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
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EULIS participants
new participants
expected participants
For these remarks, we consider the whole of Europe
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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
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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?
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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
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Transactions:
Finance
Increasing volume of cross border mortgage outstandings
Example Germany
Volume of cross border mortgage business of vdp member banks
Target Groups: Banks
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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
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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
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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:
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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
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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?
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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
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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)
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