Global markets at recovery inflection point: ING REIM

The recovery in global real estate markets is playing out rapidly in 2010, faster than forecast at the end of last year, and has now reached a crucial inflection point in terms of sustaining momentum, ING Real Estate Investment Management (ING REIM) has said in its latest Global Vision Update research report.

Timothy Bellman, global head of Research & Strategy at ING REIM said: 'There have been clear signs of markets for prime properties stabilising and recovering in the first five months of the year. They're doing better than we expected in our Global Vision annual strategy paper at the end of 2009, but are now reaching a crucial turning point for the upside. Our analysis suggests that real estate values are not yet being affected by the sovereign debt problems in Europe and we think investors may see returns at the upper end of their expectations in the next few years.'

Bellman added that following the greatest global financial and economic crisis since the 1930s, it is axiomatic that any market outlook will be hedged with a fair degree of risk and uncertainty. A specific risk for real estate investment is the scale of market debt that needs to be refinanced over the coming years.

Against this background, ING REIM believes real estate investors with a low appetite for risk will want to continue to focus on the retail and industrial sectors, which tend to exhibit more stable returns in a downturn and to outperform in the early stages of the recovery. However, the latest Global Vision forecasts show a recovery in office markets sooner, and a little stronger, than previously projected.

In Europe, the UK property market is bouncing back, albeit with some doubts about the sustainability of the pace of the recovery. Elsewhere in Continental Europe, the sovereign debt crisis means the economic outlook seems less certain than it did a few months ago, although certain markets such as France are recovering and prime yields are showing signs of stabilisation and rebound.