CEI

Confederation Europeenne de l'Immobilier European Confederation of Real Estate Agents
Property Clocks – Office Rentals
1 Oct 2012

Property Clocks – Office Rentals

See the latest development of prime office rentals worldwide, published by the research team of Jones Lang LaSalle. Source: http://www.joneslanglasalle.com/GMP/en-gb/Pages/Global-Market-Perspective-Charts.aspx

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23 Jan 2012

Less Regulatory Burden for Small Businesses

The Commission presented a new approach to ensure that the EU responds better to the needs of small businesses. The European Commission will seek wherever possible to exempt micro-enterprises from EU legislation or introduce special regimes so as to minimise the regulatory burden on them. In a report to the Council and the European Parliament, the Commission presented a list of initiatives of this kind already taken and to be examined for the future. It announced stronger means to ensure the input of micro-enterprises and small and medium-sized enterprises (SMEs) to the formulation of new EU initiatives. José Manuel Barroso, President of the European Commission said: "In this time of crisis we are putting all our energy in promoting the best possible conditions for growth and job creation. The smallest enterprises have a central role in economic recovery, but at the same time they are the most vulnerable. For them, complying with regulation can be ten times more expensive than for large companies. We therefore want to lend them a helping hand and reduce the regulatory burden to a minimum so that their growth potential is fully unleashed for the benefit of the European economy." As of January 2012 the Commission will further:
  • step up the search for exemptions or lighter requirements for micro-enterprises in existing and new EU legislation;
  • strengthen the processes by which micro-enterprises and other SMEs are consulted when reviewing existing EU regulation and preparing new EU laws.
  • produce annual scoreboards to evaluate the real benefits for businesses and to ensure a continuing focus on their needs and interests .
Background The 'Single Market Act' and the revised 'Small Business Act' with its 'Think Small First' principle clearly underline the Commission's commitment to support the development of the European SMEs. The initiatives launched today are the latest in a series under the Smart Regulation agenda aiming at improving legislation for European businesses. Around 200 legal acts that bring substantial benefits for businesses have already been adopted with the "Simplification Rolling Programme". With the Action Plan for Administrative Burden Reduction, the Commission has tabled reduction proposals for 39 billion Euros for enterprises. More information: Read the full report: http://ec.europa.eu/governance/better_regulation/documents/minimizing_burden_sme_EN.pdf Further information: Better Regulation: http://ec.europa.eu/governance/better_regulation/index_en.htm Small Business Act for Europe: http://ec.europa.eu/enterprise/policies/sme/small-business-act/index_en.htm Source: http://europa.eu/rapid/pressReleasesAction.do?reference=IP/11/1386&format=HTML&aged=0&language=EN&guiLanguage=en

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23 Jan 2012

Credit Rating Agencies in the focus in Europe

Credit rating agencies (CRAs) are major players in today's financial markets, with rating actions having a direct impact on the actions of investors, borrowers, issuers and governments. For example, a corporate downgrade can have consequences on the capital a bank must hold and a downgrade of sovereign debt makes a country's borrowing more expensive. Despite the adoption of European legislation on credit rating agencies in 2009 and 2010, recent developments in the context of the euro debt crisis have shown our

existing regulatory framework is not good enough. So, today the Commission has put forward proposals to toughen that framework further and deal with outstanding weaknesses.

Internal Market Commissioner Michel Barnier said: "Ratings have a direct impact on the markets and the wider economy and thus on the prosperity of European citizens. They are not just simple opinions. And rating agencies have made serious mistakes in the past. I have also been surprised by the timings of some sovereign ratings – for example ratings

announced in the middle of negotiations on an international aid programme for a country. We can't let ratings increase market volatility further. My first objective is to reduce the over-reliance on ratings, while at the same time improving the quality of the rating process. Credit rating agencies should follow stricter rules, be more transparent about their ratings and be held accountable for their mistakes. I also want to see increased competition in this sector."

