Debt crisis dampens deal activity in Mediterranean region

The Mediterranean region continues to be off institutional investors’ radar screens as its largest economies accounted for less than EUR 500 mln of property investment in the first quarter of 2012.

A looming banking crisis in Spain, coupled with rising unemployment and borrowing rates have put a strain on the countries’ property investment market, dashing hopes of an imminent market recovery.

‘We believe 2012 will be a year of change and reorganisation,’ said Adolfo Ramírez-Escudero, head of CBRE’s Spanish office. ‘Although some investors are taking a closer look at Spain, especially those with an opportunistic approach, we do not expect activity to increase substantially this year. We might, however, see a rise in the number of sales by the banking sector,’ he added.

Spain’s financial sector is undergoing one of the biggest restructurings in history, with property lenders being forced to remove confiscated property assets from their balance sheets and place them in separate special purpose vehicles aimed at speeding up sales.

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