Ernst & Young: 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 macroeconomic environment 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.
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 expectations around financing of real estate transactions.
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.
Key findings:
• 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
Source: Ernst & Young
This article is also available in: Romanian
This post is also available in: Romanian
