As the European debt crisis plunges back into calamity on the back of Greece’s surprise decision to hold a referendum on proposed austerity measures, powerhouses France and Germany have continued their efforts to manage the crisis during this week’s G20 summit. Euro scepticism within the UK appears to be taking a hold, with calls for a referendum on whether the UK should pull out of the European Union. In spite of all of this, a report from Cushman & Wakefield shows a marked increase in trading volumes in European property investment.
In view of the Greek decision, Cameron’s attempts to keep calls for a referendum on the UK’s policy on the European Union at bay will no doubt prove more difficult. Urban Exposure’s Randeesh Sandhu comments: “the implications of Greece returning a no vote would be profound, and the fallout felt across Global markets, this would take the debate wide open in the UK”.
But despite fragility across EU economies and the unity of the European Union currently at an all-time low, investment volumes within the Eurozone have, surprisingly, demonstrated an increase: recorded at €28.8 billion.
The latest figures from commercial real estate brokers and consultants Cushman & Wakefield show a marked rise in the proportion of international buyers, with trading volumes up across European property investment markets, reportedly by as much as 5% on the previous quarter, with a 12.3% rise in the last year, demonstrating that values are stable, despite general speculation that ‘the bubble will burst’, markets have remained resilient.
According to the head of European Capital Markets at Cushman & Wakefield, Michael Rhydderch, commercial property in particular is proving a particularly lucrative investment class:
“If anything, property has a growing level of appeal to many buyers in today’s environment…popular wisdom will tell you that we have seen a flight to quality focusing on core markets, but in reality it is not that black and white. Investors are clearly very discerning but many are looking for value, not just low risk”.
According to Rhydderch, the study found that, unsurprisingly given the economic climate, one of the key factors for investors is risk avoidance; and that it has a knock on effect when it comes to the way a deal will be managed; often dictating what markets investors will be drawn to, how expediently they will take action to secure an investment, and in particular how a deal will be financed.
The research conducted by Cushman & Wakefield also revealed that key players demonstrating market growth in Q3 of this year within the Eurozone are France and Switzerland, but also the Czech Republic, Poland, Hungary and Slovakia, as international investors start acting within Central Europe.
Urban Exposure’s Randeesh Sandhu comments, “A few years ago we operated extensively throughout Eastern Europe. Investment in these countries is unsurprising given the strength of their economies, most of which have broadly avoided recession and continue to demonstrate strong economic growth in direct contrast to their Western European counterparts.”
Above all, it has emerged from Cushman & Wakefield’s findings that integral to the market buoyancy seen in this third quarter, are foreign buyers. In Q1 and Q2 of this year international players represented 34% and 35% of the market respectively; Q3 saw this increase substantially, now up to 40% and expected to be even higher before the year is out.
Find out more about Randeesh Sandhu and Urban Exposure here: http://www.urbanexposureuk.com/en/expertise/key-people/