Four main goals of the proposed draft Directive and draft Regulation

1. To ensure that financial institutions do not blindly rely only on credit ratings for their investments.

Ratings currently have a quasi-institutional role. We need to reduce our reliance on them. Our proposals in July 2011 on the Capital Requirements Directive IV reduce the number of references to external ratings and require financial institutions to do their own due diligence. Today, we are making similar changes with regard to rules relating to fund managers, in a complementary draft directive. And this will be completed by changes to rules on insurance next year. A general obligation for investors to do their own assessment is also included in today's proposal.

In addition, more and better information underlying the ratings would need to be disclosed by CRAs and by the rated entities themselves, so that professional investors will be better informed in order to make their own judgments. For example, CRAs would have to communicate their ratings to the European Securities and Markets Authority (ESMA), which would make sure that all available ratings on the market for a debt instrument are published under a European Rating Index (EURIX), freely available to investors.

At the same time, credit rating agencies will have to consult issuers and investors on any intended changes to their rating methodologies. Such changes would have to be communicated to ESMA which would check that applicable rules on form and due process have been respected.

2. More transparent and more frequent sovereign debt ratings.

Member States would be rated more frequently (every six months rather than 12 months) and investors and Member States would be informed of the underlying facts and assumptions on each rating. To avoid market disruption, sovereign ratings should only be published after the close of business and at least one hour before the opening of trading venues in the EU. The possible suspension of sovereign ratings is a complex issue which we believe merits further consideration.

3. More diversity and stricter independence of credit rating agencies to eliminate conflicts of interest.

Issuers would have to rotate every three years between the agencies that rate them. In addition, two ratings from two different rating agencies would be required for complex structured finance instruments and a big shareholder of a credit rating agency should not simultaneously be a big shareholder in another credit rating agency.

4. To make CRAs more accountable for the ratings they provide.

A CRA should be liable in case it infringes, intentionally or with gross negligence, the CRA Regulation, thereby causing damage to an investor having relied on the rating that followed such infringement. Such investors should bring their civil liability claims before national courts. The burden of proof would rest on the credit rating agency.

Background

The EU Regulation on Credit Rating Agencies (CRA), (in force since December 2010), was part of Europe's response to the commitments made by the G20 at the November 2008 Washington summit. This Regulation was amended in May 2011, to adapt the Regulation to the creation of ESMA.

The existing CRA Regulations focus on registration, conduct of business and supervision of CRAs:

(1) registration: in order to be registered, a CRA must fulfill a number of obligations on the conduct of its business (see (2)) intended to ensure the independence and integrity of the rating process and to enhance the quality of the ratings issued. The European

Securities and Markets Authority (ESMA) is entrusted since July 2011 with the responsibility for registering CRAs in the EU; 28 CRAs (of which some belong to the same group) are now registered with ESMA.

(2) conduct of business: the existing Regulation requires CRAs to avoid conflicts of interests (for example, a rating analyst employed by a CRA should not rate an entity in which he/she has an ownership interest), to ensure the quality of ratings (for example, requiring the ongoing monitoring of credit ratings) and rating methodologies (which must be, inter alia, rigorous and systematic) and a high level of transparency (for example, every year, CRAs should publish a Transparency Report).

(3) supervision: since July 2011, ESMA exercises exclusive supervisory powers over credit rating agencies registered in the EU and has comprehensive investigative powers including the possibility to demand any document or data, to summon and hear persons, to conduct on-site inspections and to impose administrative sanctions, fines and periodic penalty payments. This centralises and simplifies the supervision of CRAs at European

level. Centralised supervision ensures a single point of contact for registered CRAs, significant efficiency gains due to a shorter and less complicated registration and supervisory process and a more consistent application of the rules for CRAs. CRAs are at present the only financial institutions which are directly supervised by a European supervisory authority.

EU rules would apply to ratings of public entities within the EU but also outside the EU provided that the sovereign ratings are issued by a CRA registered in the EU.

The proposals now pass to the European Parliament and the Council (Member States) for negotiation and adoption.

