REAL ESTATE ISSUES Volume 38, Number 1, 20133Editor’s NoteMary C. Bujold, CRE5ContributorsEUROPEAN LEADERSHIP ROUNDTABLE8R...
BY MARY C. BUJOLD, CREEditor’s NoteREAL ESTATE ISSUES Volume 38, Number 1, 20133“Coming together is a beginning; keeping t...
REAL ESTATE ISSUES Volume 38, Number 1, 2013When a united European Union was first contemplated,there were those who said ...
REAL ESTATE ISSUES Volume 38, Number 1, 2013Much of the focus of his work in real estatelies in operational and external a...
REAL ESTATE ISSUES Volume 38, Number 1, 2013The Counselors of Real Estate® is seeking originalmanuscripts for publication ...
REAL ESTATE ISSUES Volume 38, Number 1, 2013EUROPEAN LEADERSHIP ROUNDTABLEReal Estate Marketsand the Economy:European Insi...
REAL ESTATE ISSUES Volume 38, Number 1, 2013EUROPEAN LEADERSHIP ROUNDTABLEReal Estate Markets and the Economy: European In...
REAL ESTATE ISSUES Volume 38, Number 1, 2013DISCUSSIONBUJOLD: Overall, with respect to the economy, theEuropean Union, the...
REAL ESTATE ISSUES Volume 38, Number 1, 2013NEUHUBER: The economic crisis in Europe has becomesomething of a normal phenom...
REAL ESTATE ISSUES Volume 38, Number 1, 2013KUEHMAYER: The European Union is an economicunion. One of its goals is to inte...
REAL ESTATE ISSUES Volume 38, Number 1, 2013BUJOLD: What do you see as the greatest challenges andthe greatest opportuniti...
REAL ESTATE ISSUES Volume 38, Number 1, 2013parks combined with high business rates (local propertytaxes) having a marked ...
REAL ESTATE ISSUES Volume 38, Number 1, 2013infrastructure have been put off, such as high-speed railand new runway capaci...
REAL ESTATE ISSUES Volume 38, Number 1, 2013regions are now attractive again. This and the fact thatthere is a huge develo...
REAL ESTATE ISSUES Volume 38, Number 1, 2013is unlikely to disappear, even with new developmentreduced to a trickle. In th...
REAL ESTATE ISSUES Volume 38, Number 1, 2013The rising cost of energy will continue to be aphenomenon that we must deal wi...
REAL ESTATE ISSUES Volume 38, Number 1, 2013KUEHMAYER: I am not a real expert in these markets.According to my understandi...
Upcoming SlideShare
Loading in...5

Real Estate Markets and the Economy: European Insights - a CRE Discussion


Published on

Simon Wainwright and other Icade European Alliance members were invited to participate in a roundtable discussion organised by the US Counsellors of Real Estate on European Union (EU) real estate markets and the current economic situation throughout the EU.

Published in: Real Estate
  • Be the first to comment

  • Be the first to like this

No Downloads
Total Views
On Slideshare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Real Estate Markets and the Economy: European Insights - a CRE Discussion

  1. 1. REAL ESTATE ISSUES®Published by THE COUNSELORS OF REAL ESTATE®Volume 38, Number 1, 2013www.cre.orgEUROPEAN LEADERSHIP ROUNDTABLEReal Estate Markets and the Economy: European InsightsModerator: Mary C. Bujold, CRE and Editor in Chief of Real Estate Issues;Panelists: Hans-Ulrich Berendes, CRE; Marie-Noelle Brisson, CRE;Tomáš Ctibor, CRE; Leopold Kuehmayer, CRE; Alfons Metzger, CRE; Alexander Neuhuber, CRE;Michael P. Smithing, FRICS; and Simon Wainwright, FRICSFEATUREComparing Value: U.S. Government Office Leases vs. Credit Tenant LeasesDonald Sonneman, ASA; and David J. Yerke, MAI, SGAINSIDER’S PERSPECTIVEAdvertising and Promotion of Expert ServicesJack P. Friedman Ph.D., CRE; Barry A. Diskin, Ph.D., CRE; and Nicholas Ordway, Ph.D., J.D.RESOURCE REVIEWMiami: Mistress of the AmericasReviewed by Joe W. Parker, CRE
  2. 2. REAL ESTATE ISSUES Volume 38, Number 1, 20132013 EDITORIAL BOARDBOARD MEMBERS1EDITOR IN CHIEFMary C. Bujold, CREMaxfield Research, Inc., Minneapolis, MNASSOCIATE EDITOROwen M. Beitsch, Ph.D., CREReal Estate Research Consultants, Inc., Orlando, FLLIAISON VICE CHAIRMichael S. MaRous, CREMaRous & Company, Park Ridge, ILRobert Bach, CREGrubb & Ellis, Chicago, ILNorman Edward Briesemeister, CREGreat Oaks Strategic Partnerships, Delano, MNPeter C. Burley, CRENational Association of REALTORS®, Chicago, ILK.C. Conway, CREColliers International, Lilburn, GAJohn A. Dalkowski, III, CREPHOENIX Real Estate Counselors, Inc., New York, NYBarry A. Diskin, Ph.D., CREDiskin Property Research, Tallahassee, FLAnthony Downs, CREThe Brookings Institution, Washington, DCJack P. Friedman, Ph.D., CREJack P. Friedman & Associates, Richardson, TXTom Hamilton, Ph.D., CREUniversity of St. Thomas, Minneapolis, MNPeter L. Holland, CREBartram and Cochran, Inc., Hartford, CTMark Lautman, CRELautman Economic Architecture, Albuquerque, NMDavid Charles Lennhoff, CRESC&H Appraisal Services, McLean, VAGerald M. Levy, CREGerald M. Levy & Co. LLC, New York, NYMarc Louargand, CRESaltash Partners LLC, West Hartford, CTDavid J. Lynn, Ph.D., CRECole Real Estate Investments, Phoenix, AZMichael S. MaRous, CREMaRous & Company, Park Ridge, ILWilliam P.J. McCarthy, CREW.P.J. McCarthy and Company Ltd.,Burnaby, BC, CanadaJonathan J. Miller, CREMiller Samuel Inc., New York, NYDevon W. Olson, CREUtah Retirement Systems, Salt Lake City, UTJoe W. Parker, CREAppraisal Research Company, Inc., Jackson, MSMartha S. Peyton, CRETIAA-CREF, Newport Beach, CAAnthony J. Pierson, CRECornerstone Real Estate Advisers LLC, Hartford, CTKenneth P. Riggs, Jr., CREReal Estate Research Corporation, Chicago, ILNico B. Rottke, CRE,EBS University for Economics and Law,Wiesbaden, GermanyRoy J. Schneiderman, CREBard Consulting LLC, San Francisco, CAMichael Sklaroff Esq., CREBallard Spahr LLP, Philadelphia, PADaniel L. Swango, Ph.D., CRESwango International, Tucson, AZCraig A. Werley, CREFocus Real Estate Advisors, LLC, Coral Gables, FLRobert M. White, Jr., CREReal Capital Analytics, New York, NYMANAGING EDITORCarol ScherfDESIGN/PRODUCTIONCharles KulmaThe articles/submissions printed herein represent the opinions of the authors/contributors and not necessarily those of The Counselors of Real Estate® or itsmembers. The Counselors assumes no responsibility for the opinions expressed/citations and facts used by the contributors to this publication regardlessof whether the articles/submissions are signed.Published by The Counselors of Real Estate, a not-for-profit organization of the National Association of REALTORS®, 430 N. Michigan Ave.,Chicago, IL 60611. Copyright 2013 by The Counselors of Real Estate of the National Association of REALTORS. All rights reserved. (Printed in USA.)Third class postage paid in Chicago. Real Estate Issues® publishes three times annually. Subscription rates are: $48 for one year (3 issues); $80 for two years;$96 for three years; $42 per year to students and faculty; $54 foreign rate, submit in U.S. currency; single copy $15. Remittance may be made by credit cardor personal check, payable to The Counselors of Real Estate. Remittance, change of address notices, undeliverable copies, orders for subscriptionsand editorial material should be sent to Real Estate Issues. The Counselors of Real Estate, 430 N. Michigan Ave., Chicago, IL 60611.Phone 312.329.8427; Fax: 312.329.8881; Email:; website: Library of Congress card number LC 76-55075Real Estate Issues is a registered trademark of The Counselors of Real Estate, a not-for-profit organization.PRESIDENT AND CHIEF EXECUTIVE OFFICERMary Walker FleischmannREAL ESTATE ISSUES®Published by THE COUNSELORS OF REAL ESTATE®
  3. 3. REAL ESTATE ISSUES Volume 38, Number 1, 20133Editor’s NoteMary C. Bujold, CRE5ContributorsEUROPEAN LEADERSHIP ROUNDTABLE8Real Estate Markets and the Economy:European InsightsModerator: Mary C. Bujold, CRE and Editor in Chief of Real Estate Issues;Panelists: Hans-Ulrich Berendes, CRE; Marie-Noelle Brisson, CRE; TomášCtibor, CRE; Leopold Kuehmayer, CRE; Alfons Metzger, CRE; AlexanderNeuhuber, CRE; Michael P. Smithing, FRICS; and Simon Wainwright, FRICSWith economic news from Europe daily hitting our media, theReal Estate Issues® Editorial Board frequently had discussedtrying to get a better perspective on the views of our EuropeanCRE members and RICS associates regarding current real estateissues and the impact of the financial situation on EU real estatemarkets. In the European Leadership Roundtable discussion,moderator and Real Estate Issues Editor in Chief Mary C.Bujold, CRE, reached out to various CREs and FRICS membersin Europe for this piece. In this wide-ranging discussion, realestate advisors from London to Budapest voice their greatestconcerns for the economy, their greatest confidences, andwhat they see as the greatest challenges and opportunities forcommercial real estate and the European Union.FEATURE20Comparing Value: U.S. Government Office Leases vs.Credit Tenant LeasesDonald Sonneman, ASA; and David J. Yerke, MAI, SGAInvestors often are called upon to value a leased fee interest in asingle tenant property. The purpose of this article is to evaluatewhether single tenant, federal government agency leases,are credit tenant leases. To make that evaluation, this articleaddresses the following areas: 1) discussion of the historicalcredit tenant status for single tenant federal government officeleases; 2) examination of whether credit status is appropriategiven the current financial pressures on the U.S. government;3) consideration of important differences in government leaseclauses and lease clauses for private sector leases; and, 4) attemptto quantify the scale of economic differences between U.S.government leases and private sector credit tenant leases.INSIDER’S PERSPECTIVE31Advertising and Promotion of Expert ServicesJack P. Friedman Ph.D., CRE; Barry A. Diskin, Ph.D., CRE; and NicholasOrdway, Ph.D., J.D.The purpose of this article is to offer suggestions on how toadvertise and promote oneself as an expert witness. It is basedon anecdotal experience gained by the authors, not any scientificmethod. It is hoped that this article will assist professionals whoseek to begin serving as expert witnesses and confirm or expandthe practices of those who currently offer such services. Theauthors cover issues ranging from what to expect from theinitial call from a prospective client to promotional materialsto free publicity.RESOURCE REVIEW41Miami: Mistress of the AmericasReviewed by Joe W. Parker, CREIn his review of Miami: Mistress of the Americas by Jan Nijman,CRE Joe Parker remarks on the uniqueness of Miami andhow, without ever becoming important during its early yearsof development as a domestic city, it evolved into a trulyinternational city of commerce with a diverse population thatdefines its culture today. Parker notes the book should berequired reading for every permanent and part-time residentof South Florida, and for those real estate practitioners who areinterested in another perspective of what really goes behind thescenes in making and shaping a real estate market.CONTENTS2REAL ESTATE ISSUES®Published by THE COUNSELORS OF REAL ESTATE®
