EMEA to recover steadily

According to the latest research from Colliers International, there should be a slow but steady recovery in investment volumes in the EMEA region (Europe, Middle East & Africa) in the second half of 2008, following the sharp decline in transactions that resulted from the credit crunch.

In its EMEA Investment Market Overview 2008, Colliers suggests that many Eastern European countries, including Russia, Poland, Romania, Serbia and Bulgaria, are expecting even higher investment volumes in 2008 than were recorded in 2007.

The volume of capital chasing investment product in Eastern European markets, says Colliers, still exceeds the supply of quality product, which has led to more forward funding and purchase of products under development. Georgi Kirov, Head of the Investment & Corporate Advisory Department at Colliers International Bulgaria, reports: "The investment market in southeast Europe currently faces a shortage of operational investment product and, as a result, many of the recent transactions are forward purchase of properties under development. In some of the schemes, investors are providing development financing as well."

The largest impact of the credit crisis thus far has been concentrated in Western Europe, most notably in the UK, which saw the greatest outward movement in yields. Mark Charlton, Director of Research Services at Colliers CRE in London noted: "the re-pricing that is occurring is likely to make UK property look increasingly attractive to investors in the second half of 2008."

According to the Colliers report, prime yields in Ireland remain among the lowest in the region, while Russia, Serbia and Croatia have some of the highest yields in EMEA. Although the yield shift has been most severe in the UK, where prime yields have increased by 75 basis points in some cases, Spain, France, Germany, Italy and the Netherlands also saw increased yields in the latter half of 2007.

Jos Schussel, Leader of the Colliers EMEA Investment Business Team concluded, "Real estate markets in some countries have seen only minimal effects from the credit crunch, and leasing markets in many countries remain healthy. With a return to global financial stability and recovering economies on both sides of the Atlantic we would anticipate yields gradually improving from 2009 onwards."

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