Debt-laden European governments seeking ways to raise money are considering the possibility of selling public properties such as office buildings. Countries considering selling assets include Germany, the U.K., France and Greece, all of which were hit hard by the global banking crisis.
“It is clear that several European governments are looking to secure disposals on a large scale,” noted Richard Holberton, a CB Richard Ellis director. Although Holberton says it’s not clear what effect these sales would have on government funds, “their impact on real estate markets could be a lot more significant.” Government-owned assets comprised between two and 2 ½ percent of all European public sales since 2006. That could double this year, according to CBRE, and could account for four percent of the €100 billion — $125 billion – that will be sold this year.
Although some properties are expected to attract significant purchaser interest, some government buildings won’t sell so easily. Surplus office buildings could be in undesirable locations, for example. Prime assets that are still occupied by government offices will have far more appeal to investors. “Where assets are well located, of good quality, and continue to produce income from occupation by a public-sector tenant, this generates an income stream that is attractive to investors,” Holberton said.
compared with last year. Second-quarter totals for EMEA markets are down 24 percent from the first quarter to just $17.3 billion, a 71 percent drop from 2008. The good news is in the Asia Pacific markets, where RCA projects an 18 percent gain over the first quarter with a total of $23.3 billion in sales, approximately half of the second-quarter worldwide numbers.