in 1991. This has resulted in a number of innovative products being launched, such as indexed loans targeted at the real estate sector and a comprehensive management service for mortgage and property portfolios. The Board envisages that FGH BANK’s personal bankers will continue to play a vital role in develo ping customer relations in the coming period. One of the great strengths of this arrangement is the fact that each personal banker is supported by a back up team of in-house experts with a wide range of specialist skills. MARKET CONDITIONS Market trends Activity in the commercial real estate market is presently at a low level, with the office sector experiencing particular difficulties. However, the current drop in demand has not come as a total surprise, since FGH BANK has been warning of a possible decline for some time. The main reason for the current malaise in the office sector is the rapid growth in speculative developments that has taken place at less desirable locations. Failure to secure satisfactory preletting guarantees has proved to be a costly mistake at non-Al sites. The recent boom in speculative developments has been fueled by the large number of financial institutions - many of which were relatively new to the Dutch market - that were willing to supply funds to the real estate sector. However, the great majority of these financiers has since withdrawn from the Netherlands after suffe ring substantial losses. The prospects for the letting market are somewhat mixed after the record volume of business achieved in 1990. Relocations accounted for much of the space taken up during this period. As a consequen ce, significant volumes of second-hand space in outmoded buildings have come back onto the market. However, now that most firms have taken up new premises, the number of company relo cations is tailing off. This has had a pronounced effect on vacancy rates and has meant that even new office developments are standing empty. In contrast, demand is holding up well for office space at A1 locations, such as in the area around the Atrium and the World Trade Center in Amsterdam and in the vicinity of railway stations in the major cities in the Netherlands. The fact that many foreign investors, and particu larly those from the Scandinavian countries, have withdrawn from the Dutch market has made it more difficult for developers to find suitable buyers for their projects. Reticence on the part of Dutch investors has also made their task more difficult. Consequendy, there has been a sharp drop in the volume of transactions in the investment sector. It is generally expected that this trend will continue for the foreseeable future. At the same time as demand for office property has declined, investor interest in other sectors of the realty market has increased. Multi-tenanted busi ness complexes, and residential and retail property have been the chief beneficiaries of this shift in demand. In addition, more attention is now being focused on renovation, conversion and redevelop ment projects. Notwithstanding this re-appraisal of the potential for various sectors of the market, government poli cies are likely to have a pronounced effect on sentiment in the coming period. Not only are government planning policies with regard to deve lopment locations at issue, but concern is also being expressed about prospective environmental legislation and the level of future economic growth. Opposition to the government’s policy of designa ting specific sites for the development of industrial and office property has grown significantly during the past year. Although FGH BANK welcomes the REPORT OF THE EXECUTIVE BOARD Planning policy

Rabobank Bronnenarchief

Annual Reports FGH Bank | 1991 | | pagina 14