European Property Investment ''Expected to Rise in 2012''

The volume of investment flowing into European real estate markets in 2012 is expected to be four per cent higher than it was in 2011...

The volume of investment flowing into European real estate markets in 2012 is expected to be four per cent higher than it was in 2011. Savills made the prediction in its European Investment Bulletin March 2012, noting that last year the UK, Germany and France accounted for 80 per cent of the funds ploughed into the continent's property sectors. Investors have typically been targeting offices in central business districts (CBDs) and retail assets in the most desirable locations. However, there are signs this could change over the course of this year.

Lydia Brissy, director of Savills European research, commented: "The growing appetite for risk in 2012 will be demonstrated by the increasing number of forward funding deals, fuelled by the rising number of distressed sales and bank disposals." As a result, the industrial market may begin to recover, while there will also be more inclination to seek out real estate investment opportunities in countries such as Ireland and Spain where yields will continue to climb, she added.

Price stabilisation is the main trend anticipated for core markets, while some of the peripheral regions may see yields rise this year. The firm noted domestic investors are expected to focus on their home markets, although there is increasing interest from overseas funds in European real estate. However, Middle Eastern investors are set to be less prominent on the cross-border transaction scene than in previous years, while Asian players are expected to take a bigger share of the acquisitions.

Last month, Jones Lang LaSalle predicted there will be a significant upturn in note sale activity in Europe this year, with the volume of such transactions expected to exceed USD 20 billion (GBP 12.5 billion). The firm explained many banks in the continent need to deleverage their debts that are due for refinancing in 2012 and 2013. Managing director and global leader of note sales at the organisation Peter Nicoletti cited the US as an example where the loan sale market has matured quickly, adding he expects some European countries to follow a similar pattern.

- Wednesday 04 April 2012

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