Investors in commercial property should look to Sweden, Germany and Finland for the most attractive risk-adjusted returns over the next five years, according to an analysis by Aviva Investors. Finland has become the least risky market in Europe for real estate investors from a macro-economic perspective, the investment manager said.
Investors in commercial property should look to Sweden, Germany and Finland for the most attractive risk-adjusted returns over the next five years, according to an analysis by Aviva Investors. Finland has become the least risky market in Europe for real estate investors from a macro-economic perspective, the investment manager said.
In contrast, investors in Southern European real estate markets and particularly in Spain face high risks and low return expectations relative to other European countries.
Finland replaces Sweden, which has experienced a slight worsening in its macro and property risk ratings in the last six months, but which overall remains one of the most attractive markets for investors.
At a sector level, Finnish offices appear most appealing with Swedish industrial, Swedish retail and German industrial all relatively attractive. Risk-return prospects are least appealing in the retail and office sectors in Spain and Italy.
'We are expecting negative capital growth for many markets during the next two years, which will constrain investors’ total returns,' said Chris Urwin, Global Research Manager for Aviva Investors. 'However, for those making strategic allocation decisions, certain European markets present a strong investment case over the medium and long term. Of these, our research suggests that higher yielding industrial markets in countries such as Germany and the Nordics are worth close consideration.'
