MAGAZINE: Europe starts New Year in recovery mode

The lights appear to have turned to green for large swathes of the European real estate market. In the first weeks of 2014, the PropertyEU team filed a string of upbeat reports on prospects for the year ahead.

Global adviser Jones Lang LaSalle expects ‘exceptionally strong’ investment activity in the first quarter of 2014 will boost full-year growth in the European property market to 10%. The forecast comes after a strong performance in 2013 which saw full-year propertyinvestment in Europe grow 14% in US dollar terms to $184 bn (€135 bn). With more regional and global capital being diverted towards property, there appears to be more upside than downside potential in 2014, according to Jan-Willem Bastijn, head of European capital markets at Cushman & Wakefield. The adviser also believes cross-border investment activity is likely to rise further this year in EMEA after reaching over 40% in 2013. This compares with a cross-border investment rate of around 12% in the Americas and Asia over 2013. A wave of capital from Kuwait, Singapore, China and Germany flowed into the Central London property market in 2013, boosting investment to the highest level ever achieved, according to property advisers Savills and CBRE. As the competition for core real estate assets continues, not just in London but also in other leading cities on the Continent, investors are extending their horizons. According to BNP Paribas Real Estate, investors are showing greater interest in European second-tier markets in their search for value creation opportunities. For the coming year, the adviser has singled out 10 secondary markets with strong potential: Warsaw, Dublin, Amsterdam, Milan, Barcelona, Rome, Madrid, Brussels, Luxembourg and Bucharest. The renewed focus on secondary cities is also signalled in the latest edition of Emerging Trends in Europe, the annual report published by the Urban Land Institute and PwC. While office investors in Munich are paying yields of approximately 4%, those willing to invest in smaller German markets such as Stuttgart can achieve up to 6.5%, the authors point out. Munich tops the ranking of Top Investment Markets for 2014, with Hamburg and Berlin in third and fourth place respectively.