A new report has revealed that Dublin is showing signs of slight improvement in the real estate sector, while Istanbul, Munich, Warsaw, Berlin and Stockholm are the top five European cites for real estate investment.
The PricewaterCoopers (PwC) and Urban Land Institute (ULI) report notes that Europe’s economic crisis has left real estate investment and development in limbo, with little relief expected in 2012.
‘Emerging Trends Real Estate Europe’ says that the prospects for any turnaround this year hinge on how recent regulatory measures will affect banks’ willingness to make commercial loans, and whether another financial industry collapse caused by sovereign debt issues triggers a widespread release of assets by banks to investors.
It predicts that this year, property financing will become a major casualty of the measures banks take to tackle regulatory and macro-economic pressures; deleveraging will not free up capital for fresh property lending; debt will become more short-term and expensive; and the need to find alternative sources of funding will become imperative.
“The profound instability is affecting the providers of equity and debt,” said Joe Montgomery, chief executive of ULI Europe.
“We are operating in an environment that is very difficult to model. The uncertainty over the level of banks’ exposure to sovereign debt default, coupled with uncertainty over the regulatory changes introduced as a result, has caused significant elements of the capital markets to be reduced to a state of near paralysis.”
Meanwhile in 2011 Dublin was rated the lowest of the 27 cities evaluated for both investment and development prospects, according to the report.
In 2012 there is some improvement, with Dublin ranking second from the bottom on prospects for investments, fifth from the bottom for new investments and third from the bottom for development.
The general consensus, it says, is that Ireland’s economy has been through the worst, although uncertainties in the eurozone, the UK and the US, have presented a whole new set of challenges.
“The survey results indicate increased interest from international investors in Irish property and we are seeing that on the ground also,” commented Enda Faughnan, real estate partner, PwC Dublin.
“The expectation is also that the combination of the very positive changes for the property sector announced in Budget 2012 and increased activity from the banks will result in a much stronger transaction flow this year.”