Global listed real estate markets rebounded sharply in 2009, thanks to a dramatic improvement in credit conditions, massive liquidity creation by the world’s central banks, and early signs of a return to economic growth, according to investment company T. Rowe Price
Analysts at T. Rowe Price say they are optimistic this recovery can be sustained in 2010, despite rising vacancy rates and continued troubles in the commercial mortgage backed securities (CMBS) market.
According to David Lee, manager of T. Rowe Price's US and global real estate strategies, believes that strong economic fundamentals are underpinning a powerful recovery in emerging Asia. Rents have already stabilised and are starting to rise again in some key markets, despite substantial additions of new space.
The outlook for continental Europe is also positive, says Lee, as employment losses have been relatively modest compared to the Anglo-Saxon countries. By contrast, the UK market has been hard hit by the crisis and by oversupply in the City of London, but for this reason offers some extremely attractive valuations.
Although the short-term US outlook is difficult, T. Rowe Price believes that the longer-term fundamentals remain positive. Even a modest revival in demand should absorb the relatively limited supply available in many key US in-fill markets, says David Lee.
T. Rowe Price’s report comes on the same day that CB Richard Ellis, the property consultancy, said that commercial real estate investment has risen 42 per cent in Europe in the past three months compared with the previous three months to the highest level since the collapse of Lehman Brothers in 2008.
The data support anecdotal evidence of a rush back to property investment by a range of institutions after a bounce in values in markets such as the UK since the summer.
