As usual this week here is our roundup of the week’s stories from the commercial property and construction world. The sentiment seems to be getting more generally positive?
Resignation from ING Real Estate Investment Management
ING Real Estate Investment Management has announced that Nick Cooper, founder and CEO of its multi-manager business, ING Real Estate Select, has resigned and will leave the business at the end of December 2009. Announcing his resignation, Nick said: “I have had an exciting and challenging time with ING and have thoroughly enjoyed growing the multi-manager business into one of the most successful global businesses in this arena. The recent Head Office decision to re-locate the global Select business to the Netherlands does not, however, fit into my life or career plans at this time and I have therefore declined ING Real Estate’s offer to remain part of the business.”
Good Time to Invest in Commercial Property?
Property markets in Europe have reached a turning point as the performance outlook continues to recover, largely driven by improving capital market conditions, and with the UK setting the trend for the rest of Europe, according to Aberdeen Property Investors (API). According to Aberdeen Property Investors (API), property looks cheap now, from an historic perspective and relative to other asset classes. Gert-Jan Kapiteyn, Research & Strategy director for Western Europe, said: ‘The timing for investors to increase exposure to European property is actually very good now. However, investors will have to rely less on leverage as a driver of performance in future, as banks will be less willing and able to provide cheap finance. Less gearing in property investment products will also help institutional investors, of whom many are looking for the liability hedging qualities of property investing: high income returns, return stability, inflation protection and portfolio diversification.’
But a lot of Tricky Property Debt!
The value of UK commercial real estate debt in default or in breach of key lending agreements more than doubled to about £30 bn (EUR 33..15 bn) in the first six months of the year. Banks have also extended or refinanced an extra £16bn in the first half of the year, rolling over maturing debt that could not be paid back by cash-strapped borrowers or restructuring loans when breaches were threatened owing to the steep fall in values. According to De Montfort University, which compiles the most comprehensive study of the sector, the real estate sector accounts for £224 bn of outstanding debt. A survey by the university reveals that £43 bn of loans are due to mature this year and £32 bn are due for repayment in each of the next two years.
Not Much Investment in Property Non-Listed Funds
Five equity investments totalling a mere EUR 75 mln were made into non-listed property fund of funds in the first nine months of 2009, according to the latest Fund of Funds survey by Inrev, the organisation for the non-listed real estate sector. This compares with 97 investments totalling EUR 2.2 bn in 2007. In 2008, 50 investments were made totalling EUR 548 mln. While funds of funds may have seen a year of low investment activity, they are now poised to target opportunities in the secondary market, the survey concluded. Two thirds of respondents said the secondary market was now a more important part of their investment strategy. All respondents said this was driven by opportunities to enter funds at advantageous prices.
A Bit of Christmas Cheer from JLL
Jones Lang LaSalle has said it expects total direct investment in commercial real estate in the UK to total around £22 – £23 bn (EUR 24-25 bn) by the end of 2009. This is comparable with turnover in 2001 and would represent a 10% increase on last year’s total of £21 bn. Julian Stocks, head of Capital Markets England, Jones Lang LaSalle said: ‘2009 has been a year of two halves. The first six months of the year were characterised by low investment volumes, falling prices and worsening occupational markets. However, over the second half of the year investor sentiment dramatically changed and a confidence formed over the summer resulting in demand for stock outstripping supply. This wave of optimism has resulted in higher prices and rising activity.’
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