In a sure sign of a significant improvement in the outlook, the lexicon of the European market place has changed over the past year.
We still have “austerity” and “deleveraging” to cope with of course and “bad banks” are also still with us – albeit now more likely to be a specifically designated institution rather than a definition for the whole sector.
However in a sign of progress federal “deficit” gave way to federal “deadlock” and that now looks to be changing to federal “fudge”. More notably, as the eurozone recession has ended and property values and activity have stabilized, “confidence” has clearly seeped back, and in some cases flooded back, into the system.
“Crises” are now more likely to be political, social or climatic rather than economic or financial while “haircuts” are once more between me and my barber not the bond market.
For real estate markets, leasing activity is no longer only seen when a “lease event” draws near and “secondary” is no longer short hand for unsellable or un-lettable – not everything has a price yet of course but there is a healthier degree of realism and compromise in the air.
Occupiers are getting more ambitious; if still very conscious of cost and seeking property and locations that really add to business effectiveness. At the same time, interest from investors has spread quickly to new markets, as noted in our last European Capital Marketbeat, which reported that “the market is going through the gears quickly: firstly with demand escalating in core cities, then with interest moving on to second tier core markets, followed by demand spreading to top tier cities in previously overlooked areas like southern Europe, and now with escalating demand for better quality secondary assets in top cities.”
Momentum has in fact quickly carried from market to market. The investment sector has seen16 different countries appear in the list of the top 5 for quarterly growth over the past year, with only 4 managing to get on the list twice (Spain, Portugal, Sweden and Poland). Similarly in the office leasing market, 16 different cities have featured in the top 5 over the past 4 quarters with only Vienna, Dublin, Athens and Dusseldorf managing to repeat the feat.
So if 2013 has been a year of “stabilization” and “diversity”, will 2014 be about “recovery”? Certainly “tapering”, and possibly “bubble” will be words we hear too much of but if we’re lucky, “growth” might be in there too and above all we will hopefully have decisions and “action” somewhere in the mix!
David Hutchings, European Research Group, London