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ePaper created 2013-04-15, 17:20:51 | version 1.25.7
Management report 49 conditions should keep the demand for property stable. How- ever, the pace of price increases will vary. In addition to regions with strong price increases like Zurich, Geneva and Lausanne, property prices are only expected to rise moderately in other regions of Switzerland. However, the current development of the property market will lead to further discussions concern- ing the dangers of it overheating. The Swiss National Bank is also continuing to issue warnings about overheating risks based on the ongoing increase in property prices, especially for con- dominiums. At the same time, motives for property purchases partially counter the creation of a property bubble because houses and apartments are still primarily purchased for per- sonal use, and rarely for speculative reasons. “Demand for residential property and property financing will remain high in many regions of Germany.” The American residential property market is expected to recover further, although the recovery could be hindered by the uncer- tain economic prospects and current discussions about tax increases, as well as government spending cuts. In the cur- rent economic situation, demand for rental apartments is likely to remain high among renters and investors over the medium term. According to estimates from large brokerage agencies, the vol- ume of transactions in the German commercial property mar- ket will develop stably in 2013. Investors will need to ease their previously strong focus on core properties before a noticeable increase can take place. Initial signs of this are already visible. No major changes are expected in financing conditions and interest rates, in particular, should continue to remain low. The European commercial property markets will move sideways. Investors will continue to focus on Europe’s liquid markets. In Western Europe, aside from the UK and France – with their prop- erty strongholds of London and Paris – these particularly include the Scandinavian countries. The gap in returns obtainable from The Pfandbrief market will continue to benefit from investors’ high demand for safe investments. The Pfandbrief is also sup- ported by the regulatory environment. The German Pfandbrief market is counting on seeing the volume of new Mortgage Pfandbriefe issues rise further in 2013. The volume of Public Pfandbriefe issued will decrease further due to the difficult overall conditions in this segment. The resulting general decline in the volume of new Pfandbriefe issued on the market – espe- cially in the benchmark area – will lead to stable spreads for new issues. Property and property financing markets Unchanging low interest rates, a stable job market, rising incomes and the search for safe capital investments all ensure that demand for residential property, in particular, will again remain high in many parts of Germany in 2013. Prices for condominiums and houses will continue to grow here. Higher new construction activity will still be unable to fully meet the needs seen in Germany’s metropolitan centres in 2013. As a result, demand for property financing should remain high. The fairly high share of equity capital provided by borrowers hinders excesses from occurring in the financing markets. At the same time, the risks of higher prices in certain regions and localities cannot be ignored. We cannot exclude the possi- bility that rising speculative expectations may be linked to prop- erty purchases in certain areas. In contrast, the outlook for most of the other European residen- tial property markets remains dim. The Association of French Notaries expects cuts to state support measures and higher taxes in 2013, in particular, to reduce property purchases in the residential market by 25 percent below the average fig- ure recorded in past years. The residential property market in the UK will also be characterised by uncertainty, and will only stabilise when the overall economic situation shows sufficiently stable development. We expect that the overall conditions in the Swiss property mar- ket will not change significantly in 2013. The forecast for Swit- zerland includes a favourably developing real economy, steady immigration, a stable job market and low interest rates. These