Analysis: No simple answer to EU growth vs. austerity conundrum

Reuters) - Fierce debate is growing in Europe over whether austerity or growth offers the best strategy to overcome the continent's sovereign debt crisis. As if it were that simple.

As the euro zone hovers on the brink of its second recession in three years, the battle launched in academic journals, blogs and the financial press has spread to the hustings in France, Greece and soon in EU economic powerhouse Germany too.

"Europe can't cut and grow," Sony Kapoor, head of the Re-Define think-tank, and Peter Bofinger, a member of the German Council of Economic Advisers, said in an article before European Union leaders adopted a budget discipline pact last month.

"The EU needs a growth compact, not a fiscal one. Swift action on tax and jobs is the way out of the crisis."

The growth camp argues that synchronized austerity across Europe will only aggravate economic contraction, swell the ranks of the unemployed and make it harder for debt-laden countries to reduce their deficits and restore market confidence.

Less government spending reduces public sector jobs and shrinks demand, depressing consumer spending and investment, and risks pushing the economy into a self-defeating vicious cycle.

"The question is whether governments should relent in their efforts to reduce deficits now, when the global economy is still weak, and policy credibility is far from granted," economist Giancarlo Corsetti said in a debate on the VoxEU website.

Harrison Ford selling Brentwood mansion he called home for 30 years

ighteen months after buying a $12.65 million mansion with his third wife Calista Flockhart, “Raiders of the Lost Ark” star Harrison Ford has listed his pristine country Colonial home he’s owned for almost 30 years on the Brentwood real estate market in LA for $8,295,000.

According to The Real Estalker , Ford acquired the Gerard Colcord-designed, country Colonial home in June 1983 for $1,000,000, which places the purchase date about six years after the 1977 release of “Star Wars,” for which Ford was nominated for an Academy Award, and about two years after “Raiders of the Lost Ark” 1981 release.

Guess it’s finally time to move on, although given the meticulous remodel that appears to have spared little cost and given tremendous attention to detail, Ford’s home has been a master work in progress with polished wood floors, moldings and many built-ins.

The main house is set high above the street just below fabulous The Getty Museum. The 7,164-square-foot house was originally built in 1951 and has 4 bedroom suites with an additional poolside, one-bedroom guesthouse plus two additional detached guest/staff suites.

Continued rebalancing in the medico-social real estate sector

Regulatory News:

Gecina (Paris:GFC) has acquired real estate companies owning a portfolio of six nursing homes from MAPI Invest, a joint venture between the WP Carey and CPA 15 funds.

The six facilities are all in outstanding locations in urban and residential areas across the Paris Region (Paris, Poissy, Chatou, Rueil-Malmaison, Rosny-sous-Bois and Sarcelles). They are let to the Medica France group under triple net investor leases, with a residual firm period of 9.5 years. These six assets are valued at 70.5 million euros excluding duties, based on 4.6 million euros in annualized rental income, giving a net yield rate of almost 6.2% for this portfolio.

In this way, Gecina is continuing to diversify its healthcare real estate portfolio, in line with the process that began in 2011 with the acquisition of the Foncière Sagesse Retraite portfolio (30 nursing homes across France, with 26 let to Domusvi and four to Korian), while rebalancing its property holdings through greater exposure to the medico-social sector (30% of rental income from this segment following the operation, versus 25% previously).

Gecina's strategy for partnerships with the main healthcare operators is also continuing to move forward with this acquisition. Indeed, Gecina has further strengthened its alliance with the Medica France group, number four on the French nursing home market with 9,730 beds and 123 facilities. Before this operation, Medica represented 4% of Gecina's annualized rental income on healthcare real estate, with this figure rising to 10% following this deal.

Paris Preferred Place for Property Investment

London has long been the darling of European property investment for many foreign buyers, but CBRE reports that the top spot has been overtaken by Paris as a result of weakening interest in other locations due to the Eurozone financial crisis. Russia is also gaining in interest, supplanting Berlin for the sixth slot on the list of most desired locations. Nordic cities and various areas in Germany are also attracting more attention thanks to their comparatively more responsible financial management and stability. Even so, the supremacy of London and Paris give credence to the benefits of being historically popular. For more on this continue reading the following article from Property Wire.
Paris has overtaken London to become the number one city in Europe for property investment while Moscow has overtaken Berlin as the number six city, according to global property adviser CBRE.
With the onset of the financial crisis in the third quarter of 2008 foreign investors largely abandoned Russia and have not yet returned in significant numbers. Domestic investors account for the majority of commercial real estate investment in Russia.

But according to Christopher Peters, director of research at CBRE in Russia once foreign investors recover their appetite for Russia her place in this table will rise further.
The Russian real estate investment market as a whole recorded €1.684 billion of activity in the fourth quarter of 2011. Together with the second quarter of 2011 with investment of €1.790 billion, these were the highest quarterly volumes seen in real estate investment since before the onset of the financial crisis.
A surge in investment activity in the final quarter of 2011 meant that investment in Paris jumped from €3.6 billion in the first half of the year to €7.9 billion in the second half, resulting in the first change in the top two of the rankings since CBRE began compiling the list in 2004.
But investment in central London in the second half of 2011 was far from subdued at €7.8 billion. Although failing to match the very high total recorded in the second half of 2010.
The French real estate investment market as a whole recorded €6.5 billion of activity in the final quarter of 2011. This was the highest quarterly turnover for France since the third quarter of 2007 and was ahead of every other market in Europe during the final quarter of 2011 except the UK, which saw an estimated €8.3 billion of investment activity.
Investment activity in France was heavily biased towards the Paris office sector and included large portfolio and single asset deals.
‘Investor sentiment in Europe has been heavily influenced by the sovereign credit rating downgrades and the lack of a solution to the Eurozone crisis. This has driven European investment activity towards the Nordic markets and German cities in particular,’ said Jonathan Hull, EMEA head of capital markets at CBRE.
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