The European Union’s Solvency I regulations, or the requirements for the amounts of regulatory capital that insurance undertakings must hold against unforeseen events, were sufficiently bland to be almost ineffective. The idea was to harmonise rules on insurance, but vagueness is not generally good regulatory policy, which is why the rewrite, Solvency II, has become a major undertaking with possible real estate market implications. The final detail of this rewrite is not yet known, which is why the implications for real estate investing are also not yet completely clear.
From the Current Issue
The victory of the Liberal Democratic Party (LDP) in last year’s general election was widely welcomed by the Japanese business and investment communities. There were hopes that the LDP would take an aggressive approach in setting the fiscal and monetary policies that would eventually turn the economy around. The LDP did not disappoint.
Economies across Europe are in trouble, with persistent low or negative GDP growth, rising unemployment and increasing adversity. The impact of debt and deficit reduction, and related austerity measures, is ever more visible and arguably ever more ineffectual — or is it that they are not doing it right? Yet from the Q1 2013 commercial real estate investment volume numbers just produced by Jones Lang LaSalle, it would seem that the logistics sector is belying this image of negativity.
Across asset classes, 2012 was the year of strong equity performance, with the MSCI World Index posting a return of more than 15 percent for the year as a whole. Real estate securities markets achieved even stronger performance, at more than 20 percent for most major markets. The results for the direct real estate market show a slowing of momentum during 2012, due largely to lagging capital value growth.
The original focus of debt funds that entered the commercial real estate lending market in 2009 was pure commercial real estate mezzanine debt, as investment managers sought to marry together the return parameters of the “alternatives” allocations of fixed income investors with commercial real estate debt.
Asian property markets rebounded surprisingly quickly from their bottom almost immediately following the global financial crisis of the late 2000s. And for the past six years, sentiment has remained relatively bullish. Until now.
In Europe, investment in real estate securities has been on a steady incline, as real estate investors are attracted to the yields and liquidity of the REIT market, according to research from EPRA, the European Public Real Estate Association.
London continues to be attractive to foreign investors. Overseas investors are scooping up assets such as 30 Crown Place in the City of London, which was recently purchased by Samsung SRA Asset Management, through Cushman & Wakefield Investors, on behalf of South Korean institutional investors.
Spring has sprung, bringing with it a number of new European funds, as investors continue to look for opportunities for diversification in new and continuing real estate funds.
Research from Savills shows that the destabilisation in the European economy has resulted in a CBD office yield gap of up to 550 basis points, when looking at the strongest and weakest markets. The yield shifts suggest that Europe may be returning to pre-euro market characteristics.
Located in the north of Italy, Milan is the capital of the Lombardy region and the second largest city in the country, with a population of approximately 1.35 million inhabitants, rising to 5.2 million when considering the wider area. Milan is the leading industrial and commercial city of Italy. It is also the financial hub and home to the Italian Stock Exchange and the country’s largest banks.