European commercial real estate still offers value, according to Knight Frank, with core property the agent’s main tip.
Delegates at the agent’s fourth annual European Breakfast in London today heard how European property is still below peak capital values. The case for investment across all major commercial real estate sectors “remains strong”, the advisory firm’s head of European capital markets, Andrew Sim, told attendees.
Recent uncertainty surrounding Ukraine and France, as well as the future of the UK ahead of Scotland’s independence referendum, was not to be ignored, however.
“Any uncertainty can only result in reduced liquidity,” Sim said. ”The euro-zone is a fragmented market – but that may not be such a bad thing.”
In a poll of attendees at this morning’s event, the office sector was still the most preferred investment target for those with a three-to-five-year hold strategy. More than one-third of respondents said the sector was their top pick. However, Knight Frank said the investment window for the sector was closing.
Most of the event’s audience chose Spain as the best place to invest, putting it almost level with the UK.
In a presentation on the Spanish market, Knight Frank country head, Humphrey White, said a recovery in employment figures was having an impact on take-up levels.
Spain, he said, had seen net office take-up improve for the first time in six years. Rents, he added, were also set to increase.
Institutional investors will continue to target European commercial real estate, with capital “waiting in the wings”, Sim said. It was, he added, “inevitable that investors will focus on new sectors in the future”.
While the focus for now is on the large amount of equity targeting real estate, there is the prospect of assets coming to the market in the near future. Sim said there were as many as 150 real estate funds with expiries in the next few years, resulting in increased disposal of properties.
