distressed assets represent non-performing investments that have ceased to generate stable payments, or at a minimum, sufficient cash flow to support their capital structure. Most of them are marked by complex structures and low-levels of transparency, and involve both economic and legal risk exposure. This is true both for the commercial market, which shows a vast supply of distressed real estate and non-performing loans, and for Germany’s residential real estate market which was misjudged particularly by foreign investors. “Having initially overpaid as a result of missing market expertise, foreign investors erroneously assumed they would be able to successfully manage their real estate portfolios without a market presence of their own,” said Winter. “As a result, we are now seeing a large number of portfolios that are no longer able to service their debt under their own steam. Here, solutions will need to be identified to lay a new groundwork for economically sound real estate investments. This will also need to include a new approach for the communication between banks and investors that prevents the downgrading of performing debt to non-performing debt, and prevents values from being wiped out.”

That said, the majority of market participants do not have sufficient expertise in this area to fairly assess the risks and opportunities associated with it. This limits the circle of investors in both quantitative and qualitative terms. “Basically, only investors with local real estate knowledge, asset management expertise and the ability to restructure balance sheets have the right risk/return profile to successfully create economic value from such investments. This is where the wheat is separated from the chaff; where investors with a multi-value added strategy will make the difference, unlike those who deprive real estate of its value through a false management strategy,” emphasised Rottke who predicts attractive investment scenarios for the coming years due to the banks’ pressure on owners to sell.

“Real estate investments are subject to value creation processes. If this is disobeyed, performance suffers,” Winter added. “This makes it even more important to draw on the EBS research to shed light on the risks involved with the upcoming market situation in order to lay the basis for economically sound and sustainable real estate investments. Innovative solutions are needed to cope with the imminent financing freeze. To this end, we intend to collaborate with the Real Estate Management Institute of EBS University so as to make an active contribution and to develop models which will help turn non-performing portfolios back into real assets.”

Private rental market – The biggest challenge and the biggest opportunity

Rising demand from those unable to buy their own homes and those reluctant to commit in the current market means that rents will rise significantly more than house prices over the next five years, says international real estate adviser, Savills, which has today published its forecasts to 2016.

Julia Dietrich für Savills

The company forecasts that private renting will account for one in five households by 2016 and it is unlikely that supply will keep pace with demand – at least in the next five years.  Competition among renters will drive rents higher, with growth in mainstream rents forecast to rise by 20.5% by the end of 2016.  This growth significantly outpaces house price growth which is expected to total just 6.0% over the same five years.

This differential in capital value growth and rental value growth will push out yields and, says Yolande Barnes, director of Savills residential research, is likely to be the catalyst for renewed investment activity in the sector by corporates and institutions looking for income rather than individuals looking for capital growth.    Rental growth of the scale forecast by Savills would see the headline average gross yield on residential stock (IPD) rise from 5.4% to 6.1% across the five year period.  In areas of low owner-occupier demand, and associated suppressed capital values, yields are already high and could see an even greater shift, perhaps averaging nearer 9% by the end of 2016.

In prime London, rental growth of 20.5% is forecast for the next five years, though the forecast of 22.7% capital growth will suppress yields. For prime central locations then, capital growth will continue to be the major draw for investors. Prime locations outside the centre will see some outward yield movements though.

“We have long been advocates of residential property investment in the private rented sector,” says Barnes.   “Until recently this has primarily been predicated on the expectation of increased capital value, but there is now a strong case on the basis of income.

“A strong investment case can also be made in terms of the rapidly rising demand for private rented accommodation, a situation that is unlikely to change for as long as mortgage finance remains scarce and first time buyer deposits are unaffordable.  And although rents have risen sharply this year, the inbuilt supply shortage means that we see nothing overheated about this market.

“The biggest challenge now is how to deliver much needed supply into the private rentals market.”

