Property purchasers want less risky investments

ECB discovers credit supply limited

European Retail Real Estate Investment increased by almost 60% in Q4 2009

US commercial property prices up +1%

Property agents in Northern Cyprus face possible legal action

New airport terminal boosts interest in Hurghada

Property purchasers want less risky investments

According to the National Association of Estate Agents (NAEA) International, residential property purchasers will be looking for less risky investments in 2010 and are leaning, in particular, towards the more stable markets such as France and Italy.

ECB discovers credit supply limited

According to the European Central Bank (ECB), businesses across Europe are facing an ongoing cash crisis after an ECB study revealed that access to credit is hindering the economic recovery, however banks will begin to ease credit standards for homebuyers this year.

The report warned that Europe could be hit harder than the US if the liquidity problems are not resolved.

Gertrude Tumpel-Gugerell, ECB’s executive board member, said: "Credit supply is very important for the recovery but it is not yet there."

The study suggested that there will be some easing of credit standards in the mortgage market as banks’ access to wholesale funding eased in Q4 2009, however, due to them being unable to transfer credit risk off their balance sheets, there is a gloomier picture on consumer credit and loans to businesses.

There was an increase in demand for housing loans for the third quarter in a row, mostly explained by the contribution of improving housing market prospects, the majority of banks reported.

European Retail Real Estate Investment increased by almost 60% in Q4 2009

European real estate transactions in the retail sector totalled €4.5bn from 100 deals in Q4 2009, nearly 60% higher than the €2.9bn achieved from 66 deals in Q3 2009 according to Jones Lang LaSalle.

However, there was a 32% decline compared to the 2008 total of €18.2bn, as 2009 only reached a total of €12.3bn over the full year.

JLL predicted in 2008 that the UK, Germany, Italy and France would continue to dominate the retail investment market in Europe each seeing over €1bn worth of deals transacted. The most active market in continental Europe was Germany with 21% of total volumes transacted. France and Italy meanwhile both saw a total volume of approximately €1.2bn during 2009, with France seeing just over €500m in Q4 alone.

Jeremy Eddy , JLL head of European retail capital markets, said “We are expecting a strong start to H1 2010 across Europe with an increasing trend of equity partnering with expertise in joint ventures and property clubs. This will enable equity players to access markets and opportunities while allowing REITS and property companies to stretch their constrained equity, enlarge their European footprint and generate fee income. Much of this equity will remain focused on the prime-end of the market and we envisage continued weak pricing for secondary assets as pricing has yet to move out to meet the pricing returns of opportunistic buyers, a significant group in this sector of the market.”

Shopping centres remained the principal target for investors in 2009, constituting 56% of all retail transactions in Europe. In comparison retail park investment declined considerably from €2.5bn in 2008 to €526m in 2009 due to a lack of high quality stock and the increased cost of finance. 

Adrian Peachey , JLL head of UK retail capital markets, said: “Recovery in pricing and liquidity of shopping centres continued in the second half of 2009 driven by the demand and supply imbalance. The question remains how long can this recovery be sustained; we believe prime assets are being slowly rebased and should hold relatively firm. The window of opportunity for brave sellers of dominant secondary schemes will remain during the start of 2010. However, an increase in the numbers of bank sales could dilute the supply and demand imbalance and this coupled with a fragile occupational story could put an end to inward yield shift in the more secondary centres.”

US commercial property prices up +1%

Commercial real estate prices in the USA rose by +1% in November 2009, the first price increase since September 2008, according to Moody's/ReaL Commercial Property Price Indices (CPPI).

Despite this increase, Moody’s believe that prices will start to fall again in the next few months as yields rise and occupancy and rental rates continue to fall.

Nick Levidy, Moody's managing director, said: "The positive +1% return recorded in November represents a bit of good news for the commercial real estate market, but the sector is not yet out of the woods,

"We anticipate further deterioration in property fundamentals and increases in cap rates, although the worst of the value declines is likely over."

It expects US commercial real estate prices to effectively fall -45-55% from their peak prices which were reached in 2007. With the incremental rise, prices have fallen -43% as of November 2009.

Property agents in Northern Cyprus face possible legal action

Following a landmark ruling in the UK Court of Appeal, any agent who has sold property in Northern Cyprus could be faced with legal action.

A judgement against the British couple David and Linda Orams has ruled that any land in the north which can be legally claimed by Greek Cypriots, has been sold illegally on to foreign citizens and will be enforced in the UK.

The case is expected to pave the way for hundreds of similar claims against British citizens who purchased property in the Turkish-controlled part of the country, with blame possibly placed on those agents and developers involved in the sale, particularly if they bought in good faith.

Many Greek Cypriots fled the north when the Turkish army took control in 1974 and much of their land was then sold on by the Turkish-Cypriot administration that now controls the area.

A new terminal for the international airport at the Red Sea resort of Hurghada in Egypt has been announced after the Civil Aviation Ministry signed contracts with a Saudi Arabian development group to construct the new terminal.

It will increase capacity from some 6.7m to 7.5m passengers annually and will cost an estimated £66m to construct, with completion scheduled for 2011. The airport is located five kilometres from downtown Hurghada.

The Post Office calculated which currencies have moved most in favour against sterling over the last year, and Egypt is placed in the top three as the British Pound strengthened against the Egyptian pound by +14%.