Real Estate Asset Investment Trend Indicator
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Real Estate Asset Investment Trend Indicator
Belgium 2013
The trend indicator is based on a survey of 20 companies that have been active in the Belgian property market in recent years. The survey focuses on two main areas:
► Assessment of the Belgian real estate market for the year to come
► Outlook on the strategies which Belgian investors will pursue in the coming year.

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  • 1. Real E t tR l Estate ment Trend IndicatorAsset InvestmBelgium 2013
  • 2. Key finding for 2013 gsNinety-five percen of participants see Belgium as an attractive or very ntattractive location for real estate investments. nUncertainty in the capital markets in 2013 could support real estateinvestment activityi t t ti ity. The Belgian real e estate transaction market is seen as robust by a majority of marke participants. et The t Th strongest sell groups are expected to be residential real estate t ller t dt b id ti l l t t ortunity/PE funds and other international funds. companies, oppo The strongest buyer groups are expected to be insurance companies/ pension funds, re esidential real estate companies and banks. Limited availabilit of senior debt funds are the significant barrier; ty Increased enforce ement is the preferred way to deal distressed loans. Retail properties will target for investors office properties declined investors, significantly in im mportance. The preferred reg gions are Brussels (office), Antwerp (retail) and Ghent (residentia al).
  • 3. AgendaReal Estate Asset InvestmentTrend IndicatorBelgium 2013 About the trend ind dicator 2013 Market outlook for Belgium 2013 Investment strategy for Belgium 2013 European outlook fo 2013 or
  • 4. Real EstateAsset Investment Trend Indicator Belgium 20 3 l i 2013
  • 5. Our trend indicator covers a broad ra ange of investor groups in BelgiumTrend indicator: real estate investment market The different type of investor groups surveyed:► The trend indicator is based on a survey of 20 companies that have been active t ► Banks in the Belgian property market in recent years. ► Closed-ended real estate funds► The survey focuses on two main areas: ► Real estate stock ► Assessment of the Belgian real estate market for the year to come. o corporations/REITs ► Institutional investors ► Outlook on the strategies which Belgian investors will pursue in the coming ► Investment companies p year. year ► Opportunity/private equity funds► In addition to Belgium, this survey was conducted simultaneously in 14 other ► Insurance companies European countries. ► Housing companies ► Other investment vehicles Background Objectives Method ► Ernst & Young Real Estate has conducted ► Assessment of the Belgian real estate ► The trend indicator is based on a survey this survey in Belgium since 2011. investment market for the year to come. r conducted by the Economist Intelligence Unit in ► 20 investors reported on their ► Outlook on the strateggies which Belgian November and December 2012. expectations for the coming year. investors will pursue in the coming year. n ► The feedback from the interviews forms the results of the real estate trend indicator.January 2013 Page 6 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 6. The same survey was conducted in other European countriesEuropean trend indicator: real estate assets investmen nt► For the first time, the survey now has participants from 15 European countries.► All surveys took place in November and December 2012.► Across Europe, feedback was gathered from more than 500 co ompanies who are active in the real estate market in these countries. Participating countries ► Austria ► Luxembourgg ► Spain p ► Belgium ► Netherlands ► Sweden ► France ► Poland ► Switzerland ► Germany ► Russia ► Ukraine ► Italy ► Turkey ► United KingdomJanuary 2013 Page 7 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 7. A clear majority views Belgium as an attractive investment location … nBelgium’s attractiveness as a location for real estate in nvestments Key messages ► A clear majority (95%) views Belgium as an attractive or very attractive 70% location to invest in real estate for 2013. The trend has turned more favorable since the last survey (2012: 84%). 25% 5% Very attractive Attractive Less attractiveOriginal question – “How do you rate Belgium’s overall attractiveness as a location for real e estate investments in 2013?“January 2013 Page 8 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 8. … particularly compared with other E European countries Belgium’s attracti iveness as a location for real estate investments Key messages in a European com mparison ► Compared with other European countries, 85% survey participants 50% rate B l i t Belgium as an attractive or very tt ti attractive investment location (2012: 35% 58%). ► Compared to last year the perception of Belgium in the European context has obviously improved. 10% 5% Very attractive Attractive Less attractive No responseOriginal question – “How do you rate Belgium’s attractiveness as a location for real estate in nvestments in 2013 compared with other European countries?”January 2013 Page 9 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 9. With capital markets braced for uncertainty in 2013 … Key messages Fear of high inflation in the medium term will drive investors toward the real estate market 50% 30% 20% ► Fear of high inflation (80%) drives demand for real estate (2012: 69%). The Eurozone sovereign debt crisis will increase investments by European investors in the real estate 35% 45% 10% 10% ► Increase in European investments in markets real estate markets due to EurozoneDue to lower loan-to-value ratios, demand for mezzanine crisis (80%). financing will increase in 2013 45% 25% 5% 20% ► Increasing demand for mezzanine There will be an increase in M&A activity in the real financing (70%). estate sector in 2013 30% 35% % 15% 20% ► Increase in M&A activities (65%, The capital market in 2013 will be attractive for real 2012: 42%). 