|*Also includes Austria, Greece, Ireland and Switzerland.|
commercial property transactions hit €26.7bn in the first quarter (Q1) of 2011
as the investment market builds further momentum, according to the latest data
by CB Richard Ellis (CBRE). The value of 2 Irish deals in the period was €124.2m.
2011 activity constitutes a 26% increase in investment turnover compared to the
same period last year and is a higher quarterly total than any of the first
three quarters of 2010. The Q1 2011 activity did decline from Q4 2010’s total of
€38.6bn; however, a fall from Q4 to Q1 is expected as Q4 has traditionally seen
a strong surge of activity prior to year-end.
said that as was
the trend last year, the vast majority of investor demand is targeting core
assets and markets, which continues to drive yields further down, with the
latest CB Richard Ellis EU-15 Prime All Property Yield Index falling by 6 basis
points (bps) over Q1 2011 to 5.53%. This is a 26 bps - - basis points (0.26%)
fall year-on-year, and reflects aggressive competition for core product.
sentiment is starting to shift further along the risk curve, albeit very
selectively. There are two distinct dimensions of risk that investors are
starting to consider - - asset specific risk and market risk:
of taking additional asset risk, CBRE said those markets where economic and occupier
fundamentals are strongest are expected to benefit most. For example, Germany
has become an investment market hotspot with €5.5bn invested in Q1 2011,
particularly in the retail sector – which saw close to €4bn invested in Q1 2011,
already above the 2009 annual total. The UK (or more specifically London), and
to a lesser extent France and the Nordic regions, also fit into this category.
same time, there is also increasing investor interest in prime properties in
what are seen as riskier markets. These would include Spain, core Central and
Eastern Europe (CEE), and even first glimpses of interest in fringe CEE markets.
Hull, head of EMEA Capital Markets, CBRE, commented: “The growing influence
of institutional type capital in the direct European property investment market
is one of the key themes this year. Increasingly diverse in origin, from
Canadian pension funds to Middle and Far Eastern capital, it will continue to
support the core end of the European market This is prompting specialist
managers to look into more ‘value-add’ opportunities - a move we expect to see
more of this year.”
Marie Hunt, executive
director, CB Richard Ellis, Ireland, said: “The stalemate that is ongoing in
the Irish investment market at present in reaction to Government proposals to
retrospectively review rents in business leases, is clearly evident when you
consider the volume of investment trading in other European markets.
transactions amounting to €124.25m were signed in the Irish investment market in
the first three months of 2011 and it is unlikely this situation will change
until such time as the Government clear up the uncertainty on this issue. The
unfortunate outcome is that many of the international buyers that are active in
other European jurisdictions and who can see opportunities to purchase
investments in the Irish market, will not invest here until there is clarity.
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