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Prague Overview of commercial real estate in Europe

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					                 Session Leaseurope 2
  The real estate leasing industry – State of play


Overview of commercial real estate
                      in Europe
        Daniela Percoco - Head of Real Estate

 Eurofinas and Leaseurope Annual Convention - Prague, 05/10/2009
                                               Agenda

       Macroeconomic trends and forecasts in Europe
       The investments in constructions
       The real estate market
                            Investment flows
                            Cross border vs domestic
                            Nationality profile of investors and sellers
                            Deal size
                            Yields and rents trends

       Focus on segments: office, retail and industrial

Overview of commercial real estate in Europe     Prague, 05/10/2009        1
                   Macroeconomics trends and forecasts in Europe


       Bank lending to households and to the non-financial
                        corporate sector




            Source: ECB


Overview of commercial real estate in Europe   Prague, 05/10/2009   2
                   Macroeconomics trends and forecasts in Europe


                                     Global GDP Growth




            Source: IMF


Overview of commercial real estate in Europe   Prague, 05/10/2009   3
                   Macroeconomics trends and forecasts in Europe


                     GDPQuarter on-quarter growth rates, EU




                Source: ECB



Overview of commercial real estate in Europe   Prague, 05/10/2009   4
                   Macroeconomics trends and forecasts in Europe

          GDP growth and Economic Sentiment Indicator, EU




                 Source: Commission services.


Overview of commercial real estate in Europe    Prague, 05/10/2009   5
                   Macroeconomics trends and forecasts in Europe


                                          Annual GDP forecast (%, y-o-y)
                                                     2009
                                           May 2009                 September 2009
         Germany                               -5.4                        -5.1
         Spain                                 -3.2                        -3.7
         France                                -3.0                        -2.1
         Italy                                 -4.4                        -5.0
         Netherlands                           -3.5                        -4.5
         Euro area                             -4.0                        -4.0
         Poland                                -1.4                        1.0
         United Kingdom                        -3.8                        -4.3
         EU27                                  -4.0                        -4.0

        Source: European Commission


Overview of commercial real estate in Europe          Prague, 05/10/2009
                    Macroeconomics trends and forecasts in Europe


                                          Annual GDP forecast (%, y-o-y)
                                                     2010


         World                                                       2.5
         Advanced economies                                          0.6
         Euro area                                                   0.0*
         Germany                                                     -0.6
         France                                                      0.4
         Italy                                                       0.2*
         Spain                                                       -0.8
         United Kingdom                                              0.2
         CEE                                                         1.0
        * September 2009
        Source:IMF, July 2009

Overview of commercial real estate in Europe    Prague, 05/10/2009
                              The investments in constructions


                   Construction output and GDP in Europe

                    6,0
                    4,0                        3,9
                    2,0                               2,6
                              1,6    1,7                                          1,6
                    0,0
                                                                           -1,0
              %




                   -2,0
                                                             -3,1
                   -4,0
                   -6,0
                   -8,0                                             -7,5
                  -10,0
                          2004 2005 2006 2007 2008 2009 2010 2011
                                                     Years

                                       GDP            Construction output
     Source: Euroconstruct


Overview of commercial real estate in Europe          Prague, 05/10/2009                8
                                 The investments in constructions
                                         2009    2010     2011
       AT                                -1.0    -2.0      0.0
                                                                              CONSTRUCTION
       BE                                -2.2    -2.2      0.2
                                                                                SECTOR
       DK                                -8.2    2.3       4.1
                                                                          FORECASTS 2009-2011
       FI                                -13.3   -8.0      -2.5

       FR                                -5.5    0.6       1.5

       DE                                -3.7    1.8       0.3

       IE                                -34.6   -16.0     -7.2

       IT                                -7.5    1.1       0.3

       NO                                -5.8    -6.5      3.2

       PT                                -10.0   -7.8      1.2

       ES                                -18.7   -6.1      2.7

       SE                                -2.9    4.2       3.1

       CH                                1.6     0.9       -0.3

       NL                                -5.8    -9.0      -0.6

       UK                                -7.5    -1.6      1.6

       Western Europe (EC-15)            -8.0    -1.5      1.0
       CZ                                -3.2    0-3       3.1

       HU                                -3.2    2.5       6.2

       PL                                5.5     10.2      15.4

       SK                                -4.3    6.0       4.9

       Eastern Europe (EC-4)             1.2     6.3      10.5         Source: Euroconstruct
       Euroconstruct countries (EC-19)   -7.5    -1.0      1.6

Overview of commercial real estate in Europe             Prague, 05/10/2009                    9
                              The investments in constructions


