In the UK, the London property market is enjoying a boom. We expect New England
Properties pic, in which we have a participating interest, to profit from this in 1986
by the sale of a number of properties.
In France, construction and sales on our housing projects are progressing in the
desired manner; it is gratifying that there are signs of an improvement in the market
for apartments on the south coast. Construction work on the project on the south
coast of Spain has since commenced and the sales results are encouraging.
A substantial proportion of the office building in Jakarta, which was completed in
1985, has already been let, despite the very poor rental market.
Group Finance
The foreign exchange developments together with the national as well as inter
national efforts to create more freedom in the money market and the capital market
led to the fact that interest developments in the year under review were
characterized by sharp fluctuations. A certain nervousness on both the supply and
demand side in this market aggravated the situation.
During the first weeks of 1985 we saw a downward trend in interest rates on the
domestic capital market. However, owing to an irresistible advance on the part of
the dollar, first the German mark and consequently the guilder came under pressure,
so that the central banks in Germany and the Netherlands were ultimately obliged
to raise the official interest rates (1/2%).
Combined with the effect of currency interventions, which reduced the money
supply, there was a sharp rise in money market interest rates, which in turn led to an
increase in interest rates on the capital market. In the second quarter, disappointing
economic growth figures in the USA coupled with surprisingly good figures in many
of the countries of Europa and in Japan were followed by a sharp adjustment in the
dollar exchange rate. This at once allowed the mark and the guilder to strengthen
their position within the EMS again. The restored confidence led to a reduction in
the discount rates and to a capital market trend which was more in line with
domestic conditions of supply and demand. Nevertheless, towards the end of the
year, there was still evidence of some resistance in the market due to the tightening
effect of the interventions by De Nederlandsche Bank N.V. (The Dutch Central
Bank) coupled with a substantial demand for long funds in connection with consolida
tion and conversion operations on the part of housing corporations among others.
It was gratifying to note that the funding of long money was able to continue on the
upward trend of previous years. A total of approximately NLG 910 million in long
funds was attracted, by such instruments as:
- the issue of bonds totaling NLG ƒ416 million (1984: NLG 381 million);
- two Euroguilder Notes, one of NLG 50 million at 8'/<% 1985-1990 and the other
NLG 60 million 7% 1985-1990;
- an issue on the public capital market in Switzerland for an amount of CHF 50 million
5%% 1985-1997; subject to interest rate adjustment after 4 years.
Once again during the year under review, operations took place involving other
currencies, including a three-year Luxembourg franc loan, the proceeds of which
were swapped for guilders.
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