Saturday 2 February 2013

Eurozone Investment- more clouds on the horizon?

A recent article in PropertyWire (see below) has further piqued my interest in property investment. The article mentions a recent survey carried out by the Royal Institute of Chartered Surveyors (RICS). The survey states that European commercial property sectors, especially France, are deteriorating. This is in marked contrast to the so called 'BRIC' economies.

http://www.propertywire.com/news/global-news/global-commercial-property-markets-201302017403.html

Its easy to think that a property Lawyer's work is restricted to dry and archaic principles (like overriding interests!). I would argue that it is equally important to understand wider economic factors. For example, an international investor will only invest in a shopping centre/ retail and leisure complex if it can be sure that the shops in the centre will enjoy high levels of footfall. Frequent footfalls= regular rent paying Tenants. Suffice it so say that strong covenants (i.e. reputable and successful Tenants) will be attractive to both Landlords and investors. This will depend on the wider economy. A country in the depths of recession means that consumers are less likely to go shopping and spend their money!

If you were an international investor (pension fund, sovereign wealth fund etc) would you rather invest in Greece or Brazil?

Ah but the UK seems to be heading towards a triple dip some would argue. They may be right. The economy contracted by 0.3%. Inflation is at 2.7%. Wages are lagging behind prices. However, I would still want to put my money in a large British shopping centre full of reputable Tenants. Why? Because the UK has an independent currency with stable governance.

The same cannot be said of our European neighbours. We have yet to see the colour of their money.

For more information on the author see my LinkedIn profile at: http://www.linkedin.com/profile/view?id=46743795&trk=tab_pro

No comments:

Post a Comment