  4. 4. BY MARY C. BUJOLD, CREEditor’s NoteREAL ESTATE ISSUES Volume 38, Number 1, 20133“Coming together is a beginning; keeping together isprogress; working together is success.”—Henry FordThis is my first issue as Editor in Chief ofReal Estate Issues®. Need I say that I follow a long line ofeditors who have molded this journal into what it is today;a sophisticated, thoughtful and intelligent publication thatoffers some of the best thinking today on important andcritical topics in real estate?My immediate predecessors, CRE Peter Burley, andbefore him, CRE Maura Cochran, have, without fail,consistently held to the principles of The Counselorsorganization, which has been reflected in the articles thathave been published here. I can only hope to continue inthat same path to ensure that the material in these pagesbrings to CREs and other professionals alike, interestingand informative work that may shape the manner inwhich we consider real estate markets.A year ago, The Counselors developed its Top Ten listof important real estate issues, and this year’s ExternalAffairs Committee is continuing the list with the intentionof making this a permanent feature of CRE. Real EstateIssues is now connected with External Affairs. As amember of both committees, I see a strong opportunityto bring additional depth to the list through the solicitingof specific articles on topics that have been identified ascritical to our professions.The U.S. economy is finally moving in the right directionafter several years of economic recession. But, we arenot out of the woods yet. Some sectors of the real estatemarket are driving our return to growth while othersremain stagnant. Capital markets are rising again from theashes, but caution remains.It is in this vein that the first issue of REI looks to ourEuropean associates for their assessment of the currenteconomic situation in Europe, and a discussion of howthe current situation is affecting commercial real estatemarkets across that continent. Information and opinionswere obtained from a group of seven high-profileprofessionals from several countries, giving a depth andbreadth to the topics presented. I was honored to be ableto work with this group’s participants to solicit their input.The result is a thoughtful compilation of insights fromCREs and FRICs practitioners.I would like to personally thank the following individualswho assisted me with bringing the European grouptogether:Brian A. Glanville, CRE, MAIArthur P. Pasquarella, CRELiliane Van Cauwenbergh, managing director, RICSEMEA (covering Europe, Middle East and Africa)Professor Alfons Metzger, CREThese individuals were instrumental in contacting peopleto encourage participation in the Roundtable Discussionand assisting me with the outline for the questions thatwere put forth.I am also indebted to the participants of the Roundtablewho gave their time and energy to so thoughtfully respondto the questions that were raised and who providedimportant insights into the current European economicsituation, issues within the euro zone and its effects onlocal real estate markets.
  5. 5. REAL ESTATE ISSUES Volume 38, Number 1, 2013When a united European Union was first contemplated,there were those who said it could not be done; that thestrong nationalist states that exist in Europe would not beable to come together and sustain a common economiccollaboration. The EU and its member states havesucceeded. The euro remains today one of the strongestcurrencies in the world, and despite financial issues,stronger than the American dollar. Although the globalfinancial crisis has perhaps rattled the EU’s foundation, itsability to come together and work through the challengesas mentioned by several of the participants will enable it torise above its difficulties. I believe that the EU will succeedand will be stronger for it.Expert Witness Testimony: I am delighted to see that wehave an article that outlines how to promote oneself as anexpert witness. I know that many of our CREs have activepractices in this area. The wealth of knowledge that isheld by our membership can be invaluable in many areasof real estate litigation. Authors Jack Friedman, CRE,Barry Diskin, CRE, and Nick Ordway take this topic andprovide a concise primer on how to attract this business,respond to inquiries and ensure that your time andexpertise is appropriately considered and compensated.Authors Donald Sonneman and David Yerke presenta strong article on the evaluation of government leasesversus credit tenants. As they state, there is a significantcontrast between the current economic information thatexists and the apparent status quo of investors who stillconsider that federal government leases justify the highestcredit rating. This article has some significant points tomake given the credit rating of our government.Miami: Mistress of the Americas was distributed to allCREs who attended the CRE Annual Meeting in October2012. For those of you who missed being in Miami andreceiving the book, I encourage you to delve into itscovers. Miami, despites its highs and lows, remains oneof the most fascinating and culturally diverse cities in theworld. Many have come to its shores seeking refuge fromoppression and political turmoil in their own countries,and its artistic, entertainment and real estate opportunitiescontinue to abound. Each time I am in Miami, I amreminded of the first time I went to the area in themid-1980s, before the rebirth of South Beach. Miamiseems to continue to dazzle.REI has been busy already this year, charting a course forupcoming issues. Our goals and objectives include:• Expanding the distribution and exposure of REIto other organizations and institutions;• Soliciting more articles, and to reach out topotential authors on focus topics;• Collaborating with the External Affairs Committeeand to solicit articles that specifically address issueson the Top Ten issues list;• Complete at least one focus issue per year.The third issue of this year will be focused on unusual orunique appraisal and valuation projects. We are currentlysoliciting case studies for this issue now and encourage allmembers who have personally been involved with thesetypes of unique assignments, or know of others who havebeen involved with these projects, to submit their casestudies to REI for consideration.We are looking forward to bringing the membershiptopics that will be enlightening and informative. ■MARY C. BUJOLD, CREEDITOR IN CHIEF4
  6. 6. REAL ESTATE ISSUES Volume 38, Number 1, 2013REAL ESTATE ISSUES®Published by THE COUNSELORS OF REAL ESTATE®CONTRIBUTORSHANS-ULRICH (ULLI) BERENDES,CRE, owner and CEO, Berendes &Partner Consulting GmbH, Hamburg,Germany (founded in 1995), has beenactive in real estate for more than 25 years,beginning his career in the real estateleasing division of Deutsche Bank. In1990 he joined Völkers King & Co. GroupHamburg (later King Sturge Germanyand now part of Jones Lang LaSalle)as managing director and shareholder.Berendes is an experienced networkerwho believes in face-to-face business,and brings all his personality to his clientand partner contacts. He holds academicdegrees in business administration andmaster of economics, and is a memberof CRE, SIOR and FRICS. His companyis affiliated with CORFAC Internationaland has offices in submarkets in Germany,including Hamburg, Berlin, Frankfurt,Munich and Stuttgart. His firm alsomaintains an office in Poland and isrepresented around Europe by partners inthe Q-Immo Network.MARY C. BUJOLD, CRE, editor in chiefof Real Estate Issues®, president, MaxfieldResearch Inc., Minneapolis, Minnesota,is considered a market expert in the fieldof residential real estate and in marketanalysis for financial institutions. As wellas providing strategic direction for thefirm, Bujold heads project assignments forlarge-scale land use and redevelopmentstudies, including downtown revitalizationfor private developers and municipalities inthe Twin Cities and in the Upper Midwest.Her work spans public and private sectorclients, including institutional clients. Bujoldalso regularly testifies as an expert witnessfor eminent domain, tax appeal and othertypes of real estate litigation. She holds abachelor’s degree in business administrationfrom Marquette University and a master’sdegree in business administration from theUniversity of Minnesota.MARIE-NOELLE BRISSON, CRE,FRICS, MAI, Paris, France, is currently anindependent consultant, serving as strategicadvisor for a large French REIT (Icade) andcounseling various European investors andservicers in real estate investment. Brissonhas more than 20 years of experience incommercial real estate and financein the U.S. and in Europe. She has heldvarious executive positions in real estateunderwriting as a rating analyst, servicer,investor, issuer and lender in the U.S. andEurope for global market leaders such asthe World Bank, Bank of America, SecurityPacific Bank, E&Y, GMAC CommercialMortgage, and Standard & Poor’s. Brissonholds a degree from Sciences-Po Paris,a post-master degree in urban planningfrom the Institut d’ Urbanisme de Paris,and a real estate diploma from New YorkUniversity where she taught a seminar onmarket research, due diligence and feasibilityanalysis. She is a designated member ofthe Appraisal Institute and The Counselorsof Real Estate, and a Fellow of the RoyalInstitution of Chartered Surveyors.TOMÁŠ CTIBOR, CRE, FRICS, founder,C.T. Development S.r.o., Prague, CzechRepublic, is a real estate developer andconsultant specializing in developmentprojects and consultancy in real estate andurban development. Since 2007, Ctiborhas been teaching at the Department ofUrbanism at Faculty of Architecture ofCzech Technical University in Prague.In 1989–1990, following a short politicalcareer (member of the advisory boardof the Secretary of Education, memberof Parliament and advisor to the DeputyPrime Minister), he co-founded a privatecompany, B.I.R.T., which specialized inreal estate counseling. Between 1996and 2000, he served as a chairman of thesteering committee of AFI (Associationfor Foreign Investments). From 1998 to2000, Ctibor also worked as a member ofthe steering committee of the Czechinvestinvestment and business developmentagency. In 2013, he accepted an offer tobecome the head of the Strategic PlanningDepartment of Prague’s City DevelopmentAuthority, with the responsibility of leadingand coordinating the development ofa new strategic plan for the city. Ctiborstudied architecture at the Czech TechnicalUniversity and the Academy of Arts,Architecture and Design in Prague.BARRY A. DISKIN, PH.D., CRE, isprofessor and Francis J. Nardozza Scholarin the College of Business at Florida StateUniversity. Diskin teaches valuation classesto real estate majors at the undergraduateand graduate levels. His focus and researchhas been on natural gas pipelines foreminent domain cases, property taxchallenges, contamination matters, andcontract disputes. Previously, Diskinpublished in The Appraisal Journal, theJournal of Real Estate Research, Real EstateEconomics, the Journal of the American BarAssociation, and other real estate journals.He has been interviewed on