Investment Drivers in European Real Estate Revealed

Factors that encourage investment in European property markets have been revealed by a new report compiled by the Royal Institution of Chartered Surveyors...

Factors that encourage investment in European property markets have been revealed by a new report compiled by the Royal Institution of Chartered Surveyors (Rics). The research - Corporate Real Estate: Investment and EU Cities - highlighted strong public transport systems, environmentally-friendly buildings and "efficient, flexible working environments" as key things that draw investors to a particular location when searching for commercial property investment opportunities.

The occupiers surveyed by Rics for the study stated that they are currently concentrating on "consolidation, cost-cutting, boosting productivity and encouraging flexibility", which means they require premises that will help them achieve these goals. 'Green' buildings are also in demand, which has resulted in many looking to established European markets, as opposed to those in the east and south of the continent, where such properties are not so readily available. International investors are also more likely to opt for sustainable buildings, which means they predominantly target destinations in western Europe.

In addition, the Rics report covered issues within the corporate real estate investment sector, with one of the most pressing problems for investors being the lack of finance. According to the organisation's findings, banks have "virtually ceased lending" for any investments that are not within core property markets. The reduction in available funding, coupled with the ongoing eurozone crisis, has resulted in many occupiers and investors putting off decisions about their future activities, while they wait to see how the situation will develop.

This indecisiveness among occupiers can be seen in figures published last month by Savills, which revealed that in the first half of 2012 take-up of office space in Europe fell by 4.2 per cent, compared with the same six-month period a year earlier. The firm went on to predict that annual take-up of this kind of commercial property will be down by 7.7 per cent when 2012 draws to a close.
 

- Wednesday 10 October 2012

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