Gold Magazine April - May 2013, Issue 25 | страница 74

property

German cities
top commercial
real estate
investment
prospects

{economy}

Investors continue
to seek safe havens

erman cities dominate the
investment prospects for Europe’s commercial real estate
sector as investors continue
to favour safe haven locations
according to Emerging Trends
in Real Estate Europe 2013, a real estate forecast
published jointly by the Urban Land Institute
(ULI) and PwC. The ranking of 27 cities across
Europe, based on respondents’ expectations
for market performance in 2013, sees Munich
top the league table followed closely by Berlin
in second place and Hamburg in fifth position,
with investors taking comfort from each of the
cities’ strong local micro-economic climate and
resilient property market conditions.
London, which is seen by many as Europe’s
ultimate safe haven market, is the largest riser in
this year’s report taking third position. Investors
continue to be attracted by the size and liquidity
of its real estate market, the stability of sterling as
a currency and its ability to stand alone from the
rest of the UK and Europe’s economic issues.
Overall, the cities that are ranked highest are the
larger Western European centres with international appeal and better economic prospects. In
contrast, the worst performing cities were those
in countries at the heart of the eurozone crisis
or struggling to cope with the consequences of
the 2008 financial meltdown such as Athens,
Lisbon, Dublin, Madrid and Barcelona.
Approximately 80% of the respondents surveyed for the report believe that the eurozone
crisis has presented their own business with new
opportunities. However this relative optimism
is tempered by a general consensus that there
will be little improvement in the overall European economy or the region’s real estate market
during 2013. Survey participants were more
pessimistic about the outlook for cities’ property
markets than they have been since 2004 and
45% of the respondents expect capital values to
remain stagnant until 2017.
The report notes that the tempered optimism

is a result of real estate companies restructuring
their business over the past five years and now
beginning to deploy new strategies to profit
in challenging economic and property market
conditions. The top five European real estate
investment markets in 2013 are predicted to be
Munich, Berlin, London, Istanbul and Hamburg.
One of the areas causing the industry the most
concern is the availability of debt and the estimated £350-£600 billion lending gap caused by
the banks continuing to undertake a structural
reduction in commercial real estate lending.
The report shows that up to 43% of businesses
found it harder to secure debt during 2012,
with 56% of the industry expecting there to
be less debt available for refinancing and new
investment in 2013.
This pessimism is particularly felt in Portugal,
Greece and the Benelux countries although a
reduction in debt availability is also expected in
Spain, Italy and Turkey. In contrast, over 60%
of businesses in the UK expect an unchanged or
improved borrowing environment, even though
individual banks remain reluctant to act as sole
lenders on deals of more than £50 million.
The report outlines the following “best bets” for
2013:
Concentrate on value-added locations in key
cities - Core properties might be hard to find
but there are pockets in key cities that appeal to
dominant occupiers such as telecommunications, media and technology (TMT) firms and
creative enterprises.
Hunt for institutional-quality properties in
suspended animation - Banks are more willing
to release good assets in need of capital expenditure and clever asset management, before values
decline further.
Look for deals in Ireland and Spain - Develop relationships in the right places. Ireland may
be most accessible through lenders outside of
NAMA, while in Spain, now is the time to start
conversations with key players such as SAREB.

74 Gold the international investment, finance & professional services magazine of cyprus

The cities that are ranked
highest are the larger
Western European centres
with international appeal and
better economic prospects
Opportunities from buyers of distress - Buy
loans and properties out of larger portfolios
acquired by opportunity funds and use management expertise to increase income and value.
Follow the money - Europe is a key destination
for tourists from China and other emerging
markets and tailoring retail, hotels and leisure
investments for this spend can bring rewards.
Team up with a local player in a local market
- Find a company in a secondary city that can
provide intellig [