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Commercial real estate investors across Europe show
little willingness to move up the risk curve, according to a new report
by DTZ. Over the third quarter of this year, commercial real estate
investment activity remained focused on the main liquid and transparent
markets of western Europe.
The firm’s latest European Quarterly
report showed total commercial real estate investment volumes reached
13.5 billion across Europe in the third quarter, a 13 per cent increase
on the second quarter.
Listed real estate companies,
particularly British real estate investment trusts, continued to be
major sellers over the quarter, with sales totalling over €3 billion.
However
DTZ believes the supply of new product to the market is likely to be a
constraining factor in driving volumes significantly higher over the
coming quarters. Magali Marton, head of continental Europe and Middle
East research at DTZ said:
‘‘As both economies and leasing
markets remain fragile across Europe, investors remain focused on
good-quality assets with long-term secure income, predominantly in core
Western European markets, notably the UK, Germany and France. However,
activity largely remains thin across the emerging markets of Central
and Eastern Europe, where the perceived risks are greater."
The
new report found that many investors have retreated to their domestic
markets. This trend is particularly noticeable across Britain, where
British investors have almost completely withdrawn from European
markets in the past few quarters and focused their activity on their
home market.
During the third quarter, British investors acquired €3.5 billion worth of assets, of which 97 per cent were in Britain.
The
depreciation of sterling, coupled with the lagged re-pricing of assets
in some continental European markets have been key factors in
restricting activity by British investors to their home market.
German
investors were also particularly active, investing €2.3 billion into
the market during the third quarter, representing 17 per cent of all
acquisitions.
Nearly half of this, €1.1 billion, was invested domestically.
Cross-border
investment totalled just over €6 billion, although this included two
major deals - Blackstone’s €1.15 billion acquisition of a 50p er cent
stake in Broadgate in London, and Tree Inversiones Inmobiliarias’
acquisition of a portfolio from Spain’s BBVA bank for €1.15 billion.
Overall, 60 per cent of all foreign investment was directed towards
Britain.
‘‘Looking forward, a lack of product and relatively
stronger demand in the UK is leading to yield compression, and with it
we expect some of the overseas capital currently targeting the UK to
shift towards other European markets which may offer relatively better
value, for example Belgium, France and Sweden," Marton said.
Source: thepost.ie
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