Residential Outlook strategies for returns in Europe

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1 Residential Outlook strategies for returns in Europe January 21 st 2014 Dr. Marcus Cieleback PATRIZIA Immobilien AG PATRIZIA Bürohaus Fuggerstraße Augsburg T F immobilien@patrizia.ag

2 Within real estate diversification DOMINANCE OF RESEARCH RELATED TO REGIONAL DIVERSIFICATION SECTORIAL RESEARCH DOMINATED BY WITHIN COMMERCIAL REAL ESTATE DIVERSIFICATION FINDINGS CONCERNING RESIDENTIAL Availability of private rented stock limits diversification to residential in many countries Research for Switzerland and the Netherlands shows, that there is a case for residential property within portfolios Historically portfolios of institutional investors like insurance companies and pension funds had a high proportion of residential in their overall allocation 2

3 Demographic changes: quality matters more 16% 14% ES Growth in old dependency ratio (Population above 65J / Population between 15 and 64Y) 12% Population growth NO 10% Growth % 6% 4% DE PT NL DK IT FI UK SE SE FR FR 2% 0% ES UK DE NO -2% 0% 10% 20% 30% 40% 50% 60% 70% 80% Cumulative house prices growth 2000 until 2012 Source: PATRIZIA, Datastream 3

4 Tenure split in Europe Private rental Social rental Ownership other 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% DE DK FR BE SE AT PT FI IT IE PL NL ES UK Source: cecodhas 4

5 Construction sector is growing, slowly Stock Completions ( ) as % of Stock p.a. Completions (-2015) as % of Stock p.a % % Mio % % % % % 5 0.2% 0 DE NO FR UK PL NL BE SE HU AT CH FI DK IE IT ES PT CZ 0.0% Source: PATRIZIA, euroconstruct 5

6 Investments in residential properties are attractive! 8.0 % Return spread multi family homes Yield Spread Prime 10Y Gov Bond 06/ 8.0 % 7.0 % 7.0 % 6.0 % 6.0 % 5.0 % 5.0 % 4.0 % 4.0 % 3.0 % 3.0 % 2.0 % 2.0 % 1.0 % 1.0 % 0.0 % 0.0 % -1.0 % -1.0 % -2.0 % DE UK AT SE ES NO DK FR FI NL BE CZ IT PL HU -2.0 % Source: PATRIZIA, datastream 6

7 Total Return perspectives 10 % Income Return Capital Growth Total Return 8 % 6 % 4 % 2 % 0 % -2 % Source: PATRIZIA 7 10 % 8 % 6 % 4 % 2 % 0 % -2 % AT DK FI FR DE NL SE CH UK

8 Residential investments are diverse! INVESTMENT IN RESIDENTIAL ARE APPROPRIATE TO DIVERSIFY DEPENDING ON THE INVESTMENT STRATEGY THEY COME IN THE FORM OF CORE, VALUE- ADD AND/OR OPPORTUNISTIC INVESTMENTS. CORE: Buy & Hold Strategy. VALUE ADD: e.g. working on underrented assets or residential property resale OPPORTUNISTIC: e.g. development projects in rural areas 8

9 Alvar Alto WE SHOULD CONCENTRATE OUR WORK NOT ONLY TO A SEPARATED HOUSING PROBLEM BUT HOUSING INVOLVED IN OUR DAILY WORK AND ALL THE OTHER FUNCTIONS OF THE CITY. 9

10 Contact DR. MARCUS CIELEBACK GROUP HEAD OF RESEARCH For more information on the European housing markets PATRIZIA Immobilien AG PATRIZIA Bürohaus Fuggerstraße Augsburg T F M marcus.cieleback@patrizia.ag 10

11 Disclaimer This publication is purely for general information and not a prospectus. The information contained in this report is based on publicly available sources that we believe to be reliable. We cannot guarantee the correctness or completeness of information. All statements of opinion reflect the current estimations of the author and do not necessarily reflect the opinion of PATRIZIA Immobilien AG or its associated companies. The opinions expressed in this publication may change without prior notice. The research reports and presentations ( analyses ) produced by PATRIZIA Immobilien AG contain selected information and cannot be regarded as complete and correct. The analyses are based on publicly accessible information and data ( information ), which are regarded as reliable. However, PATRIZIA Immobilien AG has not verified the correctness or completeness of the information and does not accept any liability for this. PATRIZIA Immobilien AG will not bear liability for any damage arising from incomplete or incorrect information, and PATRIZIA Immobilien AG will bear no liability for direct and/or indirect damage and/or secondary damage. In particular, PATRIZIA Immobilien AG will bear no liability for statements, projections or other details contained in these analyses relating to the companies examined, their associated companies, strategies, economic, market and/or competitive position, legal conditions etc. Although the analyses are produced with the greatest care, the possibility of errors or incompleteness cannot be eliminated. PATRIZIA Immobilien AG, its shareholders and employees bear no liability for the correctness or completeness of the statements, estimations, recommendations or conclusions derived from information contained in the analyses. If an analysis is provided as part of an existing contractual relationship, e.g. financial consultancy or a similar service, liability of PATRIZIA Immobilien AG is limited to gross negligence and intent. If fundamental information is omitted, PATRIZIA Immobilien AG shall be liable for simple negligence. The liability of PATRIZIA Immobilien AG to compensate for typical and foreseeable damage is limited according to the extent of the damage. The analyses do not represent an offer, or an invitation to submit an offer for the purchase or sale of a property, a property portfolio, a security or any other investment commitment. The opinions contained in the analyses may change without prior notice. All rights reserved. PATRIZIA Immobilien AG has taken internal organization and regulative precautions to avoid possible conflicts of interest and to disclose these when they arise. 11