Austrian economy has started to emerge from economic crisis

Munich tops list for commercial property investment

“Italy has room to grow faster than it has done in years”

Worst fall in global retail rents in its 24-year history

MENA has the right combination of investment opportunities

Alberta is Canada’s real estate star

Austrian economy has started to emerge from economic crisis

According to the Bank Austria’s Business Indicator, the Austrian economy has started to emerge from the economic crisis and is enjoying a strong tailwind at the moment, as the indicator has been rising steadily since bottoming out in April.

Helmut Bernkopf, Bank Austria’s head of Corporate and Investment Banking, said: “Bank Austria’s Business Indicator improved from -1.8 to -0.9 in August, the strongest increase since calculations began nearly 20 years ago.”

All of the components of Bank Austria’s Business Indicator increased in August and the sentiment among Austrian consumers has brightened considerably. The effects of the tax reform as a pillar of the Government stimulus package and strong consumer price disinflation resulting from the correction in commodity prices have been felt. The announcement that some companies will phase out reduced working hours in the coming weeks has also helped to boost consumer confidence, but the unfavourable conditions on the labour market continue to put a strain on sentiment in general.

Stefan Bruckbauer, deputy chief economist at Bank Austria, said: “Examining the decisive upward trend among the individual components of Bank Austria’s Business Indicator, it becomes clear that after the economic stabilisation in the summer, signs point to a surprisingly strong upward trend in the coming months. We anticipate that the Austrian economy will enjoy robust growth in the second half of 2009.”

According to Bank Austria’s economists, the recovery will continue into 2010. However, expectations for further development in 2010 and thereafter are considerably more pessimistic. The development of commodity prices, the lack of a full recovery in the financial sector, the effects of the crisis on corporate balance sheets and the heavily stressed labour market, which has the potential to slow down consumption – and strong consumption would be needed for an internally driven upswing – are major risk factors.

Munich tops list for commercial property investment

According to LaSalle Investment Management’s 11 th European Regional Economic Growth, Munich has knocked London from the top of a list of best European cities for real estate investment for commercial property occupiers and investors.

This is the first time since 2005 that London doesn’t top the list and this reflects London’s exposure to the financial downturn compared with other rival business hubs. Munich has been identified as the most attractive European city for investment on a medium term outlook, followed by Paris. Dublin fell from fifth place to 73rd place.

While London’s size and wealth have kept it in the top ten, weak gross domestic product (GDP) and employment growth expectations relative to other cities have weighed heavily against the UK capital in the latest index. LaSalle found that Munich should withstand the current economic turmoil better than any other European location, owing to its wealth and a highly diversified local business structure, consisting of global players and domestic industries. Paris has benefited from its greater exposure to different sources of employment outside financial services.

The study is based on a range of indicators, ranging from relative wealth, growth levels and business across 98 European cities. It aims to identify the cities in greatest demand among occupiers and investors over the medium term.

“Italy has room to grow faster than it has done in years”

Jean-Claude Trichet, European Central Bank’s (ECB) president, recently told Sunday newspaper II Corriere della Sera that Italy is not the only country in Europe with a high debt and has room to grow faster than it has done in years.

In an interview, he said: ‘ I believe Italy's potential is considerable because it has human resources of exceptional quality.’

According to Trichet, Italy’s entrepreneurial spirit and ability to innovate could not be found in that many other countries in the Euro-zone. He said: ‘I am therefore truly convinced that the Italian economy has many cards to play. And this suggests that its potential growth could be higher than what has been seen in recent years.’

Trichet said it was important Italy monitor carefully its labour costs and productivity. Italy, in particular, needed to regain competitiveness compared with the European average. He also said Italy needed to regain control over its debt dynamics.

Worst fall in global retail rents in its 24-year history

Prime rents in over half of the world’s most prestigious shopping streets have fallen in the last 12 months as consumer spending and retail sales remain depressed, according to Cushman and Wakefield’s (C&W) Main Streets Across the World report, which is the biggest fall in retail rents in its 24-year history.

Overall, some 54% of 274 streets monitored saw their prime rents fall in the last year. Ireland’s Grafton Street in Dublin experienced a decline of -22.5% and rents at Hong Kong’s Causeway Bay decreased by -15.1%.

Globally, the biggest fall in rents was in Mumbai’s Colaba Causeway, falling by - 63.5%. In the Americas, Rio de Janeiro’s Sao Conrado Fashion Mall fell -53.4%, while in Europe, Bucharest’s Calea Victoriei fell -48.1%.

John Strachan, global head of retail at C&W, said: “ The last 12 months have been one of most difficult periods ever for the retail sector with consumer spending and retail sales down in many markets.

“The good news, however, is that the worst is almost certainly now behind us. Economic recovery in many major markets is now underway with key driver economies such as Germany now officially out of recession.”

MENA has the right combination of investment opportunities

Abu Dhabi, Dubai, Cairo and Casablanca are in the best position in the Middle East and North Africa (MENA) region to attract more long-term capital to their real estate markets, according to Jones Lang LaSalle (JLL), as they have the right combination of investment opportunities and competitiveness.

The report pointed out that long-term investors have been deterred from the MENA region by the short- term speculative mentality of both investors and developers. As a result few sales have occurred recently and a lot of work is needed to create more mature markets.

The report said: “Creating the right environment to attract long term investment into Mena real estate markets remains a work in progress. While few of the necessary requirements have yet to be fully met, significant progress has certainly been made in many critical areas.”

The last few years saw too much greed and speculation and the need to attract long term, stable investment was ignored. But now the wholesale withdrawal of speculators and short term investors over the past year due to the global economic crisis offers a chance for positive change.

In addition, prices and rentals have fallen between -25-50%. Analysts predicted that there will be more falls and prices corrections, but at a much slower rate in the rest of 2009. It pointed out that to move ahead the real estate markets need to attract long-term regional and global investment according to the report.

However, one of the biggest challenges remains oversupply, particularly in Dubai where it is likely to worsen and put further pressure on rents and prices in the short term.

Alberta is Canada’s real estate star

The Canadian Real Estate Association (CREA) has revised its forecast for sales and prices for the rest of this year and into 2010 due to a combination of low interest rates and sensible pricing creating an overall sense of optimism for the coming months.

Its research showed that Alberta in particular has seen a remarkable turnaround. And overall sales activity in August set a record with the average price across the country now up +11.3% from a year ago.

For Alberta, the association has forecasted that now overall residential sales will decrease by -2.5% this year to 55,000 units and increase by +10.5% in 2010 to 60,750 units. This is in contrast to its last forecast in May when it sales would drop by -24.7% in 2009.

CREA has also forecasted the average sale price this year in the province will decrease by -4.4% to $337,300 and rise by +1.7% next year to $343,200. In May, its forecast was for an -8.8% decline this year to $321,900 and for a -1.1% decrease in 2010 to $318,300.

The Canadian Government has committed to leave rates unchanged until June 2010. However a new survey from Royal LePage Real Estate Services, found more than a quarter of its agents do not believe the housing market’s current strength is sustainable