20% 40% 15% 25% estate IPOs and equity capital increases ► Very attractive capital market for real estate IPOs in 2013 (60%, Agree Rather agree Rather disagree Disagree 2012: 36%). * In some cases no answers were provided by the respondents, which is not shown in the graph. Thus, the total might deviate from 100%.Original question – “Which of the following statements about the real estate capital market d you agree with?” doJanuary 2013 Page 10 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 10. … the Belgian real estate market could prosper Key messages Basel III regulation will m make real estate loans less ► Basel III will reduce the attractive for banks and lead to greater restraint in the d 20% 35% 30% 15% mortgage business attractiveness of the mortgage business for banks (55%, 2012: (55% The commercial mortgage backed securities market will 46%). revive in 2013 20% 35% 25% 20% ► CMBS will revive in 2013 (55%, Supply in the real estate market will increase in 2013 2012: 38%). (maturity of structured debt, d disposal of non-performing 40% 10% 35% 15% loans, loans liquida ation of open-ended funds) ► Decreased expectations for supply in the real estate market will increase Due to Solvency II regulations, insurance companies and in 2013 (50%, 2012: 54%). pension funds increasingly act as debt providers for real t 30% 20% 35% 15% estate investments in the future e ► Less insurance companies/pension funds are expected to act as debt Agree Rather agree Rather disagree Disagree providers due to Solvency II in 2013 (50%, 2012: 58%).Original question – “Which of the following statements about the real estate capital market d you agree with?” doJanuary 2013 Page 11 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 11. The Belgian real estate transaction m market … Key messages Green building standards will play a more important role 25% 50 0% 15% 10% ► Green building standards will remain with respect to existing investment properties important as an investment criterion (75%, (75% 2012: 76%) 76%). Overall, transaction volume in 2013 will exceed the level 20% 45% 20% 15% ► Significant increase in transaction seen in 2012 volume in 2013 (65%, 2012: 19%).The average size of real estate deals will increase in 2013 g ► Growing deal size in 2013 35% 20% 15% 30% (55%, 2012: 50%). ► Minor rise in activity of international Investment activity by international real estate investors will increase compared to 2012 25% 30% 25% 20% investors. Agree Rather agree Rather disagree Disagree * In some cases no answers were provided by the respondents, which is not shown in the graph. Thus, the total might deviate from 100%.Original question – “Which of the following statements about the Belgium’s real estate transa action market do you agree with?”January 2013 Page 12 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 12. … is seen as robust by a majority of m market participants Key messages There will be more commmercial real estate portfolio ► More portfolio deals in the commercial deals in 2013 compared to 2013 20% 35% 30% 15% real estate sector (55%, 2012: 53%). ► AIFM regulations lead t consolidation l ti l d to lid ti The Th proposed AIFM Directi will l d t i d Di ctive ill lead to increasing i 15% 40% 35% 10% consolidation in the real estate funds industry e in the fund sector (55%). ► Less than majority expect revival of Given the limited amoun of prime stock available, nt investors will shift the focus to more risky real eir 30% 15% 45% 10% more risky investments (45%). estate investments ► Speculative project developments are not widely anticipated (40%). Speculative project develo opments will return in 2013 20% 20% 40% 20% Agree Rather agree Rather disagree DisagreeOriginal question – “Which of the following statements about the Belgian real estate transact tion market do you agree with?”January 2013 Page 13 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 13. Price trend expectations vary greatly depending on location … y Key messages Office Retail ► Prices for office buildings in prime 55% 55% locations will increase (60%) or will 60% remain stable (30%) (2012: increase 55% 35%, no change 42%). % 45% 40% ► Price levels for retail buildings in 35% 35% 35% 30% 30% secondary locations will be very 30% attrative (increasing 55%, 2012: 25% 31%), 31%) stable 40% 2012: 38%). 40%, 38%) 20% 20% 15% ► Price stability is expected for office 10% 5% (45%) and retail buildings (40%) in secondary locations (2012: office 35%, retail 38%) 38%). Increase No chan nge Decrease Increase No change Decrease ► In peripheral areas, respondents Prime Secondary Peripheral areas anticipate stable price levels for office (55%) and retail buildings (55%) in 2013 (2012: office 38%, retail 34%).Original question – “How do you expect purchase prices to develop in 2013 based on the typ of use and location?” peJanuary 2013 Page 14 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 14. … and type of useResidential Hospitality Key messages ► A significant majority of respondents 60% 60% expect stable development of prices for 55% premium residential locations 50% 50 0% 45% (60%, 2012: 48%). ► Respondents assume a stable develop- 35% 30% 30% 30% ment of prices for the hospitality sector 25% 25% in prime (50%, 2012: 19%), secondary 20% 15% 15% 15% 15% (50%, 2012: (50% 2012 48%) and peripheral areas d i h l (60%, 2012: 43%). 5% ► Fewer repondents assume an increase in prices for premium residential (25%, Increase No change g Decrease Increase No ch g hange Decrease 2012: 32%) and hospitality (30% (30%, Prime Secondary Peripheral areas 2012: 43%) properties. * In some cases no answers were provided by the respondents, which is not shown in the graph. Thus, the total might deviate from 100%.Original question – “How do you expect purchase prices to develop in 2013 based on the typ of use and location?” peJanuary 2013 Page 15 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 15. January 2013 Page 16 Real Estate Asset Investment Trend Indicator Belgium 2013 e
