GLOBAL - Institutional investors may overcome their reluctance to acquire sold-off public-sector property assets - but not in the markets keenest to sell them, CBRE research suggests.

CBRE EMEA research head Richard Holberton told IP Real Estate that, despite governments upgrading their marketing efforts, cross-border investors would not overlook underlying market problems.

"Some governments are trying to clean up their offer by with coherent auditing of assets and better identification of potential investors," he said.

"Understanding the market - rather than taking a piecemeal approach - might widen the market for these assets. But better marketing won't remove issues such as a lack of transparency."

To date investor appetite for sold-off state-owned assets has been largely domestic, with cross-border investors accounting for only 10% of acquisitions last year.

Holberton did not rule out an increase in international institutional investor appetite - but only for high-quality assets in attractive markets.

Income-producing assets occupied by governmental or quasi-governmental bodies will be more likely to sell, unlike surplus properties characterised by significant vacancy risk.

"Where the building is matters," he said. "Some peripheral European markets have the most ambitious programmes - but investors aren't favourably disposed."

Public-sector property sales totalled €2.3bn last year - more than double the previous year, according to a recent CBRE report.

Yet it pointed to variations across Europe in policies and structures to deliver sales programmes, including valuations.

In Spain, marketed portfolios often include secondary and restricted-use assets with investor-attracting prime ones - an approach that both influences pricing and potentially makes them less attractive to prime-seeking investors.

Germany, Sweden, Russia and the UK collectively accounted for 75% of 2011 sales.
The Netherlands accounted for a further 10%.

Residential accounted for most disposals in Sweden, and will likely dominate German disposals - including the finance ministry's sale of the state-owned TLG Immobilienholding portfolio valued at more than €1.7bn - following an early focus on office. 

Political risk - public opposition to governments perceived to be selling national assets - remains an issue in some markets.

"It depends where," said Holberton. "In Southern European peripheral markets, where the need to shore up public finances is greatest, it's probably less of an issue."