But a second report, this one produced by DTZ, counters that, while data appeared to show high debt levels, comparisons with previous property-market cycles had to be made carefully. "With outstanding private debt now around two and a half times the level that it was at the end of 1991, there is increasing concern over whether current debt levels are sustainable," the report states. "In this economic environment, debt is likely to remain affordable, with investors able to take on a higher degree of leverage." DTZ bases this argument on the likelihood that interest rates will not continue to rise.
The firm's report went on to predict that net capital flows into commercial property of euro 43.68 billion ($52.7 billion) are expected this year, a euro 2.9-billion ($3.5-billion) increase from last year. "Private capital has driven the UK market in recent years, and privately financed investors are expected to remain the key capital source for the UK over the coming 12 months," the report says.
Last year was a record period for acquisitions, at euro 70.4 billion ($84.51 billion), a rise of 70% from 2003, driven in part by a large number of corporate deals. DTZ states that non-domestic purchases accounted for about a third of all UK real estate acquisitions, with London taking the lion's share of the capital. Cross-border investment continues to grow, and Great Britain took euro 23.01 billion ($27.76 billion) in cross-border acquisitions last year, accounting for 44% of the European total, ahead of France's 24% and Italy's 8%.
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