Dublin among most amenable lending markets in Europe

Dublin has emerged as one of the cities having the most amenable conditions for lenders in an analysis of 20 markets across Europe carried out by global real estate advisors, CBRE.

The analysis pointed to Budapest, Bucharest, and Warsaw, as well as Milan and Oslo, as being the friendliest cities for both borrowers and lenders.

Dublin, Lisbon, and London were considered the most favourable locations for the lending community but scored less highly for borrowers.

London, in fact, emerged as the least friendly location in Europe in which to borrow.

The CBRE analysis is based purely on pricing and therefore suggests that lenders should veer towards more peripheral markets for more attractive returns.

However, the analysis does not account for other factors such as scale, liquidity and regulatory conditions that need to be considered.

The most amenable borrowing locations were to be found right across Europe with Berlin, Madrid, Helsinki, Stockholm, and Bratislava among the cities topping the list.

A further five cities – Brussels, Copenhagen, Vienna, Paris, and Zurich – were considered unfavorable for both parties.

Germany becomes perfect safe haven for commercial property investment in Europe

Germany remains a stand out performer in the current European commercial property investment market but overall sales volumes are down across the continent.

European investment volumes were down year on year in the second quarter of 2017 but sentiment remained buoyant in many key markets, according to the latest analysis report from Knight Frank.

Commercial property investment came to €43.3 billion for the quarter and transaction volumes for the first half of the year amounted to €90.3 billion, an 8% decrease year on year.

Germany has become the leading European investment destination for North American investors and the dominant location for intra-European cross border investment and investment markets in Spain and the Netherlands were also buoyant throughout the first half of the year with investors attracted by strengthening rental growth prospects.

Conversely, investment volumes in the UK remained well below the levels seen prior to last year’s Brexit vote, despite an increased volume of Asian capital flowing into the London market.

The report points out that during the second half of 2017 European investment volumes should also receive a boost from the completion of China Investment Corporation’s €12.25 billion acquisition of Blackstone’s pan-European logistics company, Logicor. The deal agreed in the second quarter, will be the largest ever European real estate deal on completion.

European prime yield compression showed no signs of abating with prime office yields hardening in markets including Amsterdam, Brussels, Milan, and Vienna. Prime yields also continued to fall in the major German office markets, and are now over 100 basis points below previous record cyclical lows in Berlin, Frankfurt, Hamburg and Munich.

Aggregate office take-up in the European markets monitored by Knight Frank was up by 4% in the first half of the year, driven largely by the continued strength of the major German markets, as well as increased activity in Spain following a relatively subdued 2016.

Office rental growth gained traction in the tightening Amsterdam and Madrid markets during the second quarter, while moderate increases in prime rents recorded in Frankfurt, Milan, Paris, and Stockholm. In contrast, prime rents declined in the West End of London, where they are now down by 13% year on year.

Overall, the Knight Frank European prime office rental Index climbed by 0.7% during the second quarter to reach a nine year high. The diminishing availability of prime CBD office space should drive further rental growth, particularly in key markets in Germany, the Netherlands, Spain, and Sweden, the report suggests.

‘Although overall European investment volumes were down in the second quarter compared with the same quarter of last year, activity has remained buoyant in a number of major markets,’ said Matthew Colbourne, International Research Associate, Knight Frank.

‘Germany has now established as the preferred location for investors seeking a safe haven European market while strengthening rental growth prospects have buoyed transactional activity in the Netherlands and Spain. With a number of very large transactions due to be completed in the second half of the year, we expect European investment volumes to pick up in the second half,’ he added.

 

 

Wave of re-migration – Eastern Europe’s wave of emigration may have crested

Thriving economies and low costs of living are luring expats home from the West

WHEN Richard Fetyko left his native Slovakia in 1992 for a high-school study-abroad program, he planned to return at the end of the year. Instead, he spent 22 years in America, earning university degrees and working in banking and on Wall Street. “I didn’t really see myself able to apply my skills in Slovakia,” Mr. Fetyko says. But as Slovakia’s economy matured, that started to change. In 2014 he got an offer from an investment firm in Bratislava and came home.

