real estate investment beyond the global credit crisis · 2020. 7. 15. · london 99 $14,545 12%...
TRANSCRIPT
Real Estate Investment Beyond(?)
the Global Credit Crisis
James Valente ([email protected])
Director, IPD North America
© IPD 2011 ipd.com
November 29th 2011
MeasuredFundIPD
�Overview
� Variation in regional trends
� Global investment flows into real estate
� Changing expectations
© IPD 2011 ipd.com 2
� Changing expectations
� Pricing risks
IPD Measured Fund logo identifies you are associated with IPD and that your fund(s) are independently measured and evaluated by an audited external organization
MeasuredFundIPD
�
MeasuredFundIPD
�Variation of performance across regions narrowing again
0
10
20
30
40
To
tal R
etu
rn (%
)
© IPD 2011 ipd.com
Source: IPD
-40
-30
-20
-10
0
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
To
tal R
etu
rn (%
)
Spread North America
Asia Europe
Global
MeasuredFundIPD
�As countries jockey for position
Portugal PortugalIreland
UK
IrelandIreland Korea
Switzerland
Korea
UKUS
10
20
30
40
To
tal R
etu
n (%
)
© IPD 2011 ipd.com
95th %
5th %
75th %
Median
25th %
Average
Max/Min
Source: IPD
SwedenIreland
Sweden Germany Germany Germany
UK
Ireland
Ireland
IrelandIreland
-40
-30
-20
-10
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2Q 2011
To
tal R
etu
n (%
)
MeasuredFundIPD
�The pattern of performance in 2009
Johannesburg 8.1
Cape Town 7.7
Zurich 5.6
Geneva 5.5
Munich 5.3
Seoul 4.6
Edinburgh 4.4
Vienna 4.2
Oslo 3.6
Brussels 3.4
Top 10
© IPD 2011 ipd.com
Brussels 3.4
Dallas -17.2
Denver -17.7
Portland -18.3
Atlanta -18.7
Boston -19.0
Los Angeles -20.0
San Francisco -22.1
Seattle -22.1
Miami -22.2
Dublin -22.9
Bottom 10
Source: IPD
Above average
Below average
MeasuredFundIPD
�Shifted in 2010
Washington DC 20.5
New York 19.8
London 19.4
Denver 17.3
San Diego 17.1
Minneapolis 15.9
Dallas 14.3
Los Angeles 14.3
Montreal 14.2
San Francisco 14.1
Top 10
© IPD 2011 ipd.com
Source: IPD
Above average
Below average
San Francisco 14.1
Dusseldorf 3.8
Porto 3.2
Frankfurt 3.0
Berlin 3.0
Brussels 2.9
Madrid 2.2
Budapest 1.9
Prague 1.1
Tokyo -1.0
Dublin -1.4
Bottom 10
MeasuredFundIPD
�And again through first half of 2011
Washington D.C. 22.6
San Francisco 22.6
Portland 21.3
Denver 19.9
New York 19.8
Seattle 19.4
Los Angeles 17.7
Philadelphia 17.4
Montreal 16.7
Minneapolis 16.5
Top 10
© IPD 2011 ipd.com
Minneapolis 16.5
Manchester 7.3
Birmingham 6.6
Detroit 6.3
Edinburgh 6.3
Rome 5.5
Milan 5.2
Amsterdam 4.6
Rotterdam 3.9
Tokyo 1.3
Dublin -3.5
Bottom 10
Source: IPD
Above average
Median/Average
Below average
MeasuredFundIPD
�Real estate favored among alternatives
Pension fund allocations across alternatives, heading into 2011
55% 12% 18% 12% 3%
YE 2010
© IPD 2011 ipd.com
Source: Towers Watson, 2011
52%
55%
12%
12%
21%
18%
13%
12%
2%
3%
YE 2009
Real Estate Infrastructure Private Equity Hedge Funds Commodities
MeasuredFundIPD
�Supported by improved transaction volume
$200
$250
$300
$350
Qu
art
erl
y T
ran
sa
cti
on
Vo
lum
e (U
.S. $
bil.)
© IPD 2011 ipd.com
Source: Real Capital Analytics
$-
$50
$100
$150
1Q
20
07
2Q
20
07
3Q
20
07
4Q
20
07
1Q
20
08
2Q
20
08
3Q
20
08
4Q
20
08
1Q
20
09
2Q
20
09
3Q
20
09
4Q
20
09
1Q
20
10
2Q
20
10
3Q
20
10
4Q
20
10
1Q
20
11
2Q
20
11
3Q
20
11
Qu
art
erl
y T
ran
sa
cti
on
Vo
lum
e (U
.S. $
bil.)
