Core offices remain a coveted real estate class in France, but rising vacancy rates signal an end to tightening yields A ‘recently unearthed home video of Ben Bernanke as a child’ throwing money out of the window neatly sums up the cause of the current financial crisis. The cleverly conceived moving image was part of a presentation by Mahdi Mokrane at PropertyEU’s Outlook 2013 Investment Briefing in Paris at end-November and underscores how humour can be a powerful tool for communicating a serious message.
Core offices remain a coveted real estate class in France, but rising vacancy rates signal an end to tightening yields
A ‘recently unearthed home video of Ben Bernanke as a child’ throwing money out of the window neatly sums up the cause of the current financial crisis. The cleverly conceived moving image was part of a presentation by Mahdi Mokrane at PropertyEU’s Outlook 2013 Investment Briefing in Paris at end-November and underscores how humour can be a powerful tool for communicating a serious message.
But how is the real estate industry dealing with the aftermath of an extended period of loose credit and what are the prospects for the world’s leading regions? The central message of AEW Europe’s head of research and strategy for the audience gathered together at CBRE’s office in Paris contained more cause for serious reflection than mirth. ‘It took me awhile to put together a slide for why things could go right in Europe,’ Mokrane confessed during his presentation. Europe will continue to struggle and kick the can down the road for the next four quarters, Mokrane predicted. ‘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.’ Elections next year in Italy (April) and Germany (September) are highly likely to drive the nature and timing of the eurozone crisis in the short term, he stated. ‘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 to 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 exportdriven 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 economic and structural real estate forecasts, he 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
macroeconomic forecasts were updated for France it would now actually go down.
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