nationaltelevision about home buying issues andtestified before the Florida legislatureabout mobile home park legislation. Diskinis principal in the firm Diskin PropertyResearch and has qualified as an expertwitness in six states. His doctorate degree isfrom Georgia State University.JACK P. FRIEDMAN, PH.D., CRE,FRICS, MAI, ASA, is principle andCEO of Jack P. Friedman & Associates,Richardson, Texas, a real estate appraisaland economics consulting firm. He is anationally recognized author, appraiser andconsultant in real estate economics andrelated disciplines. Friedman’s recent workincludes litigation support (principallyappraisal review and appraisal) regarding advalorem tax cases, environmental damages,condemnation, construction defects, andcontract disputes. Formerly, he served assenior research economist and head ofresearch of Texas A&M University’s TexasReal Estate Research Center, and was theLaguarta Professor in the Department ofFinance. Friedman has written more than20 books and 200 articles, and has beenpublished in The Appraisal Journal, RealEstate Issues®, Real Estate Review, and RealEstate Finance. He served on the nationalReal Estate Accounting committees ofthe AICPA and Texas Society of CertifiedPublic Accountants and was a member ofthe Appraiser Qualifications Board of theAppraisal Foundation. Friedman earnedhis doctorate degree from Georgia StateUniversity.LEOPOLD KUEHMAYER, CRE,managing partner, Central and EasternEurope, TPA Horwath, Vienna, Austria,is a tax advisor with more than 20 yearsof experience in real estate counseling.Kuehmayer was involved in projectmanagement during the expansion of TPAHorwath in CEE. He specializes in advisingon VAT issues in national and cross-border business, tax consulting, financialstatements, tax planning and compliance.5
  7. 7. REAL ESTATE ISSUES Volume 38, Number 1, 2013Much of the focus of his work in real estatelies in operational and external areas andproperty ownership models as well as theoutsourcing of investment portfolios andfinancing consulting. From a regionalperspective, his consultancy focus is onstructural advice in investments in Centraland South Eastern Europe, as well as in theorganization of legal forms. Kuehmayer isa member of the EMEA Tax Committee ofCrowe Horwath International.KR PROF. DR. H. C ALFONSMETZGER, CRE, FRICS, founder andCEO of MRG Metzger Realitäten Beratungs-und Bewertungsgesellschaft mbH (MetzgerReal Estate Group), Vienna, Austria, hasbeen active in real estate since 1966 as areal estate valuer, trustee and national andinternational real estate consultant. He isqualified as a Court Certified Real EstateExpert and a Licensed Estate Manager. Hisfirm specializes in national and internationalreal estate consulting and valuation. Metzgerhas served as president of the FIABCICongress Committee and World President ofFIABCI International. Metzger also serves asan executive member of the Global HousingFoundation, which helps solve housing crisesworldwide; delegate of UNECE, a real estatemarket advisory group; and member of theIVSC (International Valuation StandardCommittee). Metzger established thenational chapter RICS Austria –The RoyalInstitute of Chartered Surveyors in 1997, andnow serves as acting chairman of the Boardof Directors/European CRE Chapter.ALEXANDER NEUHUBER, CRE,founder and CEO, Magan Holding GmbH,Vienna, Austria, has more than 25 yearsof experience in real estate, and currentlyserves as a property investment consultantfor wealthy private and institutional clients.Presently, for some clients, his firm also actsas co-investors in Germany, Bulgaria andRumania. In 2004, his firm expanded tothe Berlin market and since 2009, the firm’ssubsidiary in Berlin has been providing aninternational clientele with consulting forinvestments in residential properties in thatcity. Prior to founding his current firm in2001, Neuhuber owned DTZ Neuhuber—then considered the number three real estatefirm in Austria— which he subsequentlysold. Neuhuber began his real estate careerin 1988 and shortly thereafter founded hisfirst real estate firm, known as Neuhuberund Partner Immobilien GmbH.NICHOLAS ORDWAY, PH.D., J.D., isa tenured full professor in the FinancialEconomics and Institutions Department atthe Shidler College of Business, Universityof Hawaii, where he teaches undergraduateand graduate courses in appraisal theory andreal estate investments and finance. Ordwayhas published numerous books and articleson real estate valuation and other realproperty topics. His research and consultingis focused on hotels, golf courses and otherresort properties. Ordway has been honoredwith the Wagner Award from the AppraisalInstitute and the Ballard Award from TheCounselors of Real Estate, and was selectedas the National Educator of the Year by theReal Estate Educators Association. Ordwayreceived his doctorate degree in landeconomics and a master’s degree in businessadministration in real estate from GeorgiaState University; and a juris doctorate degreefrom the University of Georgia School ofLaw.MICHAEL P. SMITHING, LEED AP,FRICS, director/Green Building AdvisoryServices, Colliers International, Budapest,Hungary, joined Colliers in 1993 as an officebroker specializing in tenant representation.For nine years, Smithing led the HungarianColliers team. He specializes in creating andexecuting innovative solutions to problems,and is committed to promoting greenbuilding practices across Central and EasternEurope, with a focus on using sustainablepractices to increase asset values. For thepast two years, Smithing has focused onsustainability and achieved certification asa LEED professional. He currently leads theReal Estate Management Services Team inEastern Europe and is working on a numberof LEED accreditations for properties inHungary. Smithing is a member of the RoyalInstitute of Chartered Surveyors (RICS) andis chairman of the RICS Hungarian Board.DONALD SONNEMAN, ASA, ElCajon, California, is president of AblePlusValuations, an appraisal firm that preparescommercial real estate appraisals, businessvaluations and partial interest valuations.His practice covers standard property typesand specialty properties such as assistedliving, skilled nursing and mental healthfacilities, and properties subject to credittenant leases or ground leases. In addition to20 years of appraisal experience, Sonnemanhas background in income tax preparationand property tax assessment. He has writtenextensively on appraisal topics, with articlesappearing in The Appraisal Journal, BusinessValuation Review, Fair & Equitable andthe Journal of Property Tax Assessment andAdministration. Sonneman also contributedto two chapters in the Appraisal Institutebook Appraising Industrial Properties. Heearned a bachelor’s degree in mechanical andaerospace engineering from Illinois Instituteof Technology, and later obtained a degreein certified financial planning. Other post-graduate study includes emphasis on financeand business valuation.SIMON WAINWRIGHT, BSC (HONS)FRICS, is managing director and co-founderof J Peiser Wainwright, and has more than30 years’ experience in UK commercialproperty markets. Wainwright began hiscareer at Dron & Wright, Knight Frankand St. Quintin before starting his ownpractice in 1993. Over the past 20 years,Wainwright has established a reputationfor providing independent professionaladvice on properties throughout CentralLondon. Wainwright is a graduate of theUniversity of Reading and is a Fellow of theRoyal Institution of Chartered Surveyors(RICS). He is a board member of the RICSCommercial Property Markets ProfessionalGroup, holds an Expert Witness Certificatefrom Cardiff University School of Law andis a RICS Registered Valuer. Wainwrightis the author of several published papersand lectures on the subject of propertyinvestment, valuation and development.DAVID J. YERKE, MAI, SGA, of D.J.Yerke, Inc., Reno, Nevada, and Naples,Florida, specializes in eminent domainappraisal and the appraisal of specialpurpose and complex properties. In his30-year career, he has served as an expertwitness in litigation valuation casesinvolving land and specialized commercialand industrial properties. In that capacity,his appraisals have served federal agenciesincluding GSA, the U.S. Post Office, statedepartments of transportation and manymunicipalities. Yerke also is a foundingmember of the Society of Golf Appraisersand a past chairman of the AppraisalInstitute’s California State GovernmentRelations Subcommittee. He has co-authoredappraisal articles in both The AppraisalJournal and Fair & Equitable. Yerke alsois a co-author and lecturer on Valuationof Golf Properties, a publication of theSociety of Golf Appraisers. He currentlyserves on the Appraisal Institute SouthwestRegional Professional Standards Panel andEthics Panel. Yerke is an Admiral FarragutAcademy graduate, and received a bachelorof science degree in business administrationfrom Franklin University. He completedpost-graduate studies at Ohio StateUniversity and the University of San Diego.6
  8. 8. REAL ESTATE ISSUES Volume 38, Number 1, 2013The Counselors of Real Estate® is seeking originalmanuscripts for publication in Real Estate Issues® (REI),a peer-reviewed journal published three times annually.The journal reaches a lucrative segment of the real estateindustry as well as a representative cross-section ofprofessionals in related industries.Real Estate Issues subscribers are primarily the owners,chairmen, presidents and vice presidents of real estatecompanies, financial corporations, property companies,banks, management companies, financial corporations,property companies, banks, management companies,libraries and REALTOR® boards throughout the country.Other subscribers include professors and universitypersonnel, and professionals in insurance companies andlaw firms.Real Estate Issues is published three times annually forthe benefit of CRE and other real estate professionals,planners, architects, developers, economists, governmentpersonnel, lawyers and accountants. It focuses onproviding up-to-date information about problems andtopics in the field of real estate.REVIEW PROCESSMember and nonmember authors should submitmanuscripts as Microsoft Word documents,preferably via email, to or info@cre.orgReal Estate IssuesC/O The Counselors of Real Estate430 N. Michigan Ave.Chicago, IL 60611Currently, REI is seeking articles on:■ How the aging of the U.S. population will affect thereal estate markets from housing, retail sales, healthcare, and the myriad of factors that define success fordifferent geographic areas;■ Funding of public employee retirement systems;■ Student debt burdens;■ Infrastructure funding and U.S. competitiveness;■ Changing office, retail and industrial demand;■ Real estate capital markets liquidity;■ Global change and uncertainty and what it means forreal estate investment in the U.S. and abroad;■ Integration of sustainability;■ Low cap rates;■ Civil discord and political gridlock as relates toreal estate.See the Editorial Calendar and further submissionguidelines at under “Publications” formore information.REAL ESTATE ISSUES Volume 38, Number 1, 20137Call for ArticlesREAL ESTATE ISSUES®Published by THE COUNSELORS OF REAL ESTATE®
