Continental Europe won't be hit by Brexit - M&G

According to the report, investors in Continental Europe are benefiting from increasing household spending power as well as occupational demand and lack of supply in core locations.

'Rental growth in core locations across continental Europe is performing well and Brexit is proving to have a muted impact on investment sentiment,' commented Richard Gwilliam, head of Property Research at M&G Real Estate. 'We expect continental European commercial property to remain attractive to investors seeking stable returns.'

The outlook states that the retail sector in city centre locations has experienced significant rental growth, with Paris displaying the strongest uplift, expanding around 20% since the start of the year.

Given that UK-based retailers do not represent a dominant source of demand in continental Europe, the report predicts the continued physical expansion of international retailers in Europe's prime city centres will be unaffected by Brexit.

Stronger GDP growth and the lowest unemployment rates in Continental Europe since July 2011 are also underpinning the office sector, giving developers the confidence to meet future demand with new schemes. The outlook anticipates that the European office sector will generate average rental growth of 2.3% per annum over the next three years.

Stockholm, Barcelona and Paris are highlighted as driving growth in the office sector markets with year-to-date rental growth of up to 11.5, 5 and 4.8% respectively.

Elsewhere, the logistics sector is proving robust and is predicted to generate average rental growth of 1.1% per annum. The area stretching from Lille to Marseille through the Paris region is an established distribution network and continues to demonstrate strong rental growth performance, according to the report.
Further east, Poznan and Lodz are major regional industrial hubs in Poland and have benefitted from the expansion of e-commerce and proximity to other major networks.