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18 Management report – münchener Hypothekenbank eg l annual report 2013 The economic situation remained tense in the Netherlands. Prop- erty sales and the associated demand for property financing fell against the background of comparatively high unemployment and shrinking personal income levels. According to information provided by the Dutch Association of Real Estate Brokers and Real Estate Experts (NVM), the erosion of prices eased a bit re- cently and the number of newly signed contracts to buy residen- tial property rose again for the first time. Prices continued to rise in the Swiss residential property market, albeit not as rapidly as the pace seen in previous years. On av- erage, prices for single-family houses rose by 2.6 percent and 1.6 percent for condominiums. Prices continued to vary signif- icantly from region to region as prices rose at above-average rates in the Romandie (the French-speaking areas) and Central Switzerland, in particular. The property financing market con- tinued to grow as dynamically as in previous years. The volume of mortgage loans once again grew faster than the Swiss GDP. The Swiss National Bank (SNB) viewed this situation as a further increase in risks facing the property and property financing mar- kets. The SNB took steps to calm the markets by activating the obligatory countercyclical capital buffer for Swiss banks at the end of the third quarter 2013. This measure was intended to strengthen the resilience of the banking sector by raising the re- quired percentage of equity capital banks had to hold for mort- gage loans. The residential property market in the USA recovered signifi- cantly last year. According to the Case-Shiller index, prices for residential property rose across the USA by 12 percent with the biggest gains posted by the cities which had seen particularly steep drops in property prices during the recession. Growth of property prices slowed in the fourth quarter as mortgage inter- est rates rose, the unemployment situation only improved slowly, and household incomes grew moderately. The market for rental housing continued to develop briskly. Prices for apartments rose further, especially in regions with flourishing job markets. In ad- dition, more new apartments were being built, which did not impact negatively on rental prices due to high demand. For this reason rental housing remained the preferred asset class for investors. Commercial property – Germany Investor demand for German commercial property was very strong last year. The volume of transactions rose by over 20 percent to € 30.5 billion making it the biggest sales year since 2007. The strong appeal is based on the following reasons: good overall economic conditions, Germany’s reputation as a “safe haven” for capital investments, the unbroken level of low in- terest rates, and weak returns offered by alternative forms of investment. For these reasons insurance companies and pension funds, in particular, were increasingly investing in property. Foreign investors represented 33 percent of aggregate transac- tions in 2013, down from the 42 percent share they held a year- ago. They preferred to invest in large portfolios of property where they held a 45 percent share of the volume of transac- tions. Open-ended property funds and special funds were the biggest buyer groups with € 8.5 billion. Family Offices and private investors also showed keen interest and invested € 3.1 billion. Commercial Residential (only portfolio) Development of commercial property transactions in Germany 2008 – 2013 Figures in ¤ billion 2008 2009 2010 2011 2012 2013 50 45 40 35 30 25 20 15 10 5 0 4.8 21.1 10.1 3.3 3.8 19.1 6 23 11 25 13.7 30.5 Source: Ernst & Young Research, January 2014