EUROPE – If certain peripheral economies do not leave the euro-zone, Europe will suffer and could experience real estate bubbles in core markets, delegates at INREV's CFO conference heard last week.

Speaking at the annual event in Amsterdam, Jonathan Tepper of economic research group Variant Perception said history showed that "currency breakups" were often followed by economic recoveries, but keeping the euro-zone intact was likely to result in years of economic stagnation.

Maintaining the status quo could even encourage the emergence of real estate bubbles in Northern European real estate markets, as capital is concentrated away from peripheral economies, Tepper added.

During a subsequent panel discussion, Stephen Tross, international investments director at Bouwinvest, said he expected Greece to exit the euro-zone and that Europe would "suffer for some time" if it did not.

He said only 2% of Bouwinvest's international real estate portfolio was exposed to PIIGS markets and so was not concerned about the direct effects of a Greek exit.

But he warned that investors – both European and non-European – were increasingly looking outside the region for real estate investments due to the poor economic outlook.

Germany's largest pension fund BVV recently revealed it was shifting its focus to global real estate mandates due to a perceived dearth of opportunities in Europe.

Another German pension fund is also looking to Asian real estate markets for similar reasons, according to Reinhard Mattern, managing director at iii-investments.

The real estate fund manager recently acquired four residential properties in Tokyo and Yokohama for the pension fund.

Mattern said: "As a reaction to the present market situation in Germany and the European markets, we have been searching for alternative investment locations and analysed the Japanese and South Korean markets in particular."

At the INREV CFO conference, Scott Quinn, finance director at Pradera, explained how the retail property specialist fund manager was seeking to "effectively ring-fence" two Greek assets in one of its funds.

Tepper warned that any breakup of the euro-zone might not necessarily only involve Southern European economies.

His analysis showed that currency breakups invariably "happen in clusters" and that the stronger economies are often those prompted to leave because of dissatisfaction with currency-area policies.

The potential for Finland to leave, for example, was discussed.
Jonas Berg, chief financial officer at Genesta, said the country would stay, although Ilkka Tomperi, partner at Capman Real Estate, did not rule out the possibility of its exit.

Tepper said one country leaving a currency area could lead to a chain reaction, and that such a multiple-exit scenario could span several years.