This comprehensive slideshow takes stock of the global economy, the real estate market, and the post-crisis recovery, and offers forecasts for the year to come. It also includes details of surveys conducted among MIPIM participants and the highlights of the week's keynote, including Boris Johnson and Nouriel Roubini.
8. The UK as well« Secondary property defined as the top quartile of regional offices by yield, as measured by IPD has been left behind in a recovery that has lifted the value of prime UK residential and commercial real estate: prices of secondary properties are 48% below peak levels, with no recovery in sight » Wall Street Journal – Feb 2011
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11. New sales and lack of buyers due to the lack of financing: secondary property valuations might fall further.
13. Secondary assets still included in the investor’s portfolio’s: new losses still to come ? And consequently, new redemptions? Funds might have to sell prime assets in order to finance them, thus diffusing the fallIs the Two-Tier market leading to a Two-Steps crisis ?
18. Riskier financing in a risk averse environment means: Higher yields requirements, And at the same time: focusing on prime property Is it realistic ? Source: Prequin
26. On the other hand, note that the US Housing Reits top performed in 2010: 47% of total return RPX – IEIF Index of prices in the residentialsector Paris / Ile de France
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28. the risk is measured , asset class by asset class, and translated into proportional capital requirements
30. Due to a low relative volatility, direct property will be favored for Insurance companies, as well as mortgage loans for Banks: there will be lower capital requirements for these assets
33. the listed property sector will be treated as part of the stock market, supposed to be the most volatile, therefore the most capital requiring. This could lead to reductions in the insurance companies’ holdings
34. In France, an IEIF calculation indicates that 1/10th of the market cap of the listed property companies could have to come back from the insurers’ portfolios. This is not really significant, but this could cap the market prices
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36. On the long term, this could reveal unmanageable
38. Repayment : a heavy burden, with a risk of recession and later, due to the lack of cash, a risk of deflation. The worst case scenario for real estate
39. Inflation: real estate friendly (but not for the listed sector, which will have to absorb the rates increases)Source: IMF / Soc. Gen.
53. It is interesting to notice that the Index is currently trading at some relatively low levels. Those are far from the levels reached in crisis times.
54. In other terms, the markets seem to be confident for the futureSource: CBOE