EUROPE – Investor interest in higher-return strategies and certain secondary assets is reviving, according to reports from Aviva Investors and LaSalle Investment Management.

Low yields from prime real estate assets are persuading investors to cast their net wider.

Aviva favours better-quality secondary assets in the UK, among other locations.

David Skinner, CIO for real estate, said: "In the UK, we are witnessing a turnaround in the market and increasingly identifying good opportunities in better-quality secondary assets.

"There is a similar picture in many other parts of the world, where investor focus is spreading from high-quality assets with secure incomes to the market more widely."

LaSalle identified the yield gap between primary and secondary property in the UK as presenting significant opportunities.

Mahdi Mokrane, LaSalle IM's head of research and strategy, said: "This yield gap reflects, in part, challenging leasing environments, but investors are generally more than compensated by the pricing differential witnessed today."

Global real estate markets saw gradual improvement in the first half of 2103.

The improvement in the US economy is well established and expected to continue, with consequent impact on the real estate outlook.

Skinner said: "In gateway cities, the real estate recovery is now well embedded, but, with occupier markets and the prospect for income growth steadily improving in cities across the US, there is significant potential for the recovery to broaden – both to second-tier cities and better-quality secondary assets."

Europe on the whole remains weak, but Germany and the Nordics are bright spots.

Capital flows from non-domestic investors are focusing almost exclusively on major gateway cities of Europe, with London the standout destination for investments, according to LaSalle.

Mokrane said: "Just four markets – the UK, Germany, France and the Nordics – attract 80% of the regional volume.

"In fact, London accounts for 80% of all Chinese property investment in Europe over the past five years."

Logistics as a sector was singled out by both firms, LaSalle highlighting logistics, retail and edge-of-core properties for future value.

Skinner said: "We are interested in the potential of real estate assets that are related to logistics – including transport, order fulfilment and inventory management, in Australia, Japan and China.

"The underdeveloped logistics sector in China is particularly promising."