18th European Real Estate Society (ERES) ConferenceEindhovenJune 2011

Graeme NewellUniversity of Western Sydney

Stanley McGreal, Martin Haran, Michael McCordUniversity of Ulster

Contact author: g.newell@uws.edu.au

INTRODUCTIONINTRODUCTION

PURPOSE OF THE PAPERPURPOSE OF THE PAPER

Eleven (11) major European direct property markets – 10 yrs (2001-2010)

Risk-adjusted performance

Portfolio diversification

Mixed-asset portfolios

Property investment implications

GLOBAL COMPETITIVENESS

♯1. Switzerland ♯2. Sweden ♯5. Germany

♯7. Finland ♯8. Netherlands ♯9. Denmark

♯12. UK ♯14. Norway ♯15. France

♯18. Austria ♯19. Belgium ♯20. Luxemburg

CORRUPTION CORRUPTION PERCEPTIONPERCEPTION

♯1. Denmark ♯4. Finland ♯4. Sweden

♯7. Netherlands ♯8. Switzerland ♯10. Norway

♯11. Luxemburg ♯14. Ireland ♯15. Austria

♯15. Germany ♯20. UK ♯22. Belgium

♯25. France

INSTITUTIONAL GRADE INSTITUTIONAL GRADE PROPERTY MARKETPROPERTY MARKET

♯3. Germany ♯4. UK ♯5. France

♯7. Italy ♯8. Spain ♯11. Russia

♯14. Netherlands ♯16. Switzerland ♯17. Belguim

♯18. Turkey ♯19. Sweden ♯21. Norway

♯22. Austria ♯24. Poland ♯26. Denmark

PROPERTY TRANSPARENCYPROPERTY TRANSPARENCY

♯3. UK ♯4. Sweden ♯7. Ireland

♯8. France ♯9. Netherlands ♯10. Germany

♯11. Belgium ♯12. Denmark ♯13. Finland

♯14. Spain ♯15. Austria ♯17. Norway

♯19. Portugal ♯20. Switzerland ♯21. Italy

♯22. Poland ♯24. Czech Rep. ♯27. Hungary

MAJOR PROPERTY FUND MAJOR PROPERTY FUND MANAGERS: EUROPE EXPOSUREMANAGERS: EUROPE EXPOSURE

ING: 39% UBS: 54% RREEF: 45%

Morgan Stanley:

35%

JP Morgan: 10% Pramerica : 21%

LaSalle: 34% Aberdeen: 97% AEW: 67%

CB Richard Ellis:

38%

Cornerstone: 20% Tishman Speyer: 17%

Heitman: 16% PruPIM: 86% Hines: 20%

SECURITISED PROPERTYSECURITISED PROPERTY

♯7. France ♯8. UK ♯11. Sweden

♯18. Germany ♯20. Netherlands

REITsREITs

♯3. France ♯4. UK ♯8. Netherlands

♯10. Belgium ♯13. Turkey ♯16. Germany

PROPERTY ACTIVITY: 2010: PROPERTY ACTIVITY: 2010: COUNTRIESCOUNTRIES

♯3. UK ♯4. Germany ♯6. France

♯11. Sweden ♯13. Russia ♯14. Spain

♯17. Netherlands ♯19. Italy ♯21. Poland

♯22. Norway ♯23. Finland ♯24. Turkey

EUROPE: $154B @ 24% global

PROPERTY ACTIVITY: 2010: PROPERTY ACTIVITY: 2010: CITIESCITIES

♯1. London ♯4. Paris ♯10. Stockholm

♯15. Moscow ♯21. Berlin ♯23. Frankfurt

INDIVIDUAL TRANSACTIONS: 2010INDIVIDUAL TRANSACTIONS: 2010

♯4. London ♯5. London ♯7. London

♯8. Berlin ♯9. London ♯10. Frankfurt

PROPERTY ACTIVITY: Q1 2011PROPERTY ACTIVITY: Q1 2011

♯3. UK ♯5. Germany ♯7. France

♯11. Sweden ♯12. Italy ♯13. Poland

♯16. Spain ♯17. Netherlands ♯19. Czech Rep.

♯21. Austria ♯22. Belgium ♯23. Turkey

EUROPE: $44B @ 24% global

METHODOLOGYMETHODOLOGY

* Denmark * Finland * France

* Germany * Ireland * Netherlands

* Norway * Portugal * Spain

* Sweden * UK * Pan-European

EUROPEAN DIRECT PROPERTY MARKETS : 11 COUNTRIES

Direct Property: IPD Total Returns

*All Property •Retail *Office *Industrial

METHODOLOGY

Stocks (FTSE Indices) Bonds (10Y Government Bonds)

2001-2010 :annual

Risk-adjusted performance, portfolio diversification

European property markets omitted : 6

DIRECT PROPERTY: IPD 2010DIRECT PROPERTY: IPD 2010

DENMARK ASSET PERFORMANCE (2001-2010)

FRANCE ASSET PERFORMANCE

(2001-2010)

SPAIN ASSET PERFORMANCE (2001-2010)

UK ASSET PERFORMANCE (2001-2010)

PROPERTY PERFORMANCE: PROPERTY PERFORMANCE: 20102010

STOCK PERFORMANCE: 2010

PROPERTY PERFORMANCE: PROPERTY PERFORMANCE: 2001-20102001-2010

STOCK PERFORMANCESTOCK PERFORMANCE

PORTFOLIO DIVERSIFICATIONPORTFOLIO DIVERSIFICATION

Within Sector

Within Country

DIVERSIFICATION: PROPERTYDIVERSIFICATION: PROPERTY

DIVERSIFICATION: STOCKSDIVERSIFICATION: STOCKS

UK DIVERSIFICATIONUK DIVERSIFICATION

FRANCE DIVERSIFICATIONFRANCE DIVERSIFICATION

GERMANY DIVERSIFICATIONGERMANY DIVERSIFICATION

SWEDEN DIVERSIFICATIONSWEDEN DIVERSIFICATION

SPAIN DIVERSIFICATIONSPAIN DIVERSIFICATION

PROPERTY/STOCK CORRELATIONS

PROPERTY/BOND CORRELATIONSPROPERTY/BOND CORRELATIONS

EUROPEAN PROPERTY INVESTMENT EUROPEAN PROPERTY INVESTMENT IMPLICATIONSIMPLICATIONS

Size; maturity; significance

Risk-Adjusted Returns

Portfolio Diversification* Sectors * Countries

Mixed-Asset Portfolios

Other Property Markets: IPDAustria, Belgium, Czech Rep.Italy, Poland, Switzerland, CEE

International Investor Perspectives