Category Archives: Europe

The cheap money era ending?

image-508200-galleryV9-ttntSpiegelOnline asks the big question of the day: Can the World Handle Higher Interest rates? It was always going to happen, of course. Part of the strategy of central bank’s around the world has been to cut interest rates to the bone in an effort to spark growth. It’s debatable what sort of impact this has had, but bond buying programs by the treasuries of the big nations are huge. Spiegel cites the Japanese example, in which 70% of demand for bonds is from the Bank of Japan.

It’s the topic of the moment because the American Federal Reserve has begun to hint that the days of easy money and huge bond buying programs could be numbered. And as you’ll have noticed, when the Fed makes hints, markets go haywire. It’s an interesting read, for starters, but you have to wonder what the long-term impact on real estate financing will be. Especially for existing loans. We’d welcome any thoughts on the issue you might have, anonymously or otherwise.

When the financial crisis escalated in 2008, the Fed, the European Central Bank and other central banks began their cash therapy. Almost in lockstep, they reduced prime rates to close to zero and began buying up bonds on a large scale. To this day, the leading central banks have inflated their balance sheets with such practices to $10 trillion (€7.5 trillion).

But now something is changing. “For the first time, it looks as though one country, namely the United States, is leaving the crisis behind,” says Ulrich Kater, chief economist at DekaBank. “And, also for the first time, a central bank, the Fed, is showing that it is thinking about normalization.” …



FT: Spain jobless to pass 30%

SpainUnemployAt what point does Europe (meaning Angela M) decide that massive unemployment in Spain is more of a threat to the European project than a bit of stimulus? Can anyone actually imagine things not blowing up on the Iberian peninsula by 2015, when Societe Generale figures that about one in three adults will be out of a job? There’s conservative economic theory, and then there’s real life and things like common sense. Enough is sometimes enough.

Romanians to keep waiting for passport-free travel

In something of a kick in the teeth, the European Union has told Romanians and Bulgarians to keep waiting in line, when it comes to joining the Schengen zone of passport-free travel. Several countries had “reservations“, according to AFP. Perhaps concerned that such wordings were too diplomatic, the House of Lords in London said Romania shouldn’t have been admitted to the EU in the first place.

“The last six years indicate that post-accession conditionality achieves only slow progress. In future accessions, every effort must be made to ensure that all reforms are irreversible prior to accession, as post-accession mechanisms are both undesirable and unlikely to prove effective.”

On-line retail growth forcing change on logistics providers

Patrick Kurowski CBREAre the crowds any thinner in the shopping malls this year? Most would take that as a highly negative sign, but a more nuanced approach should take into account whether on-line retailing isn’t finally having an impact on how long you wait at the counter. Whatever the answer, a recent study by CBRE suggests that on-line retailing is definitely making itself felt in the product supply changing.

‘Online retailing is an established activity across much of Europe and expected to grow further over the next few years,” says Patrick Kurowski, Director of Industrial Department in CBRE. “It is already a significant driver of logistics market activity, and its future growth will introduce significant challenges and opportunities for the logistics networks needed to support it. This is not merely a case of increased demand for generic logistics space.”

There’s no question about it: technology is disruptive. And adapting to new shopping trends turns out to be just as important for trucking companies as it is for retailers, points out Kurowski. “It will also require the development of higher specification logistics buildings tailored specifically to the needs of online retailing, and capable of handling higher levels of mechanization and process complexity.”

Across Europe 40% of 16-65 year olds use the internet to shop and 47% browse for goods online. Both behaviors are significantly more prevalent in northern and western Europe (Sweden, Germany, UK and France) than they are in southern Europe and CEE.

Retailers expect the online proportion of their total sales to double from 5% to 10% over the next two years. While 70% currently regard themselves as primarily traditional “bricks and mortar” retailers most have begun the process of evolving into multichannel retailers, with 63% expecting to be fully-integrated multichannel retailers over the next two years.

Overall internet access in Europe has risen by nearly 400% since the year 2000, and credible estimates put the rate of future growth in online retailing in Europe at 12-15% per annum over the next five years.

The Euro can wait

Great quote care of Reuters from Hungary’s Minister of Economics, which at first reminded us of that incredibly forthright admission from the country’s former prime minister that the ruling class had been lying for years, and that it couldn’t go on. It would have been daring, of course, had he said it to the public, but if memory serves, it was taped secretly and leaked spinelessly to the press. Still, it’s one of those rare moments in which you see politicians actually behaving self-critically.

In his most recent column in a Hungarian weekly publication, Minister of Economics Gyorgy Matolcsy is making the case that Hungary should can the idea of joining the Euro for the next couple decades. And in a remarkable display of chutzpah, he chides the European Union for its economic mismanagement. Seems like you could substitute the word Hungary for Eurozone here quite easily.

The euro zone faces a protracted financial and economic crisis because it grasped too much and aimed too high

Is he saying that Hungary doesn’t face a protracted financial and economic crisis because it bit off a bit more than it could chew? One can imagine him penning these thoughts in the car, as he’s whisked off to the latest round of bailout talks with the IMF.

While we’re at it, if anybody knows what this means, we would love to get our hands on an English translation:

Hungarian policy can follow a multi-step strategy which strengthens the economy without the euro in the next two wartime decades and enters the euro zone following a new peace.

But maybe this is purely intended for local consumption, and is part of a campaign to prepare citizens for what’s to come. No doubt Hungary can get its economy back on track, and it’s entirely possible that a frank admission that membership in the Eurozone isn’t going to happen in the near future is a healthy step. Now all it needs to do is to quit frightening off foreign investors for long enough for some deals to go through and we can start talking about progress.

Prologis records 615,000 sqm in leasing in Q2

Prologis Park Budapest/Sziget

Prologis announced that its European operations produced 615,000 sqm in leasing activity, including a 17,500 sqm new lease in Prologis Park Pilsen-Stenovice to an existing 18,000 sqm client, a 20,400 square meter build-to-suit expansion at Prologis Park Hunxe in Germany, and a 20,500 sqmlease extension with UTi Hungary Logistics LLC at Prologis Park Budapest/Sziget.

Worldwide, the company leased 3.3 million sqm of space and beat expectations by finishing June with a 92.4% occupancy rate (details here). Same-store net operating income rose 0.4% over the same period in 2011.

Hungary on the IMF track now?

It wasn’t long ago at all now that supposedly well-placed observers were warning that Budapest was hunkering down for a long bout of negotiations that they might not even be interested in. The perception was that the Hungarian government thought it either didn’t need more money from the IMF and the EU, or it figured it could do a nationalist/populist pirouette in order to ride out the consequences if the deal fell through.

So what’s changed? The world’s financial markets aren’t generally very forgiving in such matters, so it seems unlikely the world has capitulated. More likely is that Budapest is sending a very different message now. The Wall Street Journal blog says

A senior Hungarian official welcomed that Budapest submitted next year’s draft budget early, saying this allows lawmakers enough time to make necessary changes to ensure the debt-laden country will meet its deficit target for 2013, a pre-requisite to get much needed financial aid from the EU.

“There are unresolved issues in next year’s budget but there’s still time to amend them thanks to the early discussion,” Arpad Kovacs, head of the Fiscal Council, told the Wall Street Journal in an interview Monday. The fiscal council is an independent body, which monitors the country’s fiscal policy with a veto right on the budget.

That’s a very different mood from just a few weeks ago.