While the vast majority of European real estate investors expect the eurozone to survive, the debt crisis and the uncertainty surrounding its consequences for European real estate markets continue to create headwinds for investment in Europe’s three largest economies. That is one of the findings of the latest investment climate study from Union Investment.

While the vast majority of European real estate investors expect the eurozone to survive, the debt crisis and the uncertainty surrounding its consequences for European real estate markets continue to create headwinds for investment in Europe’s three largest economies. That is one of the findings of the latest investment climate study from Union Investment.

The survey showed that just 12% of the real estate investors polled believe the break-up of the eurozone is a likely scenario. Having said that, a further decline in expectations of an economic recovery in Europe more than justifies an adjustment of investment strategies, the survey found.

The proportion of investors who anticipate a Europe-wide recession is currently 42% - up five percentage points on the corresponding figure from the last survey in December 2011. As a result of the euro crisis, around 90% expect financing banks to impose tougher capital requirements, with over 80% anticipating a greater concentration of real estate investment in the stable markets of northern Europe. A total of 65% expect a significant decline in new-build activity as a result of the debt crisis.

'Investors also remain concerned about a new credit crunch, although the situation has eased somewhat,' said Olaf Janssen, head of property research at Union Investment Real Estate. Today, a new credit crunch is a likely scenario for 62% of German, British and French real estate professionals, compared with 72% in December 2011.

The survey took place in the second quarter of 2012 and polled 172 investment decision-makers at real estate companies in Germany, France and the UK.