European real estate will attract €50bn

The European commercial property market should attract billions in new equity during 2009, after valuations and investment volumes tumbled last year following a downturn in the real estate sector, research showed this week.

More than €50 billion (Dh249.5bn) in equity capital will target European commercial real estate in 2009, as institutions, sovereign wealth funds, and some German open- and closed-ended funds seek opportunities to enter the sharply discounted market, according to estimates from real estate broker Jones Lang LaSalle (JLL).

"Some markets like London, Paris and Madrid are well advanced in their market corrections and will no doubt attract increased investor interest if the fundamentals are judged to support the new price levels," said Nigel Roberts, JLL's chairman of European Research.

In the United Kingdom, investments in top-end Central London commercial properties plunged 65 per cent in 2008 to £6.8bn (Dh36.7bn) from 2007's record levels, a report from rival agent Cushman and Wakefield indicated, capping a dismal year where average values are likely to have fallen about 30 per cent.

Index provider Investment Property Databank is set to release the first indicative data measuring the total annual movement in commercial real estate values over 2008 on January 15.

"The positive news is that despite the lack of available credit from banks, yields, especially for short-dated income stream stock, have reacted sharply in fourth quarter," said Cushman's head of City investments, Bill Tyser, adding that some yields are approaching 10 per cent.

Meanwhile, property sales in Spain plummeted 27.7 per cent in October on a 12-month basis, data showed, in yet further bad news for the once-booming real estate sector.

There were 42,883 property transactions in October, compared to 59,320 in the same month last year.

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