  9. 9. REAL ESTATE ISSUES Volume 38, Number 1, 2013EUROPEAN LEADERSHIP ROUNDTABLEReal Estate Marketsand the Economy:European InsightsModerator:Mary C. Bujold, CREEditor in Chief, Real Estate IssuesPresident, Maxfield Research, Inc.Minneapolis, MinnesotaPanelists:Hans-Ulrich Berendes, CREOwner and CEO Berendes & Partner Consulting GmbHHamburg, GermanyMarie-Noelle Brisson, CREAdvisor, Icade Real Estate SolutionsParis, FranceTomas Ctibor, CREC.T. Development S.r.o,Prague, Czech RepublicLeopold Kuehmayer, CREManaging Partner Central and Eastern EuropeTPA HorwathVienna, AustriaAlfons Metzger, CREKommR Prof., MRG Metzger Real Estate GroupVienna, AustriaAlexander Neuhuber, CRECEO, Magan Holding GmbHVienna, AustriaMichael P. Smithing, LEED AP, FRICSDirector/Green Building Advisory ServicesColliers InternationalBudapest, HungarySimon Wainwright, FRICSManaging Director, J Peiser Wainwright – Real EstateAdvisers & Chartered SurveyorsLondon, England8About the ModeratorMary C. Bujold, CRE, editor in chief ofReal Estate Issues®, president, MaxfieldResearch Inc., Minneapolis, Minnesota,is considered a market expert in the field ofresidential real estate and in market analysisfor financial institutions. As well as providingstrategic direction for the firm, Bujold headsproject assignments for large-scale landuse and redevelopment studies, includingdowntown revitalization for private developers and municipalities inthe Twin Cities and in the Upper Midwest. Her work spans public andprivate sector clients, including institutional clients. Bujold also regularlytestifies as an expert witness for eminent domain, tax appeal and othertypes of real estate litigation. She holds a bachelor’s degree in businessadministration from Marquette University and a master’s degree inbusiness administration from the University of Minnesota.INTRODUCTIONIn 2012, the Editor in Chief of Real Estate Issues®Mary C. Bujold, CRE, and other Counselors of Real Estatediscussed the idea of contacting our fellow CREs in Europeto participate in a European roundtable discussion for thisjournal. This discussion would be held to have those closestto the various European Union (EU) economies provideinsight and perspective on their respective realestate markets and the current economic situationthroughout the EU.We reached out to a number of CREs and our fellowRoyal Institution of Chartered Surveyors (RICS) members,requesting participation in the roundtable discussion.Because of the significant geographic dispersion of theseindividuals, the format included questions sent to theparticipants via email, and then followed up withdocuments to solicit additional input.
  10. 10. REAL ESTATE ISSUES Volume 38, Number 1, 2013EUROPEAN LEADERSHIP ROUNDTABLEReal Estate Markets and the Economy: European InsightsIn order to present serious answers to the questions thatare posed for this discussion, it is important for readers tobe aware and knowledgeable about the developmentof Europe, primarily during the past decades.Europe is comprised of separate national states, eachof which has an autonomous national governmentand legislature that varies from country to country. Inaddition, each country has its own national language.The United States, China and also India are comprisedof federal states with a central government. Even thougheach federal state has its own government, the generaladministration is governed in one location, for example,Washington, D.C., in the U.S.A united Europe has its origins in 1947 when the ParisPeace Treaties were signed, establishing peace throughoutEurope following World War II. This was an absolutepeace project that has developed over time into aneconomic project.Until 1989, Europe was a divided continent. On oneside was Western Europe, from the United Kingdom toAustria. On the other side was Eastern Europe, fromCzechoslovakia to Slovenia and up to Russia/Ukraine. In1989, the collapse of Communism in Eastern Europe andthe fall of the Iron Curtain paved the way for a formerlydivided Europe to become a joint economic power.Europe has evolved into a pan-European region. Theformer Communist areas had a dramatic, pent-updemand in political, economic, social and other fields,and needed to catch up to Western European countries.The Eastern European area has become the place for someof the best investment opportunities in the world. Manyinvestments have occurred, including speculative ones.However, development in the political, economic andsocial arenas has not been consistently uniform.Because of the integration of the Eastern European statesinto the European Union, armed conflicts have beenavoided similar to those that occurred between the formerYugoslavia and Albania. Most of the Eastern Europeancountries still are considered “developing” nations andhave significant pent-up demand in various fields,especially in their respective real estate economies.The rest of Europe already has provided those countrieswith support measures in the past, and will continueto do so in the present and future.In the course of globalization over the past 20 years, thespeculative influence of other countries in Europe hasalso been present.The indebtedness of various European countries must beviewed from the perspective of the overall developmentof Europe. If those aspects are considered and economicdata is apportioned among all of Europe, then Europe isin an absolute top position to compete internationally asa continent.The European Union has 27 member states, andCroatia is planned to join in the near future.The headquarters and the parliament of the EuropeanUnion are located in Brussels, but there is still a lackof centralized power to control the individual nationalactivities of member states.To summarize, the European Union remains in adevelopment phase, with many tasks yet to be fulfilled.However, it shows great promise with many significantdevelopments and strong economic forecasts.9Context and European Background from Alfons Metzger, CRE
  11. 11. REAL ESTATE ISSUES Volume 38, Number 1, 2013DISCUSSIONBUJOLD: Overall, with respect to the economy, theEuropean Union, the European Central Bank and yourgovernment: where is your greatest concern?KUEHMAYER: Global economic ties have reached alevel whereby no matter the geographic location of aneconomic/financial crisis, the entire world will be affected.There is currently an outspoken goal within the EuropeanUnion to solve the problems that arose from the recentfinancial crisis. I would be concerned if the leaders of theEU countries would change that goal because of nationalpriorities. In the Fourth Quarter 2012, the euro zoneeconomies faced a recession of 0.6 percent. This is higherthan expected and is largely a result of further crisisamong the countries of Southern Europe.METZGER: I am very concerned that Europe and theEuropeans are not fully aware of their values and do notreact against views from the outside.BERENDES: I am most concerned about risingunemployment rates in many EU countries, especially foryoung people. In Spain, the unemployment rate for peopleunder 25 years of age is 50 percent; in Italy, it is 37 percent;and in other countries, it is also high. I believe this is likelyto cause social problems in the near future.SMITHING: The Hungarian government has a well-deserved reputation for unpredictability, taking anunorthodox approach to the economy, and displaying littlerespect for international organizations or the governmentsof other countries. In my opinion, they are a little like theNorth Korean government without the nuclear weapons.WAINWRIGHT: I am most concerned about the level ofpublic expenditure, which the various EU governmentsseem incapable of bringing under control, combined withthe continuing programme of Quantitative Easing. TheUK is still running a budget deficit and the overall levelof public debt continues to rise. There has been a strongand aggressive policy toward raising and collecting taxes,but tax receipts are falling because of the contractionin the economy, and public expenditure is still rising.Something will have to change as the current situationis unsustainable. In the UK, one of the greatest threatsis the rising level of expenditure on the National HealthService, which has been awarded “sacred cow” status bythe British public. While it does not deliver the best ormost efficient health services, there seems little willingnessto consider alternative solutions as are used in therest of Europe. There is also concern about the level ofpublic expenditure on income support and benefits, andconcerns that the problem will be exacerbated by a risingtide of immigration from new EU states, such as Bulgariaand Romania.BRISSON: Consumer and economic confidence remainsfragile and volatile as stock exchanges continue to moveup and down with various news pieces of the euro zoneresolution. We need political courage from our Europeangovernments to restore confidence and show the sovereigndebt crises can be dealt with in an effective and predictableway, and economic recessions and unemployment tamed.EUROPEAN LEADERSHIP ROUNDTABLEReal Estate Markets and the Economy: European Insights10Hans-Ulrich (Ulli) Berendes, CRE,owner and CEO, Berendes & Partner ConsultingGmbH, Hamburg, Germany (founded in 1995),has been active in real estate for more than 25years, beginning his career in the real estateleasing division of Deutsche Bank. In 1990 hejoined Völkers King & Co. Group Hamburg(later King Sturge Germany and now part ofJones Lang LaSalle) as managing director and shareholder. Berendes isan experienced networker who believes in face-to-face business, and bringsall his personality to his client and partner contacts. He holds academicdegrees in business administration and master of economics, and is a memberof CRE, SIOR and FRICS. His company is affiliated with CORFACInternational and has offices in submarkets in Germany, includingHamburg, Berlin, Frankfurt, Munich and Stuttgart. His firm alsomaintains an office in Poland and is represented around Europeby partners in the Q-Immo Network.Marie-Noelle Brisson, CRE, FRICS,Paris, is currently an independent consultant,serving as strategic advisor for a large FrenchREIT (Icade) and counseling various Europeaninvestors and servicers in real estate investment.Brisson has more than 20 years of experience incommercial real estate and finance in the U.S. andin Europe. She has held various executive positionsin real estate underwriting as a rating analyst, servicer, investor, issuer andlender in the U.S. and Europe for global market leaders such as the WorldBank, Bank of America, Security Pacific Bank, E&Y, GMAC CommercialMortgage, and Standard & Poor’s. Brisson holds a degree from Sciences-PoParis, a post-master degree in urban planning from the Institut d’ Urbanismede Paris, and a real estate diploma from New York University where shetaught a seminar on market research, due diligence and feasibility analysis.She is a designated member of the Appraisal Institute and The Counselors ofReal Estate, and a Fellow of the Royal Institution of Chartered Surveyors.About the Panelists
