Emerging Trends in Real Estate® Europe 2006 - Urban Land Institute
Emerging Trends in Real Estate® Europe 2006 - Urban Land Institute
Emerging Trends in Real Estate® Europe 2006 - Urban Land Institute
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Bus<strong>in</strong>ess park/out-of-town offices rank at or near the bottom on prospects for total<br />
Exhibit 4-18<br />
40%<br />
35%<br />
30%<br />
25%<br />
20%<br />
15%<br />
10%<br />
5%<br />
0%<br />
-5%<br />
IPD Office Property Total Returns<br />
for Selected Countries<br />
Ireland<br />
France<br />
Sweden<br />
Netherlands<br />
United K<strong>in</strong>gdom<br />
F<strong>in</strong>land<br />
Germany<br />
Portugal<br />
Spa<strong>in</strong><br />
1999 2000 2001 2002 2003 2004<br />
Source: Investment Property Databank (IPD).<br />
Note: For Ireland, 2004 figure was not available; figure shown is for the<br />
12 months end<strong>in</strong>g <strong>in</strong> third-quarter 2005.<br />
The U.K. is one exception to this, where there is more<br />
caution with regard to the regional markets, which tend to be<br />
more mature relative to cont<strong>in</strong>ental second-tier cities. “It is<br />
very important to look at local supply <strong>in</strong> U.K. regional office<br />
markets,” says one, with others see<strong>in</strong>g office rental growth <strong>in</strong><br />
London but “less evidence <strong>in</strong> the U.K. regions.”<br />
Avoid<br />
Germany and the Netherlands get the consistent thumbs down<br />
for <strong>2006</strong>. For Germany, the caution is patchy; few will touch<br />
Frankfurt and Berl<strong>in</strong>, but the other cities may have some merit<br />
<strong>in</strong> <strong>2006</strong>. “The German market is still a question mark and<br />
Munich may start to pick up while Frankfurt will cont<strong>in</strong>ue to<br />
underperform.” Concerns over economic performance cont<strong>in</strong>ue<br />
to underp<strong>in</strong> the lack of confidence <strong>in</strong> the German market,<br />
but where there is less of a supply/demand imbalance,<br />
markets could recover more quickly, say respondents.<br />
60 <strong>Emerg<strong>in</strong>g</strong> <strong>Trends</strong> <strong>in</strong> <strong>Real</strong> Estate ® <strong>Europe</strong> <strong>2006</strong><br />
Exhibit 4-19<br />
Prospects for City Centre<br />
Offices <strong>in</strong> <strong>2006</strong><br />
Prospects Rat<strong>in</strong>g Rank<strong>in</strong>g<br />
Total Returns Modestly Good 5.6 8th<br />
Rent Increases Fair 5.3 7th<br />
Capital Growth Modestly Good 5.6 8th<br />
Supply/Demand Balance Fair 5.0 8th<br />
Development Fair 5.3 7th<br />
Direction <strong>in</strong> Which Prime Yields Will Move by Late <strong>2006</strong>: Down/Stable<br />
Investment Recommendation of Survey Respondents<br />
Buy Hold Sell<br />
47.4% 36.5% 16.1%<br />
Source: <strong>Emerg<strong>in</strong>g</strong> <strong>Trends</strong> <strong>in</strong> <strong>Real</strong> Estate <strong>Europe</strong> <strong>2006</strong> survey.<br />
Exhibit 4-20<br />
Prospects for Bus<strong>in</strong>ess Park/<br />
Out-of-Town Offices <strong>in</strong> <strong>2006</strong><br />
Prospects Rat<strong>in</strong>g Rank<strong>in</strong>g<br />
Total Returns Fair 4.9 9th<br />
Rent Increases Fair 4.5 9th<br />
Capital Growth Fair 4.9 9th<br />
Supply/Demand Balance Modestly Poor 4.4 10th<br />
Development Fair 4.7 9th<br />
Direction <strong>in</strong> Which Prime Yields Will Move by Late <strong>2006</strong>: Stable/Down<br />
Investment Recommendation of Survey Respondents<br />
Buy Hold Sell<br />
24.8% 36.0% 39.2%<br />
Source: <strong>Emerg<strong>in</strong>g</strong> <strong>Trends</strong> <strong>in</strong> <strong>Real</strong> Estate <strong>Europe</strong> <strong>2006</strong> survey.