Marktbericht Europa Oct08

European real estate markets face a big challenge, contending with a credit crunch while the space markets are deteriorating

Executive Summary

• Europe’s economic outlook is deteriorating due to the breakdown of the global financial system.
  
• Bank lending is under renewed pressure, leading to uncertainty surrounding the fate of outstanding real estate debt. Investors are demanding greater transparency from fund managers.
  
• Cap rates are rising slowly across most of Europe, and property values are likely to fall for another year. Investors remain wary about buying assets.
  
• Public real estate firms garnered negative returns in the third quarter. Investors are looking for stability and greater transparency as the outlook weakens.
  
• Demand for space softened across the board in the second quarter, and sharper drops are anticipated in the office and retail sectors. Residential markets will continue to suffer at the hands of tighter mortgage markets.