Aberdeen poised to pick at distressed assets

Government efforts to kick-start the global financial sector are encouraging, but the credit squeeze will definitely last this year through 2009, according to Alessandro Bronda, head of investment strategy at Aberdeen Property Investors.

'The main problem is to restore confidence in bank lending,' Bronda told PropertyEU’s Web TV unit at Barcelona Meeting Point. 'An economy can't function without a working finance sector. Government bailouts are encouraging, and interest rate cuts will help to resolve the financial crisis. But it will take time. No one knows how long it will last but will definitely last this year and next.'

The real estate sectors in Ireland, the UK and Spain, which were the most over-valued in July 2007 when the credit crisis began, have been hardest hit by the crisis, Bronda said. Yields in these markets, he said, had reached 'very, very low levels'. In Western European, the property in the Germanic markets, Luxembourg and Belgium has weathered the crisis much better in the last 15 months as the rate of yield decompression in these countries was much lower.

Bronda said he expected distressed owners who are struggling to refinance their borrowings to put 'lots' of assets on the market over the next few months. 'These will be especially attractive for equity investors and investors like ourselves who use moderate levels of leverage.'

Click on the link below to watch the interview.