Jones Lang LaSalle Hotels announced the sale of Le Meridien Piccadilly, in the heart of London’s West End, on behalf of Starman Hotels. The grade II listed, 266-room leasehold hotel has been acquired by an affiliate of Host Hotels & Resorts for £64 million. The hotel has recently undergone a considerable capital expenditure programme and provides 12,000 sq ft meeting space, plus a restaurant, bar, gym and swimming pool.

Felicity Black-Roberts, Property Director for Starman Hotels, said “In keeping with our divestment strategy, we are delighted with the sale of this property. We chose Host as our preferred purchaser due to their track record and they have secured an excellent addition to their portfolio”

Robert Seabrook, Managing Director for Jones Lang LaSalle Hotels, said “This transaction confirms the strong appetite investors have in the London hotel market at present. Strong trading fundamentals, a comprehensive international marketing exercise and transferable debt have facilitated an extremely smooth and successful transaction for all parties concerned.”

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Cushman & Wakefield has appointed Simon Hartley to join its growing retail asset management team. Simon, who joins from GVA Grimley, will be working on a wide variety of shopping centres. The team, led by John Prestwich, has secured eight new mandates1 in the last 12 months and manages 28 centres across the UK. Its clients include Aviva, Hermes, Development Securities, Kandahar and Land Securities.

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Tamar European Industrial Fund today announces that it has sold a portfolio of three light industrial buildings situated in the Paris region, to a private investor (“PCVI Group”), for a total consideration of €7.45 million, reflecting a price that is close to the Fund’s latest March 2010 valuation.

The three assets are located in the Parisian suburbs of Tremblay-en-France, St Leu-la-Foret and St Ouen l’Aumone. The portfolio provides a total area of 126,423 sq ft (11,745 sq m) and is fully let to 11 tenants. The total gross rent is €723,471 and thus the price reflects a net initial yield of 9.00% on the gross purchase price. The majority of leases are on traditional nine year terms with three yearly tenant break clauses, with the latest letting, concerning the asset in Tremblay-en-France, renegotiated by Tamar to existing tenant, Still, the forklift truck manufacturer, on a new nine-year firm basis.

This latest TEIF asset sale follows the recent disposal of the two assets in Finland for a combined total of €20.7 million.

Rob Brook, Managing Director of Tamar Financial Services Ltd, Investment Manager to TEIF, commented: "This sale demonstrates continued investor demand in the light industrial sector. Tamar has successfully implemented its asset management strategy which has resulted in a successful outcome for the Fund. The sale also shows stability in investment values and confidence in the Fund’s latest valuations.”

BNP Paribas Real Estate advised TEIF on this disposal.

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The combination of an uncertain rental outlook and constrained access to development finance will delay the start of the next European office development cycle, according to a new report by CB Richard Ellis (CBRE).

Recent indicators have suggested a measure of improvement in the European office markets: rents have stabilised, vacancy rates are peaking at lower levels than in previous cycles, and leasing activity has increased from its mid-2009 lows. Despite this improvement, analysis of development pipelines in the major European markets shows that the absence of new starts, in the face of an uncertain market outlook, will cause a sharp drop in completions next year and that, by 2012, completions will be running at less than half their recent peak.

Richard Holberton, Director, EMEA Research & Consulting, CB Richard Ellis, said: “The delivery of new space across the main Western European office markets peaked in 2008/09 and is set to slow progressively over each of the next three years. The forward development pipeline until the end of 2012 is mainly comprised of schemes already in progress. Sentiment towards the reactivation of schemes that were mothballed in the early stages of the credit crunch is quite hard to assess but, other than in London, there seems little sign of a shift in developers’ attitudes.”

“London is currently the only major market where there is any substantial evidence of interest in reactivating delayed schemes for delivery beyond 2012. There are some isolated examples of renewed interest in development in other European markets, but these reflect specific building circumstances rather than a broader shift in momentum. Indeed, the recent Euro crisis has the potential to cause further banking loses and hence further restrict the appetite of banks to lend on property developments,” Holberton continued.

