PwC Real Estate Investor Survey ... PwC Real Estate Investor Survey 6on i odt ucIntr Germany In line

download PwC Real Estate Investor Survey ... PwC Real Estate Investor Survey 6on i odt ucIntr Germany In line

of 71

  • date post

    08-Oct-2020
  • Category

    Documents

  • view

    1
  • download

    0

Embed Size (px)

Transcript of PwC Real Estate Investor Survey ... PwC Real Estate Investor Survey 6on i odt ucIntr Germany In line

  • pwc.de/investor-survey pwc.ch/realestate pwc.pl/realestate

    PwC Real Estate Investor Survey Cap rates and letting assumptions for selected German, Swiss and Polish submarkets

    Spotlight 2030 – Brave New Real Estate 2

    Germany, Switzerland and Poland

    Volume 9 March 2019

  • PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft adheres to the PwC-Ethikgrundsätze/PwC Code of Conduct (available in German at www.pwc.de/de/ethikcode) and to the Ten Principles of the UN Global Compact (available in German and English at www.globalcompact.de).

    © March 2019 PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, which is a member firm of PricewaterhouseCoopers International Limited (PwCIL). Each member firm of PwCIL is a separate and independent legal entity.

    PwC Real Estate Investor Survey Volume 9 Germany, Switzerland, and Poland

    Published by PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft

    March 2019, 71 pages, 55 figures

    All rights reserved. This material may not be reproduced in any form, or saved and edited in any digital medium without the express permission of the editor.

    This publication is intended to be a resource for our clients and the information therein was correct to the best of the authors’ knowledge at the time of publication. Before making any decision or taking any action, you should consult the sources or contacts listed here. The opinions reflected are those of the authors. The graphics may contain rounding differences. PwC Real Estate Investor Survey Germany, Switzerland, and Poland.

  • PwC Real Estate Investor Survey 3

    Contents

    PwC Real Estate Investor Survey 3

    Introduction .................................4

    Germany – Office ................ 13 Germany – Retail ................. 17 High Street Retail .............................17 Non-High Street Retail .....................21

    Germany – Logistics ............. 23 Germany – NOI Analysis ...... 26

    Poland – Office ....................46 Poland – Logistics ................ 49 Poland – NOI Analysis .......... 52

    Switzerland – Residential ..............29 Switzerland – Office ......................33 Switzerland – Retail ......................37 High Street Retail ......................................... 37 Non-High Street Retail ................................. 41 Switzerland – NOI Analysis ............43

    Contents

    Approach and Definitions ....... 62

    Overview of the results ........ 53

    Spotlight .............................................9 2030 – Brave New Real Estate

  • PwC Real Estate Investor Survey 4

    Introduction

    1 In addition to presenting data covering the German and Swiss markets, in this issue of the PwC Real Estate Investor Survey we have also interviewed Polish investors and retrieved data on submarkets in Poland. The current market trends are reflected in the “all-risk-yields” (ARYs) which represent the relationship between the stabilised net operating income (NOI) and net purchase price.

    In Germany, we note investors’ restated interest in the Top 7 Cities office properties and their positive outlook for logistic assets – the asset class that experienced the highest compression.

    In Switzerland, residential yields for the peripheral regions compressed and moved closer to those in the Top 9 Cities. Retail yields increased across the board as investors become more pessimistic about this asset class.

    In Poland, respondents in both office and logistics sectors (investors and developers), expect growth potential, both in terms of volume and the number of transactions, which will bring the market’s maturity closer to that of the Western-European markets.

    In addition, we interviewed Ivan Nokhrin, founder of Exquance, and discussed with him how digitalisation and PropTechs solutions will change the real estate industry.

    We gather out data by interviewing various types of market participants. For an overview of the participants and for our approach and definitions, please refer to section 6 and 7 respectively.

