Archive for April, 2010

A study conducted by INREV, the European association for investors in non-listed real estate vehicles, reveals that the capital generated for European non-listed property funds plummeted by 60% in 2009.

As compared to 2008, when fund managers collected €14.8 bn, only €5.9 bn was raised last year. This figure is expected to reach €10.9 bn in 2010. Core funds that offer lower risk/return benefits contributed to 87% of the capital raised in 2009, while opportunity funds constituted 4%. Sixty four per cent of the capital inflows came from repeat investors.

Lonneke Löwik, Director of Research and Market Information believes that the subdued numbers tend to make people overlook the efforts put in by fund managers to align their fund offerings with the needs of the investors post recession.

Pension funds, life insurance and sovereign funds were the most dominant investor groups with stakes of 54%, 15% and 11% respectively, in the total capital raised. German, UK, Switzerland and Netherlands were the most generous contributors to the capital raised.

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Two UK banks are on the verge of being handed out severe penalty for mistreatment of customer complaints. Confirming the development, the FSA (Financial Services Authority) has stated that the discrepancies have been unearthed at five banking groups in the UK. Of these, two have been referred for additional scrutiny. Five others are currently revising their complaint handling procedures.

The prevailing belief amongst the consumers has always been that manhandling of their complaints was a common practice in banks. Adding fuel to the fire was another tidbit suggesting the release of incentives for members of the banking staff who were successful in warding off compensation payments, even when the bank was at fault. The senior management’s inability to manage and connect with the complaints and procedures departments has also been criticized.

Although the FSA is yet to name the banks in question, based on the volume of complaints received last year, speculations are rife that the list includes banks such as Abbey, Barclays, HSBC, Lloyds bank and Royal Bank of Scotland.

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There has been a significant decrease in the disposal of government land and property, between April 2007 and April 2009. The public spending statistics released by HM Treasury show that the revenue generated from selling central government’s land and building reduced from £2.1 bn in 2007-08 to £650 m in 2008-2009.

The total incomings from asset sales generated from across the public sector have plummeted significantly, from its average value of £7 bn to £3 bn in the last financial year. The annual borrowing was also revealed to be £3 bn less than the £167 bn amount declared by Chancellor Alistair Darling, during the budget.

There has also been a fall in the revenue generated from council property sales, which stood at £2.4 bn in 2007-2008. However, this year, such selling of counter property could muster up only £960 m.

Last week, the exclusivity granted to the government with regard to these figures was widely criticized in the media. The publicizing of this data is expected to quell those criticisms.

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Naomi Heaton, Chief Executive of London Central Portfolio (LCP), attributes the growing volume of property sales in the last few months partly to the weak value of sterling.

Heaton’s comments were based on her observation that foreign buyers are major contributors in the capital’s marketplace. The LCP chief executive suggests that the constantly deflating value of the sterling had made fresh market entries 30 percent cheaper, as compared to those earning money in euros or dollars.

Heaton’s comments were a reaction to a survey carried out by Knight Frank on April 21, which delineated how prime property sales London had reached its highest levels since the bullish run of 2007. The expert added that while the market had revived its stance substantially, it is yet to compensate for the two years it spent in utter wilderness. She expects the increasing number of transactions and the positive sentiment generated by the Olympic Games to pave the way for a quicker recovery.

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In April, the Confederation of Business Industry has reported a surge in both efficiency and sentiment on the UK industrial front. A survey conducted in this connection showed a figure of +14 against an anticipation of +6 for both the factors. With this disclosure, the country’s industrial output is estimated to have hit a two-year high. This positive outlook, however, does not draw a parallel with the lacklustre performance of the UK economy in the first quarter of 2010.

The booming industrial output is a derivative of the impressive volume of export orders that have been registered in the first quarter. The inspiring performance on the export front is, however, a reaction to the weakening UK currency.

The waning value of UK currency has contributed significantly to making UK exports attractive to the world. This, in turn, has bolstered the standing of the country’s industrial sector. While exports have strengthened the country’s industrial outputs, for this positive sentiment to spread its wings, the confidence of other sectors also ought to be restored.

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