Risk aversion drives the market

In its latest publication European Market in Minutes international real estate advisor Savillis notices that the investment market is driven by private investors interested in product that pose little risk and are on the best markets.

According to Savills, international real estate advisor, investment activity in 2013 in Europe will still be mostly stimulated by private investors who look for the best little risk products on the markets such as Great Britain, France, Germany and Scandinavia. This is related to keeping  capitalization rates of best estates stable. In the case of the office spaces they amount to 5.7%.

Lydia Brissy, European Research Director at Savills says,"in connection to continuous  economic uncertainty in Europe, we are expecting that risk-averse investors will favour those markets in Great Britain, France and Germany by investing there their funds. Nevertheless, increased activity of opportunistic investment funds from the North America will lead to increased amount of transactions on the remaining European markets."

The volume of investments on peripheral markets such as Spain or Ireland is largerly connected with access to finance and with the economic growth in a country.

"We estimate that the investment activity will remain the same as in 2012 when the total volume of transactions amounted to € 2.75 billion. This prognosis results mostly from Poland's good economic situation and still wide accessibility of commercial real estate from all submarkets which meet investment criteria both of  risk-averse investors and those who count on high cost reimbursement and are ready to purchase secondary estates situated in more risky locations. At the same time, when taking into consideration the lack of altrenative markets in our region (except Prague), it is assumed that the demand for Polish real estate will still enjoy the popularity among invetors,” says Marcin Purgal, Senior Investment Consultant at Savills.

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