INTERVIEW: 'Market fundamentals more comfortable than in 2007'

The fundamentals of the European real estate market are much sounder than during the boom years of 2006-2007, according to Martin Samworth, CBRE's CEO of EMEA.

‘It’s not 2007,’ he said in an interview with PropertyEU. ‘The market feels very different. If you look at the capital stack, we’re seeing a much higher proportion of equity going into acquisitions and more balanced investment strategies generally.'

There are other differences with the boom years, he added. 'In the coming year, there’s a strong likelihood that there will be an increase in occupier activity and we’re seeing little oversupply in many CBD locations. We’re at a different point in the cycle. In 2007, I was already beginning to feel uncomfortable before the downturn hit. If I look back, I think I was already starting to feel uncomfortable from June or September 2006. Nobody knew then what would tip it over the edge, but it was already clear that the debt-equity ratios weren’t sustainable. We’re now in a much more balanced environment.
We’re seeing much better risk management and we’re seeing some economic recovery, even if it is patchy in the regions. Poland, for example, didn’t even have a recession and sentiment in Spain has now changed fundamentally.’

Some fundamentals are still concerning, Samworth conceded, pointing to the high level of unemployment in Spain. ‘France is later coming out of the cycle, but we will see positive momentum in the coming year. The economy is gradually improving and investors are not running ahead of themselves. We’re seeing a measured and sustainable rate of growth, which is a key difference (to 2007).’

European real estate is definitely still in favour, he said. ‘In terms of sentiment, our talks with clients and research all show a very strong appetite for commercial real estate in Europe. The fundamentals for real estate as an asset class are sound and running yields remain attractive relative to other asset classes. This is a good time for real estate. We’re seeing an improving debt environment, low interest rates and a sustained flow of international capital.’

See also the full interview in the link below

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Read more about CBRE's activities and those of its peers last year in PropertyEU's Top Brokers report published in the March edition of our magazine