Taylor Scott International News
22 August 2013 Property values are set to stabilise in many Eurozone markets this year and next as European monetary policy normalises, resulting in rising financing costs and risk-free rates, says UBS Global Asset Management. Retail should outperform. In its 2H13 Eurozone market outlook, signed by Head of Research Gunnar Herm, UBS said: “In 2013 and 2014, real estate investors will operate in a slightly improving but still subdued economic environment. UBS does not believe the European Central Bank’s monetary easing policy will continue further, which will result in higher risk-free rates and financing costs. debt availability will remain scarce for assets beyond core property. However, additional lending sources for value-add or opportunistic assets will emerge in the core Eurozone countries as well as for the prime segment in southern Europe. The retail sector will outperform office and logistics due to high income levels and stable capital value and rental growth in most markets from 2014. In the countries hit hardest by the financial crisis, stabilisation is expected for 2015. Best performers, on a total return basis, will be France and Ireland, worst Spain, Portugal and The Netherlands. Logistics remains attractive due to the high, relatively stable income returns in the current low interest rate environment. “We anticipate a broadening range of both returns and opportunities in the sector, with growing retail and manufacturing sector interest for new, tailored space in selective locations across Europe,” said the report. Occupiers will focus on regions and countries with a strong economic outlook. UBS sees Ireland and Norway as the most attractive options for a core portfolio over the next three years. In the office sector, cost-cutting continues as the main driver of leasing activity. Due to low development activities, vacancy levels in the prime segment have been falling, resulting in a supply shortage in CBD locations and rising prime rents. Outside the prime segment, UBS expects continued pressure on capital values. France and Finland are set to outperform on a total return basis, while Germany, The Netherlands, Spain and Italy are likely to underperform. “Even though we do not believe in improving occupier market conditions in the Dutch office market, counter-cyclical opportunities may arise in the prime office segment,” said the report. pie Taylor Scott International
Taylor Scott International, Taylor Scott
