CANNES/LAHORE (Web Desk) – The property sector is on a slide in the world, including Pakistan where we can still see multi-storey buildings vacant or mostly vacant. Reason is simple. The cost of doing business is so high that the there are no new ventures with the existing ones relocating to cheaper premises or merging with already used ones.
Inflation is still high and there are no or very little hopes of interest rate cuts coming soon. Hence, there are no large scale investments. We first saw the trend of high vacancy rate and property prices plunging in San Francisco as the trend became more visible in the case of China.
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Now according to Reuters, LaSalle Investment Management is reducing its exposure to offices in Europe and believes between 20pc and 30pc of office space in the region could be "obsolete", the firm's head of Europe said on Tuesday.
"Is there redundant space in areas where it shouldn't have been in the first place? I think maybe 20 per cent to 30 per cent of office stock is probably obsolete," Philip La Pierre, head of Europe at LaSalle, told Reuters at the MIPIM real estate conference in Cannes.
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La Pierre said the commercial real estate market remained "fickle", although there were signs that investors were slowing redemption requests and becoming used to lower prices.
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"Everyone has to accept the fact that pricing is down 30pc to 40pc and they might want to liquidate their position ... Now they're willing to do it. But it takes a year or two psychologically to adapt to the fact that you're making a loss," he said.
Despite the tough conditions, LaSalle is targeting growing its overall property acquisitions in Europe to $2 billion in 2024, up from $1.8 billion last year, and sees growth opportunities in real estate debt, La Pierre said.
LaSalle is an independent part of global property services firm Jones Lang LaSalle.