More uncertainty for German open fund investors after new closures

This month saw the closure of a further two significant players among the German funds, AXA and Degi, bringing a measure of fresh agony for the German open-ended funds sector. The moves came as no great surprise, as all the indicators had been increasingly pointing to the likelihood of AXA’s Immoselect German open-ended fund coming under too much selling pressure to re-open in time to meet its German regulatory deadline – and so it proved to be.

Charles Kingston for REFIRE – Real Estate Finance Intelligence Report Europe

(courtesy of REFIRE: www.refire-online.com)

The French bosses at AXA pulled the plug on the fund earlier this month, making it the fifth fund to be wound up since the onset of the financial crisis, and increasing doubt about the ability of other frozen funds to re-open.

“The number of investors who wanted to sell back their shares on a re-opening of the fund is simply too high”, said AXA Investment Managers’ CEO Achim Gräfen in a statement. Although AXA had been selling off assets from the fund, the liquidity level of 10% was still well below the 25-30% required to pay out investors wishing to cash in.

AXA Immoselect was frozen in 2009 after a wave of semi-institutional investors, including fund-of-funds and private wealth managers, sought to withdraw their money. Set up in 2002, at its peak the fund had nearly € 4bn under management, mainly in European office, logistics and hotel properties, and yielded an average of just over 3% annually.

The fund had even managed to reopen after a temporary three-month closure in 2008, but suffered from punitive withdrawals in that time, losing € 1bn in value and seeing liquidity plunge from 26% to less than 7%. The 2.€ 48bn fund will now be dissolved, with the 66 properties in the fund being sold off and investors receiving payouts on the proceeds at half-yearly intervals, starting next April.

Just this week investors were given the bad news on another fund similarly facing a November deadline to declare its hand. Aberdeen’s Degi International € 1.5bn fund was a candidate to follow an earlier Degi fund (Degi Europa) into dissolution, with an announcement due before the reopening deadline of November 15th. It too duly came this week. With 70,000 investors in the fund, the demand for share redemptions was deemed by Aberdeen to be likely to swamp its available liquid resources, and the group saw no choice but to terminate the fund.

Degi International was set up in February 2003 as a diversified fund focused on Europe but with an international dimension. At end-2008 it had 41 properties in 13 countries and an apparently strong risk diversification, but …

 

 

… here you can read more about German open fund investors

 

 

 

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Britain’s most famous Shopping Streets see dramatic rise in international ownership

London: According to a recent report by international real estate advisor Savills, over the past five years estimated sales of £1 billion and £2 billion have taken place on Bond Street and Oxford Street respectively, leading to a dramatic change in ownership profile.

Julia Dietrich for Savills

UK funds, British and Irish pension funds, who accounted for 96% of ownership on Oxford Street, have reduced their collective stake to 39% having been bought out by investors from Denmark, Spain, Cyprus, Qatar, Libya, Ukraine, India, Hong Kong, Sweden, Canada and the Far East. Similarly Savills reports that five years ago 86% Bond Street landlords were British and Irish investors compared to only 31% today. These stores have been acquired by Denmark, France, Russia, Italy, Thailand, Singapore, China and the Middle East.Jonathan O’Regan of Savills’ Central London investment team says: “Investors are attracted by cheap sterling and London’s reputation as a safe haven. A lot of UK funds and Irish investors have sold out because they can see the market is …

 

… here you can read more about the ownership of  famous Shopping Streets in London

 

 

 

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Residential Real Estate London: All ‘prime’ but not all equal

‘Prime central London’ describes the best properties in the best central locations but a new study published today by international real estate adviser, Savills reveals a huge divergence in price growth between the top performing properties and the worst, even within the confines of this tightly defined geographical area.  

Julia Dietrich for Savills

In brief:

• Values of prime central London resale properties rose by 87% on average across the volatile period of the last six years compared to 25% for mainstream London
• The top 10% of prime central London residential real estate, ranked by price growth, rose 151% in six years, and has recovered 57% since the bottom of the market in March 09
• The bottom 10% has seen values rise by 42% in the six year period, and 34% since March 09
• Mayfair outperformed on price growth, up 117% on average in six years, while St John’s Wood rose by just 69% suggesting unfulfilled potential
• Knightsbridge leads in terms of average price per square foot, at £2007 (note: this does not include the record-breaking new build properties)

The Savills prime central London index showed average price growth of 87 per cent in the six years to mid 2011, significantly higher than the average for the total London residential market which grew 25 per cent.  Detailed analysis of the period reveals price growth of 151 per cent for the top 10 per cent of the prime central London market ranked by price growth, compared to just 42 per cent price growth recorded in the bottom 10 per cent.

