Investors appear to be bracing for risk as uncertainty takes center stage. Trade wars and other geopolitical tensions have stoked fears of a global economic slowdown. Political and economic turmoil from Brexit continue to weigh heavily on European investors’ minds. Though fears of an immediate UK recession receded after a surprise increase in July’s economic output, growth remains stagnant. With a Brexit hardliner as prime minister, hopes for a deal before the Oct. 31 deadline are quickly fading.
These are some of the conclusions reached in the RERC Real Estate Market Briefing – European Edition, “Bracing for Risk,” which was released recently by RERC, a SitusAMC company.
According to Ken Riggs, President of RERC, “In these increasing times of uncertainty, real or hard assets with income returns tied to leases such as commercial real estate (CRE) are viewed as relatively more attractive and less uncertain than alternative investments. CRE provides diversification relative to stocks and bonds during a downturn because of its lower volatility and steady income stream.”
Added Hugo Raworth, the new head of RERC Europe: “Yes, CRE is fully priced at the moment and offering only modest yields, but unlike other investments, it provides the safety of a bond with an equity kicker.”
Rational underlying collateral values are most important when bracing for risk, and fair assessment of values requires greater access to high-quality data. RERC’s report is intended to provide insights that will help its readers navigate through these uncertain times. The report provides analysis of the European lending market and CRE transactions and financing. Because investment happens at the local level, the report also focuses on the Netherlands, due to the increased activity that RERC is witnessing there. Given the need for more data in the European CRE industry, RERC plans to produce these briefings on a regular basis.
Thanks to its global valuation expertise, RERC can give its readers clarity about the European CRE markets. Its global presence is strong – RERC currently conducts gross asset value assessments on nearly €1.1 trillion in North America, Europe and the Asia-Pacific region annually. In Europe alone, RERC conducted valuation reviews of €28.8 billion over the past year. By working with some of the best clients – banks, pension funds and private equity firms – RERC is able to gain intimate knowledge of the markets in which it operates.
To download a free copy of the RERC European Real Estate Market Briefing, click here.
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