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Ernst & Young conducted a European-wide survey among 550 real estate investors from twelve countries, focusing on a general market assessment for the coming year and an analysis of the strategies pursued. The dominant groups which participated in the study included real estate service firms and real estate investment trusts (“REITs”), as well as institutional investors, pension funds, private property companies and diversified funds. The survey has been conducted for several years and been extended to incorporate the Luxembourg market in 2012.

Optimism rather than crisis

“Although a majority of players expect a decrease in Europe-wide M&A and transaction activity as a result of the Euro crisis, the outlook for the Luxembourg market is much more appealing, especially for office buildings in prime locations” comments Armin Tscheu, Manager within the Real Estate Advisory practice of Ernst & Young Luxembourg. “Investors predominantly perceive the national market as attractive or very attractive in comparison with other European countries, placing it in the top tier group of the survey, only beaten by Germany, Sweden and Austria.”

Increasing role of green building standards

According to 85% of respondents, green building standards will play a more important role in the future, equal measure for new and existing real estate. Going forward it will become increasingly important to assess the impact Compliance with green building standards has on property values.

Most active vendor and buyer groups and their investment targets “The market expects REITs, residential real estate companies, banks and Private Equity funds to be the most active seller groups and insurance companies to be the least”, says Philipp Schüwer, Manager in the Real Estate Advisory practice of Ernst & Young Luxembourg. Residential real estate companies, open-ended funds and other international funds are likely to be the predominant buyer groups. It is expected that retail and residential properties will have increased investor focus, while assets in logistics and hotels may be considered more niche investments. “The biggest impediment to deal flow”, Schüwer adds, “will be the availability of senior debt funds and, to a lesser extent, the price mismatch between buyers and sellers.”

Europe is exercising restraint

Uncertainty about the economic stability and the lack of transaction opportunities at attractive
prices resulted in respondents assessing their locations as less attractive. The majority of survey participants expect a decline in transaction volume despite fears of increased Inflation that historically has buoyed real estate investment. Only in France do market players anticipate an increase in transactions for 2012.

The Survey
 

(Source: Ernst & Young )

Fichiers liés: 

Ernst & Young European real estate assets investment indicator 2012