Nery Alaev

Cautious outlooks on real estate in Europe for second half of year

Nery Alaev writes about real estate prospects for the second half of the year.

In a recent research report, global consultants TH Real Estate has offered an insight into top-down views on the prospects of real estate in Europe for H2 2016, as well as the Asia-Pacific region and the USA.

I’ve decided to look further into the research, covered in the report.

Prospects for Europe

Nery Alaev

Berlin, Germany. The country is seeing record employment, which has benefitted real estate.

According to the research, European commercial real estate investment saw a slowdown of activity in H1 2016. There is debate as to whether this slowdown is down to the current political climate in Europe which, thanks to issues such as Brexit and the refugee crisis, is very tenuous.

Despite this, the major economies of Europe are projected to record steady, although nuanced economic output. An environment of low borrowing rates twinned with good asset management will be beneficial for the future, according to the report.

Further benefits include the fact that Germany, the UK and Sweden have all recorded employment that exceeded pre-crisis levels, coupled with wage growth and subsequent spending growth. This is beneficial for the market as it means consumers are wealthy enough to invest in homes and property once more.

Commenting on the situation in Europe, Mike Keogh of TH Real Estate said:

 “It would be naïve to underestimate the global economic headwinds in 2016, but it is also worth noting that the Eurozone grew 1.5% in 2015, well ahead of expectations at the start of the year, making it entirely possible that a similar situation could occur in 2016.“

Regional opportunities

There may be opportunities present in recovering ‘occupier’ markets, especially in southern European economies which are higher-yielding and have more potential for rents to recover. This includes countries such as Spain and Italy. I’ve written before about the potential for Spain to recover well from its economic ailments which massively effected the property market.

In summary, it seems that if the current political turmoil in Europe subsides (easier said than done), then there is definite potential for good investment opportunities in 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.