Spring 2008
European Investment Bulletin
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- Despite the mismatch between buyer and seller expectations on pricing, a number of investment transactions were successfully concluded in the first half of 2008.
- By and large investor minimum lot size is decreasing and there is a general preference of lot sizes sub €100m.
- Demand is focused on quality retail and logistics projects across all European countries, well located, well specified offices both on long leases to strong covenants and multi-let properties with good reversionary prospects.
- Price correction continues at a more rational rate in comparison to the latter half of 2007. Rental growth remains positive but is advancing at a lesser rate in most commercial markets in Europe.
- The driver of investment activity has become rental growth as investors are no longer able to rely on yield compression, especially in Western European markets. However, higher risk premia will be applied if occupational markets are impacted by changing economic conditions.
- The latest European Commission economic forecast projects economic growth to ease significantly over the next two years, decelerating from 2.8% in 2007 to 2.0% in 2008 and 1.8% in 2009.
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