Investment in European retail properties fell sharply in the first quarter according to the latest data from CBRE. The report just 4.6 billion Euros worth of transactions were completed in Q1 2012, representing a 64% drop on Q4 2011, and even more worryingly about a 50% drop on the running quarterly average of 9.4 billion Euros. Thank fully the firm is predicting a turnaround in fortunes for the market with investment increasing throughout the rest of the year.
Retail property investment now accounts for 20% of total commercial property investment in Europe, after a first quarter drop in all locations. Even in Germany, where investor sentiment remains incredibly strong, CBRE records just 1.35 billion Euros worth of investment, well down on the 2 year running average of 2.4 billion.
The Central and Eastern region (CEE), which has come to the rescue in many a negative report of late failed to step in this time. According to CBRE just 200 million Euros was transacted in the region in Q1, with access to funding and supply being cited as contributing to the weak performance.
The prediction is that increasing supply will fuel a recovery in the rest of the year, as banks become more actively engaged in lessening their ties to commercial property, though it is expected that we will see more “encouraged by the bank” sales than out and out short sales or repossessions. Of course that will depend just how bad things get.
This is now the third seriously negative report on commercial real estate investment in Europe in as many weeks. While this is hardly surprising given the apparent lack of viable solutions to the debt crisis, one does wonder just how bad things will get before they start to get better.
- Tuesday 08 May 2012