  12. 12. REAL ESTATE ISSUES Volume 38, Number 1, 2013NEUHUBER: The economic crisis in Europe has becomesomething of a normal phenomenon. The initial panicafter the Lehman disaster and fears of a crash in Greecewere followed by a mixture of resignation and calculatedoptimism. Europe must face the big question that anyrespectable merchant must face: Are we able to repay thedebt burdens accumulated in recent years and reduce theinflated amount of money?CTIBOR: Europe has undergone many unificationprocesses over the past few years, but still remains adiversified union. Solutions that are being put on thetable must respect this fact and avoid overgeneralization,which results in a restriction of the existing diversity.Some economic and fiscal tools that have been discussedrecently seem to be unreal or in direct contradiction torealizing an effective impact. The main problem, withrespect to the EU structures, is the range of instrumentsthat are used for certain goals. It is always necessary tocarefully evaluate whether a generalized provision isreasonable and brings measurable benefits. There aresome criteria and some regulations that soon after theiradoption have turned out to be not beneficial. Holding toprevious agreements that have been unsuccessful makesthe entire process less credible.BUJOLD: Where do you have the greatest confidence?BERENDES: I have the greatest confidence in the euro.Since it was implemented, it is essentially a success story.We started with a currency value against the dollar ofnearly $1.10 and even in the hardest economic timestoday, it is quite stable at around $1.30.EUROPEAN LEADERSHIP ROUNDTABLEReal Estate Markets and the Economy: European Insights11Tomáš Ctibor, CRE, FRICS, founder, C.T.Development S.r.o., Prague, Czech Republic, isa real estate developer and consultant special-izing in development projects and consultancy inreal estate and urban development. Since 2007,Ctibor has been teaching at the Department ofUrbanism at Faculty of Architecture of CzechTechnical University in Prague. In 1989–1990,following a short political career (member of theadvisory board of the Secretary of Education, member of Parliament andadvisor to the Deputy Prime Minister), he co-founded a private company,B.I.R.T., which specialized in real estate counseling. Between 1996 and2000, he served as a chairman of the steering committee of AFI (Associa-tion for Foreign Investments). From 1998 to 2000, Ctibor also worked as amember of the steering committee of the Czechinvest investment and businessdevelopment agency. In 2013, he accepted an offer to become the head of theStrategic Planning Department of Prague’s City Development Authority,with the responsibility of leading and coordinating the development of a newstrategic plan for the city. Ctibor studied architecture at the Czech TechnicalUniversity and the Academy of Arts, Architecture and Design in Prague.Leopold Kuehmayer, CRE, managingpartner, Central and Eastern Europe, TPAHorwath, Vienna, Austria, is a tax advisor withmore than 20 years of experience in real estatecounseling. Kuehmayer was involved in projectmanagement during the expansion of TPAHorwath in CEE. He specializes in advisingon VAT issues in national and cross-borderbusiness, tax consulting, financial statements, taxplanning and compliance. Much of the focus of his work in real estate liesin operational and external areas and property ownership models as well asthe outsourcing of investment portfolios and financing consulting. From aregional perspective, his consultancy focus is on structural advice in invest-ments in Central and South Eastern Europe, as well as in the organization oflegal forms. Kuehmayer is a member of the EMEA Tax Committee of CroweHorwath International.KR Prof. Dr. h. c Alfons Metzger, CRE,FRICS, founder and CEO of MRG MetzgerRealitäten Beratungs-und BewertungsgesellschaftmbH (Metzger Real Estate Group), Vienna,Austria, has been active in real estate since 1966as a real estate valuer, trustee and national andinternational real estate consultant. He is qualifiedas a Court Certified Real Estate Expert and aLicensed Estate Manager. His firm specializes innational and international real estate consulting and valuation. Metzger hasserved as president of the FIABCI Congress Committee and World Presidentof FIABCI International. Metzger also serves as an executive member of theGlobal Housing Foundation, which helps solve housing crises worldwide;delegate of UNECE, a real estate market advisory group; and member of theIVSC (International Valuation Standard Committee). Metzger establishedthe national chapter RICS Austria –The Royal Institute of CharteredSurveyors in 1997, and now serves as acting chairman of the Board ofDirectors/European CRE Chapter.Alexander Neuhuber, CRE, founder andCEO, Magan Holding GmbH, Vienna, Austria,has more than 25 years of experience in real estate,and currently serves as a property investmentconsultant for wealthy private and institutionalclients. Presently, for some clients, his firm alsoacts as co-investors in Germany, Bulgaria andRumania. In 2004, his firm expanded to the Berlinmarket and since 2009, the firm’s subsidiary inBerlin has been providing an international clientele with consulting forinvestments in residential properties in that city. Prior to founding hiscurrent firm in 2001, Neuhuber owned DTZ Neuhuber—then consideredthe number three real estate firm in Austria— which he subsequently sold.Neuhuber began his real estate career in 1988 and shortly thereafterfounded his first real estate firm, known as Neuhuber und PartnerImmobilien GmbH.About the Panelists
  13. 13. REAL ESTATE ISSUES Volume 38, Number 1, 2013KUEHMAYER: The European Union is an economicunion. One of its goals is to integrate most of theEuropean states in order to have the larger Union exertmore influence on the member states and solve theproblems of these states arising from differences in theeconomic power (and in that way avoid conflicts betweenthe countries). There are still large differences in theeconomic power of the individual EU member states. I amconfident, however, that the original idea works and theeconomic hurdles can be solved better in the union thanin each state as a single entity. And, there is huge potentialfor growth in the CEE/SEE (Central East European/South East European) countries in the long-term. AndGermany’s forecast for the First Quarter 2013 is alreadyvery positive in the short term.METZGER: I have the greatest confidence in Europe andthe European people, as well as their development, sincetoday’s Europe has a significant historically grown powerto provide the continent with a new form and a positivefuture leading global competition.SMITHING: The EU is a stabilizing factor for Hungary.I do not, however, anticipate any significant changes inour economic fundamentals or political situation in thenear-or medium-term future.CTIBOR: It is the difference of each participant’s pointof view that gives the community the ability to perceivedetails and particular opportunities. This can lead tofinding the right solution.NEUHUBER: This is not the end of the world. Noseriously, I trust in the economic strength in Central andNorthern Europe and the readiness to provide services.Europe’s economic and political stability are strongenough to overcome this crisis as well.BRISSON: A first step has been taken to secureEU-wide financial security and make progress in resolvingthe debt crisis. The European Central Bank will supervisethe bloc’s largest financial institutions and intervene withstruggling smaller banks. Through different formats, bankrecapitalization is on the mend and the LTROs (programof the European Central Bank similar to US’ quantitativeeasing) certainly have eased the credit crunch but theyalso have “kicked the can down the road,” not structurallysolving the liquidity issues. Capital inflows are improvedfrom the last two years and we should see greatercross-border investments in 2013. The funding gap willlikely be partly filled with alternative funding comingprimarily from insurance companies and other funds.WAINWRIGHT: I have the greatest confidence inLondon, which is a world-class, vibrant and dynamiccity in which to live and work. It sits in stark contrast tothe rest of the UK and operates as a “state within a state.”What is required is to bring this vibrancy to the rest ofthe UK? Improved communications and less expensivehousing are seen as the solutions to open up London tothe rest of the UK. The recent fall in the value of sterlingagainst the euro and dollar has caused significant increasesin the price at which real estate is being transacted, withforeign buyers accounting for the majority of recentpurchases in London.EUROPEAN LEADERSHIP ROUNDTABLEReal Estate Markets and the Economy: European Insights12Michael P. Smithing, LEED AP,FRICS, director/Green Building AdvisoryServices, Colliers International, Budapest,Hungary, joined Colliers in 1993 as an officebroker specializing in tenant representation.For nine years, Smithing led the HungarianColliers team. He specializes in creating andexecuting innovative solutions to problems,and is committed to promoting green buildingpractices across Central and Eastern Europe, with a focus on usingsustainable practices to increase asset values. For the past two years,Smithing has focused on sustainability and achieved certification as aLEED professional. He currently leads the Real Estate ManagementServices Team in Eastern Europe and is working on a number of LEEDaccreditations for properties in Hungary. Smithing is a member ofthe Royal Institute of Chartered Surveyors (RICS) and is chairmanof the RICS Hungarian Board.Simon Wainwright, BSc (Hons)FRICS, is managing director and co-founderof J Peiser Wainwright, and has more than 30years’ experience in UK commercial propertymarkets. Wainwright began his career at Dron& Wright, Knight Frank and St. Quintinbefore starting his own practice in 1993. Overthe past 20 years, Wainwright has establisheda reputation for providing independent professional advice on propertiesthroughout Central London. Wainwright is a graduate of the Universityof Reading and is a Fellow of the Royal Institution of CharteredSurveyors (RICS). He is a board member of the RICS CommercialProperty Markets Professional Group, holds an Expert WitnessCertificate from Cardiff University School of Law and is a RICS Reg-istered Valuer. Wainwright is the author of several published papers andlectures on the subject of property investment, valuation and development.About the Panelists