  • 16. The Industrial sector is seen as stable Key messages Industrial ► A clear majority of respondents anticipate a stable price level for 70% 70% 65% industrial buildings in prime (70%), secondary (70%) and peripheral areas (65%). 25% 20% 15% 10% 10% 5% Increase No chang nge Decrease Prime Secondary Peripheral areas * In some cases no answers were provided by the respondents, which is not shown in the graph. Thus, the total might deviate from 100%. gOriginal question – “How do you expect purchase prices to develop in 2013 based on the typ of use and location?” peJanuary 2013 Page 17 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 17. Which seller groups will be the most active in Belgium in 2013 …Seller groups Key messages Residential real estate companies 35% 45% 20% ► Residential real estate companies would continue to remain the most Opportunity/PE funds 20% 60% 20% active seller group again in 2013 2013. Other international funds 45% 30% 25% ► Opportunity/PE funds will be significantly more active in 2013. Banks 20% 55% 25% ► Continuing last year‘s trend, banks would continue to play active to Corporates (non-property) 10% 65% 25% moderate role as sellers. REOC/REITs 5% 60% 35% ► Open-ended funds will play a more cautious role as sellers in 2013. Closed-ended funds (real estate) 30% 30% 40% Public sector 15% 40% 45% Insurance companies/pension funds 10% 45% 45% Open-ended funds (real estate) O d df d ( l t t ) 20% 30% 50% Active Moderately active Cautious * In some cases no answers were provided by the respondents, which is not shown in the graph. Thus, the total might deviate from 100%.Original question – “Which seller groups do you think will be active in Belgium in 2013?”January 2013 Page 18 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 18. … and who will be the buyers in Belgium? Buyer groups Key messages ► Insurance companies/pension funds, Insurance companies/pe ension funds 25% 60% 15% residential real estate companies and banks will remain among the most Residential R id ti l real estate comp i l t t panies 50% 30% 20% active buyer groups in 2013. Banks B 25% 55% 20% ► Closed-ended funds (real estate) and international are expected to be Opportunity/PE funds 35% 30% 30% less active on the buy side in 2013. REOC/REITs 25% 40% 35% Open-ended funds (real es state) 25% 40% 30% Private/family office 15% 50% 35% Sovereign wealth funds 10% 45% 45% Other international funds 5% 50% 40% Closed-ended funds (real es state) 30% 20% 50% * In some cases no answers were provided by the Active Moderately active Cautious respondents, which is not shown in the graph. Thus, the total might deviate from 100%. gOriginal question – ”Which buyer groups do you think will be active in Belgium in 2013?”January 2013 Page 19 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 19. Limited availability of debt fundings a the most significant barrier to aresuccessful transactions in 2013 …Transaction impediments Key messages Limited availability of senior debt funding 65% 15% 10% 10% ► Again, limited availability of senior debt funds (80%, 2012: 72%) and availability of junior debt funding Level of equity required 50% 20% 25% 5% (70%, 2012: 50%) will be the greatest impediments for deal flows. Limited availability of junior debt funding 25% 45% 20% 10% ► Price mismatch between buyers and sellers will be another major barrier j for transactions (75%, 2012: 46%). Price mismatch between buyers and sellers 35% 40% 20% 5% ► Minority (35%) assume the introduction of new laws and New laws and regulations regulations to act as hurdle to 10% 25% 50% 15% successful transactions. Agree Rather Agree Ra ather disagree Disagree * In some cases no answers were provided by the respondents, which is not shown in the graph. Thus, the total might deviate from 100%.Original question – “Do you agree or disagree that the following will be impediments to Belgiums deal flow in 2013?”January 2013 Page 20 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 20. … and increased enforcement is the p preferred way to deal withdistressed loans Approaches to dea aling with distressed loans Key messages ► Increased enforcement (65%, 2012: Enforcement 45% 20% 20% 15% 31%) and a prolongation of the repayment period (65% 2012: 65%) (65%, will be the preferred ways to deal with distressed loans. Ex xtend repayment period 10% 55% 20% 15% ► Consensual restructuring of deals continues to play an increasingly p y gy minor role in 2013 (35%, 2012: Debt-for-equity swaps 25% 30% 35% 10% 46%). Replacement of real estate asset managers 25% 30% 25% 20% Consens sual restructuring deals 15% 20% 45% 20% Agree Rather agree Rather disagree Disagree * In some cases no answers were provided by the respondents, which is not shown in the graph. Thus, the total might deviate from 100%. gOriginal question – “Which actions do you expect banks to take regarding distressed loans in Belgium?“ nJanuary 2013 Page 21 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 21. The following types of use will be pop pular …Strong or moderate investment focus Key messages ► Retail properties will have the highest focus for investors (25%, 30% 30% 2012: 19%) 19%). 25% 25% 25% ► Office buildings declined significantly in importance from last 20% year, but continue to be one of the 15% top investment p p priorities ( (50%, , 2012: 80%). 