European respondents to Colliers International's Q3 2010 Global Investor Sentiment Survey see Eastern Europe as having firmly moved passed the bottom of the market cycle and is on the upswing, while in Western Europe the sentiment is more conservative with a slower recovery expected. In addition, over 70% of European investor respondents expect to either expand or maintain their current level of real estate holdings over the next 12 months.
On balance, investors in Western Europe have indicated an intention to expand their property holdings over the next 12 months. 73% stated that they would look to expand their portfolios, versus just 4% reporting that they expected to be net sellers. This represents a steady improvement in sentiment from our previous survey, in Q1 2010, when 60% of respondents had indicated an intention to expand versus 11% looking to contract.
"There is an increased interest in cross border investment opportunities with a focus on Paris offices, retail assets across Germany and London offices," said Thomas Dänzel, Chairman of EMEA Investment Services, "And we should start to see an upswing in the cycle within the next 12 months."
The region to watch is Central and Eastern Europe as the overwhelming majority of respondents (82%) believe the market will be between seven and nine o'clock, which is full recovery mode. Across the region the range of locations being targeted by investors was quite diverse, although Warsaw remains the most popular destination, notably for office product. Other popular targets quoted were Kiev, Prague, Moscow and Bucharest.
"Several factors put the recovery of Central and Eastern Europe ahead of other global regions," says John Verpeleti, Managing Director, Central and Eastern Europe Investment Services, "Low production costs in a commodity driven market, relatively low public debt in most countries and low exposure to the global equity markets place the region in a good position for continued recovery."
Globally, the largest group of survey respondents, which included real estate investors in every region of the world, put the Global Property Clock for their particular regions at eight o'clock, with the second and third largest groups at six and seven o'clock, respectively. These responses indicate that most markets globally are on the upswing and are characterized by rising demand, falling availability and vacancy and rising headline rents. This marks a significant move from Colliers International's last Investor Sentiment Survey conducted in Q1 2010, when most respondents placed their markets at between five and six o'clock.
"Most of the survey's top line findings demonstrate a growing optimism in the global real estate market," said Chris McLernon, Chief Executive Officer, Colliers International EMEA. "While current sentiment varies by region, the large majority of respondents felt the market would still be on the upswing one year from now. Optimism in the market is reinforced by the nearly three-quarters of respondents saying a double dip recession is unlikely."
Some additional key global findings of Colliers International's Q3 2010 Global Investor Sentiment Survey include:
- 90% of respondents said they planned to expand their current level of real estate holdings within a year or maintain them at current levels.
- New York, Chicago, San Francisco, Washington, London, Sydney, Singapore and Hong Kong were listed as key cross-border investment destinations. Emerging markets mentioned include Poland, Ukraine and Brazil.
- Nearly 80% think debt will be easier to access in the next 12 months. Respondents who said they believe the cost of debt would rise in the next 12 months fell slightly from the first quarter of 2010, with 44% predicting an increase versus 52% six months ago.
The Colliers International Q3 2010 Global Investor Sentiment Survey was conducted from August 15 to September 7, 2010. More than 200 major institutional and private investors with holdings of US $710 billion and representing a broad cross-sectio