It was not long ago that the commercial real estate markets were humming along. Institutions were raising allocations, funds were clamouring to get their hands on virtually any type of asset and investors were willing to accept miniscule yields just to get into the game. But times change, and the song does not remain the same.
As the potential for turning a profit in Europe’s more traditional real estate markets evaporated, due to yield compression and increased competition for deals, many investors ventured east in search of higher returns. But as dark economic clouds loom over Europe, the risks of investing on Europe’s periphery are becoming more evident by the day.
Despite the continuing credit crunch and the settling back of commercial property asset values in many sectors and regions, high-quality buildings with creditworthy occupiers and prudent debt levels remain safe, income-generating repositories of capital amidst the gyrating values of other investment alternatives.
“It was the best of times, it was the worst of times.” With its description of life in Paris and London before and after the French Revolution of 1789, with machinations and ruinations, Charles Dickens’ A Tale of Two Citiesis aptly named for those engaged in the business of right-time, right-place real estate investing. With his evocative descriptions of the minutiae of contemporary daily routine, Dickens often features as a source for quotations in property articles, but rarely in this context.