  14. 14. REAL ESTATE ISSUES Volume 38, Number 1, 2013BUJOLD: What do you see as the greatest challenges andthe greatest opportunities?SMITHING: The greatest challenge, in my opinion, isrestoring confidence among international investors. Thegreatest opportunity is that the lack of foreign investmentmay lead to the increased importance of Hungariancapital. Unfortunately, this appears unlikely as financing isessentially unavailable. However, Europe came out of theMiddle Ages stronger than it went in. Over the course ofthe next few years, Hungary may be able to fight its wayout of its current situation without external assistance.BRISSON: From a macro-economic viewpoint, bringingpublic deficits down and curbing unemployment arecertainly the greatest challenges. On the real estate side, Isee three areas that are both challenges and opportunities:buying debt or restructuring bank assets and asset/loan management; investments in Southern and EasternEurope; and, thirdly, the greening of buildings. There areenough troubled assets and loans on bank balance sheetsbut the disposition of those has been sparse. Even inIreland, Spain and the UK where there have been themost NPL sales, the disposal activity has been lessthan the need would lead you to think. Still, good assetmanagement skills for either bricks and mortar, or loans,are sought after.The crisis in Southern Europe represents buyingopportunities, with utmost care. If well-located and well-built assets in Spain, Greece and Italy are well-priced, theycould be an attractive alternative to Irish assets.Finally, European countries have established toughenvironmental standards for building. “Green credentials”are now a requirement and have generated more expensivenew construction and investment. Existing buildings notyet to code will have to be refurbished. But those too fargone or poorly located will need to be either demolishedor completely restructured. This creates more investmentopportunities and should boost building trade activities.NEUHUBER: The greatest challenge, as I mentioned, willbe to pay back the enormous debts run up by the states.Yet, one has to see first how European national economiesreact to a future rise in the interest rate (the currentinterest rate at its level of near zero is not a perpetuummobile). For the moment, I don’t see great opportunitiesfor the continent as a whole. Asia and the rapidly growingnational economies represent too large a challenge.METZGER: The greatest challenge is to shape theEuropean central government in Brussels and to place thenational aspects as a lower priority. Another challenge isto defend against the influence from outside regarding thestandards and principles vis-a-vis the powerful centralgovernment. Europe’s greatest potential is to effectivelybalance the Eastern and Western European differential,which will open up significant investment opportunities inthe former Eastern Bloc countries.KUEHMAYER: I see the greatest challenge within theEU as the high unemployment rate among young peoplewithin many (especially southern) EU countries (23.4percent in 2012 was the EU average). Along with thebudget deficits and the public debts, this is a situation thatis challenging for the involved parties.The European Union has 27 member states and the eurozone consists of 17 European countries. One reactionof the euro zone countries during the crisis was a risingunemployment rate. Non-euro zone member states hadthe possibility to devalue their local currencies and couldlargely avoid a significant increase of their respectiveunemployment rates by doing so.The labor law in some countries is much in favor of the(long term) employed people, and that is the reason whyyoung people are in a poor position when applying forjobs. There is the opportunity to solve the legal hurdlesinvolved in these situations and, therefore, increase jobopportunities for young people.WAINWRIGHT: One of the greatest challenges is theplanning system in the UK, which is stifling developmentand economic growth. Radical changes are required tomake the UK more pro-development. The high priceof housing in London and the South East is the directresult of shortages of supply and high levels of demand.Changing patterns of demand for offices and redundancyin the current stock are providing many opportunitiesto convert offices to residential units. This trend is set tocontinue with the proposed relaxation of planning useclasses.Demand for offices in London is currently limited tothe smaller end of the market, with few major financialinstitutions seeking new accommodation. A number ofrecently completed larger developments remain vacant,with owners reluctant to split floors into smaller units.The retail sector in the UK is probably the mostchallenging, with the impact of the larger supermarkets,the online shopping revolution and retail warehouseEUROPEAN LEADERSHIP ROUNDTABLEReal Estate Markets and the Economy: European Insights13
  15. 15. REAL ESTATE ISSUES Volume 38, Number 1, 2013parks combined with high business rates (local propertytaxes) having a marked impact on the traditional highstreets, which are in serious decline. This is apparent fromthe high number of tenant failures in the retail sector, witha new national multiple retailer filing for administration(Chapter 11) every week. The current focus is ontransforming high streets, with local specialty shops,restaurants and coffee bars providing personalized servicein a rebellion against the national multiple retailers.CTIBOR: The European Union should abandon unilateralthinking. Debates on the topics of key problems must beopen, without prejudice. It is important to enable more EUorganizations and groups to be involved in the discussion,not only the European Commission. Without the ability ofunrestrained reflection on our situation, we cannot moveforward. Directives that did not bring the desired effectshave to be reevaluated. Revoking agreements that wereunsuccessful at implementation cannot be viewed as a signof disintegration, but as an important part of a process offacing multiple challenges. The greatest opportunity maybe just in the model of a truly open discussion where eachmember can take part in an integrated process, not a one-way process that is replete with political and emotionalprecautions and apprehensions.BUJOLD: What measures do you think should be takento resolve the current economic situation (political,monetary, economic)?BRISSON: Confidence in politicians and in the bankingsystem and markets in general has been so eroded, it isdifficult to say. There are, however, signs of new directionsand improvement bringing us out of the tunnel.The European Commission’s legislative proposals forbank resolution and recovery are a good beginning. As Imentioned earlier, the European Central Bank has steppedup to the plate and has been an effective shock absorber.By building the single rule book for EU financial marketsand ensuring its consistent application across the EU,the ESMA (European Securities Market Authority) nowcontributes to the supervision of financial services firmsand rating agencies with a pan-European reach andalso has begun to put some order in the governance offinancial institutions. Sovereign debt, of course, needs tobe dealt with, and with pain from both private investorsand governments.METZGER: As I mentioned earlier, a powerfulgovernment in Brussels is required in order to ensurean expansion of the euro and support attractive positivedevelopment of the EU economy.BERENDES: The members of the European Unionhave to find a combined solution between austerity andinvesting in the future. Bureaucracy has to be cut back andstates like Spain, Italy, Greece and Cyprus, which spentmoney like crazy during the past few years, have to comeback to a balanced budget. Furthermore, banks’ gamblingand greed have to be stopped. To divide banks betweenthe investment and so-called normal activities could bea first step in the right direction. I believe that money atthe moment is far too cheap and I am worried that whatwe experienced between 2004 and 2008 may come back.Perhaps in a slightly different way, but investment banksseem to have already forgotten where the mess came from.CTIBOR: Rational behavior, discussion about differencesand no prejudices in political questions—these areelementary principles, always valid, but even moreimportant today. Tools that we are using or discussingthese days, such as fiscal union, common taxes, etc.,are just formal principles. We have to fill them withreasonable content. If the implementation of a specifictool results in wide resistance, it is not judicious to push itthrough by force; we must be able to have rational debatesabout it. The European Union is a great opportunity foreach member, but it is necessary to consider how bestto integrate all members. Presently, the EU does not payenough attention—neither in discussion nor in practicalimplementation—to some themes that are very importantfor economic growth (e.g., infrastructure, investments inenergetics), while others such as CO2 reduction policyreceive the spotlight. An independent evaluation of theadvantages and disadvantages of the tools available isnecessary to remain competitive as an EU community.WAINWRIGHT: A dramatic shift in the way the UKdelivers public services is required. This calls for someradical thinking, with privatization being the obvioussolution and empowering people by giving them theability to choose their services directly, thereby removinga layer of bureaucracy. This is a significant challengeas outside of London and the South East, between 50percent and 80 percent of the UK workforce is directly orindirectly employed by the public sector.There is a proven need for more housing and betterinfrastructure. The UK is currently facing an energycrisis caused by years of procrastination about buildingmore power stations. Similar decisions about transportEUROPEAN LEADERSHIP ROUNDTABLEReal Estate Markets and the Economy: European Insights14
