Market Overview 2014


 

Tourism

In 2014, growth opportunities come from the weighty intra-European market. As the crisis' legacy fades and confidence improves, European outbound travel strengthens further, while becoming more balanced across source markets. According to a European Commission’s survey2, 8 in 10 EU citizens plan to go on holiday in 2014, with the vast majority planning to travel domestically or within the EU.
Economic indicators suggest a strong performance of Germany and the UK as outbound markets, with private consumption boosted by sustained economic growth and, in Germany, by stable consumer prices. Early indicators also point to persistent growth of travel from France, but rising consumer confidence remains vulnerable to fragile economic conditions. Underlying fundamentals of outbound travel also remain strong for Russia, although trends may abruptly change depending on the evolution of the Ukraine crisis.
Embracing a joint vision for tourism growth is a strategic decision, whose impact goes beyond the tourism sector and impacts on Europe’s overall economic development. This encouraging momentum calls for bold actions, to strengthen European tourism competitiveness and set Europe on a durable path of growth.
(European Travel Comission)

Real Estate

As investors increase their allocations to property, there has been a “huge capital push” into core European markets, which will continue through 2014. The implications are many and varied. Interviewees and survey respondents talk of “pricing bubbles” and “markets overheating” – the language of the pre-financial crisis era. This is a cause for concern for some and an opportunity for others. Jones Lang LaSalle’s pan-Europe forecast for prime capital values in 2014 is a more sober 4 percent growth for offices, 1 percent for industrial and 4 percent for unit shops. Low Euribor and Libor rates provide the backdrop to this modest growth and some – by no means all – respondents expect a rise in 2014. “We are starting to see pressure in the bond markets and this will affect swap rates,” says one UK interviewee. “However it would have to be a meteoric rise to start changing the direction and velocity of the marketplace. Real estate is still seen as a good diversifier and a good way of getting dividend, and I don’t see that changing.” The competition for assets is so intense in key sectors that there is a high risk of failing to execute the deal on any asset that comes on the market. Hooking up with a local partner will mean relinquishing some control, but can provide superior market intelligence about assets to target and avoid, as well as a head start on the competition.
(pwc)

Energy

New types of investors in the energy sector are emerging, but the supply of long-term finance on suitable terms is still far from guaranteed. Much of the dynamism in energy markets is coming from smaller market players or new entrants: the expansion of shale gas and tight oil production in North America has been driven by multiple, entrepreneurial companies; emerging state and private companies are taking an increasing share of investment in many non-OECD countries; and the expansion of distributed renewable energy capacities and of energy efficiency initiatives is turning more small businesses and households into energy investors. These players tend to share a reliance on external sources of financing. Even for efficiency projects, which we estimate are almost 60% self-financed today, the required scaling up of efforts is likely to depend on greater recourse to debt or equity. Outside North America (where external financing is more readily available), there is a need to unlock new sources of finance, via growth of bond, securitisation and equity markets and, potentially, by tapping into the large funds held by institutional investors, such as pension funds and insurers. This would help to diminish undue reliance on the relatively short maturity of loans available from the banking sector, which may themselves be further constrained by new capital adequacy requirements in the wake of the financial crisis.
(International Energy Agency)