Direct investment in commercial real estate in Europe for 2008 will likely come to EUR 105-110 bn, down 55% on volumes recorded for 2007. The lower figure for 2008 is partially due to a decline in capital values and volatile foreign exchange rates, Jones Lang LaSalle has said.
Direct investment in commercial real estate in Europe for 2008 will likely come to EUR 105-110 bn, down 55% on volumes recorded for 2007. The lower figure for 2008 is partially due to a decline in capital values and volatile foreign exchange rates, Jones Lang LaSalle has said.
In a new report, the broker noted investment activity had already slowed in the first half of 2008, but the situation got worse following the collapse of Lehman Brothers in September. Volumes for European direct real estate transactions in the fourth quarter - traditionally the strongest quarter of the year - are estimated at EUR 16 bn. JLL said this is a 30% fall in transaction volumes from the previous quarter.
Tony Horrell, Head of Capital Markets at Jones Lang LaSalle, said: 'The volumes in 2008 are no surprise to those close to the market given the situation in global financial markets, the wider economic slowdown and investor confidence levels. Although we believe that we are through the worst, investment activity will remain low in the early part of next year.'
Significant changes to global debt markets have fundamentally altered the dynamics of direct real estate investment. 'Through 2008 we saw a reduction in activity from all types of investors including institutional investors and listed property companies, German open-ended funds together with a more cautious attitude from both international wealth capital and private equity investors,' he said.
The impact of falling investment volumes has been Europe-wide, but most pronounced in the UK, Germany and France, where volumes fell by 60% to around EUR 60bn, according to the report.
