Commercial property people

Drivers Jonas Deloitte – the debate continues

The punditry comment continues in the aftermath of the announcement of Deloitte / Drivers Jonas merger to form Drivers Jonas Deloitte.

Giles Barrie, Editor of Property Week blogged with his thoughts on the upsides and possible downsides. Essentially, if I may be allowed to paraphrase his view was:

Upsides:

• Drivers Jonas’s property experts will be able to work alongside Deloitte’s receivership teams (hopefully this is only a relatively short term area of rich pickings).
• Drivers Jonas is the most consultancy-based of the top 20 agency firms, and its collegiate approach to business life will fit in well with Deloitte.
• The merger takes Drivers Jonas global.
• The deal is good news for the surveying profession as it indicates that property professionals are valued.
• The owners of Drivers Jonas become co-owners of Deloitte, a firm which, in the depths of recession, made a profit of £601m in 2008/09.

Potential downsides:

• Drivers Jonas brokers might encounter problems operating in the new environment.
• In the case of receiverships, will Deloitte be able to show that it has secured best value for creditors by using Drivers Jonas Deloitte rather than an unrelated provider?
• Property professionals do not always fit in with bigger corporate entities.
• An air of sadness about the end of Drivers Jonas’s independence after more than 250 years as a standalone firm.

Also on Property Week TV is an interesting interview with Matthew Elliot and Richard Owen, equity partners of Drivers Jonas commenting upon the merger. It is interesting that they say Deloitte is particularly looking to expand the transaction side of the business.

And finally on Drivers Jonas Deloitte for this week there is a fairly well informed debate on the Linkedin UK Commercial Property Group.

It was rumoured during the week that Capita may be in talks looking to purchase NB Real Estate, possibly due to complete in early February. It is thought that Capita will pay £10m immediately, with a further £10m depending on future performance. NB Real Estate potentially appeals to Capita and their Capita Symonds business because of its strength in property management, which will be used across the enlarged group’s portfolio.

Colliers CRE – 2009 wasn’t a great year

Colliers CRE announced that it expects to post a loss of around £10 mln for the year 2009 on the back of difficult trading conditions. Most of the loss (around £8 mln) was generated in the first half of 2009, Colliers said, as activity started to pick up in the second half of the year. They said that the fourth quarter was their strongest in terms of revenue generation in 2009, and they expect that momentum to continue into 2010. Colliers completed an £18.4 mln share capital issue in October last year, in efforts to expand the group’s equity base. ‘This fundraising both strengthened the balance sheet and also brought in FirstService Real Estate Advisors (FirstService REA) as a major shareholder.

Hotel Investment – the figures are in for 2009

Investment in EMEA hotels fell by over 50% in 2009, according to research from Cushman & Wakefield Hospitality. Total investment volumes totalled EUR 3.2 bn in 2009 against EUR 6.4 bn in 2008, with 50% by value in 2009 being distressed sales. The 2009 total marked an 85% fall on 2007’s record figure of EUR 19.8 bn. Although the UK market has suffered the sharpest decline over the last three years, it remained the most active EMEA market with 29% of total volumes or EUR 935 mln invested despite a fall of 50% in 2009 alone. France and Germany were the next most active markets with 16% and 9% of total volumes invested respectively (EUR 520 mln and EUR 300 mln). The largest European deal in 2009 was the purchase of the 560-room Radisson Blu Hotel in Hamburg by Invesco Real Estate from the Azure Group for EUR 155 mln. This was closely followed by the purchase of the Aviemore Highland Resort in Scotland by MacDonald Hotels from administrators PricewaterhouseCoopers for EUR 153 mln. The year ended on a high with the purchase by a subsidiary of BBVA of a hotel development on The Strand in London for about EUR 125 mln, Cushman & Wakefield said.

The shape of the property recovery

Leading experts in the commercial property sector in the UK have predicted a cautious year for listed real estate which will see the office market recover far more strongly than industrial, retail and residential property. The latest Expert Panel survey commissioned by Reita, the online portal for real estate investment trusts in the UK, shows that less than 5% of respondents think the remarkable recovery in asset values will continue strongly during 2010. However, different parts of the market are moving at different speeds, and there remains concern that the wider market – particularly secondary stock not included as part of IPD universe – could take another year to 18 months to catch up with Mayfair and the City. As between different sub-sectors, the Expert Panel remains most optimistic about offices, with 48% expecting it to recover faster than retail, industrial and residential over the next 12 months.

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