EUROPE - Significantly more secondary assets will come onto the market this year as lenders begin to exert pressure on borrowers to sell, according to DTZ.
Nigel Almond, associate director of forecasting and strategy, said this week the result could be to increase pricing clarity in the market.
Despite a slight increase in sales by receivers in 2011, activity up to now has largely been the result of non-distressed deals.
"In a number of markets, there have been a lot of consensual sales, where the borrower is selling assets, but with pressure coming from the lender," Almond said.
"It's difficult to gauge, but private equity houses are likely to take assertive action, so more activity will come through."
Although DTZ has tracked limited distress in continental Europe, notably in Germany, the UK will account for most distressed assets.
In the meantime, non-European investors are taking advantage of weak European currencies to transact €6bn (20%) in deals, as European investors retreat to their domestic markets.
According to DTZ, the first sign that investors have been getting nervous is a drop in intra- regional investment to 16%.
Only France, with 33% growth, and Sweden and Norway, with strong growth year-on-year, have proven resilient in the downturn.
"There is a concern among investors that one or more European economies will default, and a fear of contagion," said Almond.
The result will be a mild recession in 2012, with negative growth in Italy and Spain, although growth elsewhere in mainland Europe will stave off a major pan-European recession.
Despite localised growth in central London and parts of Paris, he said rental growth would continue to be the main driver, with the strongest markets being Moscow, Warsaw and Bucharest.
Yet investment in Central and Eastern European markets perceived as core by investors just a few years ago declined by 40% in the fourth quarter last year as investors became more selective.
According to head of CEMEA research Magali Marton, Poland will see another year of strong economic growth, but investors should focus on the capital and central business districts in secondary markets.