Price per square foot values have polarised, with price growth for top properties and locations hugely outpacing the lower end of prime.  Average prices ranged between £900 and £1,000 per square foot across the index in 2005, but now range from an average of £1,400 in the bottom decile to over £2,350 per square foot at the top.

“This analysis suggests that investors in prime central London need to look beyond the headline averages for real comparables in order to understand value,” says Lucian Cook, director of Savills research.  “The extent of the divergence in performance is too big …

 

 

… here you can read more about the residential real estate in London

 

 

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pbb Deutsche Pfandbriefbank financed a loan facility of € 143 million to institutional investors sponsored by J.P. Morgan Asset Management

pbb Deutsche Pfandbriefbank has financed a loan facility of € 143 million to institutional investors advised by J.P. Morgan Asset Management for the refinancing of existing loans and for the financing of planned retail conversion works in Docks de Marseille, a 70,000 square meter historical office and retail trophy asset located in the heart of Euromediterranée, the now well established business district on the sea front of Marseille in France. The transaction closed on September 30th 2011.

Oliver Gruss for Deutsche Pfandbriefbank AG

“We are pleased to have been able to support J.P. Morgan Asset Management in its refinancing of this landmark Marseille property and its planned renovation works”, comments Harin Thaker, Head of Real Estate Finance International. He continues: “This transaction demonstrates pbb’s commitment to supporting its clients in complex transactions in the face of current market disruptions.”

“This successful operation demonstrates again the quality of our long lasting relationship with our lenders and our ability to focus on value-add initiatives to reveal the full potential of our properties.” comments Jean-Philippe Vergnol, Head of J.P. Morgan Asset Management – Global Real Assets, Real Estate France.

Multiple-Award-Winning Prime Mall in Antakya Opens for Business

Prime Development opens second shopping centre in Turkey

Dietmar Müller for Prime Development

Prime Development, an international shopping centre developer and mall manager specialising in projects in Turkey, opened its multiple-award-winning Prima Mall shopping centre in the Turkish city of Antakya this past weekend. During the 2009 CNBC Awards ceremony, the shopping centre was cited as “Best Retail Development” in the categories “Turkey,” “Europe,” and “World.” During its first two days in business, the mall counted a footfall of 175,000 visitors.

Located in the town centre, the Prime Mall Antakya had an investment volume of approximately 90 million Euros and was completed in a construction period of twelve months. During a market period of seven months, 107 stores and thus 93% of the floor space was let.

The team behind the development and management of Prime Mall Antakya has an international cast whose staff members have an average industry experience of more than 13 years on European growth markets. The professional experience of these specialists adds up to an involvement in the planning, project-development, construction and management of 67 shopping centres.

Overall, Antakya’s first shopping centre is home to 127 retail units spread across four storeys and around 37,000 sqm in lettable area. It is served by 800 parking spaces in the underground car park and outdoor parking areas. Retailers include national and international brands such as Darty, Mc Donald’s, Vodafone, Samsung, Nike, Adidas, Burger King, Yves Rocher, as well as Benetton, and Pierre Cardin.

