The transaction market began 2011 with gusto but the ongoing debt crisis has gradually whittled away at investor confidence and cast a shadow over H2.
The transaction market began 2011 with gusto but the ongoing debt crisis has gradually whittled away at investor confidence and cast a shadow over H2.
The multi-million-euro question hanging over the European real estate investment market is whether the upswing in investment seen in the first six months of 2011 can be extended into the second half or whether the brittle recovery will falter in the face of renewed debt fears and macroeconomic uncertainties.
How successful the second half will be depends on the economy and how the global crisis develops, according to Giles Wilcox, head of cross-border investment at Savills. ‘There’s a great deal of uncertainty and it’s pretty difficult to predict how the market will develop. If the market continues to turn southwards, investors will no doubt become more cautious. The next two to three months will be quite critical.’ Wilcox said, however, that until the summer, things were looking good. ‘There’s still a lot of equity out there and incredible investor appetite. Savills has been packaging a substantial amount of product for the second half and the intent to do deals is certainly there.’
Even if the crisis deepens, there will be a continued focus on good-quality products in prime locations, Wilcox noted. ‘The gap between the European periphery countries like Greece, Spain, Portugal and Ireland on the one hand and the core countries such as the UK, France and Germany on the other will widen further.’
The first half was very much a game of two halves: the first quarter was above-average until the growing uncertainty triggered by the expanding sovereign debt crisis began to queer the pitch and cause investment growth to stall in Q2. Various research reports put the total volume at a disappointing EUR 24 bn. The UK - in particular London where a wide range of foreign investors and local REITS have been piling in since the start of the year - began to lag.
However, there were some bright spots, including Germany, the Nordics and Central and Eastern Europe. The full analysis appears in the September issue of PropertyEU. Click on the following link to subscribe:
