Banks increasingly unwilling to lend for real estate investment in European cities, says RICS
|Tuesday, 16 October 2012|
Efficient, flexible working environments, public transport networks and ‘green’ buildings are amongst the key drivers of investment attraction in Europe’s key cities, according to the Royal Institution of Chartered Surveyors.
According to the globally respected organisation, banks have virtually ceased lending for real estate investment outside core markets such as London and Paris, often providing finance only to major international firms.
As a result, investors and occupiers are reluctant to take decisive action and commit to a deal as they wait to see how the eurozone crisis develops, it says in its Corporate Real Estate investment and EU Cities report.
However, the crisis has also brought some positive trends to the market, as reduced lending means less speculation, a return to fundamentals.
The report suggests that occupiers are focusing on consolidation, cost cutting, boosting productivity and encouraging flexibility, with demand continuing for space saving efficient working environments and ‘green’ buildings, often in lower supply in Eastern and Southern European markets.
Occupiers’ choice is very much influenced by urban planning and strategies adopted at local level. Public transport, connectivity to other cities, and quality of life are cited as being important factors in driving investment and retaining staff, with Corporate Real Estate professionals under pressure to deliver creative solutions to suit requirements in cities where landlords’ expectations and quality of real estate stock are still lagging behind international standards.
The need for more transparency, professionalism and common standards in the market was a common issue in each city, especially in the field of green ratings and codes of measurement.
‘Greater levels of dialogue are needed between occupiers, the real estate profession and local authorities in order to deliver the urban fabric and regulatory framework and allow sustainable growth,’ said Thomas Jezequel, EU policy and public affairs officer at RICS and author of the report.
‘City, government and policy decision makers must monitor how easy it is for businesses to locate in their city and make decisions accordingly,’ he added.
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