                    RESIDENTIAL SECTOR (2009: -15%)
        Turbulence in financial market

         Limitation of the mortgage loans to households for purchasing flats

        Freezing of new housing starts and slowing down of developments

      surpassing the most pessimistic forecasts

        Decrease in prices

        Slowdown repairs in existing stock, but performing better than new

      developments

       Source: Euroconstruct


Overview of commercial real estate in Europe   Prague, 05/10/2009              10
                              The investments in constructions


                   NON RESIDENTIAL SECTOR (2009: -8%)

        Difficulties with financing projects for public non residential

      construction

         Difficulties in financing and lack of new investment transaction

      caused stop or delay of many constructions in private sector

        Freezing of new project especially in industrial sector

        Slowdown repairs in existing stock


       Source: Euroconstruct


Overview of commercial real estate in Europe   Prague, 05/10/2009           11
                              The investments in constructions


                 INFRASTRUCTURE SECTOR (2009: +1,6%)




        Sector usually financed by public sources and supported by

      national governments is more resistant to the crisis and anti-cyclical

        Civil engineering remains substantially steady

        Slowdown repairs in existing stock




       Source: Euroconstruct


Overview of commercial real estate in Europe   Prague, 05/10/2009              12
                             The investments in constructions

         Change in the construction production by segment
                            (2004-2009)

                100%

                 80%       47,8        48,1         47,3           45,3          43,4        43,4

                 60%

                 40%       30,9        30,7         31,5           32,7          32,5        31,4

                 20%
                           21,3        21,2         21,2           22            24,1        25,2
                  0%
                          2004         2005        2006            2007          2008        2009
                                                           Years

                  Civil engineering   Non residential construction        Residential construction


             Source: Euroconstruct


Overview of commercial real estate in Europe               Prague, 05/10/2009
                                    The real estate market

                     Total European Transaction Volumes
                                 (€ billions)




             Source: Jones Lang LaSalle


Overview of commercial real estate in Europe   Prague, 05/10/2009
                                    The real estate market

                      Investment Volumes by Investors Type




             Source: Jones Lang LaSalle


Overview of commercial real estate in Europe   Prague, 05/10/2009
                                    The real estate market


     Cross-Border Investment by Buyer Nationality, H1 2009




             Source:CB Richard Ellis


Overview of commercial real estate in Europe   Prague, 05/10/2009
                                    The real estate market

                      Net Investment by Investor Source of Capital




                Source: Jones Lang LaSalle


Overview of commercial real estate in Europe   Prague, 05/10/2009
                                    The real estate market

                      Turnover by Deal Size, H1 2009




             Source:CB Richard Ellis


Overview of commercial real estate in Europe   Prague, 05/10/2009
                                    The real estate market

                      Average prime yields per sector




                Source: Savills research


Overview of commercial real estate in Europe   Prague, 05/10/2009
                                    The real estate market

                      Average prime annual rental growth




               Source: Savills research


Overview of commercial real estate in Europe   Prague, 05/10/2009
                                          Office market

                      European Office rental cycle, Q2 2009




             Source: Jones Lang La Salle


Overview of commercial real estate in Europe     Prague, 05/10/2009
                                          Retail market

              European Consumer Confidence Index, June 2009




             Source: Ecowin


Overview of commercial real estate in Europe     Prague, 05/10/2009
                                               Retail market


                         Retail sentiment, June 2009




             Source: Ecowin


Overview of commercial real estate in Europe       Prague, 05/10/2009
                                                   Retail market

                            Retail Investment share of the market


                                 Retail Investment (LHS)           Share of the Total Market (RHS)

                        35.000                                                                      40%
                        30.000
                        25.000                                                                      30%
            € million




                        20.000
                                                                                                    20%
                        15.000
                        10.000                                                                      10%
                         5.000
                            0                                                                       0%
                                  H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1 H2 H1
                                 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007 2008 2008 2009




                Source:CB Richard Ellis


Overview of commercial real estate in Europe                  Prague, 05/10/2009
                                               Retail market


          Shopping Centre vs All Other Retail Investment (€ m)




             Source: CB Richard Ellis


Overview of commercial real estate in Europe       Prague, 05/10/2009
                                           Industrial market


Industrial & Logistics Investment Turnover, Europe (€ m)




             Source: CB Richard Ellis


Overview of commercial real estate in Europe     Prague, 05/10/2009
                                           Industrial market


                         Warehousing Market Rental cycle




             Source: Savills research


Overview of commercial real estate in Europe     Prague, 05/10/2009
          Thank You for Your attention!

                                                 Contacts:
                                                 Daniela Percoco
                                                 Nomisma Real Estate
                                                 daniela.percoco@nomisma.it
                                                 www.nomisma.it


Overview of commercial real estate in Europe   Prague, 05/10/2009             28

				
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