PRN: Europe's Economic Crisis has Left Real Estate Investment and Development in Limbo - Little Relief Expected In 2012: Emerging Trends Real Estate® Europe
PRN: Europe's Economic Crisis has Left Real Estate Investment and Development in Limbo - Little Relief Expected In 2012: Emerging Trends Real Estate® Europe.
Europe's Economic Crisis has Left Real Estate Investment and Development in Limbo - Little Relief Expected In 2012: Emerging Trends Real EstateÂ® Europe
PARIS, January 27, 2012 /PRNewswire/ --
An economic crisis has left the European real estate industry in limbo, with preferred markets chosen more on their potential as safe havens than high-growth hubs, and with highly specialised non-core investments gaining attention as alternatives to traditional property types, according to Emerging Trends in Real EstateÂ® Europe 2012, the annual industry forecast published by PwC and the Urban Land Institute (ULI).
The report says that the prospects for any turnaround this year hinge on how recent regulatory measures will affect banks' willingness to make commercial loans, and whether another financial industry collapse caused by sovereign debt issues ultimately triggers a widespread release of assets by banks to investors.
2012 marks the beginning of an era that will be defined by more negatives than positives in its early years, says Emerging Trends, which includes interviews with and surveys of more than 600 leading commercial property professionals across Europe. It predicts that this year, property financing will become a major casualty of the measures banks take to tackle regulatory and macro-economic pressures; deleveraging will not free up capital for fresh property lending; debt will become more short-term and expensive; and the need to find alternative sources of funding will become imperative.
Joe Montgomery, chief executive of ULI Europe, said:
"The profound instability is affecting the providers of equity and debt. We are operating in an environment that is very difficult to model. The uncertainty over the level of banks' exposure to sovereign debt default, coupled with uncertainty over the regulatory changes introduced as a result, has caused significant elements of the capital markets to be reduced to a state of near paralysis."
John Forbes, real estate partner at PwC and author of the report, said:
"Debt will be the main story of 2012.Â There is general pessimism regarding the availability of debt this year, and significantly lenders are the gloomiest of all.Â
"A mere 6% of lenders believe that debt will be as available as it was in 2011, with 42% believing that it will be moderately less available and 52% believing that it will be substantially less.Â This will be a huge challenge for many, but will create opportunities for others, in particular equity investors less reliant on debt, those who are able to take advantage of the opportunities from bank deleveraging and new debt providers entering the market.Â
"The good news is that the view of respondents regarding the availability of equity is much more positive. Most promising is the response from institutional investors: 65% believe that equity will be moderately more available, with a further 10% believing that equity would be substantially more available."
Emerging Trends says that 2012 is about finding new opportunities in both longer-term and short-term non-core investments.
Recommendations for longer-term non-core investments include:
Recommendations for short-term, non-core investment strategies include:
This year, the report predicts, investors will continue to eschew a strategic focus on whole countries, cities or sectors in favour of asset-led, deal-by-deal approaches. "Nowhere is considered a 'must buy,' today," it says.
Values posted for European cities "could hardly be described as electric," it notes, with over half the cities recording a lower investment score than last year, including major markets such as London, Frankfurt, Copenhagen, Madrid and Rome. The top-ranked cities in the survey tend to be either in western or northern Europe, or growing regions to the east. The top five markets are:
In addition to Istanbul holding firm as the top investment and development market, the report highlights other trends:
Respondents from Ireland ("Irish interviewees believe their economy is through the worst") and Turkey were the most optimistic about business confidence and profitability over the coming months. Least optimistic were respondents from the Czech Republic, France and Portugal.
To download a copy of theÂ Emerging Trends in Real EstateÂ® Europe 2012Â Â report,Â click here.Â
Notes for editors
About the Urban Land Institute
The Urban Land Institute (http://www.uli.org) is a nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide. Established in 1936, the Institute has nearly 30,000 members representing all aspects of land use and development disciplines.
PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 163,000 people in 151 countries in firms across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See pwc.com for more information.
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