By Marianne Schulze
May 2007

Photo: The Russian hotel market is particularly promising. One should not just look at Moscow—the high price segment has been covered in the meantime, but property prices are too high for mid and low-budget hotels.

. . . is the name of the game in real estate segments. Whether as an investment or a development—the weighting criteria have clearly shifted compared to last year. Especially Hotels have experienced an unforeseen renaissance.

For the fourth time already, the Urban Land Institute ULI and PricewaterhouseCoopers surveyed more than 390 investors, project developers, financers and consultants about their predictions of the European real estate investment and development markets. They also evaluated the development of each real estate sector and location. A good 165 participants of the study published at the beginning of the year, “Emerging Trends in Real Estate© Europe 2007”, not only answered questionnaires, but also took part in detailed interviews.

At ten minutes to twelve

The European real estate investment market has almost reached its peak. “If twelve o’clock is the top of the cycle, we are at five or ten minutes to twelve,” said one of the participants of the study, summarising the European real estate investment market.

What no one expects, however, is that capital pressure on the European real estate markets will soon decrease. Investors with “pockets full of money” are still entering the European investment market. In 2006, an estimated 600 billion US-Dollars of real estate changed owners. In just the first half of the year, 65 billion US-Dollars came from the USA, Near East and from the Asia-Pacific region. The three markets where the funds flowed into were Great Britain, France and Germany—they made up roughly 70 percent of all investments in Europe. Sweden, Central and Eastern Europe followed with roughly six percent.

There are still complaints about imbalanced supply and demand, and the resulting lack of acceptable investment properties. This shortage of suitable products has even led to conservative investors increasingly becoming involved in project developments, which is experiencing a new boom. More importance is being put on urban renewal and redevelopment than in the previous years. Both offer good opportunities particularly in Central Eastern Europe, since there is a huge backlog demand here.

FINANCE INVESTORS AND THE REAL ESTATE INDUSTRY
Unity or Opposition? 

REAL ESTATE INVESTMENT TRUSTS
The G-REIT and its brothers 

CROSS-BORDER INVESTMENTS
Still plenty of value to be released 

New Fund Strategies
Raring to go 

Investment Market Germany
German real estate market in frenzy 

Property derivatives
An emerging market