Americas Asia / Pac. Europe
MeasuredFundIPD
�And diverse regional investment flows
Country # $ %
United States 754 $18,139 15%
Hong Kong 142 $17,130 14%
Canada 488 $12,284 10%
Singapore 74 $10,881 9%
UK 247 $9,593 8%
Germany 100 $6,074 5%
Netherlands 51 $5,967 5%
France 105 $3,787 3%
Norway 20 $3,246 3%
Other 967 $33,514 28%
Total 2,948 $120,614 100%
Volume in Millions of $
Top Countries of Origin
© IPD 2011 ipd.com
Source: Real Capital Analytics
Volume in Millions of $
Country # $ %
London 99 $14,545 12%
Paris 78 $6,702 6%
Shanghai 16 $5,917 5%
Manhattan 26 $5,393 4%
Beijing 15 $2,588 2%
Melbourne 29 $2,548 2%
Kowloon 3 $2,507 2%
Singapore 14 $2,359 2%
Ruhr Valley 33 $2,249 2%
Other 2,635 $75,806 63%
Total 2,948 $120,614 100%
Volume in Millions of $
Top Market Destinations
MeasuredFundIPD
�Canadian firms invested abroad
Top Market Destinations
Market # $ %
London 9 $3,638 22%
Ruhr Valley 21 $2,004 12%
Manhattan 2 $1,463 9%
Melbourne 2 $1,255 8%
Reading 1 $643 4%
New Territories 1 $589 4%
NYC Boroughs 1 $416 3%
Dubai 1 $406
© IPD 2011 ipd.com
Source: Real Capital Analytics
Dubai 1 $406 2%
Bern 1 $300 2%
Other 456 $5,780 35%
Total 495 $16,493 100%Vo lume in M illio ns o f $
MeasuredFundIPD
�But expectations for value change have pulled back
% respondents
Rise
30
40
50
60
70
© IPD 2011 ipd.com
Fall
Source: IPE Sept/Oct 2011
-20
-10
0
10
20
Ge
rma
ny
Fra
nce
UK
HK
Au
str
alia
Ja
pa
n
US
A
Glo
ba
l
Mar-11 Jul-11 Sep-11
MeasuredFundIPD
�Because the crisis is not over yet
50
60
70
80
90
VIX
(No
v. 2
00
4 -
No
v 2
011
)
Sub-prime crisis
Lehman’s bankruptcy
& TARP
Extensive Govt
intervention
European sovereign debt crisis
Recession concerns
© IPD 2011 ipd.com
Source: VIX November 23, 2004 – November 25, 2011)
0
10
20
30
40
No
v-0
4
Fe
b-0
5
Ma
y-0
5
Au
g-0
5
No
v-0
5
Fe
b-0
6
Ma
y-0
6
Au
g-0
6
No
v-0
6
Fe
b-0
7
Ma
y-0
7
Au
g-0
7
No
v-0
7
Fe
b-0
8
Ma
y-0
8
Au
g-0
8
No
v-0
8
Fe
b-0
9
Ma
y-0
9
Au
g-0
9
No
v-0
9
Fe
b-1
0
Ma
y-1
0
Au
g-1
0
No
v-1
0
Fe
b-1
1
Ma
y-11
Au
g-1
1
No
v-11
VIX
(No
v. 2
00
4
crisis
VIX avg. (1990 - Current)
MeasuredFundIPD
�Growth expectations moderate
South America
Eastern Europe
Oceania
Asia
4%
5%
6%
7%
3Q
20
11
(2
011
-2
01
3)
© IPD 2011 ipd.com14
North America
Euro Zone
OceaniaWorld
Other W. Europe
0%
1%
2%
3%
0% 1% 2% 3% 4% 5% 6% 7%
3Q
20
11
(2
011
4Q 2010 (2011 - 2013)Source: Moody’s Analytics
450
MeasuredFundIPD
�With meaningful variety within regions
-20%
0%
20%
40%
% C
han
ge
in 3
-Yr.
GD
P F
ore
cast
© IPD 2011 ipd.com15
-80%
-60%
-40%
Nor
th A
mer
ica
Uni
ted
Sta
tes
Can
ada
Mex
ico
Sou
th A
mer
ica
Arg
entin
aB
razi
lC
hile
Eur
o Z
one
Fin
land
Fra
nce
Ger
man
yG
reec
eIr
elan
dIta
lyN
ethe
rland
sP
ortu
gal
Spa
inO
ther
W. E
ur0p
eD
enm
ark
Nor
way
Sw
eden
Sw
itzer
land
Uni
ted
Kin
gdom
Eas
tern
Eur
ope
Cze
ch R
epub
licP
olan
dR
ussi
aT
urke
yO
cean
iaA
ustr
alia
New
Zea
land
Sou
th A
fric
aA
sia
Chi
naIn
dia
Japa
nS
outh
Kor
eaS
inga
pore
Tai
wan
Hon
g K
ong
Wor
ld
% C
han
ge
in 3
Source: Moody’s Analytics
MeasuredFundIPD
�Pricing recovers near previous lows in some markets
6%
8%
10%
12%
14%
Pri
me
Ca
p R
ate
s
© IPD 2011 ipd.com16
Source: Real Capital Analytics
2%
4%
6%
Am
eri
ca
s
US
Ca
na
da
La
tin
Am
eri
ca
Eu
rop
e
Un
ite
d K
ing
do
m
Ge
rma
ny
Fra
nce
Ita
ly
Sp
ain
Ne
the
rla
nd
s
Asia
Pa
cif
ic
Asia
(x-J
ap
an
)
Ja
pa
n
Au
str
alia
/N.Z
.
