Investors could offload €472bn of overdue assets – DTZ

DTZ has estimated that €472bn of European real estate could come onto the market as investors have held onto assets for longer than normal.

The company has analysed more than 37,000 transactions since 2000 and found that assets are held for an average of 6.5 years.

“We estimate that more than €470bn of assets have been held beyond the average and could therefore become available to the market,” said Nigel Almond, head of capital markets research at DTZ.

Almond said this was especially likely because two-thirds of these assets were being held by unlisted funds and private funds, both of which tend to use shorter holding periods.

Unlisted funds, which dominate trading across Europe, and private investors have holding periods of 6.25 and 6 years, respectively, while institutional investors hold for 7.25 years on average.

DTZ said many unlisted funds and private investors will have spotted opportunities to re-trade relatively quickly.

Magali Marton, head of EMEA research at DTZ, said: “Of those assets acquired in 2003, 18% have since been re-traded with an average price increase of 21%. Of those acquired in 2007, just 8% have since re-sold, averaging a loss of 18%. The market events of recent years could have extended the hold periods for some investors.”

The research showed variations across Europe in the length of holding periods, ranging from 4.5 years in the Nordics, reflecting shorter lease lengths, to 7.75 years across the Benelux region.

Longer, upward-only leases mean UK investors’ average hold period is 7.25 years, more than the 6-year average for continental Europe.

“There is also a relatively higher proportion of assets in the UK reflecting the longer hold periods and the higher share of trading in the UK over 2000-2004,” said Almond.

“This should provide more than sufficient opportunities for investors to unlock as the weight of capital chasing CRE remains at record levels and with European volumes set to surpass €210bn in 2015.”