JLL Says Europe Down but Still Strong

CANNES, FRANCE-At the MIPIM 2008 show today, Jones Lang LaSalle officials detailed the troubles Europe is now in following the downturn of the capital markets, though they stressed that some property types are still doing well, and that real estate is still a safe investment as a whole. The officials predict that UK investment turnover will be down 30% to 40% in 2008, Germany is expected to have a strong rent market and Russia will maintain dynamic growth, especially in retail.

Tony Horrell, JLL’s head of European Capital Markets division, tells GlobeSt.com following the conference that he expects unstable market conditions to remain during 2008, and that investment transaction volumes across Europe will be down 25% from 2007. “We’ve been rocked, we could be in better shape,” he admits. “But it’s just a different ballgame now, of what to buy and where to buy. It’s pretty obvious that Europe is slightly polarized, some markets have accepted that pricing has changed, and others are partly in denial. The UK has accepted it and re-priced itself, but in general the continent has not.”

He says in the next 18 months, the markets will re-price, and investors will just have to resign themselves to getting their hands dirty in hard research about what to buy. The good news, he says, is that he expects volumes to fall just to 2005 levels. “In 2005, we all thought such levels of activity were reasons for great optimism,” he says. “It’s just that at the beginning of 2005, there was a five-to-one ratio of capital to assets, where now its around a two-to-one ratio.”