As one door shuts, another opens. Ernst & Young European real estate assets investment indicator 2012
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8 Februarie 2012 |
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ERNST & YOUNG S.R.L. |
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About this report
Ernst & Young’s European real estate assets investment indicator is based on a forward looking survey of executives from organizations across Europe who invest capital in real estate assets. Opinions were canvased in December 2011 by Ernst & Young and the Economist Intelligence Unit (EIU).
This report summarizes investors’ outlook on transactions and opinions on market attractiveness, together with insight into the drivers of these views and expectationsaround financing of real estate transactions.
Further details of individual markets, transaction pricing and asset classes may be obtained through the contacts listed on page 8.
This report is based on a survey of 534 real estate investors including selected Ernst & Young clients and regular EIU contributors. Participants were based in 12 countries: Austria, Belgium, France, Germany, Luxembourg, Netherlands, Poland, Russia, Spain, Sweden, Switzerland and the UK.
As one door shuts, another opens
The future has never been certain, but today it is less than clear, even for an asset class “as safe as houses”. While real estate asset transaction volumes might not increase across Europe in 2012, there are positive signs in a number of markets. The greater question is, however, around the financing of real estate investments. As the door to bank finance could partially shut, another might open from certain “alternative” sources.
Investors in real estate assets have different objectives and priorities. Attitudes vary with respect to risk, to capital growth versus income and to asset class and quality. But there appears to be consensus on the development of the macroeconomicenvironment amongst the more than 500 European investors in real estate assets we surveyed in late 2011. A clear majority of respondents are fearful of ongoing instability in the Eurozone. The present uncertainty is seen as likely to cause delays in real estate investment, financing, construction and occupation.
While there are commonalities in the views of the investors surveyed, one striking finding of this report is the range of investment attitudes, objectives and priorities across Europe. Though it might not surprise that views differ between mature and emerging markets, it might surprise that there are even differences in investor appetites between markets such as Germany, Sweden and Switzerland.
There is, however, agreement amongst investors around the change in financing of real estate asset investments. The respondents predict a shift from traditional bank lending to other sources of capital. Whether these are insurers, the equity markets or tradable securities varies across Europe.
Key findings
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Outlook for transactions in real estate assets differs by country
Market attractiveness high across Europe
Impact of inflation on real estate investment will vary across the region
The Eurozone crisis is likely to adversely impact activity in many markets
Little consensus on outlook for commercial mortgage–backed securities
Equity financing market expected to open more widely in 2012
Insurers to increase volume of debt financing for real estate transactions
Banks expected to partially reduce mortgage lending
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Market outlook
After a period of calm during mid-2011, the sovereign debt crisis in the Eurozone led to renewed capital markets volatility. This was compounded by weak economic data in a number of key markets. Real estate investment is particularly affected by these factors. Our survey of European investors therefore poses the question “What does 2012 hold for the real estate markets?”. Respondents to our survey offer an insight into likely transaction trends for 2012 and beyond.
Transaction outlook differs by country
Across Europe, forty percent of all respondents expect improvement in activity levels in 2012, while a similar number disagree. There is significant variance in expectations between countries. Approximately 55% of investors in Germany, France and Luxembourg expect a recovery in volumes, whereas almost 60% in Belgium and Switzerland take the opposite view. Such disparity in investors’ views across locations demonstrates the substantial differences between local markets, and the need for investors to treat real estate assets on a country–by–country basis, ratherthan regionally. Further insight into which categories of real estate assets are likely to be in demand in 2012, and the pricing of these on an intra–country basis was obtained through the survey and is available on request.
