Marktbericht Europa Jul10

Recent news on both the wider economy and real estate markets has generally been positive.

Executive Summary

• Europe’s economic recovery appears to have gained traction in the second quarter, although growth forecasts remain downbeat.
  
• Real estate debt markets are showing signs of life, despite wider pressures on the banking system. The focus of lending activity continues to be on prime real estate in core, Western European cities, although there are some signs that risk appetite is returning. Fears that real estate borrowing costs could rise sharply are probably misplaced.
  
• Investment activity continues to grow, with retail sector transactions dominating deal flows. However, yields were unmoved in the second quarter, halting the rebound in prime capital values.
  
• Listed market volatility rose in the second quarter, as the wider equity markets reacted to investors’ heightened concerns about sovereign credit risk. Companies with even a small exposure to Southern Europe have been severely punished.
  
• Prospects for real estate occupier markets are beginning to improve and rent levels have stabilized in most markets. However, the path of the recovery remains uncertain, and the synchronized downturn should make way for a greater divergence in performance across markets and sectors.