Some Remarks on the Market Prospects of EULIS 9th December 2005, Warsaw EULIS Annual Meeting Andreas Luckow Association of German Pfandbrief Banks, Berlin What is the market for EULIS? - EULIS is a cross-border-database on real estate Market: cross border real estate transactions and their participants Transactions: Buy and sale Residential real estate Commercial real estate Finance Investments Brokerage 2 EULIS participants new participants expected participants For these remarks, we consider the whole of Europe 3 Transactions: Buy and sale Residential real estate Commercial real estate Ever more people are: • Moving between countries (studies, international companies, retirement etc.) • Setting up secondary residencies • Investing their money in other countries Private investors are looking for other countries Figures / business areas: No information Target groups: •Private clientele – difficult to address •Agents, brokers •Lawyers, law firms •Notaries? No, cross border authentification not allowed in most cases 4 Transactions: Residential real estate Commercial real estate Finance Estimate EMF: less than 1 % of the market (new loans 2004 about 1000 bn €) For home customers going cross-border For home customers going cross-border For international customers For international customers For customers in the target country For customers in the target country Recent size of the market: Example vdp-members (mortgage banks) loan commitments 2003: € 305 mln 2003: € 8.119 mln 2004: € 246 mln 2004: € 8.349 mln 2005 (9 mths): € 507 mln 2005 (9 mths): € 11.371 mln • Still high transaction costs in cross-border business High amounts, but limited case numbers European total? 2 x – 3 x? 5 Volume of cross border mortgage business of vdp member banks (as at September 2005) in bn. € 45 40 35 30 25 20 15 10 5 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 of which residential cross border 6 Transactions: Finance Increasing volume of cross border mortgage outstandings Example Germany Volume of cross border mortgage business of vdp member banks Target Groups: Banks 7 Transactions: Residential real estate Commercial real estate Only large portfolios Main field of investment Investments By professional investors: funds, insurances, investment banks etc. Expected cross border deals for 2005 in Europe: € 70 bn = more than 50 % of all transactions (source Wallstreet Journal, Europe JLL), 2004 still 33 % Jan. – June: € 25 bn € 305 mln. Of which to: UK € 7,7 bn Sweden € 2,0 bn France Spain € 3,8 bn € 1,1 bn Real estate funds alone in Europe manage ~ € 180 bn of assets Target group: Funds, investors, law firms, advisors 8 Transactions: Residential real estate Commercial real estate Brokerage Brokerage still rather local, exception large real estate advisory firms Target group: real estate advisors, brokers Result so far: limited, but growing market 9 Favorable influence of ongoing and future developments Fast process of internationalisation and globalisation Residential: crossing the border is becoming more common Commercial: crossing the border is normal now; often several countries are included: 10 Property Property to to pledge pledge Investor Investor sponsor sponsor Property Property to to finance finance Bank Bank syndication syndication Borrower Borrower Rating Rating agencies agencies Bank Bank Bank Bank All those relations can cross borders; some transactions cross many borders 11 Influence of ongoing and future developments Obstacles become smaller or will disappear: • • • • • • • • • Information on other countries is more easily available Legal systems converge (ex.: mortgage law reform in France) Business structures and markets converge, customs are taken over Economical integration is growing Cross border access to credit worthiness information Change of attitudes EULIS Eurohypothec? Eurotitle? Eurotrust? 12 Excursion: Central Europe: • In central Europe, real estate and real estate finance markets are still in development • Cross border business does not find stiffened structures: development may be faster • Even cross border retail residential finance to customers of the target country is possible; even to western European countries 13 Result: • Market still small • Things move the right directions • Time for development Customers must be approached to show the advantages of the service (cross border business has found its ways; new techniques are always a threshold) 14