Posts Tagged ‘Germany’

Despite Great Recession, the Rich Grew Richer

Thursday, July 29th, 2010

Even with the recession, the world’s millionaires grew to 10 million and their wealth 19 percent to $39 trillion. It’s ironic that — even in the depths of the Great Recession — the number of millionaires around the world grew by 17 percent to 10 million.  Their collective wealth surged 19 percent to $39 trillion, according to the latest world wealth report from Merrill Lynch-Capgemini. “We are already seeing distinct signs of recovery and, in some areas, a complete return to 2007 levels of wealth and growth,” said Bank of America Corporation wealth management chief Sallie Krawcheck.

India, China and Brazil are home to the majority of the world’s newest millionaires, despite the fact that they were some of the hardest hit markets in 2008.  Asia now has three million millionaires - meaning it has caught up with Europe - thanks to a 4.5 percent economic expansion rate.  Their combined wealth soared 31 percent to $9.7 trillion, outstripping Europe’s $9.5 trillion.

North America’s wealth grew by 18 percent, while the number of individuals considered rich climbed 17 percent; their wealth totals $10.7 trillion.  Last year, the United States boasted the most millionaires - 2.87 million.  Japan was next with 1.65 million; Germany had 861,000; and China 477,000.  Switzerland boasts the highest concentration of millionaires, with approximately 35 for every 1,000 adults.

According to Lyle LaMothe, Merrill Lynch’s U.S. wealth management chief, “The wealthy allocated, as opposed to concentrated, their investments.”  In other words, they put their money into fixed-income investments that provided predictable cash flow.  The trick now is to convince the wealthy to return to higher risk investments that have a higher income potential.  “There is still a hesitancy,” LaMothe notes.  “Liquidity is incredibly important and people need cash flow to preserve their lifestyle - but they want to replace that cash flow in a way that does not increase their risk profile.  Investors are open to areas they hadn’t thought about before as they try to preserve their ability to be philanthropic, to preserve their lifestyle.  To me, the report underscored that clients are involved and they’re not inclined to stay in one percent savings accounts.”

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Posted in Economics | 1 Comment »

European Nations Look Into Selling Public Assets to Resolve Debt

Thursday, July 22nd, 2010

European nations look into selling public buildings to pay down debt. Debt-laden European governments seeking ways to raise money are considering the possibility of selling public properties such as office buildings.  Countries considering selling assets include Germany, the U.K., France and Greece, all of which were hit hard by the global banking crisis.

“It is clear that several European governments are looking to secure disposals on a large scale,” noted Richard Holberton, a CB Richard Ellis director.  Although Holberton says it’s not clear what effect these sales would have on government funds, “their impact on real estate markets could be a lot more significant.”  Government-owned assets comprised between two and 2 ½ percent of all European public sales since 2006.  That could double this year, according to CBRE, and could account for four percent of the €100 billion — $125 billion - that will be sold this year.

Although some properties are expected to attract significant purchaser interest, some government buildings won’t sell so easily.  Surplus office buildings could be in undesirable locations, for example.  Prime assets that are still occupied by government offices will have far more appeal to investors.  “Where assets are well located, of good quality, and continue to produce income from occupation by a public-sector tenant, this generates an income stream that is attractive to investors,” Holberton said.

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Posted in Development, Economics, Office | No Comments »

Jon Levy: European Real Estate Opportunities

Monday, April 26th, 2010

Jon Levy is a European Union analyst with Eurasia Group and a frequent commentator on European issues, appearing on CNN, CNBC and NPR. He was previously director of national security policy for John Kerry's presidential campaign. Jon Levy is a European Union analyst with Eurasia Group and a frequent commentator on European issues, appearing on CNN, CNBC and NPR.  He was previously director of national security policy for John Kerry’s presidential campaign.  In a recent interview for the Alter NOW podcasts, Levy discussed several factors shaping European real estate markets - as well as European investment in U.S. assets.  His comments touch on the outlook for eastern Europe, investment thinking in Germany and some of the macroeconomic challenges facing the U.K.  Levy’s comments add a unique perspective to some of the key trends we are watching in the European markets.

