annual financial statement 2011 - conwert Immobilien Invest SE

CONWERT IMMOBILIEN INVEST SE
ANNUAL FINANCIAL STATEMENT 2011
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OPERATING ENVIRONMENT
THE ECONOMIC SITUATION IN EUROPE
The uncertainty related to the European sovereign debt crisis, which was strongly influenced by
the developments in Greece, Italy and Spain, grew worldwide in the second half of 2011. After three
preceding interest rate moves in the year 2011, the Governing Council of the European Central
Bank (ECB) again reduced its monetary key rate by 25 basis points on 8 December 2011. The rate
on main refinancing operations therefore declined to 1.00% as of 14 December 2011. At the same
time, the interest rate on the marginal lending facility was also reduced by 25 basis points to 1.75%
and the deposit rate was decreased by the same amount to 0.25%. After this fourth and last change
of the interest rate in the past financial year, the base rate was back to the record low of the period
from May 2009 to April 2011 again at the end of the year 2011.
Although the Austrian economy had been cooling off since mid-2011, because of the general
economic conditions in Europe, the gross domestic product (GDP) increased by +3.3% for the whole
year 2011 thanks to a strong first half of the year.
The gross domestic product of Germany rose by 3.0% during the same period. As in Austria, growth
in Germany was mainly concentrated on the first six months of the year 2011. Above all, strong
domestic demand and the relatively high level of consumer spending turned out to be of great
support to the economic development in Germany.
THE INVESTMENT MARKET EUROPE 2011
As a result of a particularly strong final quarter, the transaction volume of the European commercial
property market rose to 115.0 billion € in 2011, up 4% on the previous year. In the fourth
quarter of 2011, the transaction volume even exceeded the prior quarter by 15% and amounted
to 32.0 billion €. This reflects the trust investors place in the European property market –
especially in Germany, France, the United Kingdom and the Nordic countries.
(CBRE Germany, press release 18 January 2012)
OPERATING ENVIRONMENT AUSTRIA
INVESTMENT MARKET
In the Austrian investment market, demand was strong in 2011 and the price level high at the same
time. Overall, investments in properties totalled approximately 1.7 billion €. In comparison with
the previous year, the transaction volume rose by nearly 7%, but fell short of experts’ estimates
due to lower investments in the commercial property segment. This was above all attributable to
the limited credit financing for medium and larger transactions. While the commercial property
segment was faced with persistent low demand for retail space in the financial year 2011, transactions
in the market for apartment buildings from the late 19th century in Vienna increased. The
trend towards increasing prices and decreasing yields is expected to continue to a moderate extent
in this segment in 2012. The establishment of ownership in apartment buildings with a subsequent
sale of freehold flats turned out to be particularly attractive for investors in 2011 as yields on
rentals were low and the selling price for freehold flats was high.
(CBRE Austria – Vienna Offices Market View 2011, EHL Immoflash today 25 January 2012)
RESIDENTIAL PROPERTY MARKET VIENNA
The strong demand in the residential property market in Vienna was again contrasted by
scarce supply in 2011. This resulted in above-average price increases of up to 20% for soughtafter
objects in good locations. Properties that were traded at a market value of 2,500 €/sqm
two years ago, cost roughly 3,000 €/sqm in 2011. In prime locations (not including the first
district of Vienna) the purchase price for newly built freehold flats even ranged between 3,500
and 5,000 €/sqm. Loft extensions cost between 3,500 and 5,500 €/sqm on average, depending
on location. In the market for used freehold flats, prices ranging from 2,000 to 3,000 €/sqm
were realised in moderate locations and up to 4,500 €/sqm in good locations. In the first district,
purchasing prices for freehold flats ranged between 8,000 and 16,000 €/sqm.