Prime Development’s latest project is situated in Antakya, a major city located in south-eastern Turkey, close to the Mediterranean seaboard. Antakya is the …

… here you can read more about the Prime Mall Antakya

Incentives for modern logistics spaces of more than 5,000 sqm decline heavily

• Realogis successful in NRW: 110,000 sqm of industrial and logistics real estate brokered in the first three quarters
• 6 major deals with leading manufacturers, trading companies and logisticians 

 

Silke Hoffmann for Realogis Immobilien Holding GmbH

 

 

In the first three quarters of 2011, Realogis found more than 110,000 sqm of warehouse and logistics space for well-known manufacturers, trading companies and logistics service providers in North-Rhine Westphalia. Among the top deals closed by the specialists in industrial and logistics properties in the three core markets of Cologne / Bonn / Aachen, Düsseldorf / Mönchengladbach / Lower Rhine and the Ruhr region are 24,000 sqm to a large wholesaler in Dortmund / Holzwickede, 11,000 sqm to the forwarding company Talke in Weilerswist, 9,000 sqm to the forwarder Vetten in Grevenbroich, around 7,000 sqm to the packaging company Comcoplast in Willich, 4,500 sqm to the wheel rim manufacturer Alcar in Troisdorf and 4,000 sqm to an international logistics company in Cologne Porz. This represents a slight increase on Realogis’ result for the same period the previous year (2010: 103,000 sqm).

“We are seeing a significant recovery in the real estate markets. We have been able to lease many of the properties very quickly, predominantly to forwarders and contract logistics experts,” says Bülent Alemdag, Managing Director of Realogis Immobilien Düsseldorf GmbH. Alemdag goes on to say, however, that there is a serious shortage of modern logistics spaces larger than 5,000 sqm at the top locations, and there are as yet no speculative development projects in the pipeline. “In the segment of top-quality logistics real estate, we now have a lessor’s market,” Alemdag says. “As a result, owners are offering fewer incentives to potential tenants, and in strategic locations they are not entering into short-term leases anymore, leading to tenancy periods of less than five years becoming rare.”

 

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Commercial property online: B2B portal Immopro24 with almost 1 million page views in September

Immopro24 – The specialised portal for commercial real estate registered 968,436* page views within their online presence in September 2011:

•  45% rate of increase since January 2011
•  Users are particularly interested in real estate offers and news in the sectors office- and storage space

 

Jasmin del Olmo for Immopro24 – The specialist for commercial real estate online

“The consequent concept and the know-how of Immopro24 as an online market place and information source exclusively for the B-to-B-segment of commercial real estate is continuously preferred by increasing page views in the line of business” says Alexander Müntzer, director of business development Germany.

Hence Immopro24 is contrary to the current trend in the commercial real estate market. Whereas for example, the business activity index by King Sturge / Jones Lang Lasalle registered a bearish mood for the second time in a row in September 2011, Immopro24 achieved increasing numbers of page views for the last 3 month with a rise of 20% in total.

Müntzer says: “The accesses to our real estate blogs accordingly stabilised on a high level. The increases were especially generated through our main site Immopro24.

(*Source: Domain factory Webalizer Version 2.21, Statistics WordPress)

  

About Immopro24 - The commercial real estate portal

Specialised commercial real estate market place

Specialised in the segment “commercial real estate”: Sales prospects for the sectors real estate investments, commercial real estate and commercial properties (business-to-business) find office and storage space, retail and wholesale properties on Immopro24. This specialisation applies to acquisition as well as the lease of commercial real estate.

Commercial real estate know-how-transfer:

Offer of information: Sales prospects obtain expanding knowledge with latest daily real estate news (currently ca 23,240 news) as well as real estate market reviews (1,048) in cooperation with international providers.

Internationality:

The concept of Immopro24 is very European. Immopro24 makes it possible for potential customers to get information in their respective national language. The currently supported languages are German, Spanish and English. Important for providers: Immopro24 is currently the sole European portal working with its own marketing in the markets Germany, Great Britain and Spain. Within the framework of internationalising German real estate companies Immopro24 offers special support such as translation services, direct marketing, public relations ect.

Internet skills:

With all important search criterion in the sector of commercial real estate in Germany Immopro24 has always top priority in Google search results through constantly optimising search engines.

Social media for commercial property:

Immopro24 offers their users essential social media activities: for example on Twitter via the account Gewerbeimmobilien with currently 1,050 followers or on Facebook via the account of Alexander Müntzer with currently ca 1,490 friends.

