Europe will continue to struggle and kick the can down the road for the next four quarters, Mahdi Mokrane, head of research & strategy at AEW Europe, told PropertyEU's Outlook 2013 Investment Briefing held in Paris last week. 'The eurozone is fighting negative GDP growth this year and we will probably have near-zero real growth or contraction next year. That will result in a drag on consumption which will inevitably have implications for retail assets.'

Europe will continue to struggle and kick the can down the road for the next four quarters, Mahdi Mokrane, head of research & strategy at AEW Europe, told PropertyEU's Outlook 2013 Investment Briefing held in Paris last week. 'The eurozone is fighting negative GDP growth this year and we will probably have near-zero real growth or contraction next year. That will result in a drag on consumption which will inevitably have implications for retail assets.'

The gloomy macro-economic forecast for Europe is deterring US investors, he noted. 'US investors are interested in Europe but they are worried about the market. They are not ready to invest massively yet.' He added, however, that a key reason was not so much the fragile condition of the European economy, but rather the strength of the US market which is set to book above-trend growth in the coming years. 'They think the real estate market will rebound more strongly in their own domestic market. They think Europe will take time.'

Elections in Italy (in April) and Germany (in September) next year are highly likely to drive the nature and timing of the eurozone crisis in the short term, he continued. 'In the meantime Europe will continue to fiscally consolidate and flirt with double-dip recession.'

Mokrane also painted a sombre picture for Europe's economic outlook beyond 2013. Unemployment in Europe is set to continue rising until 2014-2015 while EU economies are not seen rebounding until 2016-2017, he said. 'That means they will only revert back towards historical GDP growth of around 2% by 2019-2020.' Longer-term, Europe will remain the sick man of the world, he added. ‘We’re in this for some time.'

Nevertheless, parts of Europe - in particular export-driven countries - may benefit to some extent from the above-trend growth forecast for the US and the BRIC countries, Mokrane said. Pointing to an attractiveness score drawn up by AEW Europe for real estate in Europe which combines the economy, structural real estate and economic forecasts, Mokrane said that two countries really stand out in this environment - the UK and Germany. 'France is a close third,' he noted. He added, however, that if the macro-economic forecasts were updated for France it would actually now go down.

Citing a recent cover story in The Economist, Mokrane pointed out that France is currently being viewed as 'the time-bomb at the heart of Europe'. Another statement made earlier this year on the cover of The Economist that France is still in denial was more to the point, he added. 'People have moved from the UK in the early 1980s to talk about the Nordic countries at the end of the decade as the sick man of Europe. Then we talked about Germany in the 1990s and early 2000s as the sick man of Europe. Then we quickly switched to Italy, but we don't talk about them anymore and now the focus is on France.'