BNP predicts recovery in European market
A recovery in the European commercial property market is predicted for this year by international property experts BNP Paribas Real Estate.
Its executive chairman, Peter Rosler, indicated that investment transactions across Europe could increase by between 20 and 30pc.
BNP Paribas also expects that German funds will be a key player in this recovery. Already this German activity has been reflected in a number of Irish-related deals, as Ballymore Properties sold its 1 Snowhill office in Birmingham to Commerz Real for a gross price of £126m (€143.2m), reflecting a yield of 6.2pc.
Another German fund, DEKA, purchased the Tommy Hilfiger store in Grafton Street, Dublin, a few months ago for around €25m.
In 2009 Commerz Real made four acquisitions totalling €250m and has indicated that its open ended funds, special funds and closed funds will look to continue investment at a similar level as long as the occupational market continues to improve.
Commerz Real has also indicated that it will aim to invest €300m in France in 2010 across the office, logistics and hotel sectors.
Speaking at BNP Paribas Real Estate's annual property presentation in Paris, Patrick Curran, managing director, BNP Paribas Real Estate Ireland, said the price correction that occurred in all European markets was allowing investors to come back into the markets in order to catch opportunities.
"Moreover, deals larger than €40m are being closed again more frequently, showing that investors are able to get access to credit more easily."
Acknowledging that the recovery trend was not evident in all European markets including Ireland, BNP Paribas RE said that Europe would continue to see some difficult months ahead.
Nevertheless, it points out that office take-up activity has regained momentum. "This trend can be explained by large deals that fuelled a market which had registered very low levels during the first three quarters of 2009."
The French market experienced a further increase in investment over the fourth quarter of 2009, when €3.5bn was invested in real estate.
This brought total investment in 2009 in the French market to €8.4bn -- a drop of 44pc compared to 2008. The subsidiary of one of France's biggest bank is also forecasting that investment in French commercial property this year could reach €10bn.
However, there were warnings that there could be a shortage of prime stock available on the market.
Jean Claude Dubois, president of real estate valuation, France, for BNP Paribas Real Estate, said: "There will be very few willing sellers of core product in 2010. As a result we will see a measured approach to risk taking by buyers."