10% ► Residential buildings also declined significantly in importance from last year (40%, 2012: 62%). Strong Moderate Office Retail Residential Other * In some cases no answers were provided by the respondents, which is not shown in the graph. Thus, the total might deviate from 100%.Original question – “Which types of use are you particularly focusing your investments on in 2013 compared with last year?“January 2013 Page 22 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 22. … and not so popular with investors in 2013 Low or no investm ment focus Key messages ► Half of repondents will have no investment focus on office buildings in 2013 (50%, 2012: 8%) (50% 8%). 50% 40% 4 30% 30% 30% 20% 15% 0% Low No focus Office Retail Residential Other * In some cases no answers were provided by the respondents, which is not shown in the graph. Thus, the total might deviate from 100%. gOriginal question – “Which types of use are you particularly focusing your investments on in 2013 compared with last year?“January 2013 Page 23 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 23. Brussels and Namen/Namur will be th most sought after destinations heamong office investors in 2013; demand for retail will be strongest inAntwerp…Office and retail focus Key messages ► Brussels (35%, 2012: 58%) and Namen/Namur (30%, 2012: 12%) 35% attract the highest investor demand 30% 30% 30% for offices in 2013. 25% 25% 25% 25% ► Mixed trend for the preferred destination for retail investment. 20% ► Antwerp (30%) are the most 15% 15% anticipated cities for retail 10% investments. ► Altogether, differences in retail location demand have shrunk in comparison to previous years. Office Ret tail Brussels Namen/Namur Liège/Luik Antwerp Ghent Mons/Bergen * In some cases no answers were provided by the respondents, which is not shown in the graph. Thus, the total might deviate from 100%.Original question – “Which locations are you particularly focusing your investments on in 2013 compared with last year? “January 2013 Page 24 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 24. … and Ghent will again be the preferr target among residential redinvestors in 2013 Residential and “no focus“ Key Messages ► Again, Ghent (30%) will be the preferred target for residential 45% investments (2012: 30%) 30%). ► Apart from Brussels, investor‘s 35% 35% demand for residential properties 30% seems to be equally distributed. 25% 25% 25% 25% 25% ► Overall, Overall there is no clear investor 20% 20% focus on any property type for any of the major cities in Belgium. 5% Resid dential No focus Brussels Nammen/Namur Liège/Luik Antwerp Ghent Mons/Bergen * In some cases no answers were provided by the respondents, which is not shown in the graph. Thus, the total might deviate from 100%. gOriginal question – “Which locations are you particularly focusing your investments on in 2013 compared with last year? “January 2013 Page 25 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 25. The main exit channels in 2013 Planned exit strategies Key messages ► Trade sales have gained significant importance in acting as the preferred 35% exit channel for the investor (35%) (35%). ► Mutual funds have lost relevance in the current scenario (10%). 25% ► Closed-ended funds still remain one 20% of the preferred exit strategies (25%). 10% 10% 2013 Real estate operating companies/REITs Mutual funds Closed-ended funds Trade sale e Other * In some cases no answers were provided by the respondents, which is not shown in the graph. Thus, the total might deviate from 100%.Original question – “What exit strategies do you have planned (more than one answer possib ble)?“January 2013 Page 26 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 26. SummaryJanuary 2013 Page 27 Real Estate Asset Investment Trend Indicator Belgium 2013 e
  • 27. Summary of participants’ perceptions Outlook for Belgium Attractiveness ► A significant majority of respondents expect stable development of prices for premium residential locations ► A clear majority view Belgium as an attractive or very y (60%, 2012: 48%). attractive real estate investment location for 2013 (9 95%, 2012: 84%). Seller/buyer groups ► Residential real estate companies (80% 2012: 88%) and (80%, ► Compared with other European countries, survey opportunity/PE funds (80%, 2012: 58%) will be among the participants rate Belgium as an attractive or very attr ractive most active sellers in 2013. investment location (85%, 2012: 58%). ► Insurance companies/pension funds (85%, 2012: 73%) and Real estate financial/capital market residential real estate companies (80%, 2012: 69%) will ► Fear of high inflation drives demand for real estate (8 80%, remain among the most active buyer groups in 2013. 2012: 69%). Greatest deal impediments ► Increase in European investments in real estate marke due ets ► Limited availability of senior debt funds (80%, 2012: 72%) to Eurozone crisis (80%). and junior debt funds (70% 2012: 50%) will be the greatest (70%, Real estate transaction market impediments for deal flows. ► Green building standards remain important as an Bank actions to handle distressed loans investment criterion (75%, 2012: 76%). ► Increased enforcement (65%, 2012: 31%) and a prolon- ► Significant increase in transaction volume in 2013 (65% 5%, gation of the repayment period (65%, 2012: 65%) are (65% 2012: 19%). preferred ways to deal with distressed loans. Purchase price expectations ► Prices for office buildings in prime locations are expec cted to increase (60%, 2012: 35%).January 2013 Page 28 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 28. Perceptions of the Belgian real estate m market Outlook for Belgium Real estate use types Exit strategies ► Retail properties will have the highest focus for inv vestors ► Trade sales have gained significant importance in acting (25%, 2012: 19%). as the preferred exit channel for the investor (35%). ► Office buildings declined significantly in importance from ► Mutual funds have lost relevance in the current scenario last year, but continue to be one of the top investmment 10%). 10%) priorities (50%, 2012: 80%). ► Closed-ended funds still remain one of the preferred exit Preferred regions strategies 25%). ► With regard to office p p g properties, Brussels (35%, 20 , ( , 012: 58%) and Namen/Namur (30%, 2012: 12%) show the highest investor demand for 2013. ► Antwerp (30%) are preferred cities for retail investm ments in 2013. ► Again, Ghent (30%, 2012: 30%) is the preferred target for residential investments.January 2013 Page 29 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 29. Real Estate Asset Investment Trend Indicator Europe 2013January 2013 Page 30 Real Estate Asset Investment Trend Indicator Belgium 2013 e
