* Says repricing of European comm. property has found floor
* Weak stg has lifted offshore interest in UK property mkt
* Says retail sector more lettable than offices, warehouses
* Sees UK IPD Index weak in 2010, due to falling rents
LaSalle Investment Management on Monday said investor sentiment in the European commercial property sector had stabilised, that repricing had found a floor and that there was rising interest in the UK market.
In its 2009 Mid-Year Update, the U.S. real estate investment firm said, looking forward to 2010, investors should capitalise on the reversion to more sustainable pricing in commercial property, although deals will need to withstand falling rents.
This could be achieved by long leases or by picking properties that were so attractive to occupiers that they will weather the recession without this protection, LaSalle said, adding retail offered the best investment prospect.
Good retail property is much more lettable in a recession than an office or warehouse as there is always a retailer looking to expand, even in tough times, LaSalle said.
LaSalle's head of European research and strategy, Robin Goodchild, said there were great opportunities emerging in the UK to acquire good-quality real estate at attractive prices, particularly from real estate investment trusts (REITs).
More of these opportunities are starting to appear in Continental Europe as banks begin to deal with non-performing loans and their REITs are increasingly squeezed by re-financing issues, Goodchild said.
Cash-rich investors that could react swiftly were most likely to benefit from the round of re-pricing, and delaying investment decisions could increase the risk of missing the upturn and yield recovery phase.
However, some of the best opportunities are likely to be in partnership with the banks because of their desire to avoid fire sales, Goodchild said.
Meanwhile, a number of offshore investors had been enticed to the UK market because of the pound currency's weakness, including the Canadian Pension Plan, Goodchild said. In all these cases we have focused on high quality, robust cash flows and I doubt if we could buy these properties at as attractive pricing today, Goodchild said.
LaSalle also said debt markets would remain highly restricted with lending limited to preferred long-term customers and trusted business models. Even then, customers borrowing more than 50 million euros ($70.79 million) would prove difficult.
Typical loan-to-value ratios on prime assets were now limited to 50-60 percent, with finance not available for speculative developments, LaSalle said.
It expected the benchmark UK Investment Property Databank Index to remain weak into 2010, mostly due to falling rents, before recovering sharply as prices become more attractive relative to other asset classes.
On July 14, IPD said British commercial property values had fallen 0.9 percent in June, nearly half May's decline and taking the market's total fall to 44.1 percent since June 2007. [ID:nLE533285] ($1=.7063 euros) (Reporting by Andrew Macdonald; Editing by Marie Maitre)