GLOBAL - "Growth will fall - but not off a cliff." That is the latest prognosis for European property markets from LaSalle Investment Management.
As the group's quarterly outlook forecast continued appetite for prime assets, investment manager Matthew Sgrizzi said investors would continue to buy real estate equities.
More specifically, he said these represented a midway asset between bonds and non-property equities, reflecting returns associated with moderately leveraged real estate.
Despite a Q1 fall, property equities outperformed equities, which fell 14.5%, largely as a result of safe haven markets such as Finland and Switzerland.
"Historically, Finland - a small market with liquidity risk - has traded at a higher yield. And Switzerland? Nothing bad ever really happens there," said Sgrizzi.
Q1 figures also indicate investor appetite for quality, according to European securities head Ernst-Jan de Leeuw.
"Investors aren't throwing in the towel yet. They want good quality assets with strong management teams and balance sheet capacities. They want rental growth," he told IPE Real Estate.
"You're seeing a pricing differential between secondary and good-quality secondary, and even more so between secondary and prime. Yield movements are faster in prime and you can get rental growth from good quality assets. With secondary, you don't ever get rental growth," added de Leeuw.
In a note on Italian real estate investment trusts (REITs), Sgrizzi also claimed Italy was "in some ways ideal" because banks and the government, which own a lot of property, could sell it into REITs.
He said: "The fact that Italy introduced REITs came as a big surprise - but the government hasn't made a good job of making the legislation clear. On the other hand, there was no government for a couple of months so it had other things on its mind. The legislation isn't ideal, but it is in place."