  16. 16. REAL ESTATE ISSUES Volume 38, Number 1, 2013infrastructure have been put off, such as high-speed railand new runway capacity for London and the South East.These projects and increased homebuilding urgentlyneed to go ahead, which should stimulate the economy.What is required is a re-focusing of public expenditurefrom the revenue account (health services and benefits)to the capital account (infrastructure) to enable newconstruction and development by the private sector.KUEHMAYER: Leaders should find a way out of theunhealthy situation of cutting public spending and, inthat manner, creating a climate of non-confidence and anegative investment climate. The way out of this situationis to find a way to stimulate the positive investmentclimate.Currently, there is a shortage of loans. Fighting theEuropean banking crisis created a lot of new legal(bureaucratic) rules for banks. The new rules stated thatbanks had to change their lending/risk policy to a widerange of investments where it was not a problem to receiveloan financing until 2009. Currently, there is almost nopossibility of being able to obtain a bank loan. Thereshould be a re-thinking of the new regulations in light ofthe current shortage of bank loans.SMITHING: Riots, mass insurrection or politicalassassinations might encourage the Hungariangovernment to follow the advice of the EU, IMF,international investment community, foreign press andeveryone else who have provided detailed, well-reasonedanswers to this question.NEUHUBER: Even Nobel prize winners have a greatdeal to discuss in terms of mastering the financial andeconomic crisis ideally. Basically, there is the principle ofrunning up limitless debt (see also the U.S.) as opposedto a stringent monetary policy that has been practicedby the European Central Bank for a long time. For bothalternatives, there are “pros” and “cons.” The solutionwill probably be the “happy medium.” This may haveto do with the classical Austrian attitude toward time;not to run up debts that cannot be repaid (just as inGreece) and at the same time, not to block every kindof economic performance because of austerity measuresthat are too strict. After imposing a single currency onnational economies in different phases of development(Central Europe versus Southern Europe) and withdivergent mentalities, it has become clear how difficultit is to implement the idea of a true common economicmarket and the European peace project. In addition,there are nationalist anxieties (e.g., Great Britain andHungary), which means that a “shallow” confederation(the idea of federal states) is rather a long-term project. Itis, therefore inevitable, even if patriotic feelings are beinghurt, to transform the European Council into a Europeangovernment with a common economic and fiscal policy.The latter is absolutely necessary in order to reduce fiscalcompetition among EU member states (examples areGreece, where the imposition of taxes is non-existent, andCyprus, where we mainly bailed out huge foreign assetsthat had been transferred to Cyprus).BUJOLD: How do you view the property andinvestment markets currently and in the future, as aresult of the current economic situation? Where doyou have confidence?NEUHUBER: Economically, Europe is a continent thatconsists of countries whose stages of development andspeeds vary. Consequently, the distribution of capitalflows differs considerably when it comes to finding a safe“haven” for investments. In many national economies ofSouthern Europe, such as Spain and Greece, it is difficultto attract investment capital; yet countries that areconsidered safe as far as property investment is concerned,such as Germany, the largest national economy of the EU,or Austria (to a lesser degree for being smaller) are in greatdemand.BRISSON: Prime assets in stable markets such as theUK, Germany and France will feed market flows. London,Berlin, Munich, Hamburg, Frankfurt and Paris wereamong the most active cities. As they get picked over andoverpriced, secondary cities beckon.Sovereign funds have become very active, and not onlyfrom the Middle East; the Norwegian fund, of course,has made a solid commitment to Europe. New ones areemerging such as the Azerbaijan fund buying a trophyasset in Paris. In 2012, France has seen 17 billion euroin commercial real estate investment, half of the 2007amount, but still better than in the past two years.Insurance companies also have been active and havestarted to make a small dent in the funding gap wherebanks have been reluctant.KUEHMAYER: As a result of the economic crisis, peopleinvested increasingly in real estate in countries withstable property markets (e.g., Germany/Austria/WesternEurope). In Central and South Eastern Europe, prices ofreal estate properties dropped dramatically. Prices in theseEUROPEAN LEADERSHIP ROUNDTABLEReal Estate Markets and the Economy: European Insights15
  17. 17. REAL ESTATE ISSUES Volume 38, Number 1, 2013regions are now attractive again. This and the fact thatthere is a huge development potential in these marketsare the reasons that economic growth will create a highdemand for all kinds of properties as soon as investorstrust these markets again.BERENDES: The property and investment market inEurope is, against all odds, quite stable. Germany is seenas a safe haven, but there is not enough product on themarket to feed the demand. Especially in the residentialmarket, prices are increasing and we are seeing the firstsigns of a real estate bubble, especially in the attractivebig cities and regions of Germany. The main problem atthe moment is that banks are sitting on their loans andproperties without doing anything. Because of the fact thatthey get the money from the Central Bank for 0.75 percentand still most of the properties sold or bought duringthe years of the investment hype are still performing,banks are making the best profits ever. However, there isa danger here. They have socialized the debts and are nowmaking significant margins. We all have to face the factthat most of the properties will need new credit facilitieswithin the next one to two years. The first big portfolioswill be brought to the market, especially by the UK banks,and there are many to follow. This is again a challengeand an opportunity for all being active in the real estatemarket, but on the other hand, these distressed propertiesmight flood the market.SMITHING: From my perspective, I am seeing that bankshave begun to take a realistic approach to repossessing andoff-loading distressed assets. This process will accelerateover the course of the next 18 to 24 months, increasingmarket liquidity.WAINWRIGHT: The market for property across Londonremains strong in all sectors, with the opportunity to addvalue by creating residential space remaining a strongimperative. In many cases, this results in mixed-usedevelopment with planners seeking to maximize theaffordable housing component. The Central London officemarket is not oversupplied, but demand is down as a resultof economic uncertainty. There is a view that a pick-upin demand will result in a rise in office rents once theavailable supply is absorbed, particularly at the smallerend of the market. Outside of London, property marketsremain in the “doldrums.”CTIBOR: Because of a decline in the will to invest,investments have been concentrated in ventures thathave the lowest possible risk level. This leads to an“overheating” of these sectors in the market, whenprices are dictated by significant demand. This makesthe whole market more vulnerable. For example, in theCzech Republic, the Class A office yield is relativelylow—fluctuating around seven percent—and is beingfurther suppressed by investors’ seeking safety ratherthan by lack of supply. The higher market volatility is, thehigher should be the yield because evolution dynamicsshorten the life cycle of buildings.METZGER: The dynamic development since the fall ofthe Iron Curtain in 1989 has led to a partly uncontrolledinvestment strategy, especially in the field of real estatein the former Eastern Bloc countries. Of course, there ishigh, pent-up demand in these areas. Various investmentshave occurred, which have not been compatible withthe location and the still weak spending capacity; andother issues have led, in various cases, to substantiallosses. These situations, however, were not the fault of thenational group in charge, but the unprofessional behaviorof investors. This was so prevalent in these markets thatI had, at one point, considered becoming a valuationappraiser to assist these so-called professional investorswho have invested according to the gold diggersystem rather than appropriately evaluating theirrisk-return ratios.BUJOLD: About what are you most concerned?NEUHUBER: I personally find that, at the moment,growth in the housing market, mainly in Germanconurbation areas, is too fast. The run does not necessarilyhave to last. Within the past two years, the housinginvestment market in Berlin has changed dramatically;demand has risen enormously, and pricing has reached aceiling of what the local population can afford—a situationthat has led to civil resistance. Now, even in Germany, theydiscuss the so-called bubbles in some areas. It is importantto pay attention to the demographic development thatgreatly differs in various parts of Europe. Withoutpopulation growth, the formation of a bubble ismade easier.SMITHING: Vacancy rates in the office and industrialsectors are exceptionally high. With little hope of a returnto dynamic growth for the foreseeable future, the overhangEUROPEAN LEADERSHIP ROUNDTABLEReal Estate Markets and the Economy: European Insights16
  18. 18. REAL ESTATE ISSUES Volume 38, Number 1, 2013is unlikely to disappear, even with new developmentreduced to a trickle. In the medium term, assets will needto be converted to other uses.KUEHMAYER: There are still a lot of bad debts in banksin Central and South Eastern Europe resulting from theconsumption/purchase of real estate. There is, on the onehand, a risk for the banks that, I believe, they can handle.But the larger risk is a social one, (i.e., problems thatpoliticians do not want to be exposed by homeless people).BRISSON: Decision-making is slow everywhere andvelocity has slowed as well. There is a lot of talk beforeanything can be done. Fiscal uncertainty is a concern,particularly in France.WAINWRIGHT: There is a continuing shortage ofproperty financing. New lenders are emerging for seniordebt, but this is avoiding the riskier end of the spectrumand development finance. This shortage of debt financehas resulted in new equity buyers entering the market, butis restricting activity in the UK property markets. Privateequity funds are also quite active, but seeking returns of 10percent plus. Banks are still sitting on a large number ofnon-performing loans, or loans in default of their originalloan covenants, and they are slow in releasing these backto the market. Many loans are due for repayment in thenext three years and there is currently not sufficientcapacity to refinance these. The result is continued loanextensions, and the arrival of Basel III is likely to imposeeven greater limitations on the banks.BUJOLD: What are the greatest challenges and thegreatest opportunities?METZGER: Europe, especially the Eastern Bloc countries,belongs among the most important and largest investmentmarkets of the coming decade. The requirement, therefore,is that the investments occur in a controlled and demand-oriented manner.BERENDES: Though there may be some disagreementover this, overall, I believe that Europe, especiallycountries such as France, Germany, Switzerland, Austriaand Scandinavia are still strong performing markets withgood opportunities for foreign and European investors.The European markets, with the exception of the UKmarket, were never too speculative to trade property, butrather kept properties for long-term investment as a safepart of their portfolios.SMITHING: I believe that I outlined the greatestchallenge in my previous statement. The greatestopportunity will be the purchase of development land at“distressed” prices—although these prices will likely becomparable to land prices in the 2000 to 2003 time frame.Land