PwC: High-Quality Asset Shortage Boosts RE Development
29 January 2016 – Cinco Días
The abundance of capital and shortage of high-quality assets will drive real estate development in 2016, as well as boost investment in alternative sectors. Those are the findings of a report, Trends in the European Real Estate Market in 2016, prepared by PwC on the basis of 550 interviews with key players in the sector.
Capital will continue to force its way into the market, thanks to the sustained environment of low interest rates in Europe – and the consequent greater appeal of real estate investments versus the low returns on fixed income products and the volatility of the markets – the majority of the cash flows from outside Europe will come from Asia and America.
Nevertheless, there will continue to be a scarcity of high-quality assets, and those that are available will be overvalued, in almost every European market. In this context, property development is the best option for acquiring high-quality assets with good prospects in terms of returns.
The property development drive will be accompanied by an increase in activity in other segments – beyond the traditional commercial and office properties – such as health centres, hotels, student accommodation, data centres and logistics assets.
The document reflects the optimism of the funds, institutional investors, real estate companies and banks, although to a lesser extent than last year. Expectations are especially high in countries in Southern Europe, including Spain. Financing has completely disappeared from the list of (these players’) concerns about the sector.
Just like every year, the report analyses the main European cities and classifies them on the basis of their investment and development prospects. Madrid and Barcelona fair well. The Spanish capital maintains its position as the fourth most attractive city in Europe, behind Berlin, Hamburg and Dublin. Between October 2014 and September 2015, Madrid was the fifth most active market in Europe, during which time €5,000 million was invested in the city. Barcelona rises one place in the ranking – from thirteenth to twelfth.
Original story: Cinco Días (by Carlos Santana)
Translation: Carmel Drake