Real estate heads 'back to basics' - CBRE

The future European real estate market will be much more traditional than in recent years, according to the latest research from CB Richard Ellis. The financial engineering, high levels of gearing and reliance on yield compression to generate returns that were such a feature of the last four years are a thing of the past, according to the new CBRE report entitled 'European Property: Back To Basics?'

The report was published on Wednesday at the MIPIM international property fair in Cannes, France.

CBREsaid investors will be focussing on long-term returns and the more conventional ways of generating profits: buying quality buildings in good locations that benefit from strong demand and rental growth; and adding value to investments through active management of the physical property and its tenancy characteristics.

'For many investors who found it difficult to identify value in the market over the last few years, this will be a welcome return to a pricing environment in which investors get properly rewarded for taking risks that they can understand and manage, and for adding value to their assets,' said Nick Axford, head of EMEA Research & Consulting at CBRE and one of the authors of the report.