| LONDON, April 20
LONDON, April 20 Debt-laden euro zone countries
hoping to sell state-owned property must cut prices and
establish more transparent sales programmes to boost the slow
trickle of transactions to date, research showed.
While European governments more than doubled real estate
sales to 2.3 billion euros ($3 billion) last year to cut debt in
the wake of the financial crisis, they were dominated by more
robust economies like Germany and the UK, a report by property
consultancy CBRE said.
Greece, Portugal, Spain, Italy and Ireland, the five nations
most debilitated by the sovereign debt crisis, together
accounted for less than one percent of the total, CBRE director
of research Richard Holberton said.
"In some cases there may be a need to drop prices" he told
Reuters. "In others there is still a basic need for a
comprehensive audit to understand what they've got and how to
get rid of it."
The urgency to raise funds was underlined this week as
Spanish 10-year bond yields rose above 6 percent, r aising
concerns about its ability to borrow money at sustainable
levels. Italy was forced to relax its budget deficit targets.
Government property disposal programmes have prompted
accusations that countries are selling off the family silver and
have been opposed by groups such as trade unions.
Greece aims to raise 50 billion euros through privatisations
and real estate sales by 2015. Last year, it set up the Hellenic
Republic Asset Development Fund to dispose of 70,000 properties
including ministeries, tax offices and tracts of beachfront
"They haven't got a cat in hell's chance of hitting that
target," said David Parker, the Emeritus Professor of Economics
at Cranfield University who has advised governments on
"There is a real likelihood of price cutting if there is
desperation to find buyers who themselves are finding debt
financing difficult to arrange."
A lack of transparency over ownership or planning status has
deterred potential buyers of Greek real estate, CBRE said.
In one case, the 1,000-year old Vatopedi Monastery in Greece
was accused of trading cheap farmland for prime state-owned real
estate in Athens. The deal is estimated to have cost the Greek
government 100 million euros and led to the imprisonment of the
"Everything has to be tied down and above board for
investors in this climate," said Chris Bell, managing director
of Europe at property consultancy Knight Frank. "The last thing
they need is this sort of concern from leftfield."
In Spain, national and local government bodies have
organised public tenders for the sale and leaseback of
state-occupied property. But many lots are a mix of good and bad
which has put off buyers, Holberton said.
Several property investors, including Pierre Vaquier, chief
executive of Axa Real Estate, which has about 42 billion euros
of assets under management, told Reuters that prices for all
Spanish property need to fall further for sales to come through.
Holberton described Italy's target of raising 20 to 30
billion euros by selling prisons, theatres and other
publicly-owned buildings as ambitious, given that average annual
investment in all Italian commercial property was 5.5 billion
Sweden sold the most real estate last year, including a
portfolio of rented apartments in the city of Sigtuna for 189
million euros. Germany disposed of more than 440 million euros
with the focus also on residential.
In the UK, which accounted for 20 percent of European real
estate sales last year, a government-owned property company has
been set up to manage and sell off some assets belonging to the
Department of Health.