DTZ: European property markets return to growth

Europe's real estate markets turned the corner last year, with invested stock increasing by 4% in marked contrast to the decline of 8% in 2009, according to DTZ's Money into Property 2011 report.

The rise in invested stock varied considerably across Europe, ranging from 1% in the UK to 11% in France. There was one notable area of decline, Portugal, Italy, Ireland, Greece and Spain (PIIGS) posted a 3% fall.

'Following two years of decline, Europe is returning to a more normal situation with an increase of its invested stock in 2010,' said Hans Vrensen, global head of Research at DTZ. 'We expect the region to continue this positive trend with a 4% increase in 2011.

The forecast rise is predominantly a result of capital value growth as some CEE markets are projected to re-price. On the other hand, the contribution to stock growth from the new development pipeline is modest in Europe, in contrast to Asia Pacific where construction is booming.'

Investment transaction volumes in Europe rose 64% in 2010, just below the global increase of 76%. Europe is forecast to continue to recover into 2011, with a 20% increase. This is expected to be the fastest regional increase as transaction volumes in Asia Pacific are expected to plateau.

The European debt funding gap stands at $118 bn over the next three years, a 6% reduction from DTZ's previous estimate. In Europe, the amount of equity available is 19% higher than the debt funding gap. Consequently, there is sufficient equity available to address the gap, the broker said. Globally DTZ estimates that $403 bn of equity is available for investment over the next three years, nearly double the $202 bn global debt funding gap over the same period.