  • 30. Executive Summary Outlook Europe Attractiveness Purchase price expectations ► The vast majority of countries are rated as attractive or ► The growth potential for prime offices is recognized in most very attractive by market participants. countries. ► Non-Eurozone countries are currently seen as more ► Retail prices are expected to increase or at least remain attractive than euro countries than countries inside the stable in many prime locations. currency zone. ► Price trends for residential real estate are generally seen as ► Spain and Italy are viewed with caution caution. very promising and even stable in peripheral locations locations. Real estate capital market Seller and buyer groups ► In almost all countries, the Eurozone crisis and fear of ► Most active sellers in 2013: opportunity/PE funds, banks inflation is expected to stimulate transaction activity. and closed-ended funds. ► N New laws and regulations (e.g. B l d l ti ( Basel III and Solvency II) l dS l ► M t active b Most ti buyers i 2013: opportunity/PE funds, private in 2013 t it /PE f d i t are expected to impact upon real estate financing. investors and family offices. Real estate transaction market Investment focus ► Most investors anticipate a rise in transaction volume − p ► Generally, investors will be less focused on office properties y, p p fostered to an extent by international investors. in 2013. Strong interest is seen in only a few countries. ► Green-building standards are set to play an important ► Demand for retail properties is mostly seen as strong to role in almost all countries surveyed. moderate. ► Speculative project developments are set to return ► Very strong demand is expected for residential real estate in slowly in many markets markets. most countries countries.January 2013 Page 31 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 31. Some non-Eurozone countries are perceived by their market participantsas being particularly attractive Key messages Attractiveness o your market of In comparison to other countries ► Some non-euro countries (Sweden, 58% 42% Sweden 50% 46% 4% Turkey and to an extent the UK) are 60% 40% Turkey 45% 50% 5% particularly attractive. This might be attractive 71% 29% Luxembourg L b 53% 41% 6% a reflection of the continuing 1% 58% 41% Germany 69% 30% 1% difficulties in the Eurozone. Belgium 5% 70% 25% 35% 50% 10% ► Compared to other countries, 8% 60% 32% Switzerland 44% 42% 14% market participants in Germany, the Germany 9% 63% 28% UK 49% 51% UK and Poland perceive their 10% 45% 45% Poland 45% 55% domestic markets as being the most 13% 64% 23% Russia 37% 46% 17% attractive. 19% 48% 33% Austria 24% 62% 14% ► The countries that are viewed as 20% 50% 30% Ukraine 10% 60% 30% suffering most from the Eurozone 22% 62% % 16% Netherlands 38% 56% 6% sovereign debt crisis are Italy and 33% 46 6% 21% France 46% 28% 26% Spain. 63% 20% 17% Spain 20% 7% 73% 70% 30% Italy 30% 70%* In some cases no answers were provided by the respondents, which is not shown in the graph. Thus, the total might deviate from 100%. Very attractive Attractiv ve Less attractiveOriginal question – “How do you rate your country’s attractiveness as a location for real esta investments in 2013? And compared to other countries in Europe?” ateJanuary 2013 Page 32 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 32. The Euro crisis and fear of inflation is expected to stimulate transaction sactivity in a number of markets Key messages Perceptions of th euro crisis he Fear of inflation ► The Eurozone sovereign debt crisis is 8% 47% 45% Germany 49% 42% 8% 1% expected to stimulate transaction 5% 12% 46% 37% France 42% 44% 7% 7% volume in most of the countries 12% 6% 24% 58% Luxembourg 58% 24% 18% surveyed. 10% 10% 45% 35% Belgium 50% 30% 20% ► Expectations of increases in property 18% 55% 24% Switzerland 29% 52% 16% investment are most significant in 10% 14% 19% 57% Austria 43% 38% 19% German-speaking and French- G ki dF h 15% 10% 35% 40% Poland 60% 15% 15% 10% speaking countries. 16% 16% 52% 16% Netherlands 34% 44% 16% 6% Russia ► Investment activity in non-Eurozone 7% 27% 36% % 30% 33% 37% 17% 10% countries is affected less than in 25% 15% 15% 45% Ukraine 50% 30% 5% 15% Eurozone countries. 35% 10% 10% 45% Turkey 55% 20% 25% 37% 6% 21 1% 34% UK 45% 25% 11% 19% ► However, respondents still perceive 33% 13% 17 7% 37% Sweden 34% 29% 4% 29% some countries to be struggling with 27% 33% 20% 20% Spain the consequences of the Eurozone q 23% 27% 23% 27% Italy sovereign debt crisis. 50% 15% 1 20% 15% 10% 10% 60% 20%* In some cases no answers were provided by the respondents, which is not shown in the graph. Thus, the total might deviate from 100%. Agree Rather agree Rather disagree DisagreeOriginal question: “Do you agree with the following statements: The Eurozone sovereign deb crisis will increase investments by European investors in the real estate markets. / Do bt marketsFear of high inflation in the medium term will drive investors towards the real estate market."January 2013 Page 33 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 33. With regard to real estate financing, Solvency II could offset some of thepotential impacts of Basel IIIBasel III regulations Solvency II re egulations Key messages10% 5% 52% 33% Austria2) 43% 42% 10% ► All countries surveyed expect 13% 4% 33% 50% Sweden 37% 33% 17% 13% Basel III to restrict bank lending in6% 13% 19% 62% UK 59% 21% 9% 9% the property markets markets. 