has not generally come under pressure from banksyet as there is not income potential, and banks are thushesitant to repossess.CTIBOR: The local market—the Czech Republic—iscurrently obsessed by a strong lack of confidence. Thiscommon fear has manifested in a significant amount ofmoney being kept away from the market. An increasingdisillusionment will certainly only deepen this negativity.Mortgage interest rates of less than three percent cannotlead to an acceleration of the market, but they bind banksinto long-term, low profit contracts.The only chance to avoid this bias is to re-establish thecredibility of markets. In many cases, the development isclosely related to public money, or institutional privateinvestments. But their behavior can be easily influencedby irrational trends. I believe that only non-institutionalprivate sector entities can solve the problems and avoidsolutions that merely conform to the norm.BRISSON: London is starting to overheat, and moregenerally the chase for prime assets has raised pricesand is pushing investors to take more risks in exploringalternative markets and transactions in local pockets ofopportunities. The CMBS market is opening up again afterfour consecutive moribund years. With maturity wallsin 2013 and over the next few years, refinancing remainsan issue that will hopefully be addressed by “shadowbankers.” Debt will play a key role in 2013.WAINWRIGHT: There is currently an over-capacity inthe UK real estate industry, with insufficient business forthe number of real estate professionals. This has resultedin competitive pricing for real estate services, takeovers,mergers and consolidations in the industry. The challengeis for real estate professionals to find new ways of addingvalue and provide new services against a background oflimited occupational demand, an impending shortage ofmodern stock and a shortage of finance.For well-financed occupiers, there are some interestingopportunities for owner occupiers as the occupier isundoubtedly “king” in today’s market. One simple factremains: buildings wear out and leases come to an end;these are the opportunities for tomorrow.EUROPEAN LEADERSHIP ROUNDTABLEReal Estate Markets and the Economy: European Insights17
  19. 19. REAL ESTATE ISSUES Volume 38, Number 1, 2013The rising cost of energy will continue to be aphenomenon that we must deal with. The current modernstock of offices is very energy efficient and there seemsonly limited scope for additional improvements fromcurrent design standards. Future savings are likely tocome from changes in the patterns of building use and theequipment deployed in those buildings. The energy issuealso may affect future patterns of how and where peoplelive and work as long distance commutingbecomes unaffordable.KUEHMAYER: It is necessary to look at the individualmember states as the picture is different in every country.While some CEE/SEE countries like Poland and the CzechRepublic are in good economic positions, countries suchas Slovenia and Croatia as well as Bulgaria and Romaniaare in distressed economic positions. The political leadersof Hungary increased the negative trend of the economyby a lot of unfriendly regulations towards investors.Very important is that specific development projects andother companies do not have sufficient access to bankloans. The situation can be described as “credit crunch.”To create more confidence in the markets, the availabilityof bank loans has to be increased.For real estate advisors, there is also the opportunity torestructure existing real estate portfolios. Restructuringwill be one of the segments with increased demand in theshort term.There will be opportunity in increased demand for officeswith lower energy footprints (“green buildings”). Tenantslook at the total costs of a building. The components, netrental fees and additional building expenses will be majorelements to distinguish a building from its competitors.BUJOLD: How do you view the U.S. and other globalmarkets (China, South America) by comparison?NEUHUBER: To my knowledge, the U.S. propertymarket has always been much more volatile than theCentral European one (except for London). We havecurves that rise and drop more gently. For the time being,it will probably stay like that. The markets in Europe andAsia, where demographic development and consumerhabits are so different, cannot really be comparedto one another.WAINWRIGHT: I think that the U.S. made a far sharpermarket correction than the UK in 2008 to 2009 and, asa result, is better placed today to take advantage of anyeconomic recovery. The stronger economies in China andSouth America also give rise to more vibrant real estatemarkets than in the UK and Europe. The one significantdifference between those markets and the UK are supplyconstraints imposed on the UK by the restrictive planningsystem and the resultant time lag introduced into thedevelopment cycle.Overall, I believe that the U.S. and BRIC (Brazil, Russia,India and China) countries will experience substantiallyhigher economic growth than the UK and Europe, whichwill drive the pace of real estate development in thosemarkets. In contrast, the low growth/high tax in theUK will continue to suffer from a shortage of occupierdemand, which will limit the pace of new developmentin all but the prime CBD areas. The CBD area of CentralLondon is one of those exceptions that will continue toexperience strong demand.BRISSON: The U.S. is certainly a land of opportunities,especially with the favorable currency exchange. But itnow tends to be seen as one among many other markets.When investors are not looking for core assets, theyare aware that the many U.S. submarkets are subjectto different cycles, and are more cautious. In general,European players consider that there are enough saferopportunities in or close to their backyards, especiallywhen the markets are more volatile, due diligence is costlyand averages reported in surveys do not mean much inanalyzing local micro-opportunities. The Middle East andAsia are being looked at but, for the moment, the inflowsare much more significant. South America has been, up tonow, a more marginal investment destination.CTIBOR: Although I am not a specialist in the U.S. orthe BRIC markets, I see a crucial point in the differencebetween deficits and market possibilities. The UnitedStates is experiencing a significant problem withits effectiveness. It is necessary to focus on specific,innovative and individual solutions. The knowledgeeconomy cannot just be a phase; it has to reach its fullpotential by finding smarter ways of doing business andbringing new and better products to the market.To the contrary, China, India and South America all stillhave strong inner deficits—lack of services, infrastructurethat is not fully developed, etc. In comparison to theprevious decades, these countries cannot be viewedanymore as pure exporters. A significant level of domesticdemand within each of these economies’ growth existsnow and I expect this will continue for quite some time.EUROPEAN LEADERSHIP ROUNDTABLEReal Estate Markets and the Economy: European Insights18
  20. 20. REAL ESTATE ISSUES Volume 38, Number 1, 2013KUEHMAYER: I am not a real expert in these markets.According to my understanding, the U.S. market is alreadyback from crisis. That is not the case in many CEE/SEEcountries. The real estate market in China is linked to itshigh growth rate. Because of an average GDP growth ofmore than 10 percent, and now shortly below 10 percent,the demand is still very high. There has been no crisisthere since the high growth rates began. In general,because of its strong economic growth, the Asian realestate market is in a better position than Europe.SMITHING: My direct exposure to these markets isvery limited in my current role. From my perspective,it appears that the U.S. economy is generally improvingand confidence has returned. Movement is in a positivedirection, although they are still walking, not running.BERENDES: Markets like Asia, especially China andsome others as well, are getting closer to being the nextbubble. On the other hand, as long as this part of theworld will have economic growth at a level similar towhat has occurred over the past ten years, then realestate investment there will most likely be a profitableinvestment, but risky on the other hand. The U.S. market,in my opinion, will recover and one can see the firstpositive signs in the residential market as well as thecommercial market.METZGER: The U.S. market is generally spread ontothe larger cities such as New York, or Washington, D.C.,where the investment markets are relatively diverse. Onthe other hand you have areas such as Florida, where youcan make investments in vacation properties or vacationhomes. For private investors, it is challenging because ofthe distance to Europe, and the costs of operation andmaintenance have become quite expensive. In comparisonto the boom of the 80s and 90s, many have attempted tosell their private investments. Overall, I believe that manyforeign investors do not trust the U.S. markets because ofthe subprime crisis.The Chinese market remains a closed market these daysand hardly viable because of the significant languagebarrier. In addition, there are further issues suchas the environment, urban development issues andinfrastructure, but principally, the government’sdealings regarding human rights.Referring to the South American market, I can onlymention that we are currently engaging with theBrazilian real estate market for investments. Ourcurrent knowledge shows that this market holdspositive prospects for investors.SUMMARY COMMENTSCTIBOR: More than ever, today’s European Union mustreflect on the partial mistakes of its policies and makeclear, specific steps for the future. Being aware of mypersonal experience with central planned economies, Ibelieve it is imperative that planning and decision-makingmust be very closely related to objective issues. Rulesshould be introduced that take into account the commoninterests and needs of as many participants as possible,so that everyone can accept and abide by them. In thismanner will we be able to optimize our creative potentialand link different approaches together to implement newand innovative strategies for moving forward.BUJOLD: I want to extend my sincere thanks to all of theparticipants for their insightful comments. After listeningto the discussion, I feel as though I have a much greaterinsight into the political, economic and social structuresthat support the EU and, at times, create challenges toconsensus. These are challenges that most democraticsocieties face, although the national histories of Europeperhaps make consensus on significant issues moredifficult. I applaud the EU for the goals it has achieved indeveloping a common economic union and a currencythat is highly respected and valued throughout the world.I look forward to the ongoing success of the EU. ■EUROPEAN LEADERSHIP ROUNDTABLEReal Estate Markets and the Economy: European Insights19