Prime property investments will continue to be the main focus of those with money to plough into Europe's real estate sectors over the coming year. This is the assertion of Savills, which stated in its briefing note on European investment trends for 2012 that the poor economic outlook for the continent will have a negative impact on investor sentiment and confidence. As a result, prime assets in core locations will be the most popular targets, with the majority of those operating in the real estate sector choosing risk-averse opportunities.
Offices and retail properties are expected to be the most sought-after investments, with established cities such as London, Paris, Stockholm, Munich, Amsterdam and Warsaw likely to see the largest proportion of funds flowing into their real estate markets. Meanwhile, the gap between the top-performing European nations - like the UK, Germany and Sweden - and the periphery economies of Greece, Portugal, Spain and Ireland is set to widen. According to Savills, these countries won't see their property sectors stabilise until 2013-14, following further capital value declines this year.
"We expect markets with good fundamentals, balanced demand and supply and stable prime rents to attract the most investor interest, although as we are approaching the bottom of the cycle in the higher-risk markets, some opportunities may emerge for investors with a long-term investment horizon," the firm stated. BNP Paribas Real Estate recently predicted the level of funding being ploughed into western European property investments is likely to fall back in 2012, depending on the availability of credit on the continent.
The organisation revealed the total volume of transactions in the marketplace in 2011 was only two per cent higher than that recorded in 2010, indicating the recovery within the real estate sector has "lost momentum" as a result of the intensification of the eurozone crisis. While there was little movement in the amount of money flowing into the office sector, retail assets saw further growth over the course of 2011, with Italy and Germany accounting for the largest share of such deals.
- Thursday 16 February 2012