NAI apollo group analyses market for logistics properties in the Rhine-Main region for Q3 2011

Germany: – New leases of almost 160,000 sqm – 50 percent of which in properties of more than 10,000 sqm – Take-up of 433,350 sqm in 2011 exceeds forecast – Shortage of properties in the Rhine-Main region continues – Requests from owner-users for customised space on the increase – 2011 an exceptional year: many short-term tenancy deals

Silke Hoffmann for NAI apollo

After an exceptional first half of the year, with 274,450 sqm logistics and warehouse space being leased, demand in the Rhine-Main region rose strongly again in the third quarter, adding to the shortage of available real estate. According to an analysis conducted by NAI apollo group, a total of almost 160,000 sqm of logistics and warehouse space was leased by all market players in July, August and September. “This means that in the current year already 433,350 sqm of space were leased out in this special segment – a figure that exceeds our previous expectations,” says Martin Birkert, authorised signatory of NAI apollo group. And Birkert expects a further increase in the fourth quarter: “It will be interesting to see if we can break through the 500,000 sqm mark on the logistics real estate market in Rhine-Main.” In particular demand among trading companies, manufacturers and logisticians in the third quarter of 2011, accounting for around 50 percent of all new leases, were spaces of more than 10,000 sqm. “What is more, in this exceptional year 2011, we are also seeing an unusual trend towards short-term leases,” says Birkert. “And at the same time, custom-tailored properties are in more demand from owner-users.”

 

EUROPEAN YIELDS SHOW SIGNS OF CONVERGING AGAIN

Europe: According to Savills European data, the average yield gap between prime and secondary offices has compressed by approximately 18 basis points over the past twelve months and now stands at 89.5 basis points. This, the international real estate advisor states, follows a high point in January at which the average yield gap between prime to secondary yield was 91.3 basis points – the highest since 2005.

Julia Dietrich for Savills

The data suggests that of the 20 CBD locations surveyed, the widest yield gaps exist in London’s West End, Madrid and Brussels office markets – all exceed 100 basis points. London sees the strongest polarisation with 225 basis points.

Lydia Brissy, European research director, says: “In the peak of the cycle we saw an …

… here you can read more about the yield gaps in Europe

RENTAL RECOVERY IN EUROPEAN PRIME CBD OFFICE MARKETS

Europe: International real estate advisor Savills predicts that prime central business district (CBD) office markets in Europe have bottomed out and are showing trends of rental recovery. According to the firm’s pan-European index of prime CBD office rental growth markets, the UK, Sweden and Germany will show the largest amount of growth in the short to mid term, with average rents expected to rise by 11.1% in London’s West End, 7.9% in Stockholm and 3.5% Berlin in 2012.

Julia Dietrich for Savills

In the longer term Savills forecasts significant rental growth in Madrid and Milan, at 8.5% and 4% respectively in 2015, boosted in Italy by the positive impact expected to result from Expo 2015. The firm expects to see average prime rental growth of 2.1% in the Parisian CBD over the next five years.

Eri Mitsostergiou, Director in European Research, says: “European property markets have felt the impact of a slowdown in the Eurozone’s economy in the second quarter of 2011 with overall investment and occupational activity plateauing. However, assuming that the problems in Greece do not turn into a wider disorderly default, our pan-European rental index shows that overall prime CBD office markets are gradually on the road to rental recovery.”

In Germany Savills predicts that rental values will be …

… here you can read more about the office markets in Europe

 

King Sturge Real Estate Economy Index: Euro Crisis Dampens Spirit of Real Estate Economy

Germany: • Real Estate Climate drops for second time in a row • Confidence slumps, especially in regard to office property • Helge Scheunemann, Jones Lang LaSalle: “There is no need for pessimism. The real estate economy is competitively positioned.”