Pri
me
Ca
p R
ate
s
Previous Low Crisis Peak 3Q 2011
MeasuredFundIPD
�Yet spreads remain wide
United Kingdom
CanadaGermany
Australia
United States
France Sweden Japan
Singapore350
400
450
500
550
600
3Q
20
11
Sp
rea
ds
© IPD 2011 ipd.com17
Spain
Singapore
Hong Kong
100
150
200
250
300
350
100 150 200 250 300 350 400 450
3Q
20
11
Sp
rea
ds
Average Spreads (2007 - 3Q 2011)
Source: Moody’s Analytics, Real Capital Analytics
450
MeasuredFundIPD
�Because bond yields are low RISK
4
6
8
10
12
Yie
ld (%
)
© IPD 2011 ipd.com
Source: Moody’s Analytics
0
2
4
Un
ited
Sta
tes
Ca
na
da
Ge
rma
ny
Ire
lan
d
Ita
ly
Ne
the
rla
nds
Sp
ain
Un
ited
Kin
gd
om
Ja
pa
n
So
uth
Ko
rea
Sin
ga
pore
Ta
iwa
n
Ho
ng
Ko
ng
Au
str
alia
Ne
w Z
ea
lan
d
Previous Peak 3Q 2011 Forecast Peak (2012 - 2013) Nov. Bond Auction
MeasuredFundIPD
�Especially in markets where …..
70%
90%
110%
130%
150%
-GD
P (2
01
0)
Japan = 220%
© IPD 2011 ipd.com
Source: IMF
-10%
10%
30%
50%
Jap
an
Gre
ece
Italy
Be
lgiu
m
Sin
ga
po
re
Ire
lan
d
Un
ited
Sta
tes
Po
rtu
ga
l
Ge
rma
ny
Ca
na
da
Fra
nce
Wo
rld
Un
ited
Kin
gd
om
Bra
zil
Ind
ia
Ne
the
rlan
ds
Sp
ain
De
nm
ark
Ho
ng
Ko
ng
Ch
ina
Ko
rea
, So
uth
Ne
w Z
ea
lan
d
Au
stra
lia Pu
blic
De
bt -
to-
MeasuredFundIPD
�And banks face potential capital shortfalls
Country # Banks Tested CT 1 < 5 5< CT 1 < 6
U.K. 4 0 0
Irelanda
3 0 0
France 4 0 0
Germany 12 0 2(3)b
© IPD 2011 ipd.com
Germany 12 0 2(3)b
Spain 25 3 6(7)b
Italy 5 0 1
Portugal 4 0 4
Greece 6 2 2a All three Irish banks failed in Dec. 2010 test
b (.) additional bank at CT1=6.1
MeasuredFundIPD
�Conclusions
� Markets (price) are recovering around the world
� Recovery has not been highly coordinated as investors chased
expectations / rotated away from perceived risks
� Investors remain attracted to real estate and made significant
investments during first three quarters of 2011
� Growth expectations have pulled back
© IPD 2011 ipd.com 21
� Growth expectations have pulled back
� Cap rates (especially primary global markets) are approaching
previous cyclical lows
� But spreads remain very wide due to low benchmark bond yields
� THIS IS INJECTING RISK
� Spreads could contract quicker than property earnings grow due to
political and banking risks
MeasuredFundIPD
�Thank You For Your Time
Jim Valente
Director, Performance & Risk Analytics
20 N. Wacker Drive, Suite 1760
Chicago, IL60606
© IPD 2011 ipd.com © IPD Dec-11 22
Intellectual Property Rights and use of IPD statistics as benchmarksWhether in the public domain or otherwise, IPD's statistics are the intellectual property of Investment Property Databank Limited.It is not permissible to use data drawn from this presentation as benchmarks.
© Investment Property Databank Limited (IPD) 2010. Database Right, Investment Property Databank Limited (IPD) 2010. All rights conferred by law of copyright and by virtue of international conventions are reserved by IPD
Chicago, IL60606
Tel: +1 312 646 6258
Email: [email protected]
Web: www.ipd.com/us