IRELAND’S 1000 TOP CEO’S EXPECT LESS THAN 1% GROWTH IN 2011
Funding Environment To Improve But Restoring Government Finances And Reducing Unemployment The Key Objectives For 2011
Dublin, 14th November, 2010 | The Dublin office of CB Richard Ellis Group (“CBRE”), the international commercial real estate firm, today issued the results of its 13th annual survey of the Top 1,000 CEO’s in Ireland.
The results reflect the continuing difficult operating environment faced by companies in Ireland, the ongoing negative impact of the banking crisis and the urgent need to address Government finances and unemployment in 2011. Ireland’s Top 1000 CEO’s believe commercial property values are, on a national basis, unlikely to appreciate in the near to medium-term but that the Dublin Office and Retail sectors are poised to outperform the market.
► 65% of Ireland’s Top 1000 CEO’s expect the Irish economy to show positive growth in 2011 but of those that do, a majority expect growth of less than 1%
► 47% of Irish CEO’s are less optimistic about Irish economic prospects in the short to medium term than they were 12 months ago
► Majority (61%) of CEO’s state that the ongoing banking crisis is the factor having the greatest negative impact on the Irish economy
► ‘Restoring Government finances’ (49%), ‘Progressing NAMA’ (41%) and ‘Reducing the Unemployment Rate’ (38%) are the factors in need of most urgent attention in 2011 according to CEOs
► 34% of CEO’s expect no change to their employee numbers in 2011; 28% expect to increase employee numbers and 34% expect to reduce headcount in 2011
Property & Investment
► 81% of the Top 1000 CEO’s who responded to the CBRE survey are less favourable towards commercial property in Ireland as an investment compared to this time last year
► 73% of respondents cited bank deposits as their preferred investment choice in the current climate.
► Two thirds of CEO’s expect residential property to decline in value over the next three years.
► The sectors of the commercial market likely to out-perform over the next 3 years are the Dublin Office and Dublin Retail sectors.
Guy Hollis, Managing Director of CB Richard Ellis, Ireland, “This is the 13th year of our ‘Top 1000’ CEO survey which continues to provide an interesting insight into the views of the CEO’s of some of Ireland’s leading public and private companies. “
“Given the broader economic backdrop and recent newsflow, it is no surprise that expectations for 2011 are for modest growth at best. Our respondents have clearly identified Government finances and unemployment as the two factors which require “urgent attention” in 2011. As a firm, CBRE has a truly international perspective, and we share the view that the Government must urgently address its deficit and work to restore confidence in Ireland in the international capital markets and among international investors. As investor confidence in Ireland returns, it should have a positive impact on both employment and on the commercial property market.”
Two thirds of the Top 1000 Irish Chief Executive respondents expect the Irish economy to show positive growth in 2011, although the majority of these only expect growth of between 0% and 1% be achieved next year.
47% of Irish chief executives say they are less optimistic about Irish economic prospects in the short to medium term than they were 12 months ago. 14% say they are more optimistic about Irish economic prospects than they were this time last year and 39% expect no change.
More than three quarters of Irish chief executives expect bank funding for businesses and households to improve in 2011, which is encouraging.
49% of respondents to the survey believe that European Central Bank (ECB) base rates will remain unchanged in 2011 while a further 46% of respondents expect interest rates in the Eurozone to rise slightly next year. Only 4% of respondents anticipate interest rates in the Eurozone increasing significantly next year.
54% of respondents believe UK rates will be kept on hold next year with a further 37% expecting UK interest rates to rise slightly in 2011. 44% of respondents expect US interest rates to rise slightly next year while 45% expects US interest rates to remain steady in 2011.
When asked what factor had the most negative impact on the Irish economy in 2010, it is not surprising that ‘the ongoing banking crisis’ was identified by the largest proportion of respondents (61%). A further 22% of respondents cited ‘Government finances’ as having had the most negative impact on Irish economic activity in 2010. Interestingly, when the Top 1,000 CEO’s in Ireland were asked to indicate factors in need of most urgent attention in 2011, ‘Restoring Government finances’ (49%), ‘Progressing NAMA’ (41%) and ‘Reducing the Unemployment Rate’ (38%) featured most strongly.
Perhaps not surprisingly, 73% of respondents cited bank deposits as their preferred investment choice in the current climate. Almost 84% of CEO’s said that they are more favourable to bank deposits compared to last year while more than 64% said they were more favourably disposed towards equities than they were 12 months ago.
82% of respondents said they were less favourable to residential property in Ireland than they were 12 months ago. Meanwhile, 81% said they were less favourable to commercial property in Ireland as an investment vehicle compared to this time last year while 55% of respondents said they were more favourable to UK and European commercial property than they were in late 2009.
Only 22% of the Top 1,000 CEO’s who responded to this years survey expect residential property in Ireland to appreciate in value over the next three years. A further 12% anticipate that residential property values will remain stable at current levels while more than 50% expect further slight value decreases and almost 15% anticipate further significant decreases in house prices in the time period.
With regard to commercial property, 35% of respondents expect values to either remain the same or to increase over the next 3 years with 42% saying they expect commercial property values to decrease slightly over the three year timeframe and almost 23% saying they expect values to decrease significantly in the period. When asked what sector of the commercial property market they expected to perform best over the next three years, 36% of Irish chief executives identified retail property in Dublin while the Dublin office market was tipped to outperform other sectors by almost 31% of respondents. A further 27% selected industrial property in the capital as the most likely to outperform in the time period.
30% of respondents expect to decrease existing staff numbers slightly in their organisation in 2011 with only 5% expecting to cut numbers significantly. Encouragingly, more than 28% of the respondent companies expect to increase staff numbers next year while a further 34% anticipate no change in staffing numbers next year.
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About CB Richard Ellis
CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2009 revenue). The Company has approximately 30,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.
In Ireland, with offices in Dublin and Belfast, CB Richard Ellis is the country’s largest commercial real estate services company, now employing over 130 employees and offering a full range of property services including property sales and acquisitions, leasing and management, investment, corporate services, project management, consultancy, valuations and research. CB Richard Ellis Ireland has been listed among the top 50 Best Workplaces in Ireland, 2010, for the sixth year running. Please visit our website at www.cbre.ie or www.cbre.ie/ni