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Mergent's April 2014 Europe Property Report

Mergent's April 2014 Europe Property Report

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Mergent's April 2014 Europe Property Report
Mergent's April 2014 Europe Property Report

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Published by: calibrateconfidence on Apr 28, 2014
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http://webreports.mergent.comIndustry Report -
 - April 2014
 A Company and Industry Analysis
 April 2014
Current Environment
Sector OverviewSector PerformanceLeading CompaniesMerger and Acquisition Activity
Industry Prole
Industry Size and ValueResidential SegmentOfce SegmentRetail SegmentSector Investment
Market Trends and Outlook 
Global Commercial Investors ReturnDevelopers Embrace Sustainability StrategiesMobile Retail Continues to GrowMarket Outlook 
Country Proles
• France• Germany• Spain• SwedenUnited Kingdom
Currency Conversion Table
The Scope of this ReportKey ReferencesComparative DataReports CoverageCurrent Environment – Key Points
The property sector showed signs of recovery in the second half of 2013 as positive growth and improved investor sentiment was substantiated with price and rent gains.The European Central Bank (ECB) lowered its main renancing rate in November 2013 by 25  basis points (bsp) to 0.25% to support the fragile economy.Europe’s property equities market performed well over the six months to January 15, 2014, with the average share price of the top 12 European property companies by revenue up 13.58%. Leading European property companies reported mixed nancial results in the second half of 2013, with some recovering from losses, while others made a prot. There was little merger and acquisition activity in the second half of 2013, due to the unstable state of the economy and property market.
Industry Prole – Key Points
The European Public Real Estate Association (EPRA) estimates Europe’s property market was worth €336.8 billion (US$462.2 billion) in fourth quarter 2013 — 7.9% higher than the €312.1  billion (US$428.3 billion) in the third quarter.House prices in Italy tumbled by 1.1%, while the UK saw the highest increase, 2.5%, followed by Sweden, 1.8%, France, 1.2% and Spain, 0.8%.Ofce take-up in Europe declined 8% in 2013 compared with 2012, due to a reduction in transactions of more than 5,000 sq m in Milan, Paris and Brussels.Consumer condence picked up across Europe as most capital cities reported stronger demand for retail space while secondary cities’ rents remained stable throughout the third quarter of 2013Real estate investment strength continued to stem from the three largest markets — Germany, the UK and France — as investor sentiment improved signicantly during the second half of 2013
Market Trends and Outlook – Key Points
International investors renewed their appetite for commercial real estate such as retail and ofce space in the second half of 2013 as investments surged 75% to €46 billion (US$63.1 billion) in the nal quarter of 2013.Sustainability has become a new business opportunity and an expectation in the development of real estate in the post-recession market.Traditional storefront retailers are facing tough challenges as demand for more modern shopping options arise.The European property market is likely to grow in the rst half of 2014, as investor sentiment and optimism improve.
Property Sectors
 Adding Value to Information Since 1900
http://webreports.mergent.comIndustry Report -
 - April 20142
Copyright Statement
Copyright 2014 by Mergent, Inc. All Information contained herein is copyrighted in the name of Mergent, Inc. and none of such information may be copied or otherwise reproduced, repackaged, further transmitted, transferred, disseminated, redistributed or resold, or stored for subsequent use for any such purpose, in whole or in part, in any form or matter or by any means whatsoever, by any person without prior written consent from Mergent.
 All information contained herein is obtained by Mergent, from sources believed by it to be accurate and reliable. Because of the possibility of human and mechanical error as well as other factors, however, such information is provided “as is” without warranty of any kind. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF  ANY INFORMATION IS GIVEN OR MADE BY MERGENT IN ANY FORM OR MANNER WHATSOEVER. Under no circumstances shall MERGENT have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance involved in procuring, collecting, compiling, interpreting, analyzing, editing, transcribing, transmitting, communicating or delivering any such information, or (b) any direct, indirect, special, consequential or incidental damages whatsoever, even if Mergent is advised in advance of the possibility of such damages, resulting from the use of, or inability to use, any such information.
The Europe Industry Reports are published by Mergent, Inc., headquartered in
Fort Mill, South Carolina
