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since withdrawn from the Netherlands after suffe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withdrawn from the Dutch market has made it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