Invista: 'stable' European markets will benefit investors

Nathan Cross 11/03/2010 12:00

Continental European property markets should benefit from more stable economic conditions, subdued development activity and attractive pricing, according to research by Invista Real Estate Investment Management.

The company said investor demand will be characterised by a requirement for high and stable income returns in the short term, and cyclical growth opportunities in the medium term.

It added its expects property returns in 2010 to surpass the “modest growth” reported last year.

Invista said it believes rental declines will begin to slow this year as confidence in the economic outlook improves and tenants take advantage of better rental affordability.

“France looks set to perform strongly, with prospects for rental growth in the medium term considered to be good in Paris’s CBD office market, where low vacancy rates and negligible future supply are expected to lead to strong competition amongst tenants for good quality space,” said Invista.

“By contrast, markets underpinned by more cyclical economies, such as Ireland, Portugal and Spain are not expected to see strong improvements in returns until after 2010-2011 when capital re-pricing abates and rental growth resumes.

“Belgium and the Netherlands are expected to see ungeared returns in the 7% to 8% per annum range, driven primarily by high and stable income returns.”

nathan.cross@estatesgazette.com

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