Ute Gombert for King Sturge Deutschland

The debt crisis in Europe is impacting Germany’s economic growth. Sentiment is deteriorating in the German real estate industry, too. In September, the poll-based Real Estate Climate of the King Sturge Real Estate Economy Index slipped for the second month in a row, down to now 126.3 index points (previous month: 135.0). The clear drop by 6.4 percent is actually steeper than the one in August, and has effectively checked the lateral movement of the sentiment indicator. The decline of the Real Estate Climate in September is based primarily on the development of the Investment Climate, which fell by 7.4 percent and dropped to 126.9 points (from 137.1 last month). In addition to the willingness to invest, the more than 1,000 market players polled also took a sober view of rental and income growth: The Rental Income sank by 5.5 percent to 125.6 index points (from 132.9 the month before).

“The real estate economy, which for the past months had stood its ground against the general deterioration in sentiment in the wake of the Euro crisis, is finally feeling the effects of the debt disaster as even the market players in our industry are losing heart,” commented Helge Scheunemann, Head of Research Deutschland at Jones Lang LaSalle. “The sense of unease is plausible not only because the macro-economic parameters in Germany have noticeably deteriorated, but also because the experts are divided in their predictions regarding the further economic trend.”

Office Climate Suffers Steepest Losses

For the second consecutive time, assessments deteriorated for all real estate segments. At -10 percent, the Office Climate registered the steepest losses and dropped from 124.5 to 112.1 index points. While the sentiment did remain in the positive range, the assessments regarding office real estate dropped even faster in September than the month before (-8.6 percent). The Retail Climate decreased by 4.9 percent to 125.7 index points (previous month: 132.9). Market players once again rated …

 

… here you can read more about the Real Estate Economy Index Germany

Madrids office market: decreased vacancys / increased refurbishments

Madrid: The Madrid office vacancy rate has eased in the second quarter of 2011, standing at 4.73% in the city’s Central Business District (CBD), down from 5.31% in Q111, according to international real estate advisor Savills. The firm states that this is an encouraging sign for Madrid’s office market, however it is important to note that occupier take-up is not the main reason for the decrease but a lack of new stock coming to the market. Take-up levels for Madrid reached approximately 90,000 sq m (968,751 sq ft) in Q2 2011, down from 160,000 sq m (1.7m sq ft) in Q2 2010.

 

Julia Dietrich for Savills

As a result of the continued stagnation in Madrid’s development pipeline, which saw just over 26,000 sq m (279,861 sq ft) of new space completed in Q2 11, landlords have increasingly looked to refurbish their existing properties in order to make them more competitive and efficient. In fact, Savills expects that almost 20% of the total new supply in 2011 will be refurbished space, compared with 9% in 2010, and predicts this stock could account for more than a third of new supply in 2012. Prime examples of markets that have already witnessed an increase in refurbished properties are on Calle Alcalá and the Castellana area where several properties are due to come back to the market having undergone technical and technological improvements that are currently demanded by the market. In some cases owners are making the most of lease expiries to completely refurbish their facilities, which is the case at Mutua Madrileña’s property at Paseo de la Castellana 50.

Ana Zavala, head of office agency Savills Madrid, says: “The lack of good office stock in the Madrid market has prompted a response from landlords to refurbish their existing stock, which is a promising sign. However, we need a greater level of refurbishments in the city’s urban centre as whilst we are still seeing prudence and caution from occupiers generated by a lack of confidence in Spain’s economic outlook, there are several large space requirements circulating that will be a good boost the market. In addition, we are expecting to see some growth in the Spanish economy at the end of 2011 and beginning of 2012, which will also help to ease confidence concerns.”

