Asset markets had a turbulent 2011 and are heading into 2012 faced with uncertainty and fat tail risks. Despite this volatility, good-quality commercial real estate has provided attractive returns and solid income. Nevertheless, as the global economic outlook softens, expansion plans and business investment are being put on hold and occupational markets are deteriorating, albeit modestly. Given that Asia Pacific will remain the global growth leader in 2012, how should investors position themselves to take advantage of opportunities on both sides of the “great divide” — ie. both in the core and the opportunistic space?

Germany’s healthcare real estate market has positive long-term perspectives, driven by its ageing, yet wealthy population as well as by strong government financial support backed up by the country’s compulsory health insurance programme. The recent changes within the regulatory framework for the provision of medical services have further enhanced opportunities within the sector that provide for the growth of independent medical service platforms. The rise in private health insurance and the statutory right of access for all to free healthcare, when combined with the prior-mentioned factors, are orchestrating a sea change in the scope and quality of medical office facilities as well as for those within the retirement care sector. 

In this article, we would like to consider the renewed flight to quality that has been triggered by the sovereign debt crisis and examine the merits of investing in safe-haven locations and in corporate bond–type properties with very secure income streams. We believe that these assets carry more investment risk than is often realised and that secondary class A properties in northern Europe, which have good bricks and mortar fundamentals but which are perhaps compromised by a weak tenant or a short lease, offer better investment value.

Inflation is a personal thing; it affects everyone differently. We all have a view on how high or how low inflation is, and we all have a different story to tell on how much we think our hard-won spending power is being relentlessly eroded by increasing prices. It’s rarely a case of how little that spending power is being eroded, as every little bit takes on a significance even in a low-inflation environment. For many people, inflation is about how much the price of the bus or railway ticket to work went up by at the beginning of the year. Deflation, if we thought about it, could be about how much the price of flatscreen TVs has come down by in the past year — and there’s nothing more deflating than seeing the price of that super TV you bought for Christmas come down further since you bought it.  

Valad has sold Tevlingveien 23, an office and retail mixed-use property in Oslo, to Wenaas Eiendom AS, a wholly-owned subsidiary of Wenaasgruppen.

Union Investment Real Estate GmbH has acquired the Sophienhof shopping centre in Kiel, Germany, on behalf of its UniImmo: Deutschland open-end real estate fund.

Tishman Speyer has acquired Eland House in London from Land Securities for £171.1 million (€205.6 million).

THProjektmanagement GmbH, Makon GmbH & Co KG and Global Assessment GmbH have merged to form VALTEQ GmbH.

International investors have been targeting the property market in Poland. The country may be attractive because, according to Cushman & Wakefield, economic growth there is expected to hold up in 2012.

Orchard Street Investment Management has invested in two UK retail properties for £40.7 million (€48.9 million). 

Legal & General Property (LGP) has acquired a UK leisure park from Aviva Life & Pensions UK Ltd for £40 million (€48 million).

Hermes Property Unit Trust (HPUT) has acquired a portfolio of 17 freehold pubs in the United Kingdom for £23.85 million (€28.7 million).

The Henderson German Retail Income Fund (HGRIF), which is sponsored by Henderson Global Investors, has raised an additional €90 million in equity in a second close.

German real estate transaction volume in 2012 is likely to exceed €20 billion, according to Savills, following a strong performance in 2011, when property valued at approximately €22.6 billion changed hands.

Aerience Investments SA has launched a £100 million (€120 million) closed-end specialist debt fund, OREL.

Cushman & Wakefield Investors (CWI) has acquired a 2,100-square-metre office property in the City of London on behalf of the West Sussex Pension Fund.

CBRE Global Investors (CBREGI), on behalf of its European Shopping Centre Fund (ECSF), has acquired Centre Commercial Boissénart, an 11,450-square-metre shopping centre in Cesson – Savigny le Temple for €68 million.

While office markets around the world began 2011 strongly, a steady increase in uncertainty led to a major bump in the road to recovery taking shape during the third quarter of the past year. The outlook for 2012 is conservative as a result: relatively stable, perhaps, but slow and cautious when set against the backdrop of a weaker global economy.