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Corporate Real Estate: Investment and EU Cities

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One common trend is the great difficulty to access finance. Banks have virtually ceased to lend money for investment and only major international firms can get access. In some cities investment activity has virtually come to a standstill, meaning hardly any new construction projects or refurbishment activities are taking place. This happened quite sudden. The global financial crisis has had a major effect causing investors and occupiers to postpone decisions. The decision-making process has become extremely difficult and many economic actors are waiting to see how the crisis will develop. However there is also a virtuous effect of the crisis in the form of a clean-up of the real estate market, with less speculation, and a return to fundamentals and real values. The need for more transparency, professionalism and common standards was affirmed in each city, especially in the field of green ratings and codes of measurement. Occupiers all over Europe are focusing on consolidation, cost-cutting, productivity and flexibility: demand is high for a more efficient workplace allowing new ways of working and reducing the need for space. Corporate Real Estate professionals are under pressure to deliver creative solutions to suit requirements in cities where landlords’ expectations and quality of real-estate stock are still lagging behind international standards. The demand for sustainable buildings varies across Europe. While green buildings are requested by international investors and are the only choices considered in Northern and Western Europe, markets in Eastern and Southern Europe are slowly picking up and still suffer from a lack of A-rated buildings to suit occupiers’ requirements. Urban planning and strategies at the local authority level greatly influence the choices of occupiers since they affect the way they can operate in a market. Efficient public transport, connectivity to other secondary cities and quality of life were mentioned as important drivers of investment attraction and retention of high-skilled labour. Greater levels of dialogue are needed between occupiers, the real-estate profession and local authorities in order to boost synergies and deliver the ideal urban fabric and regulatory framework to allow for a sustainable growth. In order to be successful as a city, government and policy decision makers need to consistently monitor how easy it is for businesses to locate in their city and make decisions accordingly. RICS members, in their roles as service providers for corporate occupiers, increasingly and consistently deliver added value to businesses within their corporate real estate strategies.

Source: RICS

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