Please activate JavaScript!
Please install Adobe Flash Player, click here for download
ePaper created 2015-04-21, 16:47:46 | version 1.37.0
18 münchener Hypothekenbank eg | annual report 2014management report The volume of transactions noted for residential property port- folios fell by about € 1 billion to € 12.8 billion. This decline was, however, not due to lower demand. It was caused by a notably smaller availability of properties while buying interest was very higher. Commercial Property – International Demand for commercial property across Europe was so strong that observers were already calling 2014 a boom year. The vol- ume of transactions rose by almost one third to € 218 billion, of which just three countries, Great Britain, Germany and France, accounted for about 70 percent of total property turnover. Banks were very willing to provide financing. Correspondingly, their willingness to act as sole providers of financing for bigger investments also rose. The number of lenders continued to rise as increasing numbers of credit funds and insurance companies offered financing services. Providers of financing were observed competing against each other in certain cases. However, coopera- tion between banks and non-banks was also noted. “Demand for commercial property across Europe was so strong that 2014 was already being referred to as a boom year.” Demand for property in attractive locations continued to exceed supply in Great Britain. As a result, prices for core properties con- tinued to rise. At the same time investors intensified their focus on regional locations and peripheral properties even more than in 2013. This led to a narrowing of the spread for initial yields attainable in core locations and those in peripheral locations. The French transaction market developed favourably despite the weak economy. At the end of the third quarter the volume of transactions had risen by about one third to € 14.6 billion. The three main drivers behind this increase were: generally high in- vestor interest in the European property markets; low interest rates, and a greater willingness to provide financing. This was reflected by the fact that foreign investors also represented about half of the property transactions recorded in France. Yields were under pressure due to high demand as peak yields for top office properties in Paris fell below 4 percent with returns on top re- tail properties falling even further. Office properties dominated property classes with a 65 percent share. “Lenders’ willingness to provide financing was high, which in turn led to a further intensification of competition.” The budding economic recovery in the Netherlands favourably affected demand for commercial property. The volume of trans- actions rose notably, and in the final quarter of 2014 an increase of almost 90 percent over the same year-ago figure was record- ed. Office properties accounted for the greatest share. Although high demand pushed peak yields down in the Netherlands, they were still quite high in comparison to the average figure noted for Europe. Most of the primary and secondary markets in the American commercial property market were in very good shape in 2014. Demand was particularly strong for office space and was driven by robust and broad-based economic growth and a further im- proving jobs market. The focus of investor interest remained unchanged on the core markets of New York City, San Francisco, Washington DC, Boston, Seattle, Houston, Chicago and Los Angeles. High demand for core properties remained intact. As demand exceeded supply, inves- tors increasingly turned to higher-yielding value-add properties as well as real estate located on the fringes of primary markets. In addition, investor demand rose for properties located in the central business districts of secondary markets. The financing market appeared stable and liquid, and was marked by intense competition among providers. The market for com- mercial mortgage backed securities, in particular, was able to further recover. A softening of financing standards resulting from the heavy competition was observed. Financing providers