, USA. Each industry sector report is updated every six months. Mergent, Inc., a leading provider of global business and financial information on publicly traded companies, operates sales offices in key North American cities as well as London, Tokyo and Melbourne.
Jonathan Worrall
John Pedernales
Managing Editor
Peter O’Shea
Research Analyst
Stanley Bong Wenjian
Customer Service:
1800 342 5647 or 704 559 7601email: customerservice@mergent.com
Sales Enquiries: Fred Jenkins - Executive Vice President, Sales
704 559 6897email: fred.jenkins@mergent.com
http://webreports.mergent.comIndustry Report -
 - April 20143
Current Environment
The property sector showed signs of recovery in the second half of 2013. Positive growth and improved investor sentiment was evident, with most leading companies reporting signicantly better nancial results. This trend was substantiated with the share prices of 12 leading  property companies rising by an average of 13% in the six months from July 15, 2013, to January 15, 2014.Global economic activity improved in the second half of 2013, driven by modest European growth and gradual Eurozone stabilization. Nevertheless, overall global economic results were still underwhelming as industrial output remained low and trade levels were stagnant. GDP rose by 0.2% in the Eurozone during the third quarter of 2013, compared with the previous quarter, according to the statistical ofce of the European Union, Eurostat. Compared with the same quarter the previous year, the Eurozone’s seasonally adjusted GDP rose by 0.1%. The Eurozone composite Purchasing Managers Index (PMI) reported its fourth reading above the 50 neutral mark at 51.9 in October, further bolstering indicators of recovery. The European Central Bank (ECB) lowered its main renancing rate in November 2013 by 25 basis points (bsp) to 0.25% as weak economic growth and further deation threatened recovery. Eurozone ination fell to 0.7% year-on-year in October, the lowest level since the fourth quarter of 2009. The unemployment rate remained at 12.2%, the highest level on record, at the end of the fourth quarter, as growth was not robust enough to generate jobs.The slowdown in China beneted the Eurozone as Chinese investors redirected their focus. China’s economic growth contracted to 7.7% in the fourth quarter of 2014, as investments declined. Optimistic investors turned to the recovering Eurozone, providing nancial liquidity and capital, aiding economic revival. However, the lack of domestic lending held back the region’s recovery as banks were still unwilling to lend to risky borrowers. Rumors of the US Federal Reserve’s tapering of its quantitative easing had a signicant impact on investor condence in the second half of 2013. Investors were nervous as the tapering could potentially reduce nancial liquidity and debt availability, accounting for slow growth. The Fed began reducing its bond buying stimulus  by US$10 billion a month in December 2013 when it  purchased US$75 billion worth of bonds compared with US$85 billion a month in December 2012. Nevertheless, there are chances of the ECB issuing another round of long term renancing operations (LTRO) to boost cash ow in the market and avoid a severe credit crunch.Construction levels fell 2.4% in October 2013, compared with a year earlier, according to Eurostat estimates, while  building construction was down 2.2 % and the number of civil engineering projects fell 3.4%. The lack of debt nancing and tight credit constraints affected construction funding during the third quarter. Construction activity in Spain dropped by 3.9% as investors were still hesitant to commit despite the recovery from recession, while in France it fell by 1.1%. Sweden and the UK reported  positive growth of 4% and 5.1% as a housing shortage and high demand stimulated construction activity. Construction  production was unchanged in Germany over the year.
Sector Performance
Europe’s property equities market performed well over the six months to January 15, 2014, with the average share price of the top 12 European property companies by revenue increasing by 13.58%. The share prices of 11 of 12 companies were up as condence and investor sentiment improved signicantly. Stock performances of major European companies were similar from country to country. Italy’s leading companies  performed well, the share price of Aedes SpA (ITL:AE) rose 15.79% and of Prelios SA (ITL:PRS) by 6.15%. Aedes SpA’s price started at €0.038 (US$0.052) on July 15, rose to €0.051 (US$0.069) on October 16 and settled at €0.044 (US$0.06) on January 15, 2014. Prelios SA’s price started strong at €0.602 (US$0.826) on July 15, before declining to a low of €0.566 (US$0.777) on December 11, and settled on a high of €0.639 (US$0.877) on January 15. In France, the share price of leading property company Gecina SA (PAR: GFC) rose by 4.46% to €95.65 (US$131.26) on January 15, 2014, from €91.57 (US$125.65) on July 15, 2013, and that of Klepierre SA (PAR: LI) by 2.73% to  €33.86 (US$46.46) from €32.96 (US$45.23).
Sector Overview

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