By historical standards, the current development cycle has been relatively subdued as a result of weaker rent signals and sharp reductions in leasing activity and debt availability. Aggregate completions from 2007-10 in Western Europe are expected to amount to around 14.5 million sq m, compared to more than 17 million sq m in the 2000-03 period and over 22 million sq m between 1989-92.

So what would need to happen for the current weak development scenario to change, and what are the potential consequences if it doesn’t?

Holberton commented: “Clearly an accelerated economic recovery would help to spur the next development cycle in Europe, but current forecasts suggest employment in financial and business services across Europe may not return to previous peak levels until 2012-13. Therefore with demand-side pressures on rents remaining subdued, it could take considerable time in some markets for speculative development to resume, even if finance availability improves. If developers remain cautious and look to secure pre-lets before initiating schemes, occupiers could be significantly impacted, needing to forward-plan large new requirements as choice becomes more constrained.”

Gábor Borbély, CEE Research Analyst of CBRE added: “We see confirmed pipelines falling across all CEE, only Moscow will show some pick up later this year. Pipelines are drying out in core Central European (CE) markets to an extent where South Eastern Europe will see more development in 2011 than CE for the first time on record. The Budapest development market has also come to a still stand with only a handful of projects being under construction.”

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Austerity measures to reduce fiscal deficits adopted by eurozone countries and the UK affect property markets, says the latest RICS Global Commercial Property Survey published today, (26 July 2010).

While occupier demand is rising in the majority of countries across the globe, in the UK and eurozone countries, tough measures to reduce deficits appear to be having a more pronounced impact on businesses’ appetite to take up new space.

Brazil is leading the way with the net balance of surveyors reporting a rise in occupier demand moving from 70 per cent to 85 per cent, with markets in Peru and China also performing well. By way of contrast, demand in the UK turned negative for the first time in a year with a net balance falling from a positive 14 per cent to a negative 4 per cent.

In Western Europe, sentiment is still negative in Spain, Germany and Greece, whilst the French commercial property market was one of the best performers, particularly in the investment arena. The resilience of the French market reflects the strength of its domestic economy.

In Eastern Europe, tenant demand and rental expectations in Poland turned positive for the first time since 2008 and in Russia surveyors expect lettings activity and rents to grow in the coming months. On the investment side, activity was also strong in both countries.

Significantly surveyors in the US reported a rise in tenant demand across all three sectors for the first time in three years.

Indicators in China still remain strong despite measures introduced by the Chinese Government to address the property boom.

Looking forward into the third quarter of 2010, surveyors expect rental increases in Brazil, Hong Kong and Peru, as well as in some Eastern European markets such as Russia, Ukraine and Poland.

In the investment market, sentiment towards capital values is particularly strong in France, ranking top in Europe, as well as in Peru and Brazil.

RICS chief economist Simon Rubinsohn said:
“The real estate world continues to be split broadly speaking between the emerging and developed economies. Strong growth in many of the former, including the likes of Brazil, Hong Kong and India, is continuing to boost demand for new space from occupiers as well as encouraging investment activity. Meanwhile in many of the latter, fiscal retrenchment allied to bank deleveraging continues to place significant obstacles in the way of a meaningful recovery in the commercial property market.”

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UK pooled property funds have delivered 22.9% annual total return over the 12 months to the end of the second quarter, as measured by the IPD UK Pooled Property Fund Indices (PPFI). This compares with a 23.9% return on direct markets.

The indirect fund performance represents the second-highest rolling annual return to June in the last 10 years, behind the 24.7% delivered over the 12 months to Q2 2006 – at the height of the property bull market. Over the 12 months to June, specialist funds, which adopt esoteric strategies and apply higher levels of leverage, delivered 28.8%, outperforming the direct market by almost 500 basis points, while balanced funds returned almost 10 percentage points lower that specialist funds, at 19.0%.

“Specialist funds have comfortably outperformed the main market over the last 12 months, driven by successfully-applied focused strategies as well as by the positive impact leverage can have in rising markets,” explains Cameron McVean, Head of Fund Indices at IPD.

