MORE THAN HALF OF IRISH CEO’S EXPECT THE AVAILABILITY OF BANK FUNDING TO IMPROVE NEXT YEAR
According to the 12th annual survey of the Top 1,000 CEO’s in Ireland conducted by property consultants CB Richard Ellis, 53% of Irish chief executives expect bank funding for businesses and households to improve in 2010, which is encouraging.
38% say they are less optimistic about Irish economic prospects in the short to medium term than they were 12 months ago while only 29% say they are more optimistic about economic prospects than they were this time last year.
78% of respondents to this year’s survey expect the economy to contract in 2010 but only 14% of Irish CEO’s expect the economy to contract by more than 5% next year. Although more than a fifth of respondents expect the Irish economy to show positive growth in 2010, less than 2% of respondents anticipate growth of more than 2% to be achieved.
51% of respondents to the CB Richard Ellis survey believe that European Central Bank (ECB) base rates will remain unchanged in 2010 while a further 43% of respondents expect interest rates in the Eurozone to increase slightly next year. 1.5% of respondents anticipate interest rates in the Eurozone increasing significantly next year while only 4.5% of respondents believe that ECB rates will fall slightly next year. With regards to UK interest rates, again the vast majority of Irish managing directors (49%) believe that interest rates will rise slightly over the next year. 43% of respondents believe UK rates will be kept on hold next year with a further 49% expecting UK interest rates to rise slightly in 2010. 56.5% of respondents expect US interest rates to rise slightly next year while 36% expect US interest rates to remain steady in 2010.
When asked what factor had the most negative impact on the Irish economy in 2009, it is not surprising that ‘funding issues arising from the global credit crunch’ were identified by the largest proportion of respondents (39%). A further 25% of respondents cited ‘the slowdown in construction activity’ as having had the most negative impact on Irish economic activity in 2009. Interestingly, when the top 1,000 CEO’s in Ireland were asked to indicate factors that are likely to have the most negative impact on economic performance in 2010 the most significant issues identified included ‘restoring Government finances’ (57.5%); ‘restoring competitiveness’ (30%); ‘getting NAMA up and running’ (16.5%) and ‘reducing the unemployment rate’ (16.0%).
Perhaps not surprisingly, 43% of respondents cited bank deposits as their number-one preferred investment choice in the current climate. 18% of the Top 1,000 CEO’s who responded to the survey identified equities as their preferred investment vehicle while 13% said their preferred investment choice was commercial property.
Almost 80% of CEO’s said that they are more favourable to bank deposits and equities than they were 12 months ago while 82.5% of respondents said they were less favourable to residential property in Ireland than they were 12 months ago. Meanwhile, 74% said they were less favourable to commercial property in Ireland as an investment vehicle compared to this time last year. 57% of respondents were however more favourable to UK and European commercial property than they were in late 2008.
Only 30% of the Top 1,000 CEO’s who responded to this years survey expects residential property in Ireland to appreciate in value over the next three years. A further 15.5% anticipate that residential property values will remain stable at current levels while 38% expect further slight value decreases and 16.5% anticipate further significant decreases in house prices in the time period.
With regard to commercial property, 47.5% of respondents expect values to either remain the same or to increase over the next 3 years with 31.5% saying they expect commercial property values to decrease slightly over the three year timeframe and 21% 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, 37% of Irish chief executives identified retail property in Dublin while the Dublin office market was tipped to out-perform other sectors by a third of respondents. A further 15.5% selected industrial property in the capital as the most likely to outperform.
62% of respondents said they are not in favour of Government proposals to introduce a national property tax while 60% of CEO’s said they are not in favour of a new National Wage Agreement.
Only 19% of respondents expect the rate of unemployment in Ireland to decline in 2010, with the majority or 57% of respondents expecting the rate of unemployment to increase slightly next year. Most respondents expect the rate of unemployment to peak at somewhere between 13% and 15% although more than 30% of respondents expect the rate of unemployment to go above 15% in this cycle. 38% of respondents expect to decrease existing staff numbers slightly in their organisation in 2010 with only 8% expecting to cut numbers significantly. Encouragingly, more than a fifth of the respondent companies expect to increase staff numbers next year.
92% of respondents say they will be implementing a pay freeze in their organisation in 2010. Of those that said they intend to implement pay increases in 2010, 86% said this pay increase would be less than 5%. Of those that said they expect to be implementing pay cuts in 2010, 72% said this pay cut would be greater than 5%.
According to Guy Hollis, Managing Director of CB Richard Ellis, Ireland, “This survey gives us a fascinating insight into the views of the CEO’s of some of Ireland’s leading companies. The two main positives I take from this year’s survey are that Chief Executives agree that the unemployment rate in Ireland is unlikely to increase beyond 15% and that over 50% believe that the availability of bank finance will improve in 2010. Both of these factors are key to economic recovery going forward. While an air of pessimism generally pervades it is becoming increasingly clear that business leaders believe that things will start to slowly improve in 2010 and this is certainly encouraging”.
Please see further below for a pdf copy of the full 2010 CEO Survey Report.
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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 2008 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. CB Richard Ellis has been named a BusinessWeek 50 “best in class” company three years in a row and a Fortune 100 fastest growing company two years in a row. Please visit our Web site at www.cbre.com.
In Ireland, CB Richard Ellis is the country’s largest commercial real estate services company, now employing over 110 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, 2009, for the fifth year running. Please visit our website at www.cbre.ie