20% 54% 25% Germany 43% 46% 10% ► On the other hand, respondents 9% 19% 25% 47% Netherlands 28% 44% 25% 3% think Solvency II will make it 9% 21% 37% 33% France 33% 42% 9% 16% attractive for other debt providers, 20% 15% 20% 45% Poland2) l d 35% 25% 2 20% 20% such as insurance companies to fill companies, 24% 12% 24% 40% Luxembourg 64% 18% 12% 6% that gap. 32% 42% 21% Switzerland1) 5% 58% 26% ► In countries that might suffer most 30% 10% 20% 40% Ukraine1) 2) 55% 10% 35% from Basel III, market participants10% 30% 30% 30% Russia1) 27% 50% 10% 13% expect insurance companies and 17% 27% 36% 20% Spain 40% 20% 23% 17% pension funds to take over the role of 25% 20% 5% 50% Turkey1) Question not inclu uded in Turkish survey banks as alternative lenders. 35% 10% 25% 30% Italy 25% 15% 25% 35% 1) Not a member of the European Union, Solvency II not legally binding. 15% 30% 35% 20% Belgium 30% 20% 35% 15% 2) Not a member of the Basel Committee on Banking Supervision, Basel III not legally binding. * In some cases no answers were provided by the respondents, which is not shown in the graph. Thus, the total might deviate from 100%. Agree Rather agree Rather disagree DisagreeOriginal question – “Do you agree with the following statement: Basel III regulation will make real estate loans less attractive for banks and lead to greater restraint in the mortgage Dobusiness. / Due to Solvency II regulation, insurance companies and pension funds increasingl act as debt providers for real estate investments in the future." lyJanuary 2013 Page 34 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 34. Transaction volume expected to rise, driven partly by internationalinvestments Key messages Transaction volume Cross-border activity ► The vast majority of respondents 12% 6% 82% Luxembourg 58% 18% 6% 18% expect a higher transaction volume 13% 3% 41% 43% Netherlands 41% 31% 9% 19% in 2013 than in 2012 2012. 5% 12% 48% 35% France 23% 54% 14% 9% ► In Luxembourg, the Netherlands, 15% 2% 36% 47% UK 51% 30% 11% 8% France, the UK, and Turkey, more 20% 5% 70% Turkey 60% 10% 5% 25% than three quarters of interviewees 25% % 56% 19% Germany 20% 66% 14% expect transaction volume to 17% 13% 29% 41% Sweden 37% 33% 17% 13% increase. 25% 5% 25% 45% Ukraine 45% 20% 10% 25% ► There is a significant rise in the 7% 23% 37% 33% Russia 23% 30% 37% 10% expectation of increased volume 15% 20% 45% 4 20% Belgium 25% 30% 25% 20% compared to 2012. 14% 14% 43 3% 29% Austria 34% 34% 33% 33% 14% 14% 19% 19% ► This is fostered by international 15% 25% 10% 50% Poland 30% 20% 25% 25% investors looking for new investment 17% 33% 33% 17% Spain 27% 20% 20% 33% opportunities. pp 45% 39% 11% Switzerland 16% 50% 29% 35% 30% 15% 20% Italy 5% 20% 30% 45%* In some cases no answers were provided by the respondents, which is not shown in the graph. Thus, the total might deviate from 100%. Agree Rather disagree Disagree Rather agreeOriginal question – “Do you agree with the following statement: Overall transaction volume in 2013 will exceed the level seen in 2012. / Investment activity by international real estate Do Overall, 2012investors will increase compared to 2012.”January 2013 Page 35 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 35. Environmental sustainability standar will play an important role in rdsmany markets Key messages Impo ortance of green-building standards ► Respondents in almost all countries Austria 57% 33% 5% 5% expect green-building standards to play an important role role. Luxembourg 88% 12% Switzerland 32% 55% 8% ► This development could be Turkey 60% 25% 15% influenced by the requirements of Sweden 45% 38% 4% 13% institutional investors and national Germany 27% 53% 19% 1% building standards standards. Netherlands 40% 38% 16% 6% Poland 45% 30% 20% 5% Belgium 25% 50% 15% 10% France 21% 49% 28% 2% Russia 23% 43% 27% 7% Ukraine 50% 15% 10% 25% UK 39% 21% 17% 21% Italy 45% 10% 15% 30% Spain 20% 20% 30% 30%* In some cases no answers were provided by the respondents, which is not shown in the graph. Thus, the total might deviate from 100%. Agr ree Rather agree Rather disagree DisagreeOriginal question – “Do you agree with the following statement: Green-building standards wil play a more important role with respect to existing investment properties.” llJanuary 2013 Page 36 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 36. Speculative project developments are expected to return slowly in manymarkets Key messages Spec culative project developments ► In just a few countries (France, France 28% 45% 16% 9% Russia, Luxembourg, and Poland), a Russia 37% 30% 17% 13% majority of participants anticipate Luxembourg 53% 6% 6% 35% the return of speculative Poland 25% 30% 20% 25% developments. Turkey 35% 15% 30% 20% ► In Germany, Italy and Sweden, a high Netherlands 22% 22% 28% 28% degree of pre letting is expected to pre-letting Austria 19% 1 24% 19% 38% be a prerequisite for project Ukraine 40% 20% 40% developments to gain financing. Belgium 20% 20% 40% 20% Spain 10% 27% 17% 46% UK 19% 1 17% 25% 39% Switzerland 5% 29% 37% 21% Germany 3% 25% 56% 15% Italy 15 5% 10% 35% 40% Sweden 4% 8% 8 17% 67%* In some cases no answers were provided by the respondents, which is not shown in the graph. Thus, the total might deviate from 100%. Agr ree Rather agree Rather disagree DisagreeOriginal question – “Do you agree with the following statement: Speculative project developm ments will return in 2013."January 2013 Page 37 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 37. Investors in most countries acknowle edge growth potential for primeoffice propertyPrice trends, office property (prime/periphery) / Key messages ► In almost all countries surveyed, office property prices in prime locations are expected to remain p SWE 1325 8 stable or grow. 42 ► However, in Spain, Italy, Sweden, and 50 62 19 41 28 RU US 7 43 50 17 33 Switzerland, the growth perspective NL 28 53 50 31 e e even in p prime locations see s to be e ocat o s seems GB 2 42 28 somewhat limited compared with BEL 10 30 60 20 25 40 58 30 PL 15 30 40 55 30 45 40 other countries. GER 8 ► Growth potential for office prices in 6 29 24 26 LUX 35 59 57 35 69 UA 10 1 20 47 35 55 35 45 peripheral locations is seen F 199 23 33 CH AT 5 especially in countries located in the 33 38 19 72 44 29 24 24 62 39 68 43 Eastern part of Europe. I 40 15 15 SP 65 20 * In some cases no answers were provided by the respondents, which is not shown 3310 40 30 45 in the graph. Thus, the total might deviate from 100%. 