According to Cushman & Wakefield's latest commercial real estate investment report, European commercial property investment volumes increased in the fourth quarter of 2011 and are predicted to remain stable in 2012. buy property in qatar
Cushman & Wakefield's European Capital Markets Group Head Michael Rhydderch tells the World Property Channel, "There's no denying that there's a lot of anxiety out there, and that uncertainty may be holding back deal volume this year. At the same time, the increased volatility in other asset classes, as well as the relative level of property yields, is fueling demand for the finest assets in defensive markets. Despite the challenges in the debt markets, we expect turnover to remain stable this year at around €123 to €128 billion (USD $160 billion to USD $166 billion), with some new equity entering the market and those on the sidelines likely to become more motivated "..
With bank deleveraging expected to pick up, obtaining affordable financing will be difficult for all except the top tier of borrowers with the best asset backing, but present conditions, according to Rhydderch, will also lead to additional chances. "This year, the number of debt maturities is expected to climb, and many of them will be unable or unwilling to be refinanced. More stock will definitely enter the market as a result of this."
"Large pension and sovereign funds from around the world will continue to be ravenous for prime assets in core markets, with North American and Far Eastern funds dominating once again. At traditionally higher risk levels, private equity will be a prominent player this year, while private individuals from Europe, Asia, and the Middle East will likely be strong across a variety of risk levels. All players, however, will need to pay close attention to which markets and sectors they are pursuing; we expect many to change their price and/or risk tolerance in order to accomplish their buying objectives "..
"In 2012, distressed markets may offer the finest high-return prospects, but significant demand in core sectors will persist, and the best should give stable, if not improved, prices. Indeed, yields remain attractive and may fall further. Meanwhile, countries such as the Nordics, where economic growth is above average and market risks are minimal, or portions of CEE, where economic growth is projected to continue, notably Poland and Russia, and maybe Turkey, will offer good prospects "Rhydderch came to a conclusion.
"The hallmark of the year is likely to be whether or not the economy and the housing market can recover their confidence," says David Hutchings, Head of European Research at Cushman & Wakefield.
"The Eurozone crisis is certainly not going away anytime soon, and further austerity, a liquidity crunch, and the beginnings, hopefully, of more real reforms are all on the road. In the middle of all of this, a full-scale collapse of the Eurozone in 2012 is unlikely, given the costs to those leaving as well as those left behind. Indeed, the jigsaw parts of a solution may begin to fall into place shortly, and if so, this might be the key to more confidence and assisting Europe in regaining its mojo "..
"However, no one knows how the sovereign debt crisis will play out, and if 2011 taught us anything, it's that some of the year's most significant difficulties may not even be recognized yet. As a result, as investors build their portfolios, the more successful will grasp that risk management necessitates diversity rather than having core holdings in a few low-risk areas. As a result, a rising wave of investment could progressively expand to new markets later in 2012, but not as far as secondary coastlines for a while."
Commercial property investment volumes increased by a better-than-expected 17.7% in the fourth quarter of 2011 to €36.8 billion, bringing total volumes for the year to €126.2 billion, up 7.8% from 2010.
The main driver of growth was foreign investors, who increased activity by 16.2% year over year compared to 3.6 percent for local buyers, and increased their market share to 35.8% from 33.2 percent in 2010.
Investors have continued to demonstrate a significant interest in core markets, with the United Kingdom, Germany, and France accounting for 61.4 percent of all investment for the year.
Taking market share from the PIIGS was relatively simple, as volumes in these markets fell 25.9% year over year, compared to 17.7% growth in the rest of the Eurozone.
Only Switzerland, Denmark, and France from the West made the top ten growth markets last year: Bulgaria, Estonia, Slovakia, the Czech Republic, Hungary, Russia, and Croatia, with only Switzerland, Estonia, Slovakia, the Czech Republic, Hungary, Russia, and Croatia from the West.
However, as the year progressed, risk appetites shifted dramatically. Volumes in CEE markets increased by 75 percent year over year, while Western markets only increased by 2.8 percent. However, between the first and second halves of the year, Western volumes increased by 19.7%, while CEE volumes remained unchanged at 0.1 percent, as buyers became more cautious as the Eurozone debt crisis worsened.
Despite this, Central Europe had a successful year, with volumes up 115.7 percent and a market share of 4.7 percent, the most on record, as investors reassessed the real amount of risk in these areas and began looking for areas with stock and development potential.
Overall, volumes in the Nordic region remained flat, with strong demand but limited supply at the prices investors were willing to pay. Only Finland had a drop in volumes, with the rest of the non-Eurozone Nordics, particularly Denmark, enjoying considerable gain.
All sectors have seen increased demand, with industrial markets seeing the highest growth, with volumes up 24.5 percent and a 9.4 percent market share. Offices experienced an 11% gain in volume and a 44% market share, while retail experienced only a 3% growth in volume and a 3% reduction in market share from 33 percent to 32 percent.
Despite this, demand for retail has been strong, with investors viewing it as a safe haven asset. However, supply of the correct type of retail continues to fall short of demand, and a lack of financing for large lots has slowed activity. The UK has reclaimed its position as Europe's largest retail market, which Germany had for a time last year, but France has surpassed the UK as the region's largest office market, displacing Germany, which has dropped to third place.