- Investors could release EUR 472 bn currently tied up in commercial real estate
- Two-thirds of these assets belong to unlisted finds and private investors
- Average hold period in Europe is 6 years
According to DTZ’s report, EUR 472 bn of commercial real estate assets could be released onto the European market. Most of these assets belong to unlisted funds (EUR 190 bn) and private investors (EUR 149 bn), both of whom have a proclivity towards comparatively shorter hold times.
Almost 30% of the real estate that could be made available on the market belongs to listed companies and institutions. However, these have decreased the sizes of their portfolios, which could limit opportunities to make sales.
The average hold period in continental Europe is six years; seven years and two months in the UK, seven years and seven months in Benelux—the longest in Europe—and four years and five months in the highly liquid Nordic markets, the shortest in Europe.
Investors hold EUR 472 bn in commercial real estate assets which could be released to the European market due to uncharacteristically long hold periods. This situation was caused by the economic crisis and decreasing real estate values. Thanks to today’s favourable macroeconomic conditions and a loosening of financial policies, the real estate begins to appreciate, making up for previous losses, and the market participants are optimistic about the future. We expect that unlisted funds and private investors will in particular be looking for options to sell owned assets, taking advantage of capital inflows into funds investing into alternative asset classes, including real estate. Despite the fact that the first quarter was weaker than last year, transaction volume in Poland is still expected to reach EUR 3 bn. Assets put on the market will include both new, and thus the most liquid assets, and those whose sale is forced by the investors’ investment policy, said Łukasz Maciak, Director, Capital Markets at DTZ.
In order to prepare the report, DTZ’s experts analysed hold periods for commercial real estate in Europe based on 4,000 transactions concluded since 2000, worth almost EUR 160 bn.