European real estate sales fell to the lowest in 18 months in the first quarter as reduced debt funding and concerns about slowing growth deterred investors, according to Real Capital Analytics Inc.
Sales of commercial real estate, hotels, development sites and apartment blocks fell 28 percent from a year earlier to 28.4 billion euros ($37.4 billion), according to data released today by the New York-based researcher. It was the lowest level of property transactions since the third quarter of 2010, RCA said.
European banks may scale back real-estate lending by as much as 700 billion euros in the next three to five years as they shrink balance sheets to meet proposed capital regulations, Morgan Stanley estimates. Spending cuts by national governments are hurting growth and lifting unemployment across the continent. The U.K., Europe’s largest property market by transaction value, entered its first double-dip recession since the 1970s in the first quarter.
“Continued sensitivity to risk among active investors and a severely constrained debt market have hampered investment activity across almost every market,” Joseph Kelly, RCA’s director of market analysis in Europe, said in an interview.
Transactions in the U.K. and Germany, the continent’s largest investment markets, fell 23 percent and 33 percent, respectively, the RCA figures show. France had a 9 percent increase.
The only sectors to show an increase in transactions were land sales and multi-family housing, such as the 1.4 billion- euro purchase of 21,000 apartments by a group including Patrizia AG. Sales of offices, hotels, stores and industrial properties all registered declines, RCA said.
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