The decline of London in the ratings for new investment and concerns over lending have been highlighted in a European property report.
London’s ratings have declined for new investment, existing investment and development, a report by PwC and the Urban Land Institute has concluded.
Concerns over the difficulty of obtaining assets, strong competition and pricing on the brink of a bubble are cited in the 2012 report, “Emerging trends real estate Europe”.
Across Europe there are worries about the availability of financing this year. According to the report, 42% of lenders believe debt will be moderately less available than it was in 2011, and 52% believe it will be considerably less.
However, 65% of institutional investors think equity will be more moderately available.
Joe Montgomery, chief executive of ULI Europe, said: “We are operating in an environment that is very difficult to model. The uncertainty over the level of banks’ exposure to sovereign debt default, coupled with uncertainty over the regulatory changes introduced as a result, has caused significant elements of the capital markets to be reduced to a state of near paralysis.”
John Forbes, real estate partner at PwC and author of the report, added: “Debt will be the main story of 2012. There is general pessimism regarding the availability of debt this year, and lenders are the gloomiest of all.”
The report has recommended hospitals and data centres for longer-term non-core investment owing to their stable income stream. Budget hotels in London’s King’s Cross and Waterloo are recommended for short-term, non-core investment strategies.
Ireland and Turkey were the countries most optimistic about business confidence and profitability over the coming months, and least optimistic were the Czech Republic, France and Portugal.
joanna.bourke@estatesgazette.com
