Nery Alaev

Peripheral markets are an investor target in 2016

Nery Alaev writes about changes to investor targets in Europe.

According to a major real estate firm, ‘peripheral’, European real estate markets are becoming an investor target in addition to markets that haven’t completed their respective cycle yet.

I’ve decided to look deeper into this and find out more about the markets targeted as well as the news in general.

Market cycles

As aforementioned, areas that aren’t at the end of their ‘market cycle’ are popular targets, according to reporting by Savills.

Nery Alaev

Helsinki, Finland. Finland is a new target for investors.

What is a market cycle? The definition is quite complex, and there’s more than one.

Investopedia defines market cycles as either:

“Trends or patterns that may exist in a given market environment, allowing some securities or asset classes to outperform others. The securities themselves may exhibit price patterns in their trading.”

Or

“Trends within a particular sector or industry created by a particular innovation, product line, or regulatory environment. Revenue and net profits may exhibit similar growth patterns among many companies within a given industry.”

External effects

Taking into account the second definition, the regulatory environment is a definite factor in the changes in demand. A quote from Eri Mitsostergiou of Savills states:

“Low interest rates and loose monetary policy in Europe continued to underpin investor demand for commercial real estate last year…

…Over half of its countries surpassed their previous investment peak of 2007/2008.

The countries that witnessed negative year-on-year growth were those to have already experienced striking recovery in 2014, showing that the investment activity in these markets is gradually normalising.”

The quote implies that the monetary policy enacted by European nations in the wake of the Great Recession of 2008 has had an effect on demand for property across the region.

Nery Alaev

Nery Alaev is the current Director of ESN Investments GmbH, which engages in acquisition and development of commercial and residential property in Germany and Austria.

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