Jones Lang LaSalle Inc. (JLL), which is the second-largest publicly traded broker, has predicted that commercial property investment in Europe will increase 30% this year from 102 billion Euros in 2010. A shortage of well-located commercial property will cause rents to rise and encourage investors, according to the Chicago based firm.
Let's be honest, this is hardly a bold prediction. Signs of recovery in the US economy prompted a 42% growth in commercial US property investment in 2010, fuelled by the fact that commercial property values had plummeted to record lows.
Now, in Europe we have commercial properties being sold at severely depressed prices, especially malls, and especially in those countries mired by the sovereign debt crisis. Now, that we are seeing signs that 2011 will be the year that these worst hit economies finally start to turn the corner, and with them set the EU as a continent back firmly onto the recovery track, it is not too far out there to predict a massive rise in retail and commercial property investment in Europe.
Meanwhile CB Richard Ellis Group Inc. report that global property investors have shifted their focus away from the UK towards commercial property in Germany. The group put the change down to the fact that UK commercial property has seen its value rise the fastest.
The report was based on a survey of 350 investors taken at at a conference in Cannes, France. They reported that 32% of respondents said that they intend to buy in Germany this year, a strong increase on the 18% recorded in 2010.
Meanwhile the number of investors planning to invest in the UK this year has fallen by almost half, from around 31% in 2010 to around 15% in 2011.
"The U.K. led the European market recovery in both transaction volumes and property values from the low point in 2009," CBRE said in the report. "But the survey revealed that investor attention is starting to turn elsewhere, possibly as a result of the degree of capital value growth that has already been realized in the U.K.'s prime markets."
The survey also found an increase in the popularity of retail property investment, according to the report 43% of investors now plan to spend in the retail sector this year, compared to 34% last year. Well-located shopping malls in Germany are offering yields close to the 2006 peak, CBRE said.
- Saturday 02 April 2011