Does sustainability fit well with Crisis? Thierry Delvaux Managing Director Hungary & Romania...
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Does sustainability fit well with Crisis? Thierry Delvaux Managing Director Hungary & Romania October 14, 2008 Subprime
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Transcript of Does sustainability fit well with Crisis? Thierry Delvaux Managing Director Hungary & Romania...
Does sustainability fit well with Crisis?
Thierry DelvauxManaging Director Hungary & Romania
October 14, 2008
Subprime
2
0
1 000
2 000
3 000
4 000
5 000
6 000
Poland Russia CzechRepublic
Romania Hungary Other CEE Slovakia
2006 2007 Q3 2008
Impact of the crisis on investments in CEE countriesInvestment volume 2006 - Q3 2008
Source: Jones Lang LaSalle Research , 2008
€ million
3
Investment volume in the CEE region
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
2000 2001 2002 2003 2004 2005 2006 2007 Q32008
-53%
Source: Jones Lang LaSalle Research , 2008
4
0
50 000100 000
150 000
200 000250 000
300 000
350 000400 000
1999 2000 2001 2002 2003 2004 2005 2006 2007 H12008
2008 2009 2010
0%
5%
10%
15%
20%
25%
Completion Take-up
Vacancy Rate GDP GrowthPlanned future completion
m2
Source: Jones Lang LaSalle Research , 2008
Still robust office leasing market in Budapest
5
Impact of the crisis on developers and investorsCost of financing (above interest rate)
Margins in 2007 Margins till summer 2008
German Open Ended Funds 30-60 bps 100 bps
International Investors 80-110 bps 150 bps
Hungarian Banks 150 bps 200-220 bps + or no availability
Margins today
Banks may terminate their signed financing contracts
No interbank lending
LTY 75-80% 65-70%
6
Demand for real estate products No balance of demand and supply
In the last years demand was high and supply was low
Subprime crisis
Today: low demand and high supply
High prices and low yields
Lower prices and higher yields
7
Yield Q3 08 (vs. Q2 07) in %
Office Primary Secondary
Czech Republic 6.00 (5.25) 7.00 (6.00)
Hungary 6.25 (5.75) 7.50 (7.00)
Poland 6.00 (5.50) 7.00 (6.00)
Retail
Czech Republic 6.00 (5.50) 7.00 (7.00)
Hungary 6.00 (5.75) 7.25 (7.25)
Poland 5.50 (5.50) 7.00 (7.00)
Source: Jones Lang LaSalle Research , 2008
Yields are moving upwards across CEE
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Will rents go up?
9
Sustainable Real Estate
• Back to basics: Real Estate vs operating income
• Green features: not a premium but a must
• Multinational firms relocating to the CEE have „green” requirements but do not pay more for it
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What makes a building „green”?
• Geothermal heat pump system
• Solar collectors
• BMS (Building Management System)
• Storm water collection
• Ice chillers
• Installations of low-energy systems
• „Green” construction
• Daylight and views of 90% of the space
• Green roof• Re-use of materials (Waste construction materials)• Selective waste collection• Preference for local products• Bicycle storage• Tram or metro access• LEED or BREEAM international labeling
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• Investment volume is down
• Robust take-up on the leasing market
• Increased cost of finance – increased yields
• Sustainability is a must
Thank you!
COPYRIGHT © JONES LANG LASALLE IP, INC. 2008
