Marktbericht Europa Januar 2011

Europe’s economies surprised on the upside in 2010.

Executive Summary

• Europe’s commercial real estate markets are facing a challenging year amid economic uncertainty as governments institute austerity plans and export demand softens. Policy makers have taken a strong stand in support of the euro.
  
• The banking sector remains a concern. A slight recovery in prime property values has helped ease potential losses, but banks’ loan books have been growing as they extend maturing loans. Banks are either tightening lending standards or have withdrawn from the market entirely.
  
• Lack of access to debt will intensify the gap between the size of maturing loans and the amount properties qualify for at refinancing. Investors are targeting the expected “funding gap” with mezzanine and senior debt strategies, but with an eye toward prime rather than secondary assets.
  
• Transaction activity picked up in the fourth quarter, driven by investor demand that is focused on prime assets in the deep and liquid markets of Northern Europe. There are growing worries that those markets are starting to look expensive.
  
• The European Public Real Estate Association’s (EPRA) index posted a 4.8% total return in the fourth quarter. Most real estate stock prices reflect net asset values. As in the private market, investors are favoring the faster growing prime markets in Northern Europe.
  
• European occupier markets are slowly improving, but demand is still driven by cost-saving, so there is little net absorption of space. Even so, with new supply waning, rental growth is likely to pick up in some markets. Ireland and South Europe lag the recovery.