Cushman & Wakefield - European Commercial Property Investment
19 Jan, 2012, EMEA
VOLUMES TO HOLD FIRM IN 2012 BUT IN A CAUTIOUS AND DIVIDED MARKET
According to Michael Rhydderch, Head of the European Capital Markets Group at Cushman &
With bank deleveraging to pick-up, getting hold of affordable debt will be an issue for all except the top tier of borrowers with the best asset backing but current conditions will also lead to more opportunities according to Rhydderch. "The volume of loan maturities is set to rise this year and a lot can?t or won?t be refinanced. This will inevitably result in more stock coming onto the market."
"On the demand side, large pension and sovereign funds from around the world will remain hungry for prime assets in core markets, with North American and Far Eastern funds again dominant. Private equity will also be a key player this year at typically higher risk levels, while private individuals from Europe, Asia and the Middle East are likely to be strong across a range of risk levels. However, all players will need to look closely at which markets and sectors they are targeting; we expect there to be an adjustment to pricing and/or risk tolerance by many in order to meet their buying objectives."
"Distressed markets may offer the best high return opportunities in 2012 but strong interest in core markets will continue and the best should deliver stable and possibly improved values. Indeed yields still look relatively attractive and could fall. Good prospects meanwhile will be seen in areas such as the Nordics where economic growth is above average and market risks low, or in parts of CEE where economic growth is expected to hold up, notably Poland and Russia and possibly Turkey," concluded Rhydderch.
According to David Hutchings, Head of European Research at Cushman & Wakefield, "The hallmark of the year is likely to be whether or not the economy and the property market can recover its confidence."
"The Eurozone crisis is clearly not going away any time soon and alongside this we have more austerity, a squeeze on liquidity and the start, hopefully, of more serious reforms. Not a recipe for great certainty but amidst all that, a full-scale breakup of the Eurozone in 2012 still looks unlikely given the cost to those leaving as well as those left behind. In fact the jigsaw pieces of a solution may soon start to come together and if so, this could be the key to greater confidence and helping Europe to get its mojo back."
"However, in truth no one yet knows how the sovereign debt crisis will play out and what's more, if 2011 taught us anything it is that some of the biggest challenges of the year may not even be known about yet. As a result, as investors build up their portfolios, the more successful will recognise that risk management requires diversification not just core holdings in a small number of low risk markets. A rising ride of investment could therefore steadily spread to new markets later in 2012 - albeit not reaching as far as secondary shores for some little while yet."