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Catella: EUR 515 Bn global real estate capital knocking on Europe's door
"We see this large volume of capital changing the investment markets in Europe in the medium term." says Thomas Beyerle, Group Head of Research at Catella. "As capital spills over from traditional Europe investment centres London and Paris in the next 12 months, we expect to see increasing investment activity in Germany, the Nordics and Spain."
Catella's research indicates that cross-border activity between these markets will gain momentum and the investment markets become more increasingly international. Domestic investors will be challenged by the new investors attempting to enter these markets. The reasons why this large investment volume is targeted at the European market now are complex. It is not only thanks to the high liquidity provided by the FED and ECB, but also because of:
Poor performance of the bond and fixed income markets
Need for stabilized investments in the long run
Over-allocation from Asian fund managers into Europe's economies
Strong increase of Chinese investment capital into real estate in Europe and US
New targeting of Middle Eastern capital, especially sovereign wealth funds out of London and Paris
Slightly increased interest from US investors and private equity funds, and Canadian Pension funds
"While the figures seem dramatic and impressive, we expect about half of the capital to actually find its way into the markets in the end. The reasons are shortage of core segment properties, mismatched price expectations and complex regulations that hamper new funds' investment ability. Therefore, our forecast for 2014 is positive but cautious, predicting a European transaction volume of around EUR 215 Bn, which is slightly lower compared to 2007, but an increase of 53 percent compared to 2013." says Beyerle.
Catella provides high end market analysis products and services for the real estate market. We use our perspectives from the financial markets and experience from investment banking to create truly forward-looking research. Catella's research operations are led by Dr. Thomas Beyerle, Group Head of Research.
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