EUROPEAN INVESTMENT MARKET - zhonglun.com · 2 CBRE | EUROPEAN VALUATION MONITOR Economic ... 30 CBRE | EUROPEAN VALUATION MONITOR 60327 Frankfurt am Main, …

EUROPEAN INVESTMENT

MARKET July 2014

2 CBRE | EUROPEAN VALUATION MONITOR

Economic

trends

Major markets +

Key transactions Outlook


Economic

trends

Major markets +



Economic sentiment, vs long-run average

SENTIMENT HAS IMPROVED

(20) (15) (10) (5) 0 5 10 15 20

France

Italy

Spain

EU Average

Germany

UK

April 14

April 13

Source: Eurostat


80

90

100

110

120

130

140

20

04

Q1

20

05

Q1

20

06

Q1

20

07

Q1

20

08

Q1

20

09

Q1

20

10

Q1

20

11

Q1

20

12

Q1

20

13

Q1

20

14

Q1

20

15

Q1

20

16

Q1

20

17

Q1

20

18

Q1

20

19

Q1

Eurozone

France

Germany

Italy

Spain

United Kingdom

Source: CBRE Research, Oxford Economics

Q1 2004 = 100

REAL EUROPEAN GDP INDEXED TO 2004

Index


VARIED ECONOMIC OUTLOOK

Average annual GDP growth

2014-2016

3.5% and above

2.6% to 3.4%

1.5% to 2.5%

0.5% to 1.4% RUSSIA

IRELAND UK

SWEDEN

NORWAY FINLAND

NETHERLANDS

BELGIUM GERMANY

FRANCE

SPAIN

PORTUGAL

ITALY

SWITZERLAND

LUXEMBOURG

CZECH

REPUBLIC

POLAND

AUSTRIA

BELARUS

UKRAINE

ROMANIA

SLOVAKIA

HUNGARY

SLOVENIA

GREECE

BULGARIA

CROATIA

SERBIA

LITHUANIA

LATVIA

ESTONIA

MOLDOVA

BOSNIA AND HERZEGOVINA

ALBANIA MACEDONIA

TURKEY

ICELAND

MONTENEGRO

DENMARK


Office (regions)

EVM EUROPEAN VALUE INDICES

Q4 2007 = 100

Source: CBRE Valuation

45

55

65

75

85

95

105

Q1

09

Q2

09

Q3

09

Q4

09

Q1

10

Q2

10

Q3

10

Q4

10

Q1

11

Q2

11

Q3

11

Q4

11

Q1

12

Q2 1

2

Q3

12

Q4

12

Q1

13

Q2

13

Q3

13

Q4

13

Q1

14

France

Germany

UK

Italy

Spain


(30)

(20)

(10)

0

10

20

30

40

50

60

Q1

20

03

Q1

20

04

Q1

20

05

Q1

20

06

Q1

20

07

Q1

20

08

Q1

20

09

Q1

20

10

Q1

20

11

Q1

20

12

Q1 2

013

Q1

20

14

Office

Quarterly yield shift in the EU-15 countries

INCREASING INVESTMENT HAS PUSHED DOWN YIELDS

Q-on-Q Change (Bps)

Source: CBRE Research


All Property

SPREAD OF PRIME AND SECONDARY YIELDS

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

3.50

4.00

4.50

5.00

5.50

6.00

6.50

7.00

7.50

8.00

8.50

Spread

Prime

Secondary

Source: CBRE Valuation

Percentage Points



EUROPEAN CRE in 2013 €166 billion

EUROPEAN CRE in 2012 €128 billion

North

America 2013 €20.5 billion

2012 €11.9 billion

Asia 2013 €9.9 billion 2012 €4.9 billion

Australia 2013 €0.6 billion 2012 €0.2 billion

Middle East 2013 €9.85 billion

2012 €5.8 billion


0

50

100

150

200

250

300

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 H12014*

COMMERCIAL REAL ESTATE INVESTMENT IN EUROPE

Billion €


* Preliminary results


0

5

10

15

20

25

30

35

Lon

don

Ne

w Y

ork

Pari

s (

IDF

)

Tokyo

Ho

ng

Kon

g

Sin

ga

po

re

Sydn

ey

Sha

ngh

ai

Housto

n

Chic

ago

Mu

nic

h

Domestic

Intra-regional

Cross-regional

LONDON A MAJOR TARGET Billion €


Note: * All commercial real estate and hotels


INTERNATIONAL INVESTMENT IN EUROPE

24%

15%

15% 4% 1% 1%

11%

7%

22% USA

Asia

Middle East

Canada

Australia

Other Global

Germany

UK

Other European

2013



Destination hierarchy

GLOBAL INVESTORS

TRADITIONAL PRIME

HIGHER GROWTH POTENTIAL OPPORTUNITIES

London

Paris

Major German cities

UK Regions

Major cities –

Rest of Europe

Spain | Portugal | Italy


Economic

trends

Major markets +


UK


Market highlights

UNITED KINGDOM

Country overview

Population 64.2 million

GDP output (2013) £1.5 trillion

Investment market

CRE investment 2013 £54 billion (Central London: 50%)