More information:

http://ec.europa.eu/internal_market/securities/agencies/index_en.htm

Source: Website EU Commission

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23 Jan 2012

New Consumer Programmes by EU Commission

The European Commission adopted proposals for the new Health for Growth and Consumer Programmes. The two programmes aim to foster a Europe of healthy, active, informed and empowered citizens, who can contribute to economic growth. These new programmes will run from 2014-2020 with a budget of € 197 million for the Consumer Programme. Focus will be on fewer concrete actions that offer clear EU added-value. The Consumer Programme will support EU consumer policy in the years to come. Its objective is to place consumers at the centre of the Single Market and empower them to participate actively in the market and make it work for them, particularly by:

  • Enhancing product safety through effective market surveillance;
  • Improving consumers' information, education and awareness of their rights;
  • Consolidating consumer rights and strengthening effective redress, especially through alternative dispute resolution;
  • Strengthening enforcement of rights cross-border.
In announcing the new Health and Consumer programmes, Commissioner Dalli said, "These two programmes are about people; about fostering the conditions for people to live to their full potential and play a key role in society and in the economy. Keeping people healthy and active for longer is good for people and is good for jobs and growth. Confident, empowered consumers create thriving markets. I am confident the two programmes will make a significant contribution to achieving Europe 2020goals – to create smart, sustainable and inclusive growth by the end of this decade". What the programmes aim to achieve This programme aims to build on the previous programme by focussing action on empowerment of the consumer through safety, information and education, rights and redress and enforcement actions. Actions will focus on:
  • Monitoring and enforcing safety through EU-wide systems such as RAPEX, the EU rapid alert system for dangerous consumer products
  • Information and education initiatives to make consumers, particularly young consumers, aware of their rights. This includes also the continuing development of the evidence base for better policy making at both EU and national level on consumer issues, with, for example, the Consumer Markets Scoreboard which maps out the markets that fail consumers in Europe;
  • Delivering legislation aimed at enhancing consumer rights, for example the Consumer Credit Directive which ensures that consumers across Europe enjoy a common set of core rights, including the right to receive clear and comparable information before committing themselves financially; and Redress, where good preparatory work has been done, particularly, on Alternative Dispute Resolution.
  • Enforcement action through "Sweeps" operations, which are co-ordinated by the European Commission and carried out simultaneously by national consumer enforcement authorities to see where consumer rights are being compromised or denied;
Background These new EU programmes build on the ongoing Health and Consumer Programmes, which provide valuable opportunities for Member States to invest in health and consumer protection. The current programmes run until the end of 2013. The new Health and Consumer Programmes are part of the EU's financial priorities for 2014-2020 (the EU Multiannual Financial Framework), which was announced by the European Commission in June. Further information: For information on the Multiannual Financial Framework 2014-2020 please see: http://europa.eu/press_room/press_packs/multiannual_financial_framework_2014_2020/index_en.htm For information on the 2008-2013 Health Programme "Together for Health" http://ec.europa.eu/health/programme/policy/index_en.htm For information on the 2008-2013 Consumer Programme: http://ec.europa.eu/consumers/strategy/programmes_en.htm Source: Website of EU Commission Commissioner John Dalli's website: http://ec.europa.eu/commission_2010-2014/dalli/index_en.htm

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22 Jan 2012

Austria – Market Outlook 2012

  The demand for residential properties in Austria does not appear to be diminishing. There are several reasons for investment in properties in Austria. Mainly the fear of a higher inflation and the fear of a struggling Euro are the forces behind the high demand for properties. „People say that they have saving accounts between EUR 100.000 and 500.000 and want to know what kind of property they will get for their money“, says Andreas Wollein from the board of the Austria real estate association OVI describing the situation in his home country.

Prices expected to climb

The prices are expected to climb to an even higher level on the basis of the decreasing offer on the residential market.  The minor production of  new areas will enforce this trend in light of a growing population in most of the austrian agglomorations, with Vienna at the head, as well as the rise of one-person-household.

Increasing real estate prices create needs for political greed referring to additional tax revenue. This has been articulated in the latest political postulation for a housing taxation. The Övi, however, protests vehemently against additional real estate taxation whatsoever.

