News from 10/24/2008
European investment market: Q3 revenues plunge by 60% compared to last year
Investment on Europe’s commercial real estate market has continued to plummet during the third quarter. According to a Jones Lang LaSalle (JLL) market update, the value of transactions fell to €25bn—19% below that of the second quarter (€31bn) and 60% lower than during the same period of the past year. The figures published by the consulting firm CB Richard Ellis (CBRE) paint the same picture: according to them, the European property market had transactions valued at €26.4bn in the third quarter—60% less than during the same period in the prior year. However, the value calculated by CBRE for the second quarter (€27bn) was nearly matched. According to JLL, increases were registered in the second quarter only in the Netherlands, Sweden and Russia, while Ireland, Norway, Germany and Great Britain showed far poorer results. CBRE highlighted strong activity among the German open-end funds, which accounted for investments of €2.9bn, 11% of all acquisitions during the third quarter.
dm-Drogeriemarkt: 1,000 new branches planned in Germany
The dm drugstore chain wants to keep expanding. Erich Harsch, CEO of dm, declared at a financial report press conference, “We think that we can manage another 1,000 stores in Germany during the coming ten years.” For the current year, he said 250 further branches will be opened at home and abroad. “We’re looking for suitable objects in inner cities, city districts and shopping center locations measuring at least 400 sqm; for branches in big-box shopping centers, we need at least 600 sqm.” At the moment, the chain is represented in Germany and elsewhere by 2,024 stores. According to the balance sheet, dm attained €3.36bn in revenues at its German locations—an 11.4% increase compared to last year and, internationally, revenues ran to approximately €4.71bn (+ 13.4%).
Berlin: Apartment rentals stable, demand in luxury segment satisfied
The rented apartment market in Berlin appears to be relatively stable; all in all, it should remain so until 2011 according to the current apartment market barometer compiled by the investment bank IBB. In particular, the report says demand for rented apartments in the upper price segment is fulfilled and in the low and medium price segment the market barometer anticipates a slight shortage over the coming three years. Especially in the borough of Friedrichshain-Kreuzberg and, in the longer run, in Mitte (Center) and Reinickendorf, rising demand for more economical apartments will probably encounter limited supply. It estimates particularly high demand for apartments suitable for senior citizens in the medium and low price segments. Based on a poll taken among some 250 participants in the Berlin market, this IBB barometer identifies developments on both the rented apartment and the condominium markets in Berlin until 2011, differentiated according to boroughs and price segments.
Frankfurt region: “Kinzigbogen” shopping center in Hanau 80% rented
Most of the planned big-box shopping center called “Kinzigbogen” in the Lamboy district of Hanau has been rented. Helmut Peter, general planner for HP&P Real Estate, told the daily newspaper Frankfurter Rundschau in an interview that about 80% of the space set aside for retail, gastronomy and leisure has been let out. Although the €100mn project had been plagued by temporary delays, the initial customers have retained their interest, he explained. Almost 27,000 sqm of gross floor area in the Kinzigbogen are reserved for specialty shops, while a further 10,000 sqm will go to leisure uses and food services. As had already been reported, the discount supermarket Aldi, the electronics supplier Expert and the pet supplies chain Fressnapf have already been secured as anchor tenants. The investor in the project is Gazit and it is being developed by Aurelis, the previous owner of the premises.
Stuttgart region: €30mn logistics center planned in Ludwigsburg
The logistics firm Atege GmbH has had its offer for a municipally owned plot in the commercial area “Hintere Halden” accepted by the Ludwigsburg city council. The sale price for the 5.4 hectares amounts to approximately €13.5mn (€250/sqm). The firm wants to build a new, approximately €30mn logistics center there. Atege is a subsidiary of the Swiss firm Gondrand Global Transports & Logistics.
Morgan Stanley: P2 Value fund wants to invest $1bn
Morgan Stanley’s open-end fund P2 Value wants to invest approximately $1bn in new objects during the next twelve months. CEO Walter Klug explained, “At present, we are checking investment possibilities in Asia, the U.S.A. and especially in Great Britain. Thanks to the current price corrections, far better investment bargains are available there than during the past half of the business year.” In the long run, he said, the fund is targeting the following segment allocations: 40% in Europe, 30% in Asia/Pacific and 30% in America. During the first half of the 2008-2009 business year, the fund scored a net cash influx of €278mn, boosting the fund’s assets by about 14%, to €2.18bn. The value of the property portfolio runs to around €2.19bn, with the financing at 36%. Liquidity, at €770mn, is 35% of the fund’s volume.
Real I.S.: Office object acquired in the Netherlands for €67mn
The fund initiator Real I.S. has acquired an office property in Amsterdam for €67mn to be placed in its special fund BGV Bayerische Grundvermögen III SICAV FIS, seated in Luxembourg. The five-story building located in the center of the Dutch capital comprises approximately 18,000 sqm of lettable area and an underground garage with 181 parking spaces. A tax authority rents 95% of the building. Real I.S. is a composite enterprise belonging to Sparkassen-Finanzgruppe, a financial group of the regional savings banks, and is responsible, as an asset management company, for commercial properties belonging to BayernLB.
Strabag: Infrastructure contract in Poland worth €500mn
A consortium around the Austrian construction company Strabag has won a €500mn contract to build the Wroclaw bypass in Poland. Of that sum, €350mn will go to Strabag. Construction, scheduled to begin in the first quarter of 2009, is expected to last 29 months. The new contract brings Strabag’s job backlog in Poland to approximately €1.5bn, a nearly threefold increase compared to the previous year. Strabag sees Poland, in addition to the Czech Republic, as a leader among the central and eastern European markets (with the exception of Russia) in terms of growth and profitability.