Real estate: News
Positive outlook for European real estate, says PwC 25/01/2007
Author: Stuart Fieldhouse
Despite some concern that there may be too much money chasing too few assets, respondents to the third annual Emerging Trends in Real Estate Europe 2006 survey, published by PricewaterhouseCoopers and the Urban Land Institute (ULI), expressed a fundamentally positive outlook.
United States investment banks, Middle Eastern petro dollars, Australian REITs, hedge funds, and the deep pockets of private money from East Asia are driving the interest in European real estate, respondents to the PwC survey said. In addition, the continuing evolution of real estate investment trusts (REITs) and the REIT-related marketplace in many European markets is likely to further spur interest from global investors, the report claimed.
"Increasingly, US investors are seeing many of the same innovations taking place in Europe that helped transform the U.S. real estate marketplace," noted William E. Croteau, global real estate assurance and US real estate sector leader for PricewaterhouseCoopers. "Innovations such as the development of REITs and ongoing expansion of securitisation in commercial real estate, greater transparency and more reliable data on returns and performance have helped contribute to a robust marketplace that continues to mature and attract investment capital from around the world."
According to the report there is an increasing consensus that real estate has been repositioned as an asset class. This contention is supported by the continuing increase in strategic institutional target weightings in real estate. Private equity, venture capital, and hedge funds that invest in real estate-related assets are all now the recipients of increasing percentages of institutional allocations in addition to core investments.
Key findings from Emerging Trends in Real Estate(R) Europe 2006 include:
Overall investor sentiment is hugely weighted to the "buy" side, with even the lowest-ranked city markets receiving much higher "hold" recommendations than "sell."
Growing investor interest in German real estate may help offset recent problems experienced by German open-ended funds.
Substantial growth in CMBS issuance is forecast for 2006.
The growth of a real estate derivatives market in the UK has drawn interest from several major international banks.
The top five markets for overall investment are: 1) Paris, 2) London, 3) Helsinki (up from fifth in the previous year), 4) Madrid, and 5) Barcelona.
Top ranked cities for development prospects were Istanbul and Moscow (both fast-growing cities with a shortage of modern high-quality assets).
By property type, the sectors viewed as best in which to invest were retail parks and shopping centres. Hotels ranked third, rising from sixth place a year ago. Mixed-use properties, a new category, came in at a respectable fourth place. Warehouse, street retail, residential and city centre office rounded out the middle of the pack, while business parks/out-of-town office and manufacturing properties lagged.
The report is the third annual European edition of Emerging Trends in Real Estate Europe 2006. The version covering US real estate has been published for 27 years.
