New funding sources to boost investment in 2011
As MIPIM continues, new research is coming thick and fast from the major property advisory companies. Cushman & Wakefield has published its giant Global Investment Atlas 2011, which forecasts that worldwide investment will rise just 5%-10% this year after a 42% leap in 2010. Jones Lang LaSalle in its European Capital Markets Bulletin expects direct investment in European commercial property to grow 30% in 2011 from the EUR 102bn transacted last year, saying that liquidity has returned to the market in the form of private and institutional investors. “A lack of prime product and improving rental prospects will encourage investors to broaden their horizons and consider higher risk and return profiles this year,” it adds.
Jones Lang LaSalle has also investigated the European distributing warehousing market in its European Industrial Markets Spring 2011 survey, noting that investment volumes in this area were up 28% at EUR8bn last year – less than the 45% increase it calculates was recorded across all direct European commercial property investment, due to a lack of available prime industrial assets. Occupier take-up was at its highest for a decade in 2010 with European occupier take-up for large distribution warehousing units at 14.6m sq metres, which was 30% ahead of 2009. Although the ongoing lack of finance curtailed speculative development activity, JLL thinks that the shrinking level of supply and the increasing availability of funding should encourage the first speculative development schemes this year.
The availability of finance was again the hot topic at this morning’s breakfast summit hosted by the British Property Federation and Jones Lang LaSalle as part of the UK Country of Honour programme. Delegates heard that greater partnership working – between banks, developers and local authorities – would be needed to kick-start growth in many regional markets, the BPF noted.
British Land chief executive Chris Grigg said: “The key question for all property companies, while banks remain cautious over lending, is whether or not they have the balance sheet strength to commit to development projects. Many financially strong property companies have already committed to significant development programmes.”
“If we look beyond London, planning restrictions are certainly limiting development, particularly in out of town retail, but extension and repositioning are still providing opportunities. At British Land we are seeing occupiers increasingly ready to commit to good space in good locations, and as this tenant confidence returns we hope banks will increase their exposure to the sector and to development.”
Today Nouriel Roubini is to give the keynote address at MIPIM, focusing on the implications of the global economic outlook for the property industry.