In terms of office rents, Savills research shows that overall rental decreases continue to slow with average CBD rents at…

… here you can read more about the office markets in Madrid

King Sturge Real Estate Economy Index: Sentiment in the Real Estate Economy Takes Noticeable Dip

Germany: • Real Estate Climate registers steepest decline of the past semester • Unease most apparent in the office and retail markets • Macro-economic Real Estate Economic Situation index buckles

Ute Gombert for King Sturge Deutschland

The turbulences on the world’s financial markets are leaving their marks on the German real estate economy. In August, the poll-based Real Estate Climate, which serves as a sentiment indicator, dropped by -6.2 percent to 135.0 index points (down from 143.9 last month). It represents the steepest decline during the past six months. The sentiment among the over 1,000 market players polled has thus returned to the level of December 2010. The dip in sentiments has been caused by both sub-components of the Real Estate Climate. For one thing, the Investment Climate, which reflects the willingness to invest, dropped to 137.1 points (previous month: 147.1). The Rental Income, which mirrors the sentiment regarding rental growth and income performance, decreased from 140.8 to 132.9 index points. This is the upshot of the August evaluation of the monthly King Sturge Real Estate Economy Index.

“In the wake of the latest turbulences on the financial markets, it comes as no surprise that the King Sturge Real Estate Economy Index has dipped,” said Helge Scheunemann, Head of Research Deutschland at Jones Lang LaSalle. “But that does not mean the index deteriorated as rapidly as could have been expected in response to the stock market crash. While the real estate industry may be impacted by the sometimes disastrous developments on the stock markets and currency fronts, the impact is not nearly as grave. After all, real estate markets may by all means benefit from …

 

… here you can read more about the Real Estate Economy Index Germany

Investment volume in Poland is on track to exceed €2BN

Poland: The investment volume in Poland’s commercial real estate market reached just over €1bn in the first half of 2011 according to research by international real estate advisor Savills, reflecting rising investment activity in Poland and confirming its strong position in Central and Eastern Europe.

 

Julia Dietrich for Savills

The H1 total represents almost 60% of the total investment volume in 2010 (€1.73bn) and Savills researchers believe that turnover in Poland is still on track to exceed €2bn by the end of 2011, as forecasted by the firm earlier this year, representing a return to 2007 levels.

In terms of the number of transactions in Q2 2011 the retail sector dominated the market with eight transactions signed, compared with seven office deals and five warehouse transactions according to Savills research. Significant deals include the acquisition of Promenada shopping centre by Atrium for over €170m, the acquisition of the remaining 50% share in Wars Sawa Junior department stores by ING for €79m and several shopping centres in Polish regional and secondary cities. The real estate advisor expects the retail sector to further increase its market share in the second half of 2011 due to a number of pending investment transactions, but believes that prime office buildings in Warsaw will remain the most targeted stock despite a shrinking availability of such investment product. Savills has also continued to observe an increased interest from investors in the regional office market where they can benefit from relatively good quality properties offering long leases at a rate of approximately 50-75 bps discount to Warsaw.

Michal Cwiklinski, head of investment at Savills Poland, says: “The dominance of retail deals in the second quarter of 2011 confirms a growing interest of investors in well established retail assets particularly in Poland’s regional markets and smaller cities. We expect to see …

 

… here you can read more about the Property investment in Poland

Savills centrel London Investment on retail roll

London: Savills has sold 138 New Bond Street, London and 40-41 Old Bond Street, London to private investors on behalf of British Airways Pension Fund. The properties were sold for a combined lot size of £28.125 million.

Julia Dietrich for Savills

138 Bond Street is let to Italian fashion house Missoni on a new 15 year lease at £310,000 per annum for the 2,539 sq ft (235.88 sq m) property. The property was purchased by a UK investor for £9.5 million which reflects an initial yield of 3.08%,40-41 Old Bond Street is let in its entirety to French jewellers Cartier Limited with an eight years remaining on the lease. The current rent is £540,000 per annum for the 4,669 sq ft (433.8 sq m) property. The property was purchased by an Irish investor for £18.65 million which reflects an initial yield of 2.74%.

Jonathan O’Regan, Savills associate, comments “Bond Street continues to accommodate the highest quality luxury retailers in London and the rental growth prospects continue to attract many investors. Both these properties were sold for prices substantially above the quoting price and we expect the trend will continue”

Savills has this week brought to the market Rolex’s London flagship store, 100 Knightsbridge, London SW1. The 2,781 sq ft store, freehold investment, forms part of world famous residential development One Hyde Park. Offers are sought in excess of £12.5 million.

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