Mr. Fetyko was part of a wave. From 1992 to 2015, so many people left eastern Europe that its population shrank by 18m, or about 6%, according to UN figures. The trend accelerated as the region’s countries entered the European Union. It was a sour turn for the EU’s new members: rather than making them as rich as western Europe, accession lured their workers to move there.

In the West, especially Britain and France, that led to fears of “Polish plumbers” undercutting local wages. On August 23rd Emmanuel Macron started a trip to three central and eastern European countries to discuss how to stem the flow. Yet there are signs that it may already be ending. Thriving economies, rising wages and low costs of living seem to be drawing more émigrés home. A report in July by Colliers, a real-estate firm, heralded a “labor-force boomerang” as professionals come back from the west.

The EU’s lack of visa requirements makes internal migration hard to track, but some figures are suggestive. Since 2010, net emigration has fallen in nine of the 11 post-communist EU members. Net migration to Britain from the eastern countries that joined the EU in 2004, which was above 30,000 in every year from 2010 to 2015, fell to 5,000 last year. That was partly because of Brexit, but partly a broader phenomenon of rising demand for labor in eastern Europe. “It’s not old people, it’s workers that are returning,” says Mark Robinson, the author of the Colliers report.

Jobs are easy to find: unemployment rates run from 5.3% in Romania down to a remarkable 2.9% in the Czech Republic. Fully 73% of Hungarian manufacturers say they cannot find the workers they need. That drives wages higher: salaries are up 5% in the Czech Republic compared with a year ago, and in Hungary by an extraordinary 15%, helped by a big hike in the minimum wage. Tax levels, compared with western Europe, are rock-bottom: the top income-tax rate is just 25% in Slovakia and 10% in Bulgaria.

Cheap housing is another lure. Per square meter, a flat in Prague costs about half as much as one in Dublin, and one-seventh as much as in London. The cost of living is so low that an analysis of net incomes in Europe by Deloitte, a consultant, listed the Czech Republic, Slovakia, and Poland as three of the continent’s top five earners (alongside Switzerland and Malta).

But it is not just finances that bring expats home. In 2010 Milos Fusek left his hometown of Dubnica nad Vahom, in western Slovakia, for Ireland, where he worked in a warehouse and later in logistics and marketing. In 2015 he came home to run a window-manufacturing company with his father. For him, a family was the decisive factor. Others find they can reach more senior positions in their home countries than in the west.

And there is another reason: a sense of patriotic optimism. Tomas Melisko, a Slovak who earned his law degree in Britain, gave up a banking job in Vienna in 2015 to work as a real-estate consultant in Bratislava. Besides being closer to friends and family, he feels that “by coming back I bring the skills I have accumulated, and give back to society”. Westerners worried that eastern Europeans will continue to flood westwards should keep in mind that many of them love their countries, too.

This article appeared in the Europe section of the print edition under the headline “Wave of re-migration”

LISBON PORTUGAL It is in the sights of Rich people from all over the world

High-net-worth individuals looking for the next big thing should check out Portugal. Its capital, Lisbon, has “long been considered one of the most beautiful cities in Europe

“It’s underrated and not expensive in terms of property.”

Astute investors can find plenty of decent options for about $500,000 (U.S.), says Cody Shirk, the California-based founder of Codyshirk.com, who writes about and invests in foreign real estate.

Better value can be found along its coast, where “you can easily buy an apartment for $200,000.”

Another draw for Portugal is the ability for foreign buyers to gain EU residency through the country’s Golden Visa program. Foreigners buying property worth at least 500,000 euros can live and work in the country and, perhaps more importantly, travel freely throughout the Schengen zone (26 European countries) without a visa.