01. Juni 2010 
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Now is the right time to buy in Europe
The Czech Republic is classified as a warm market in the office and industrial sectors offering price levels at Fair Value, where investors can expect to earn adequate risk-adjusted returns. The Czech retail market is classified as a hot investment market with prices below Fair value offering a very attractive yield relative to other prime European retail assets. Retail Investors can expect to earn excess risk-adjusted returns in the Czech Republic.
Tony McGough, Global Head of Forecasting & Strategy Research at DTZ, comments: “What a difference a year makes. This time last year we recommended investors to wait on the sidelines as almost all commercial property markets worldwide were traded at prices above their fair value. This year, following a marked repricing of the market, our research shows that there has seldom been a better time to invest in prime commercial real estate.”
In Europe, 87 per cent of markets are at or below fair value, up from 20 per cent a year ago. Magali Marton commented: “Based on our forecasts, it is now the right time to buy in Europe, especially in Belgium, France and Germany. Retail is the most attractive sector with a wide spread of markets offering opportunities, including some countries in Central and Eastern Europe.”
DTZ predicts that buying opportunities for prime stock globally will be limited in 2010. It recommends that investors who are not confined to the domestic market seek opportunities in Continental Europe and Asia Pacific where there are more opportunities to purchase prime real estate.
Overall, DTZ’s positive outlook is reinforced by its Investor and Lender surveys which both reveal an increase in confidence for 2010 and 2011. Two-thirds of lenders are expecting to increase gross new lending in 2010 and 2011, and no respondents expect to reduce lending to the commercial real estate sector over this period. This is a marked improvement on sentiment last year when half the lenders expected that they will be decreasing gross lending volumes in 2010. DTZ’s Investor survey demonstrates rising confidence: 76 per cent expect to increase their own net investments into commercial real estate in 2010, rising to 94 per cent in 2011.
The improvement in investor and lender sentiment is supported by DTZ Research’s analysis of the funding environment. The legacy debt issue is not as big a problem as originally feared as there is sufficient new equity capital available globally. In particular, there is deal-specific evidence of new equity being put in place and DTZ Research expects increased pressure on both debt and equity to further accelerate this process.
Tony McGough, Global Head of Forecasting & Strategy Research at DTZ, comments: “What a difference a year makes. This time last year we recommended investors to wait on the sidelines as almost all commercial property markets worldwide were traded at prices above their fair value. This year, following a marked repricing of the market, our research shows that there has seldom been a better time to invest in prime commercial real estate.”
In Europe, 87 per cent of markets are at or below fair value, up from 20 per cent a year ago. Magali Marton commented: “Based on our forecasts, it is now the right time to buy in Europe, especially in Belgium, France and Germany. Retail is the most attractive sector with a wide spread of markets offering opportunities, including some countries in Central and Eastern Europe.”
DTZ predicts that buying opportunities for prime stock globally will be limited in 2010. It recommends that investors who are not confined to the domestic market seek opportunities in Continental Europe and Asia Pacific where there are more opportunities to purchase prime real estate.
Overall, DTZ’s positive outlook is reinforced by its Investor and Lender surveys which both reveal an increase in confidence for 2010 and 2011. Two-thirds of lenders are expecting to increase gross new lending in 2010 and 2011, and no respondents expect to reduce lending to the commercial real estate sector over this period. This is a marked improvement on sentiment last year when half the lenders expected that they will be decreasing gross lending volumes in 2010. DTZ’s Investor survey demonstrates rising confidence: 76 per cent expect to increase their own net investments into commercial real estate in 2010, rising to 94 per cent in 2011.
The improvement in investor and lender sentiment is supported by DTZ Research’s analysis of the funding environment. The legacy debt issue is not as big a problem as originally feared as there is sufficient new equity capital available globally. In particular, there is deal-specific evidence of new equity being put in place and DTZ Research expects increased pressure on both debt and equity to further accelerate this process.
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