Property investors eye euro zone break up
London, February 9, 2012
Businesses and investors globally are preparing for a break up of the debt-riddled euro zone in 2012, leading many to put their expansion plans on hold and shoring up safe-haven demand for top quality real estate, property consultancy DTZ said on Thursday.
DTZ said in its annual Global Outlook for 2012 that few were considering the possibility of the euro zone debt crisis reaching a resolution, which would boost investor confidence and encourage corporations to expand or invest their cash reserves.
"Most market participants are considering alternative scenarios, with most solely focused on the downside, which assumes a breakup of the euro zone ... Few care to focus on the upside potential," DTZ said in the report.
Concerns over the euro zone sovereign debt crisis have already affected sentiment in key property markets like London, which has seen developers struggle to attract tenants for their skyscraper projects and some top quality office and retail properties sell for high prices.
Property investors like Grainger, hedge funds and multinational corporations are among parties who have said they are bracing for a potential break up of the euro zone which could see the exit of one or more countries from the euro.
Forecasting the impact of a euro zone break up, DTZ said Asia Pacific office rents would be hit temporarily, before Europe and the US, due to the region's high dependency on exports, giving businesses an opportunity to take advantage of the short term decline in rents.
It also said the break up would impact capital values in European property markets severely, particularly in countries expected to leave the euro zone. The European industrial sector would be worst hit, offering investors opportunities near the end of the period, DTZ said.
In contrast, the company said capital values in the US would rise due to the projected tightening of US government bond yields which would steer investors towards prime property assets that offered higher income returns. – Reuters