Collection, analysis and interpretation of market data form the basis of rational and accurate assessment of real estate markets.
Our Research Services
Often it can be difficult to obtain information in a market where publicly available information is limited. CBRE Research provides in-depth knowledge on the Danish property market including reports, market commentaries and presentations. Read more here...
Mezzanine finance is expected to become an increasingly important source of capital for the commercial real estate market as it delivers additional debt to fill the gap between real estate investors' borrowing requirements and the levels of capital available from primary lenders.
The size of the so-called Funding Gap has been exacerbated by the effects of the economic downturn and the increased regulatory burden on traditional lenders, making debt facilities hard to come by for all but the most prime, well let and well located assets.
To date, mezzanine lenders have been widely discussed as the 'solution' to the enormous Funding Gap the industry is experiencing, as €530 billion of real estate debt is due to mature before the end of 2013 in Europe alone.
This report from CB Richard Ellis' Debt Advisory team identifies the reasons why mezzanine lenders are not likely to provide an immediate solution. It discusses where these lenders are most likely to be active in the short term and what will have to change to enable them to participate more broadly in the market.
The report concludes that these 'new, alternative' lenders will initially be most active in the refinancing market due to the strong returns and the sheer volume of opportunities. As mezzanine funds change their approach to risk and pricing and as competition increases, they will expand their activity into acquisition finance. Development financing is likely to be the last sector to benefit from these market entrants
Cost reduction still remains at the top of the agenda. However, many are now looking at new working practices and workspace reorganisation to achieve this.
Cross border relocations are likely to continue, but many insurers are also looking east for expansion opportunities, with Asia quickly becoming a global insurance hotspot.
The City of London remains a key location for many insurance occupiers, although there is a growing disconnect between tenants and landlords.
Most of the key indicators in the industrial and logistics sector have remained broadly stable despite a deteriorating economic environment
Prime rents in the sector are flat, leaving the CBRE EU-15 industrial rent index around 7.5% lower than at its mid-2008 peak. Similarly, prime yields have barely changed overall since the beginning of this year
Occupiers in a number of markets are taking advantage of a period of rental weakness to upgrade from outdated space to more modern warehouse buildings
Investment activity rose in the first half of this year, with Germany and CEE posting increased shares of investment turnover
Take-up in the last quarter was slightly higher than Q3 and stable compared with the same period last year.
Helped by the low volume of new completions, overall supply levels have fallen through the year.
Generally, this prolonged period of low completions will probably accentuate the existing shortage of good quality buildings in sought-after, central areas of some European cities.
Prime rent growth has halted in most cities, with few continuing to see rental growth.
The twin aims of flexibility and future-proofing are paramount
There is growing awareness of the need for agility in executing portfolio strategies, including tailoring occupational terms to specific situations
Occupiers’ aspirations towards customer service and landlord relations are also rising, with many looking for increased innovation from landlords
With the scope to source good buildings from built stock expected to remain limited, new approaches to development are gaining prominence particularly in emerging markets
Sustainability remains high on the agenda, and is seen as a form of operational risk management, a means of value enhancement and a buffer against future legislation
The gap between the yield on prime real estate and that on government bonds has jumped over the last two months;
In the Eurozone, with the yield on ten-year German government bonds having fallen to just 1.88%, this gap is now at a record high;
Some investors should be taking advantage of this jump in the yield gap, although our analysis suggests that it will further widen the performance gap between prime and non-prime real estate.
Increasing geographic and functional complexity of major international companies is leading many to adopt a more flexible 'hybrid' models towards real estate procurement.
Cost containment is still a key business driver however the way in which this is achieved is evolving from cutting costs to effective delivery and management of real estate strategies.
Reasons behind relocation or expanding are changing as more companies look to access skilled labour in emerging markets.
After having peaked towards 2010 year-end, supply levels have gradually begun to decline across Europe, reflecting the current, slow pace of new deliveries
There are indications that the quality profile and distribution of vacant space is also changing, with shortages of prime buildings starting to emerge in some cities and vacancy levels for inferior quality space generally moving in the opposite direction.
This polarisation has been accentuated by an occupier flight to quality, reflecting companies’ appetite for more efficient and functional space, which in many instances still trades below pre-crisis levels rents.
At city level, these supply-side shifts are amplifying the disparities in rental performance between prime and second-hand stock and among different office submarkets. As a result, investors need to be even more precise and rigorous in their selection of areas for investment.
Denmark
Real Estate Finance ViewPoint; The Funding Gap January 2011
(
458KB
)