Real estate market Vienna – above-average increase of prices for sought after objects in locations in demand

Opposed by a high number of demands is the shortage of supply, which has made the prices for newly built owner-occupied flats not only in Vienna to climb upwards over the past 2 years. You can observe an above-average rise in prices up tp 20% for sought after objects in popular locations. „Something that could have been bought for 2.500€/sqm 2 years ago, nowadays would cost  3.000€/sqm“, Andreas Wollein comments on the current price development. Even in less demanded locations it is almost impossible to find objects for under 2.000€/sqm.

A league of its own

In good locations (excluding the 1. district) purchasing prices between 3.500€ - 5.000€/sqm are realised. Attic conversions even cost 3.500€ - 5.500€/sqm at an average depending on the location. Meanwhile even on the used real property market amazing prices are reached; in moderate locations between 2.000€ - 3.000€/sqm, in good locations even 4.500€/sqm are possible. The 1. district in turn is a league of its own: here the purchasing prices can climb up to 8.000€ - 16.000€/sqm.

The Austrian Real Estate Association OVD has published its latest market outlook for the year 2012. Find the outlook for Austria under the following link:

Market Outlook 2012 of OVI

Picture: www.fotolia.de

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22 Jan 2012

Germany – Real Estate Environment remains Good in 2012

The German real estate business is heading for a good year in 2012 according to IVD forecasts. “Overall economic conditions in Germany can still be considered stable, despite the ongoing monetary turbulences”, says IVD Vice-President Jürgen Michael Schick. “As things stand we expect the domestic economy to continue growing in 2012.” The general positive trend promises a high demand for residential real estate, in his view. “Low interest rates and an altogether moderate price climate make German residential properties attractive and affordable for many buyers”, Schick describes the present constellation.

Interest rates

Interest on ten-year loans rose to just above four percent in the first quarter of 2011, but then dipped again significantly to around 3.2 percent. “With the ECB’s last cut in key lending rates only just behind us interest is very unlikely to rise beyond recent levels during the coming year”, says Schick. “This should allow German residential real estate to remain affordable.” Other major determinants of buying interest such as employment figures or income trends are difficult to predict for the coming months, but are expected to remain stable from today’s viewpoint, according to Schick.

Price uptrend

He expects the price uptrend of the past year to be sustained by the strong demand, but adds that German real estate prices are still quite low compared with other European countries. “An 80 square metre flat in Berlin costs slightly less than half the price of one in Brussels”, says Schick. “In Stockholm it takes an average 496,000 euros to buy a flat, whereas in Berlin the average is 112,000 euros”, he continues, illustrating his view that German residential real estate is anything but overpriced.

Rental Levels

The coming year will also see in many regions a continuation of the uptrend in rental levels, according to the IVD. For 2011 the IVD reports increases between 2.1 (housing built 1949 or later) and 2.9 percent (older housing), at an average inflation rate of 2.4 percent. In the urban centres it has even found rates to have increased in the range from 3.8 (housing built 1949 or later) to 5.8 percent (housing built up to 1948). “There will be no trend reversal in rental levels in the coming year”, Schick predicts. Especially in the larger cities tenants will have to adjust to rising rents”. Real estate supply in the cities is barely keeping pace with the growth in demand, and the low housing completion figures of the past years has led to a substantial and widespread demand backlog, as he explains.

Residential Construction

“Despite the revival of residential construction it will take some time before this balances the demand”, says Schick. For the first half of 2011 the Federal Statistical Office reported building permits for 95,000 residential units, which is equivalent to a year-to-year increase by 28.9 percent or 21,300 units. The IVD sees the strong increase in building permits over the previous year as a sign that the turnaround in housing construction has now been ultimately achieved. In 2010 the number of residential units approved was 6.8 percent higher than it was in 2009.

Demand still growing

“With construction activity only picking up slowly and demand still growing, investment in residential real estate will continue to be a good asset management option in 2012 as well,” says Schick. “German housing was also a welcome harbour for both private and institutional investors in the two preceding years. This has invigorated the market for rented private flats and multi-family houses.” This trend is expected to continue through the coming year. IVD members who cooperate with capital investors report continued brisk demand well into the new year. Source: website of german Real Estate Association IVD, http://www.ivd.net

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