RERC European Real Estate Market Briefing: Bracing for Risk

London (2 October 2019) – RERC, a SitusAMC company, today released its European Real Estate Market Briefing exploring how trade wars and other geopolitical tensions have stoked fears of a global economic slowdown, causing investors to brace for risk as uncertainty takes center stage. The report finds that 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 31 October deadline are fading.

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’.

In the report, European Real Estate Market Briefing: Bracing for Risk, RERC provides analysis of the European lending market and CRE transactions and financing. Rational underlying collateral values are most important when bracing for risk, and fair assessment of values requires greater access to high-quality data. Because investment happens at the local level, we also chose to focus on a particular market, the Netherlands, due to the increased activity that RERC is witnessing there.

Hugo Raworth, Head of RERC Europe, states, ‘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’.

RERC’s global valuation expertise provides readers unique insights on the European CRE markets. The firm currently conducts gross asset value assessments on nearly €1.1 trillion in North America, Europe and APAC annually. In Europe alone, RERC conducted valuation reviews on €28.8 billion over the past year.

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About RERC, a SitusAMC company
RERC is the leading provider of valuations and valuation management to the commercial real estate industry. Many of the world’s leading institutional investors, including three of the top six largest pension funds in the U.S., four of the U.S.’s top five life insurance companies by total assets, and three of the largest real estate investment managers, rely on RERC’s valuation expertise to help them identify and manage opportunities across their portfolios. RERC is also working with two large balance sheet lenders, providing appraisal management and reviews on 3rd party valuations. RERC is responsible for reviewing and consulting on more than $250 billion in institutional real estate assets on a quarterly basis, globally.

DISCLAIMER
Data Presented: the anonymised data presented in our report was sourced from (i) SitusAMC’s database of loans and (ii) RERC’s valuation reviews in Europe.

No advice: this report is not intended to provide, and should not be relied upon, for advice of any kind, including, without limitation investment advice and/or an exhaustive analysis of the Corporate European Real Estate market.

October 2019 data: Unless otherwise noted the data presented herein is as of October 2019.