REPORT OF THE EXECUTIVE BOARD to depress market sentiment. Consequently, the rise in the level of rents has remained below projected levels in most areas. In the opinion of the FGH Board, current government policy regarding business locations is only going to exacerbate the situation. The fact that large amounts of office space are situated in what the government considers to be the wrong locations could undermine the value of real estate at such sites in the longer term. The degree of oversupply currendy hanging over the market is such that even with continued growth in the level of purchases and lettings, the bloated supply position is unlikely to improve in the short term. The chance of a further shake-out in the industry cannot therefore be ruled out. In contrast, current conditions in the retail sector are dominated by the general scarcity of good property. Local authorities are restricting the amount of new development at a time when the large retail chains are wishing to expand. The prospects for existing shopping malls close to major urban centers are therefore extremely good, while the outlook for smaller shopping precincts are more mixed. To be successful, shopping malls must cater for the latest consumer requirements, which implies regular renovation programs. The demand for retail premises at central locations remains extremely buoyant. Owners generally have no difficulty in letting shops at such sites for high rents. As a result of the shortage of prime sites, more attention is being focused on accommodation at alternative locations close to the best sites, which although of slightly less quality, can still be considered to have a reasonably high standing. Rents for retail space at these locations have recently risen considerably. Moreover, projected rises in consumer spending, which are expected to follow from continued economic growth, augur well for the retail sector, which should enhance the investment potential of ■kites. In the industrial sector, there has been a marked increase in the availability of industrial space in recent years. Most of the planned new construc tion concerns business parks and multi-tenanted premises, often in combination with office accommodation. Higher architectural standards are clearly in evidence, akin to those normally associated with the office sector. Although the market is showing some signs of saturation, investor interest is still fairly strong. The take-up of space on industrial estates in the Randstad Conurbation (the region incorpora ting the cities of Amsterdam, Rotterdam, The Hague and Utrecht) and a number of other key areas in the Netherlands has significantly improved recently as a result of which prices have tended to firm. Industrial estates established on what used to be agricultural land near Schiphol Airport, have proved particularly popular in view of the quality of the surrounding infrastructure. However, other areas in the Netherlands have had to contend with disappointing take-up rates for a number of years. To what extent the degree of oversupply in the market as a whole has been brought on by the overzealous lending policies of certain finance houses is open to question. It is clear that certain firms have acted more as trend-setters in encouraging new development projects rather than mirroring market developments. In a number of cases, this has had disastrous consequences not only for the companies concerned, but also for their clients. In the present reporting period, a substantial number of finance houses have withdrawn from the market because of the downturn in activity. The Board of FGH BANK feels that such developments are regrettable since they overemphasize the cyclical nature of the realty market. FGH BANK remains

Rabobank Bronnenarchief

Annual Reports FGH Bank | 1990 | | pagina 13