However, the common ground comes from the types of assets that are in demand across the European region. Debt is scarce and risk averse in common with pots of equity, therefore the yields on core assets in all categories have been contracting, be it in office, retail or the logistics sectors. Investors, both private and institutional, are beginning to fill the void left by the absence of regular banking volume. Interest margins are still being priced at levels which demonstrate that markets are abnormal and debt to equity ratios are wide.
The UK real estate market remains dominated by Central London, attracting UK and overseas investors and developers. Development opportunities continue to be realised with high-end residential elements driving values into schemes. As a result, traditional office developers have entered this market and a number of house-builders are increasing their activity levels as they look to partner with landowners.
In Germany, there are selective shortages of prime real estate in the office, logistics and retail sectors and that is in line with what investors are seeking across northern Europe. Long secure income is the name of the game and the exclusive desire for that core profile from investors without the risk appetite required to develop supply for the future probably means that values are sustainable and growing.
Overseas investors continue to be dominated by European, Middle Eastern and Asian sovereign backed investment vehicles and family offices, but there also continues to be great interest from North American pension funds and private equity.
Further east in Russia where we also have recruitment offices, local developers are starting to be able to access more credit and therefore there are more requirements for construction and development professionals in addition to asset and property management professionals. Elsewhere in the CEE region, the Polish market is active, with a focus on core assets.
So in certain markets there is demand for technical construction related skills, although the recruitment across Europe is reflected for new roles, rather than replacement ones, by the investment market. In practice this means transactions and analytical professionals are in hot demand, as are asset management skills. Bank lending skills are making a resurgence due to the newer entrants to the market, in addition to the commercial lenders dusting off their lending teams with renewed vigour to re-enter the market.
We are seeing recruitment volumes up across the board and are confident that there will be an upbeat atmosphere atMIPIM this year.
Article first appeared in REurope Magazine, March issue.
Written by Timothy Rowe, Managing Director of Cobalt Recruitment.