LaSalle predicts 2010 will be a better year for property investment

LaSalle Investment Management has said 2010 is likely to be reasonably promising for real estate investment across most of the world's markets. The prediction is contained in the 16th edition of LaSalle's Investment Strategy Annual, a survey of, and outlook for, the global real estate markets in 2010.

LaSalle's report notes that the free-fall in values has stopped in nearly all the major markets it follows and the early stages of restored investor confidence have begun. The market is already seeing improved visibility on pricing and rising transaction volumes.

In 2010, LaSalle expects to see a further re-alignment in the pricing of risk with deal flow increasing modestly as sellers gradually come out of denial. LaSalle says investors should seek an appropriate balance between total risk aversion, which is already leading to a surplus of capital targeting a handful of ultra-safe deals and inappropriate risk tolerance in a period of economic uncertainty.

Commenting on the report, Jacques Gordon, Global Strategist at LaSalle Investment Management said: 'Overall, investors in commercial real estate should be cautiously optimistic about the outlook in 2010.

'However, as a late cycle participant in the general economic recovery, real estate will behave differently from other asset classes. The income streams from leased buildings weathered the global recession in remarkably good shape, but as leases mature in generally weak markets, net operating income will be under downward pressure in many countries for several years to come. '

Looking at the major commercial real estate markets of the world, the report’s authors observe that while they may have fallen together during the peak of the credit crisis, they are recovering in very different and surprising ways. In the UK for example, LaSalle notes the sharp rebound in prices and says that, while capital values will still increase, it is now clear that the best opportunities in the UK have passed.

In Continental Europe the investment environment continues to vary considerably: France and Germany are set to see most of the investment activity in 2010 while re-pricing in other countries continues at varying speeds and Central Eastern Europe continues to be paralysed.