Prime yield 3.75% - 4.5%

Prime rent p/sq m £1,130

Market structure

Typical lease length 10 years

VAT 21%

Transfer tax 4% stamp duty


1 Lime Street, EC3, London

THE LLOYDS BUILDING

Purchaser: Ping An

Vendor: CLI Group

Q3 2013

348,000 sq ft

£260m


61 Aldwych, WC2, London

CENTRIUM

Purchaser: China Overseas

Holdings

Vendor: GLL

Q4 2013

179,712 sq ft

£170m


London West End, W1

HANOVER SQUARE ESTATE

Purchaser: HKMA

Vendor: Great Portland Estate

Q4 2013

208,000 sq ft

£101m


Canary Wharf, London

10 UPPER BANK STREET

Vendor: Clifford Chance

Purchaser: China Life Insurance

Q2 2014

93,000 sq m

£795m

FRANCE


Market highlights

FRANCE

Country overview


GDP output (2013) €2.1 trillion

Investment market

CRE investment 2013 €16.4 billion (Paris: 68%)

Prime yield 4% - 4.5%

Prime rent p/sq m €800

Market structure

Typical lease length 3/6/9 years

VAT 20%

Transfer tax 5.9% stamp duty


Paris, La Defense

TOUR ADRIA

Purchaser: Primonial

Vendor: Testa

Q3 2013

54,000 sq m

€450m


Paris, 9ème

ROSSINI

Purchaser: Aviva

Vendor: Innovalis

Q1 2014

6,270 sq m

In excess of €90m

GERMANY


Market highlights

GERMANY

Country overview


GDP output (2013) €2.5 trillion

Investment market

CRE investment 2013 €30.4 billion

Prime yield 4.5% - 5%


Market structure

Typical lease length 5+5 years

VAT 19%

Transfer tax 3.5% - 6.5%


Office

GERMANY PRIME RENTS

€ per sq m pa


200

250

300

350

400

450

500

550

600

650

700

Q1

07

Q3

07

Q1

08

Q3

08

Q1

09

Q3

09

Q1

10

Q3

10

Q1

11

Q3

11

Q1

12

Q3

12

Q1

13

Q3

13

Q1

14

Frankfurt

Munich

Hamburg

Berlin


Office

GERMANY PRIME YIELDS

%


4.00

4.20

4.40

4.60

4.80

5.00

5.20

5.40

5.60

5.80

6.00

Q1

07

Q3

07

Q1

08

Q3

08

Q1

09

Q3

09

Q1

10

Q3

10

Q1

11

Q3

11

Q1

12

Q3

12

Q1

13

Q3

13

Q1

14

Berlin

Frankfurt

Hamburg

Munich


60327 Frankfurt am Main, Germany

TOWER 185

Purchaser: PwC Pension Fund

Vendor: CA Immo Deutschland GmbH

Q3 2013

100,201 sq m

Asset value in excess of €500m


Munich, Germany

SIEMENS FORUM

Purchaser: NPS with Hines

Vendor: Siemens RE

Q3 2013

32,000 sq m

€151m


Berlin, Germany

LINDENCORSO

Purchaser: Generali

Vendor: Lindencorso Grundstucks

Q2 2013

28,700 sq m

€150m

SPAIN


Market highlights

SPAIN

Country overview


GDP output (2013) €1 trillion

Investment market

CRE investment 2013 €64 billion (Madrid 35%, Barcelona 21%)

Prime yield 5.75%


Market structure

Typical lease length 3-5 years

VAT 21%

Transfer tax 7% (+1.5% stamp duty)


Purchaser: PSP

Vendor: Santander, BBVA, Sabadell and

Sareb

Under offer

Mixed-use office: 37,750 sq m

€140m

Madrid, Spain

CASTELLANA 200

ITALY


Market highlights

ITALY

Country overview


GDP output €1.4 trillion

Investment market

CRE investment 2013 €4.8 billion (Milan 31%, Rome 21%)

Prime yield 6.00%


Market structure

Typical lease length 6 + 6 years

VAT 21%

Transfer tax 4% for non-Italian investors


Milan, Italy

PORTA NUOVA

Purchaser: Qatar Holdings

Vendor: Hines Italia Sgr

Q1 2013

250,000 sq m

€600m


Milan, Italy

SANTA MARGHERITA

Purchaser: Qatar - Sovereign Wealth

Fund

Vendor: Tishman Speyer

Q1 2014

131,987 sq ft

€105m


Economic

trends

Major markets +



Outlook

10-YEAR GOVERNMENT BOND YIELDS

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

UK

Germany

Italy

Percent


Outlook

PRIME OFFICE YIELDS

3.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Munich

Milan

London West End

Percent


5 years to 2019 (local currency*)

PRIME OFFICES TOTAL RETURNS

Percent per annum

0 2 4 6 8 10 12 14

Paris

Berlin

Frankfurt

Munich

London (City)

London (West End)

Paris (La Defense)

Milan

Rome

Barcelona

Madrid

Dublin

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EUROPEAN INVESTMENT MARKET - zhonglun.com · 2 CBRE | EUROPEAN VALUATION MONITOR Economic ... 30 CBRE | EUROPEAN VALUATION MONITOR 60327 Frankfurt am Main, …