    Introduction

  • PwC Real Estate Investor Survey 5

    Introduction

    Increasing Stable Decreasing

    100%

    Poland

    Fig. 1 Interest rate expectation

    Short term Medium term Long term

    Increasing Stable Decreasing

    Germany 14%

    64%

    36%

    86%

    7%6%

    87%

    Increasing Stable Decreasing

    Switzerland 12%

    75% 88%

    25%

    4%4%

    92%

    93%▲▲

    Will yields increase in line with interest rate development?

    Fig. 2 Investors’ expectations regarding cap rates

    86%▲▲

    86%▲▲

    ▲▲ 67% 73%▲▲

    9%▲▲

    71%▲▲

    86%▲▲

    29%▲▲

    Will rental growth compensate increasing cap rates?

    Does this differ between primary and secondary markets?

    Germany

    Switzerland

    Poland

    Yes No

    Yes No

    Yes No

    14%

    86%

    14%

    86%

  • PwC Real Estate Investor Survey 6

    Introduction

    Germany In line with the survey results six months ago, investors still believe that the short-term interest rates will remain stable over the next 12 months, while the long-term interest rates are expected to increase. Also similar to the view six months ago, 64% of the survey respondents are of the opinion that the medium-term interest rates will increase over the next five years. However, respondents emphasised that the recent developments of the interest rates are contrary to their expectations; which makes future predictions difficult.

    The majority of the survey respondents (93%) believe that yields will increase in line with the expected increase in the interest rates. Compared to the previous survey results, an increasing number of investors (67% vs. 47% six months ago) believe that rental growth will compensate for the increasing cap rates.

    Switzerland Interest rate expectations remained relatively stable over the past six months. In the short-term, an overwhelming majority of investors expects the rates to stick to the current low level, while only few of the survey respondents expect the short-term interest rates to either increase or further decrease. In the medium- term, three quarters of the investors are convinced that the rates will increase while one quarter does not expect a change in the interest rate regime within the next 5 years. In the long-term, i.e. over a span of six to ten years, only 12% of respondents keep expecting no changes in the interest rates. The remaining 88% anticipate an increase.

    Poland All of the Polish survey respondents believe that the short-term interest rates will remain stable over the next 12 months. In contrary to Germany and Switzerland, majority (86%) of the Polish investors expect the medium-term interest rates to also remain stable. However, the long-term rates are expected to increase. The majority of the survey respondents (86%) believe that the real estate yields will increase in line with the expected increase in the interest rates.

  • PwC Real Estate Investor Survey 7

    Introduction

    Office

    Retail

    Germany The Top 7 Cities have reverted to experiencing a slight yield compression across all risk classes compared to the previous issue six month ago, where the minimum ARYs have reached a stable plateau. Berlin has taken Munich’s top rank position of the most expensive prime office properties by a slight margin.

    The overall expectation of rental growth throughout the Top 7 Cities remains high; with Berlin still being in the lead with 3.7% p.a.

    The negative sentiment continues to affect the retail market as the uncertainty about the market developments lingers. Thus, for the first time in 12 months, the yield compression in the core and core plus properties has stopped. Value add properties in the Top 7 Cities and Regional Cities show a yield compression of 12 bps and 22 bps respectively.

    Logistics

    The high demand for logistics assets is continuing to spread to risky properties and Small Locations (outside the Top 15 Locations). The compression levels in core and core plus properties were even sharper than the compression experienced six months ago. These high yield compressions do not come as a surprise given the fact that the logistics market has experienced the highest transaction volume in a decade.

  • PwC Real Estate Investor Survey 8

    Introduction

    Residential

    Office

    Switzerland

    Retail

    Yields in the Top 9 Cities remained relatively stable. Zurich and Geneva remain at the top with core assets priced at 2.2% and 2.3% ARY, respectively. Lugano is the only city that experienced a yield increase across all properties over the past six months, while in Lucerne and St. Gallen yields increased only for core plus and value add assets. In the Regions, we observed widespread yield compression, especially in Central, Eastern and Southern Switzerland and the Mittelland.

    Office yields moved sideways for most of the Top 9 Cities. ARYs in Zurich increased slightly on the low and high end, bringing them to the same leve