The IPD UK PPFI – sponsored by The Association of Real Estate Funds (AREF) and Linklaters – is comprised of 26 balanced and 34 Specialist quarterly-valued funds, with a combined net asset value of £25.3bn at June 2010. Pooled property funds have recovered substantially since the -48.8% lost over the preceding two years, with the PPFI showing funds are almost back to October 2008 levels.

Q2 performance and 12-month asset class comparison
Over the second quarter, balanced and specialist funds delivered 3.1% and 4.0%, respectively. Across the 60-strong fund constituents, all but two funds delivered a positive return for the quarter ranging from -3.9% to 10.7%.

Compared to other asset classes, in the 12 month rebound in pooled property fund performance, UK PPFI funds outperformed domestic REITS, equities and gilts, which returned 19.2%, 21.1% and 7.0%, respectively.

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A consortium managed by Bilfinger Berger has been awarded the contract to build a 12.6-kilometer section of the new ring road around Warsaw, the Polish capital. The section will connect the city’s international airport with the A2 highway; it will have three lanes in each direction and will entail the construction of 15 bridges and 18 kilometers of noise barriers. The project has a total volume of €200 million and Bilfinger Berger’ share amounts to €135 million. The new highway section is scheduled to go into operation in May 2012, before the start of EURO 2012, the European soccer championship.

In late 2009, Bilfinger Berger was commissioned to construct the 9-kilometer southern section
of the ring road around Danzig as well as an 11-kilometer highway section near Bialystok on Poland’s eastern border. Public-sector investment in the development of Polish transport infrastructure is receiving enormous support from the European Union’s structural fund. By 2013, the country will have received transfer payments of more than €60 billion.

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Ageas announces it has reached an agreement with BNP Paribas Assurance on the sale of its Pension and Life activities in Turkey. Fortis Emeklilik ve Hayat had Gross Written Premiums of €62 million in 2009. The transaction is likely to result in a limited capital gain.

Ageas acquired the insurance activities in Turkey in 2005, as part of the acquisition of Disbank by Fortis Bank. Since that time, insurance inflows have more than doubled from €29 million in 2005 to €62 million as at the end December 2009, and distribution channels have also been expanded.

This divestment is in line with the company's intention, announced in September 2009, to streamline its current portfolio against certain criteria. Specifically, businesses are expected to reach a critical size, make a meaningful contribution to the net result and have the capacity to generate returns that exceed the cost of equity.

Ageas considers the new owner to be ideally placed to develop the franchise in the future with the support of the employees.

This transaction, which is subject to regulatory approval, is expected to close in the last quarter of 2010.

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Valad Europe has been appointed by Kefren Properties IX AB (Kefren) as investment manager of its €480 million real estate portfolio in Sweden for a term of five years.

The Kefren portfolio comprises approximately 150 properties totaling more than 827,000 sq m of lettable area. The portfolio consists of predominantly office assets, and also includes warehouse and retail space, with tenants including Ericsson, Volvo and SKF.

Ole Vagner, Chairman of Kefren, said: “We wanted an investment manager with a strong presence in the Nordic region and the right resources to work through all the complex issues of this large portfolio.”

Including the Kefren portfolio Valad will manage a total of around 2.5 million sq m of property with a value of approximately €1.6 billion, across the Nordic region.

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Network Rail has awarded the contract to build the company’s National Centre in Milton Keynes to BAM Construction. The contract value amounts to approximately €118 million (£100 million). BAM Construction will start construction of the 41,000 sq m (400,000 sq ft) building next month. Network Rail’s National Centre is scheduled to open in 2012.

BAM Construction is already working as a consultant on the project, having been awarded a pre-construction services contract by Network Rail in December 2009. The National Centre will house 3,000 employees, and the scheme also includes a 700-space multi-storey car park.

Network Rail’s National Centre has been awarded a BREEAM ‘Excellent’ design stage rating and the new building includes a number of eco-friendly features, such as an extensive network of ‘living’ roofs, a rainwater harvesting system and a range of measures designed to regulate temperature and reduce energy use. BAM Construction will also recycle material from the National Hockey Stadium which used to occupy the site, with other materials sourced as locally as possible to help limit the number of lorries and further reduce the development’s carbon footprint.

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