Thursday, July 28, 2011
Wednesday, July 27, 2011
The Small Bank Problem: Why We Are 40,000 Properties Away From Recovery
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Friday, July 22, 2011
Strong franc gnaws deeper into Swiss economy
Image Caption: The franc's clout is hitting domestic industries (Keystone)by Matthew Allen, swissinfo.ch The value of the dollar sank below the franc some time ago, and there are no signs of the trend reversing with the Swiss economy performing so robustly compared to debt-laden European countries and the United States.
“It seems prophetic, and almost tragic, to say so now, but the Swiss economy has been the victim of its own success in surviving the financial crisis over the last couple of years,” Janwillen Ackett, chief economist at Julius Bär bank, told swissinfo.ch.
“Something dramatic has taken place since the start of the year and our outlook is now a more sober one. We will really feel the pain of the over-valued franc in the coming months.”
Acket has downgraded his predictions for Swiss gross domestic product (GDP) growth for this year to 1.4 per cent, compared to a 2.2 per cent forecast in January and 2.6 per cent made last year.
Joseph Jiminez, chief executive of Novartis warned on Tuesday that the drug maker would have to “reduce the total cost we have in Swiss francs” while referring to the damage caused by the strong currency.
Also on Tuesday cabinet ministers interrupted their holidays to discuss via teleconference the strong franc. However, no measures were taken.
This week, the franc recorded more gains against the euro – with one unit of the European currency costing SFr1.14 compared with SFr1.50 at the end of 2009. Many companies would go to the wall if the franc reaches parity with the euro, Peter Widmer, president of the Swiss export association, told the Blick newspaper in May.
“If that really happens then thousands of companies would face bankruptcy,” he said.
And it is not just engineering companies that face problems. The textiles industry has appealed to the government to provide bridging loans to stave off a looming crisis in that sector.
There are also reports of traditional, small cheese makers failing as exports melted by 3.5 per cent in the first quarter of this year. Imports of foreign cheeses rose by 7.4 per cent in the same period, according to the cheese marketing board.
Other milk products also face a currency squeeze. Milk products producer Emmi reported that a SFr100 million hole has been blown through its turnover in the last three years as a result of the strong franc.
Private bankers, thought to be the main beneficiaries of the strong franc as investors flock to Switzerland, insist that they are not as well off as believed because new assets are denominated in euros, while their cost base remains in francs.
The tourism sector has also suffered from the effects of the strong franc. The NZZ am Sonntag newspaper reported on Sunday that a thousand Swiss hotels were threatened with extinction as fewer tourists visited high price Switzerland.
The head of the Swiss tourist board, Jürg Schmid, appealed to the patriotism of Swiss holidaymakers in a SonntagsBlick article on Sunday, urging them to stay at home and spend their money in the domestic market.
Hansueli Loosli, chief executive of supermarket chain Coop, has also being banging the patriotic drum, accusing Swiss consumers that drive over the borders to buy cheaper euro products of costing homegrown retailers some SFr2 billion a year in lost sales.
On the other side of the coin, the Swiss price watchdog has leveled an accusing finger at retailers, saying they are doing too little to pass on the reduced cost of imports to consumers.
Swiss consumers typically pay some 20 to 30 per cent more than European counterparts for the same goods, but official statistics showed that the high street cost of goods and services imported from the euro-zone have hardly dropped despite being cheaper to buy with the Swiss franc.
The franc has gained 25 per cent in value against the euro and the dollar over the past four years.
The Swiss National Bank has emphasised that it does not pursue an exchange rate target, but consistently bases its monetary policy on its legal mandate.
This mandate stipulates that “the SNB is required to ensure price stability, while taking due account of economic developments”.
Starting in March 2009 the SNB intervened in currency markets. But after pumping in 15 per cent of GDP in May 2010 to little effect as the Swiss franc surged during the first round of the Greek debt crisis, it dropped them in June 2010.
These forays led it to a loss of SFr21 billion last year, its biggest ever, and its chairman, Philipp Hildebrand, has faced calls to resign.
Land Securities continues to power ahead
Land Securities today produced a strong first quarter interim management statement, as the UK’s largest property company continued its stellar performance since the market downturn.
The FTSE 100-listed REIT said that it had sold £177m of assets in the three months from 31 March to 30 June, at an average of 8% ahead of book value. Its sale of London office assets proved particularly profitable.
The sale of its development at 110 Cannon Street netted £52m, which LandSecs said accounted for all of its expected development profit.
It is also going full steam ahead with its strategy of undertaking development to maximise profit. As well as beginning City office developments such as the 20 Fenchurch Street “Walkie-Talkie” tower and 375,000 sq ft of office at 30 Old Bailey and 60 Ludgate Hill, it has also earmarked a £275m pipeline of smaller retail developments which it will now commence.
These developments will be anchored by fashion or food retailers, and total 1m sq ft.
Residential development has also proved profitable for the company. At Wellington House, SW1, sales have been agreed on three of the five remaining penthouses at prices which are slightly ahead of the company’s forecast of £2,000 per sq ft. Following the sales only 6% by floor area will remain unsold. Completion of the scheme remains on schedule for July 2012.
And as revealed by Property Week (finance, 24.6.11), it is now looking for a housebuilder to partner with on its huge residential development at Ebbsfleet in Kent.
Land Securities chief executive Francis Salway said: “While the quarter has seen a period of uncertainty in the wider economy, our activities show that our plan continues to deliver opportunities for value creation. The outlook for development in London remains attractive and, despite the mixed messages in the retail sector, our leasing activity demonstrates that the stronger retailers are looking to take new space.
“This retail demand has meant we have over the last few months also begun to step up our activity in retail development predominantly in edge of town locations and we now have a £275m, 1m sq ft, pipeline of opportunities to meet the growing demand from food and fashion retailers for space. Once again, we will look to marry our development expertise with retailer commitment to a scheme before we take these opportunities forward.
“We entered the financial year with a clear plan, and the letting and sales activity we have undertaken in the first quarter underpins our confidence in this plan.”
Thursday, July 21, 2011
Telemetry signs with Segro
Telemetry, communications and energy solutions specialists, Stirling Technical Engineering Limited have signed a 10 year lease for 9,400 sq ft at SEGRO’s Kings Norton Business Centre in Birmingham.
Stirling Technical has taken the decision to consolidate three locations into one secure base at Kings Norton Business Centre. The business has been based at KNBC for the past seven years, with two units on site and a further unit nearby in Kidderminster.
Steve White, operations director at Stirling Technical, said: “We have been very pleased with the site management and security at Kings Norton so it was an easy decision to bring all our l operations under one roof. Our business is growing and these new premises will enable us to increase production, whilst still offering the same high levels of service as before.”
Stirling Technical’s client portfolio includes Severn Trent Water, Wessex Water, Thames Water, South West Water and Schneider Electric.
Two JLL retail directors quit for Legal & General and Standard Life
Jones Lang LaSalle has lost two retail directors to Legal & General and Standard Life.
Mark Harvey, a director in the retail agency team, has quit Jones Lang LaSalle to join Legal & General, while Niall Macdonald, director in the Edinburgh retail team, will join Standard Life.
Harvey, who joined Jones Lang LaSalle through the purchase of Churston Heard, will now join Legal & General as a senior retail asset manager and will head the asset management of the retail and leisure assets in Legal & General Property’s Managed Property Fund.
Guy Grainger, head of UK retail, said: “We wish both Mark and Niall all the best for the future and thank them for their valuable contribution to Jones Lang LaSalle’s growing retail team over the years. We look forward to working with them as clients”.
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