Investments in real estate continue to boom in Europe
Confidence in the real estate sector is improving around the world, but most notably in EU markets, where investors’ demand is growing, according to property professionals responding to the latest RICS Global Commercial Property Monitor. During the third quarter of 2016, investment demand for commercial property has been particularly strong in a number of European cities, including Munich, Frankfurt, Berlin, Madrid and Budapest, supported by good economic conditions and benefiting from the actions of the European Central Bank, which has been injecting a large amount of liquidity into the economy. Capital values are expected to remain robust across the EU in the coming twelve months.
Looking at the occupier side, RICS indicators shows the best results in Hungary, with occupier demand growing in the office, industrial and retail sectors for the fourth consecutive quarter. RICS anticipates rents in this country will be pushed higher in the coming months, especially across prime assets.
Strong activity in the occupier market and rental growth is also expected during the year ahead in Ireland, Germany, Spain, as well as in Bulgaria, Romania and France.
In Switzerland, demand from both domestic and foreign investors was flat over Q3 at the all-sector level, almost mirroring the trend reported in the previous quarter
In the UK and especially in London, where sentiment dipped in the immediate aftermath of the EU referendum, the market appeared to have settled down during Q3 and expectations point to little change in the short term. However, a large number of respondents interviewed across Europe have seen evidence of firms looking to relocate some parts of their business away from the UK, in response to the Brexit vote. Over 30% of respondents in Poland, Germany and Ireland have already received enquiries from companies to relocate abroad since the vote in June, and at a lower scale also respondents in Spain, The Netherlands and France. Expectations about seeing some new activity due to relocation of businesses over the next two years particularly high in the cities of Berlin and Frankfurt.
In the rest of the world, sentiment is also very positive in New Zealand and in India. However, the negative market outlook across certain parts of Asia and the Middle East, reflect the challenging macro backdrop.