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| Key factors in European property investment market | ||
Investment in commercial properties in Europe began to recover its growth in early 2010 Despite a decline in volumes in the third quarter, from Cushman & Wakefield said that the activity is currently significantly higher than the previous periods by the end of the year even the growth is expected to increase. According to the company if they keep the current momentum, investment in properties in the fourth quarter of 2010 could reach 40 billion, which would be the highest quarterly value since the beginning of 2008. However, the market still has a few main factors that restrict activity and exert negative pressure on investment volumes. Report of the consulting firm CB Richard Ellis, Inc. (CBRE) shows that investment property markets in Europe at the moment has two key factors that influence the development. On one hand this is extremely low yields, which offer high-quality fixed-income bonds. Furthermore, impact on the overall economy of individual countries and in particular the property market and have massive public spending cuts, planned or implemented by many European governments. The first of these factors makes the prices of certain commercial properties to look very attractive compared with other investment assets. At one point in mid-year yield on the 10-year German bonds fell below 2.2 percent. Although it then reported a slight increase, the spread between the prime real estate and government bonds is almost the historical peak. Some investors believe the current levels of state bonds for unusual and also, that they will rise significantly in the future. Limited costs The planned cuts in public expenditure are unprecedented in scale, making it very difficult to predict their effect on the demand for commercial properties. Despite the fact that the investors today are generally very cautious in terms of risk, it is not surprising that there is a greater interest in those countries where no or little need for restriction on government spending, the report said. Among them are the Scandinavian countries like Sweden, Finland and Denmark were the only members who met the Maastricht criteria in 2009, however, Germany with its strong economic growth, as well as parts of Central and Eastern Europe, also enjoy greater investment interest. Loans Stated limitations and weak economies in Europe had an immediate impact on lending to commercial property. In the third quarter began to notice and an increased appetite for lending to larger transactions, and willingness to finance a higher share of the property value. These factors were improved only attested in those markets where the foundation of the economy and property sector is strongest. An interesting phenomenon in the last quarter is also the emergence of alternative credit institutions. The company reported increased activity by the insurance companies and institutional players are starting to tread on the debt market. One example is AXA Real Estate Investment Managers, which has already granted loans for more than 1 billion, and which announced plans to increase its capacity for further lending. This would compensate for the discrepancy in this respect between Europe and the U.S., where institutions are nearly 20% of the debt market segment of commercial real estate. Although the market appeared alternative lenders, financing for real estate sector still faces many obstacles that prevent institutional lenders to expand their presence in the European market. Some examples are the lack of standardized documentation, limited transparency and others. Source Name: investor.bg |
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| Monday, Nov 29, 2010 | ||
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