CEE Overview, Context & Key Trends 09/23/2014

Transcription

1 CEE Overview, Context & Key Trends 09/23/2014

2 External Presentation: Outline Outline: Outline Review «What s happened/changed since last year? «Investment context if you had spent 500,000 in CEE.. Looking Ahead: Driving Factors «Macro-Econ & Market Summary «Capital Value Indices room for growth? «Longer-term: structural shifts - logistic bananas, e-tailing, outsourcing, quality offices

3 September 2013: Summary Long-term investment horizon very positive Short-mid term also positive: capital values below peak/par, compared to Germany Bank finance conditions gradually improving, slowly spreading to the periphery Lack of capital market depth dependence on international investment Perception of non-core markets an ongoing concern some justified, some not. Office market trends better than headlines suggest rents stabilised + growth capacity Industrial/logistics market has very strong growth potential, esp in CE4 core and Russia Some pockets of retail yet to be tapped into, but challenging for non-dominant centres «Russia/Ukraine situation..has changed things. «Outside of the UK, Eurozone growth is very patchy 3

4 Historic Transaction Volumes: CEE f2015 f2016 Euro Billion Source: Colliers International «Russia-Ukraine has delivered worst-case, but not the whole story

5 Transaction Volumes: by Country pre H1 Source: Colliers International «Poland now dominates, Czech Rep remains buoyant; «Investment increasing in Tier 2 markets: Hungary, Romania, Lithuania, Serbia. 5

6 Transaction Volumes: by Sector Eastern Europe Region % Share by Sector: 1997 to H Source: Colliers International «Industrial starting to take share from retail? «Office and retail dominate; some hotel deals, residential very limited. 6

7 Transaction Volume Rotation: by Sector *Investment volumes as a % of modern stock Source: Colliers International «I&L popularity; office stock availability driving rotation in CEE «Defensive nature of retail holding terms increasing (7.5 yrs+) «We re not trading at the same pre-crisis rates. 7

8 How would you have done: Total Returns by Sector Capital Gains NOI Returns Total Returns Source: Colliers International «Offices most balanced; Industrial & Retail mixed. «A diversified CEE strategy = healthy returns «In a tepid occupational/rental market and limited yield compression 8

9 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% How would you have done: by Country? 12% 10% 8% 6% 4% 2% 0% -2% «Poland would have been the best country, retail the best sector «Czech the best risk-adjusted returns, vs govnt. Bonds «Romania, Slovakia and Hungary, followed by Bulgaria «CEE weighted allocation (oriented to core) = equally positive -4% -6% PL CEE CZ RO SLK H BG Source: Colliers International Capital Gains NOI Returns Total Returns Country 10 year bonds CRE Premia 9

10 How would you have done: CEE vs Europe? Office Industrial Traditional Retail 15% 10% 5% 0% Capital Gains NOI Returns Total Returns -5% -10% -15% CEE Germany Holland Spain Median CEE Germany Holland Spain Median CEE Germany Holland Spain Median Source: Colliers International / IPD «CEE matches Germany, Holland and Spain «Office & retail best performing sectors. «CEE industrial NOI comparable with other markets. 10

11 Econ Forecast Trends: Ukraine Impact? Real GDP variation [average; %] Jan-14 «Ukraine, Russia & Baltics down «CE4 & SEE markets up Bulgaria Croatia Czech Republic Estonia Hungary Latvia Lithuania Poland Romania Russia Slovak Republic Sep-14 «Croatia structural issues «Sanctions yet to be really felt? Ukraine Source: FocusEconomics 11

12 Country Summary: H v H H H Poor Neutral Good V. Good 12

13 Market Summary Russian/Ukraine impact localised to date uncertainty a problem Fresh signs of economic (and political) recovery in CE4 and SEE Clear increase in CRE investment demand elsewhere in the region Investment driven by capital markets more than CRE fundamentals? Prices/markets remain attractive relative to other Eurozone Tier 2 markets Rents have declined/been flat post-crisis, still buying off the bottom Development/repositioning is needed modernisation & investment flows «Market activity likely to see yields compress «Investment volumes likely to increase in 2014 and