Germany
Stefan Wundrak Director of Research, Property
Q3 2012
This document is solely for the use of professionals and is not for general public distribution
2
Agenda
1 Economic context
2 Investment market
3 Office
4 Retail
6 Logistics
3
Agenda
1 Economic context
2 Investment market
3 Office
4 Retail
6 Logistics
4
GDP growth
Source: Oxford Economics, Q3 2012
Economy
European recession, German slowdown
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Agenda
1 Economic context
2 Investment market
3 Office
4 Retail
6 Logistics
6
Source: RCA, Q2 2012
Regional investment volumes
Investment volumes in € bn in the 12 months to Q2 2012
Allocation in perceived “safe havens”
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Investment shares by region
Source: RCA, 2012
Global capital almost exclusively in shopping centres
London office Paris office German retail
% of total sector investment
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Prime pricing in context
Pricing peaks and troughs (yields, last cycle)
Source: CBRE, C&W, Henderson Global Investors Research, Q3 2012
Prime is fully priced in all “safe haven” markets
Cyclical maximum
Cyclical minimum
Current
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Financing costs and inflation
Max Volume
(million €)
Max LTV
%
Typical Margin
(bps)
France 50 60 275
Sweden 60 60 200
Germany 75 70 150
Italy 40 50 400
Netherlands 50 50 275
Spain 35 50 400
UK 50 60 275
Source: Henderson Global Investors Research, Q3 2012
Low financing costs can lead to overheating
Source: M.M Warburg & CO Investment Research, 2012
Expected deviation from average Euro-inflation rate
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Risk premiums
Source: CBRE, Henderson Global Investors Research, Q2 12
Attractive premium for offices and logistics?
Yield spread prime and good secondary (bps)
office 170
logistics 125
retail 55
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Initial yields by sector (net, in %)
Source: Henderson Global Investors Research, Q3 2012
Pricing pattern
4.25 4.50 4.75 5.75 6.00 6.25 6.50 7.00 7.50
Secondary offices look „cheap“
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Agenda
1 Economic context
2 Investment market
3 Office
4 Retail
6 Logistics
13
Big-7 prime rents (Index)
Source: Henderson Global Investors Research, Q3 2012
Office occupier market
Rents pause in 2012
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Agenda
1 Economic context
2 Investment market
3 Office
4 Retail
6 Logistics
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Consumers remains buoyant
GfK consumer sentiment index
Source: Datastream, GfK, October 2012
German consumer not (yet) affected by Euro crisis
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Source: OECD, Consensus, 2012
German spending is „picking up“
Consumer economy
Real retail sales (Index: 1995=100)
Sweden
UK
Spain France NL
Germany Italy
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Expanding retailers in Germany
Selected retailers (country of origin) Sector Existing stores
New stores planned
Butlers (Germany) Homeware >90 ~100 (EU)
Hunkemöller (Netherlands) Lingerie >115 ~100
Palmers (AT) Lingerie 34 60
Gerry Weber (DE) Fashion 208 70-80
WE Fashion (Netherlands) Fashion 35 65
Karstadt Sport (DE) Sport 26 10
Staples (US) Stationary 59 ~60
Camp David/Clinton (DE) Fashion 50 ~50
Dm-Drogeriemarkt (DE) Drugstore 1256 ~110
Primark (IE) Discount Fashion 4 150
Levis‘s (US) Jeans Fashion 60 ~90
Calzedonia /Tezenis (IT) Lingerie 2 ~50
Baci Lingerie (US) Lingerie 1 ~300
Das Depot (Germany) Furniture/Home >150 ~80
Woolworth (Germany) Discount >160 ~50
Retailer market is more vibrant than before the crisis
Source: Henderson Global Investors, PMA – quoting Texitlwirtschaft and public announcements, 2012
135 new retailer arrivals since 2007
Country of origin
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Agenda
1 Economic context
2 Investment market
3 Office
4 Retail
6 Logistics
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G8+China: Volume of trade in bn. US$
Source: WTO, Worldbank, 2011
Logistics sector in Germany
Top 10 countries rank scoring % (best country=100)
Germany 1 4,11 100 Singapore 2 4,09 99,2 Sweden 3 4,08 98,8 Netherlands 4 4,07 98,5 Luxembourg 5 3,98 95,7 Switzerland 6 3,97 95,5 Japan 7 3,97 95,2 UK 8 3,95 94,9 Belgium 9 3,94 94,5 Norway 10 3,93 94,2
European “Hot Banana*”
Strength of logistics service sector
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Top 20 international logistics firms in Europe (turnover* €m)
Source: Fraunhofer 2011 *represents only contract logistics, which approximately accounts for one third of total logistics
Logistics in Germany
Exports to China (bn. US$)
Source: National Bureau of Statistics China, 2012
Industry, population density, trade and location
21 Investment market leaves large potential to mature
Logistics sector punches below its weight
Source: JLL, CBRE, Henderson, 2012
Logistics take-up m. m2 in 2011
Source: Real Capital Analytics (RCA), 2012
Transaction volumes logistics and industrial € bn. in 2011
Source: IPD, 2011
Development of institutional held stock € bn.
22 Low construction levels keep occupier markets in balance
Logistics investments
Source: Fraunhofer, 2012
Key logistics locations
Source: JLL, Q2 2012
Transaction volumes 2007 - 2012
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Market summary: Germany H1 2012
Economy Economy is still growing, but has slowed down considerably Stagnation for the second half of 2012 expected Domestic investment and European exports are main reason for slowdown Consumer sector delivered very limited growth
Occupier market After some growth in 2011, 2012 has brought largely flat rental values Vacancy levels have remained stable Retail stronger than business space
Investment Secondary pricing has weakened again, whereas prime pricing still shows small price
increases Investment market as slowed down, H1 2012 had lower volumes than in 2011 More domestic and local investors, international investors sit on the fence
Top-down views
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