Real Estate, Hospitality & Construction | Capital ...FILE/ey-ccb14-info-sheet-real-estate.pdf · A...
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A note from Howard Roth, Global Real Estate, Hospitality & Construction Leader Our 14th Capital Confidence Barometer (CCB) for Real Estate, Hospitality & Construction (RHC) shows a definitive shift in many areas of the economic outlook compared to the results of our last survey in October 2015. RHC executives, however, still plan to be active in the market. In several areas, there is a shift toward stability, including the perspective on the state of the global economy, the level of confidence in capital markets indicators and expectations for the mergers and acquisitions (M&A) market. With regard to our respondents’ views of the state of the global economy, 47% say it is stable, up from just 11% six months ago. And the number who said it is strongly improving is only 2%, down from 39% last October. The level of confidence in capital markets indicators also shows a move toward stability. Fifty-three percent of RHC executives said they feel confident that corporate earnings are stable, up from 26% six months ago. The number feeling positive about corporate earnings is now just 40%, down from 61% last year. Forty-eight percent are confident that credit availability is stable, up from 25% six months ago. However, the number feeling positive about credit availability is 40%, down from 70% last fall. With regard to expectations for the global M&A market over the next 12 months, there is a shift in sentiment toward the number of deals staying the same. Forty-six percent of respondents say we will see the status quo, up from 19% six months ago. However, last October, 77% of respondents said the market would improve, vs. only 47% today. Another key change is the number of RHC executives expecting the valuation gap to increase over the next year. Forty-nine percent say the gap will increase over the next 12 months, up from 34% six months ago, while 39% say it will remain at current levels, down from 61% last October. In addition, executives believe that we will see downward pressures on valuations over the next 12 months. Twenty-nine percent say pricing will decrease vs. only 4% six months ago, while 19% say valuations will increase, down from 40% last year. Fifty-two percent expect valuations to remain the same. Even with a shift toward stability, and a possible widening of the valuation gap and decrease in valuations over the next 12 months, we still see a number of deals in the current pipeline, and 37% of RHC businesses expect to make acquisitions over the next 12 months, just under the long-term CCB average. Clearly, our respondents look to continue dealmaking in 2016. On the next page are some highlights of the survey. Real Estate, Hospitality & Construction Capital Confidence Barometer May 2016 | ey.com/rhc | 14th edition
Transcript of Real Estate, Hospitality & Construction | Capital ...FILE/ey-ccb14-info-sheet-real-estate.pdf · A...
A note from Howard Roth, Global Real Estate, Hospitality & Construction Leader
Our 14th Capital Confidence Barometer (CCB) for Real Estate, Hospitality & Construction (RHC) shows a definitive shift in many areas of the economic outlook compared to the results of our last survey in October 2015. RHC executives, however, still plan to be active in the market.
In several areas, there is a shift toward stability, including the perspective on the state of the global economy, the level of confidence in capital markets indicators and expectations for the mergers and acquisitions (M&A) market.
With regard to our respondents’ views of the state of the global economy, 47% say it is stable, up from just 11% six months ago. And the number who said it is strongly improving is only 2%, down from 39% last October.
The level of confidence in capital markets indicators also shows a move toward stability. Fifty-three percent of RHC executives said they feel confident that corporate earnings are stable, up from 26% six months ago. The number feeling positive about corporate earnings is now just 40%, down from 61% last year. Forty-eight percent are confident that credit availability is stable, up from 25% six months ago. However, the number feeling positive about credit availability is 40%, down from 70% last fall.
With regard to expectations for the global M&A market over the next 12 months, there is a shift in sentiment toward the number of deals staying the same. Forty-six percent of respondents say we will see the status quo, up from 19% six months ago. However, last October, 77% of respondents said the market would improve, vs. only 47% today.
Another key change is the number of RHC executives expecting the valuation gap to increase over the next year. Forty-nine percent say the gap will increase over the next 12 months, up from 34% six months ago, while 39% say it will remain at current levels, down from 61% last October. In addition, executives believe that we will see downward pressures on valuations over the next 12 months. Twenty-nine percent say pricing will decrease vs. only 4% six months ago, while 19% say valuations will increase, down from 40% last year. Fifty-two percent expect valuations to remain the same.
Even with a shift toward stability, and a possible widening of the valuation gap and decrease in valuations over the next 12 months, we still see a number of deals in the current pipeline, and 37% of RHC businesses expect to make acquisitions over the next 12 months, just under the long-term CCB average. Clearly, our respondents look to continue dealmaking in 2016.
On the next page are some highlights of the survey.
Real Estate, Hospitality & ConstructionCapital Confidence Barometer
May 2016 | ey.com/rhc | 14th edition
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Global Real Estate, Hospitality & Construction (RHC) contactsHoward RothEY Global RHC LeaderNew York, US+1 212 773 [email protected]
Serena WolfeEY Global RHC Assurance LeaderNew York, US+1 212 773 [email protected]
Karl HambergerEY Global RHC Tax LeaderMunich, Germany+49 89 14331 [email protected]
Christoph EhrhardtEY Global RHC TAS LeaderStuttgart, Germany+49 711 9881 [email protected]
Josh HerrenkohlEY Global RHC Advisory LeaderNew York, US+1 212 773 [email protected]
36% 48% 37%of RHC respondents view the global economy as improving, vs. 80% six months ago
of companies have three or more deals in the pipeline vs. 57% six months ago
of respondents expect to actively pursue acquisitions in the next 12 months vs. 50% one year ago
42% 47% 29% of boardrooms will be focused on increased volatility in commodities and currencies
of dealmakers expect the M&A market to improve over the next 12 months, vs. 77% six months ago
of respondents believe the price of assets will decreased over the next 12 months vs. 4% six months ago
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