57 30 TR 15 20 65 10 Legend 20 Prime Periphery 19 Increasing stable decreasing 39 37 50 11 44 (percentage results)Original question – “How do you expect purchase prices to develop in 2013 based on the typ of use and location?” peJanuary 2013 Page 38 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 38. Stable or rising retail prices expected by majority of investors dKey messages Price t i trends, ret il property (prime/periphery) d etail t i / i h► In most countries, the majority of respondents expect prices for retail property in prime locations to increase or at least remain stable. SWE 1717 42 25► Expectations of rising prices in prime 66 33 locations are strongest in Austria, NL 25 47 34 25 RUS 13 43 17 43 28 41 44 Luxembourg, and Turkey. 11 4 36 2 23 40 BEL GB G► As for office properties, further 30 35 15 30 60 15 49 35 55 PL growth potential is seen for retail 15 25 60 45 20 35 properties in peripheral locations in LUX 12 24 35 24 GER 1 3 64 41 53 43 44 48 UA 10 20 countries located in the Eastern part p 40 50 40 40 of Europe as well as in France. F 7 16 CH AT 44 44 21 16 24 33 33 24 49 4 40 67 55 65 43* In some cases no answers were provided by the respondents, which is not shown I 40 15 20 in the graph. Thus, the total might deviate from 100%. SP 23 37 7 45 55 25 47 Legend 30 56 5 TR 5 Prime Periphery 35 60 15 15 19 Increasing stable decreasing 39 37 50 11 44 (percentage results) )Original question – “How do you expect purchase prices to develop in 2013 based on the typ of use and location?” peJanuary 2013 Page 39 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 39. In some countries, residential will be a clear “buy”Price trends, residential property (prime/periphery) / Key messages ► The expectation that residential property prices in prime locations will rise is particularly strong in Germany, Austria, the UK and SWE 13 42 45 33 8 59 Switzerland. 16 RUS ► Even in peripheral locations, NL 22 44 46 3 37 20 34 38 57 40 43 residential real estate prices are 1525 GB 8 17 generally expected to be stable inBEL 15 45 26 43 60 35 66 40 PL 35 40 15 most markets. 50 35 12 GER 5 25 LUX 35 53 24 41 20 1515 A UA 35 75 25 25 15 35 65 50 50 F 19 21 33 CH AT 24 5 14 33 46 3 1613 71 53 35 44 34 55 63 I 25 25 15 55 30 SP 3 23 10 40 27 50 * In some cases no answers were provided by the respondents, which is not shown in the graph. Thus, the total might deviate from 100%. 64 33 TR 55 Legend 35 55 15 15 Prime Periphery 19 Increasing stable decreasing 39 37 50 11 44 (percentage results) )Original question – “How do you expect purchase prices to develop in 2013 based on the typ of use and location?” peJanuary 2013 Page 40 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 40. Top seller and buyer groups by count tryKey messages TOP seller g groups TOP buyer groups► Throughout Europe, residential real Residential real estate companies ( other international funds (71%) (81%), REOC/REITs (76%), Austria Opportunity/PE funds (95%), private/family office (90%), insurance companies/pension funds (86%) estate companies, banks, and Residential real estate companies ( (80%), opportunity/PE- Insurance companies/pension funds (85%), residential real funds (80%) other international fun (75%) nds Belgium estate companies (80%), banks (80%) opportunity/PE-funds are expected Banks (79%), open ended funds (re estate) (72%) other (79%) open-ended eal (72%), Closed ended Closed-ended funds (real estate) (75%) sovereign wealth (75%), to be among the most active sellers international funds (69%) France funds (75%), banks (72%), in 2013. Open-ended funds (real estate) (90 0%), other international funds (89%), opportunity/PE-funds (88%) s Germany Private/family office (93%), insurance companies/pension funds (92%), other international funds (89%)► In a majority of the countries Insurance companies/pension fund (50%), residential real ds Italy Insurance companies/pension funds (60%), opportunity/PE estate companies (45%), opportunity/PE funds (40%) funds (55%), closed-ended funds (real estate) (55%) surveyed, private investors and REOC/REITs (94%), closed-ended funds (real estate) (88%), / ( ), ( )( ), Opportunity/PE funds (88%), residential real estate companies pp y/ ( ), p Luxembourg family offices are expected to opportunity/PE funds (82%) (88%), insurance companies/pension funds (88%) Public sector (88%), residential rea estate companies (79%), al Sovereign wealth funds (81%), private/family office (72%), become more active as buyers. banks (79%) The Netherlands other international funds (69%) Closed-ended funds (real estate) (7 75%), insurance REOC/REITs (85%), opportunity/PE funds (80%), sovereign► Besides being on the seller side, companies/pension funds (75%), o opportunity/PE funds Poland wealth funds (75%) opportunity /PE funds are regarded pp y g (65%) Banks (80%) B k (80%), public sector (77%) R bli t (77%), REOC/REIT (76%) REOC/REITs REOC/REITs (90%), i t /f il ffi (87%) REOC/REIT (90%) private/family office (87%), sovereign i as very active on the