Growing confidence about the economic recovery in European is continuing to draw in foreign property investors into the region, according to the Royal Institution of Chartered Surveyors (RICS) Global Property Survey. But fierce competition for prime assets in the established European centres is increasingly driving cross-boarder investors eastwards - despite the added risks associated with second and third-tier cities. With yields still above borrowing costs in much of the Eurozone, debt/backed funds have remained active although an eastward shift in the market has eaten into available supply.
Growing confidence about the economic recovery in European is continuing to draw in foreign property investors into the region, according to the Royal Institution of Chartered Surveyors (RICS) Global Property Survey. But fierce competition for prime assets in the established European centres is increasingly driving cross-boarder investors eastwards - despite the added risks associated with second and third-tier cities. With yields still above borrowing costs in much of the Eurozone, debt/backed funds have remained active although an eastward shift in the market has eaten into available supply.
RICS said industrial property has seen the biggest global re-rating amongst investors as the US slowdown has been impacting less on global exports than previously feared. The easing of the US economy has failed to hold back expansion in tenant demand across emerging markets, resulting in swathes of money continuing to flood into the more speculative regions.
In Germany, Ireland, the Netherlands and France, investor demand activity picked up further across all three sectors (retail, industrial and office sector) with transaction activity in France and Germany most buoyant in the office market. In Spain, investor demand moderated in the retail market but picked up across other sectors. Only Italy and Switzerland saw more limited transaction activity due to new laws on the transfer of real estate ownership (Italy) and limited supply of product (Switzerland).
Growth in activity was driven notably by cross-border investors attracted by the belief that a sustainable recovery of the European economy is on track, with economic growth at 2.8% in 2006, the highest in seven years. Foreign investors continued to dominate purchasing across most countries in the region with the exception of the UK, Ireland, Greece and the Iberian Peninsula, where domestic investors are the most active players.
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