Union's Investment index reaches four-year high

The economic recovery has significantly improved the climate for real estate investment in the three major European economies of Germany, France and the UK, with optimism at the start of 2011 higher than at any time since 2006, according to Union Investment's Investment Climate Index.

The six-monthly index climbed to 70 points at the end of 2010, its highest level for four years. Positive sentiment is particularly evident in Germany, where the national index rose for the third time in succession and at 71.4 points has outstripped France (70.6) and the UK (68.1) for the first time since 2008.

In autumn 2008, the overall European index stood at an all-time low of 58.9 points. 'German and French property investors now offer proof of renewed confidence in the sustained recovery of these two core markets, but the survey results also reveal that the UK investment markets still have some way to go in terms of recovery,' said Olaf Janßen, head of research at Union Investment Real Estate. For its latest investment climate survey, Union Investment commissioned market research institute Ipsos to interview 174 decision makers at property companies in Germany, France and the UK.

Although parts of the property sector suffered severely during the economic crisis, 63% of property companies now rate their situation as better or significantly better than 12 months ago. A clear majority (64%) in all three countries were also upbeat about their prospects in 2011. This high level of optimism is also evident in the statement by 63% of surveyed companies that they intend to significantly increase their investment in real estate this year compared to 2010.

'The investment market will see a further significant improvement in 2011,' noted Janßen. This is borne out by a further fall in the number of investors focusing on security, with only 30% of companies citing 'security' as their core investment motive, compared to 42% in summer 2010.