buying side. Russia wealth funds (70%) REOC/REITs (57%), banks (53%), closed-ended funds (real Open-ended funds (real estate) (50%), banks (44%), estate) (50%) Spain REOC/REITs (40%), Residential real estate companies ( (87%), REOC/REITs (87%), REOC/REITs (88%), closed-ended funds (real estate) (87%), insurance companies/pension fund (79%) ds Sweden insurance companies/pension funds (83%) Banks (87%) corporations (non-pro (87%), (non pro operty) (74%) other (74%), Open ended Open-ended funds (real estate) (87%) insurance (87%), international funds (59%) Switzerland companies/pension funds (81%), REOC/REITs (81%) Residential real estate companies ( (95%), corporations (non- Residential real estate companies (75%), private/family office property) (90%), other internationa funds (85%) al Turkey (75%), REOC/REITs (75%)•In some cases no answers were provided by the respondents, which is not shown Open-ended funds (real estate) (77 7%), banks (75%), Opportunity/PE funds (73%), private/family office (72%), in the graph. Thus, the total might deviate from 100%. REOC/REITs (72%) UK sovereign wealth funds (70%)•Ukraine was excluded from this question.Original question – “How active do you think the following seller/buyer groups will be in the r real estate market in 2013?”January 2013 Page 41 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 41. Investors to focus less on office prop perties in 2013 …Investment focus: office property Key messages ► Compared with last year’s survey, investors are set to focus less on office properties. ► Only investors in Sweden, Turkey, SWE 44 25 67 and France show a very strong NL 31 19 RUS 1723 interest in office properties. 16 34 13 47 20 GB 26 25 BEL 50 30 17 32 PL 2020 LUX 12 46 24 GER 1322 15 25 35 12 43 F 12 2 CH 11 18 AT 1910 46 40 21 29 42 39 I 30 50 •In some cases no answers were provided by the respondents, which is not shown I id d b th d t hi h i t h SP 10 40 33 20 in the graph. Thus, the total might deviate from 100%. •Ukraine was excluded from this question. 17 TR 15 Legend 20 65 14 21 strong moderate low no focus 21 44 (percentage results)Original question – “Compared with 2012, what kind of focus do you intend to give to the following real estate use types in your investment strategy for 2013?”January 2013 Page 42 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 42. … while demand for retail is holding u upKey messages Investment focus: retail property► Investors in most countries still concentrate at least to some extent on retail properties. 17 SWE 4 50► In Italy and Spain, retail investments 29 will only play a minor role. NL 28 22 19 31 RUS 7 13 33 47 BEL 1525 30 GB G 21 23 15 30 41 18 16 PL 2020 LUX 58 12 6 GER 8 37 31 15 45 UA 30 25 10 35 F 5 19 43 CH 2111 AT 10 10 33 33 26 47 26 I 45 40 SP 27 723 15* In some cases no answers were provided by the respondents which is not shown in the graph. Thus, the total might deviate from 100%. 43 10 TR 5 35 50 Legend 14 21 strong moderate low no focus 21 44 (percentage results)Original question – “Compared to 2012, what kind of focus do you intend to give to the following real estate use types in your investment strategy for 2013?”January 2013 Page 43 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 43. Due to favorable price expectations, residential can be found on manybuyer listsInvestment focus: residential property t tf id ti l t Key messages ► Residential properties are in strong demand in most of the countries surveyed, except Italy, Spain, and Luxembourg. SWE ► Residential properties are highly 29 33 2513 RUS 1323 sought after by investors in Germany NL 25 25 25 25 27 37 and Switzerland. 2015 GB 19 26BEL 40 25 19 36 PL 2515 6 GER 2 15 25 35LUX 52 24 12 11 65 UA 30 30 1525 F 9 14 42 CH 3 AT 10 10 35 8 47 24 47 33 I 45 40 * In some cases no answers were provided by the respondents, which is not shown SP 2710 15 in the graph. Thus, the total might deviate from 100%. 27 36 TR 15 Legend 15 45 25 14 21 strong moderate low no focus 21 44 (percentage results)Original question – “Compared to 2012, what kind of focus do you intend to give to the following real estate use types in your investment strategy for 2013?”January 2013 Page 44 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 44. This publication contains information in summary form and is therefore intended for general guidance only. Although prepared with utmost care this publication is not intended to be a substitute for detailed research or the exercise of p professional j g judgment. Therefore no liability for correctness, completeness y , p and/or currentness will be assumed. It is solely the responsibility of the readers to decide whether and in what form the information made available is relevant for their purposes. Ernst & Young cannot accept any responsibility. On any specific matter, reference should be made to the appropriate advisor.January 2013 Page 45 Real Estate Asset Investme Trend Indicator Belgium 2013 ent
  • 45. Ernst & Young Tristan Dhondt Xavier Dethier Tel.: +32 2 774 60 17 Tel.: + 32 2 774 92 29Assurance | Tax | Transactions | Advisory Mobile: +32 497 480 486 Mobile: +32 476 28 69 27 Email: tristan.dhondt@bee.ey.com Email: xavier.dethier@be.ey.com© 2013 Ernst & Young - all rights reserved.About Ernst & YoungErnst & Young is a global leader in assurance, tax,transaction and advisory services. Worldwide, our167,000167 000 people are united by our shared valuesand an unwavering commitment to quality. Wemake a difference by helping our people, ourclients and our wider communities achieve theirpotential.Ernst & Young refers to the global organization ofmember firms of Ernst & Young Global Limited Limited,each of which is a separate legal entity. Ernst &Young Global Limited, a UK company limited byguarantee, does not provide services to clients. Formore information about our organization, pleasevisit www.ey.com.ED none