A few insights…

German open-ended real estate mutual funds are expected to invest 12 billion euros (approximately $18 billion) in Europe and the United States over the next few years.  These funds have already raised three billion euros in the first eight months of 2009, reinforcing a sense that - at least for Germany - the worst of the financial crisis is over and markets are stabilizing.  Germany is now one of the most aggressive investors in American real estate, behind only Australia.  These funds display a preference for high-quality, income-producing assets.

Levy noted that there has been dramatic tightening of credit and liquidity in Eastern Europe.  However, as he notes, the ability to adopt the euro - while an uneven and politically charged process - provides an exit from this environment - a key distinction with other emerging market crises.  Furthermore, within Eastern Europe, there are significant differences in outlook, with several regions and sectors poised for growth.  This situation, Levy argues, may present attractive entry points as broader credit and liquidity conditions lead to more favorable asset prices.

In the United Kingdom, an estimated $350 billion is needed to refinance commercial real estate loans in a market where many properties have gone into default and values have declined 44 percent since 2007.  The leasing pool in the City of London has been dramatically reduced as there is a consolidation in the banking and asset management industry.  There is a strong emerging view that the UK needs to diversify its economy away from financial services and back into manufacturing and agriculture to achieve a healthier balance.  Levy also provides some insight into the situation in the UK.

Eurasia Group is the world’s leading political risk and consulting firm that helps corporations make informed business decisions in countries around the world.

 
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Posted in Economics, General | No Comments »

Investors Are Choosing London

Thursday, January 28th, 2010

London beats Washington, D.C., as preferred destination for commercial real estate investment.London has overtaken Washington, D.C., as the preferred city for commercial real estate investment,  primarily because investors believe that prices have bottomed out and the time to get into that market is now. The British capital has overtaken the previous favorites of Washington, D.C., and New York, according to a survey conducted by the Association of Foreign Investors in Real Estate (AFIRE).

“London currently offers investors the advantage of a ‘re-priced’ market,” says James Fetgatter, AFIRE’s CEO.  “The re-pricing began sooner than it did in other cities.”  London’s score is 31 points higher than the perennial favorite Washington, D.C., and 40 points ahead of New York City.  A year ago, London occupied second place, ranking four points behind Washington.  The survey of the association’s approximately 200 members was taken in the fourth quarter of 2009 and represents ownership of more than $842 billion of commercial real estate.  Of that, $304 billion is invested in the United States.

London, along with the rest of the United Kingdom, has rebounded with investment rising 56 percent from the first to the second half of 2009.  Property values rose 2.4 percent in November, the largest monthly increase in 15 years.  Savills, the real estate advisory firm, is predicting London will eclipse New York as the fastest growing global financial center.

Despite London’s success, the United States is still preferred as the “most stable and secure real estate investment environment,” according to 44 percent of survey respondents.  This is the first time the United States ranked below 50 percent in the survey.  It ranked 53 percent in 2008 and 57 percent in 2007.  Germany occupies second place with 21 percent.  In terms of price appreciation, the United States ranks first, followed by the United Kingdom and China.

The preferred property for investment is multifamily residential, followed by office, industrial, retail and hotel.

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Posted in Industrial, Office, Residential | No Comments »

Is Wind the New Oil?

Tuesday, September 22nd, 2009

114975-004-10ac61f4After investing $16 billion in wind turbines, the United States has overtaken Germany as the world’s largest wind-power generator.  Wind power accounted for 42 percent of new generating capacity last year, an increase from just two percent four years ago. The American heartland’s sparsely populated states — from Texas to the Dakotas — are the ideal locations for wind turbines.

The momentum for wind power is slowing, though, and in July, T. Boone Pickens - oilman and clean-energy entrepreneur - called off plans for the world’s biggest wind farm in Texas.  His planned 687 turbines, valued at $2 billion, are now in search of a new location because the necessary transmission lines could not be built.  Harnessing wind power requires extensive grid infrastructure, which involves a complicated and lengthy state and municipal approval process.

The credit crunch also has caught up with the ability of wind farms to come online.  Wind is a capital-intensive business that requires long lead times.  While 2008 was a good year for wind power and installations are still moving forward, a slowdown is anticipated as firms fail to obtain the financing they need to purchase additional turbines.

Wind capacity grew by 50 percent last year, according to the American Wind Energy Association (AWEA).  In 2009, growth is expected to be around 20 percent.  The AWEA notes that although 2,800MW of new turbines were installed during the first quarter, just 1,200MW came online in the second.

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Posted in Development | No Comments »