A house divided  How Europe views prospects for real estate investment

Real Estate Assets Investments Trend Indicator

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Although the future may remain uncertain for many asset classes, the climate is looking more favorable for real estate investment, with many respondents predicting a shift from traditional bank lending to other sources of capital.

European real estate investors have different objectives and priorities. Attitudes vary with respect to risk, asset class and quality, and capital growth versus income.

Among the more than 500 real estate investors across the 15 countries in Europe we surveyed in late 2012, there appears to be consensus on the evolution of the macroeconomic environment. We take a closer look to determine their predictions for 2013.

Key findings: expectations for 2013

The most important finding of this survey involves a change in perception that is likely to boost sentiment. The Eurozone sovereign debt crisis, which was previously seen as undermining real estate investment, is now viewed as a potential stimulus for activity.

Other main findings include a more balanced interpretation of recent regulatory developments, and conclusions related to the likely characteristics of the real estate market in 2013.

The survey findings also reveal that investors:

  • Still view most European countries as attractive investment destinations; this is particularly true for non-Eurozone countries such as the UK
  • Think it likely that Basel III regulation will have an adverse effect on bank financing availability for real estate investment
  • Anticipate that insurance companies and pension funds will likely pick up some of the volume of debt financing for real estate transactions
  • Expect transaction volumes to rise, driven in large part by cross-border investments
  • Think green-building standards are playing a key role in many markets
  • Perceive speculative project developments to be returning only gradually in many markets
  • Expect stability and also some growth potential for prime offices or rising prices for prime retail and residential property in most European countries

Download our full report for further details and analysis of the 15 countries surveyed in our research.