Europe north-south property divide to widen -CBRE

Tue Jan 17, 2012 11:34am EST

* Investors favour UK, France, Germany, Nordics over south

* European commercial property deals up 4% in 2011

LONDON Jan 17 (Reuters) - European commercial property investors are likely to focus on top-quality real estate in core markets such as the UK and France in 2012, as concern over the region's economic outlook continues to sap appetite for riskier assets, CBRE said.

Data from the property consultancy showed European property investment volume rose 4 percent to 115 billion euros ($146 billion) in 2011, with northern Europe outperforming southern counterparts including Italy, Portugal and Spain.

"We will probably see a continuation of 2011 (trends) in 2012. Lack of debt in the market continues to be a problem and that's affecting all but the very prime markets," CBRE's Head of EMEA Capital Markets, Jonathan Hull, told Reuters on Tuesday.

"We would expect to see liquidity in most core markets, as that north-south divide is certainly affecting the numbers. More product is coming on to the market in the north, and less in the south," he said, adding people were reluctant to sell in the latter region because of heavier price falls.

Investor appetite for secondary property, which showed signs of recovery in the first half of 2011, waned as concern over a euro zone debt crisis grew and banks slashed property lending, leading to a surge of demand for prime assets.

CBRE also said investors snapped up 32 billion euros of real estate in the fourth quarter of last year, with 8.3 billion invested in the UK, 6.5 billion in France and 5.8 billion in Germany.

Italy attracted the least investment over the quarter, at 851 million euros.

CBRE singled out France as Europe's top fourth-quarter performer, where deal volume jumped 65 percent on the back of Paris office deals.

Activity was boosted by a year-end lower tax rate deadline for property sales to real estate investment trusts (REITs), it said.

The data also pointed to strong investment activity in the Nordics, particularly Sweden and Denmark, where volume rose by 40 percent. This was in part due to their perceived safe-haven position outside the debt-riddled euro zone, CBRE said.