Commercial property transactions in the EMEA region rallied in late 2012 as it stabilised in 4Q12 after its mid-year malaise to post the highest quarterly volume since 2007 at €43.7bn, said realtor Cushman & Wakefield. A broader recovery should gain momentum this year, boosting volumes 5%-6% to €141bn.
While the annual volume ended only a marginal 1.5% higher than 2011 at €133.8bn, C&W predicts that recovery will start to gain momentum in 2013. Improvements in economic stability and investor confidence will drive further increases against a backdrop of increasing divergence, with some markets seeing strong demand and robust performance as others stagnate.
C&W Head of European Research David Hutchings commented: “Risks obviously remain high in much of the region but underlying economic stability has improved and even with a fragile recovery on the cards, this should set the scene for improved confidence in 2013. Property is well priced to attract buyers when the real but secure nature of its performance is considered." The realtor is forecasting a further increase in trading activity, with increased bank sales and a somewhat more relaxed debt market pushing volumes up 5%-6% to €141bn.
Investors are again heavily focused on core, larger liquid markets – although over the year market share in France, the UK and Germany slipped slightly. The Nordics gained ground, with Finland (up 98%) and Norway (up 59%) the most dynamic. The Netherlands and Luxembourg slipped but Switzerland trebled deal volumes sparked by bank sales. The main losers were closely correlated with macro risk: Greece, Ireland, Italy, Portugal and Spain saw a 26% fall in activity, taking their market share down to just 3.8% versus a 10-year average of 11%. The Middle East and South Africa fared poorly, with a near 70% drop in volumes. "Increased corporate and commodity investment could promise a major change in the region’s standing in the long term but political stability must be secured," C&W said.
Foreign investors remained the most dynamic across EMEA, with a broad range of players from China and other parts of Asia, the Mid East, Europe and North America. By sector, offices were the main winner, with volumes rising 5.6% while industrial fell 9.9% and retail 21.9%. C&W predicts that 2013 is set to see a continuation of many of the trends under way late last year, with the relatively good property yields stoking demand for secure, quality assets and markets and a slow improvement in sentiment. Debt and stock shortages will again hold back the market however. While debt remains a barrier to activity, this factor is abating.
Michael Rhydderch, C&W Head of European Capital Markets, said: “The supply of investment stock generally is likely to improve meanwhile as banks increasingly release legacy assets through loan and real asset sales. Although we do anticipate more buyers going up the risk curve in 2013, core markets and strategies are likely to dominate again. Germany in particular will remain a top pick for most investors... London is also likely to benefit from the safety-first attitude, while Paris will stand out as a long-term liquid target for many.”
He said Turkey and Russia are looking good value for those with an appetite for risk and will benefit from their size. In central Europe, tighter pricing and a slowing in economic growth mean buyers need to be more imaginative to find opportunities in Poland. "Even though recessions are lingering in the Czech Republic and Hungary, re-pricing has taken place and hence some interesting opportunities are likely as funds and banks restructure”. By sector offices are likely to outperform in the short term but logistics looks well priced given the increased importance the best space has for retailers and distributors. pie
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