PROPERTY: Increasing investor interest in assets

21 views
4 mins read

Dublin, Madrid, Athens, Birmingham, Amsterdam and Lisbon all set to benefit from increased investor interest, according to PwC and ULI

Competition for prime assets in Europe’s major real estate markets is leading property investors to continue their move into secondary assets and recovering markets, according to Emerging Trends in Real Estate® Europe 2015, a forecast published jointly by the Urban Land Institute (ULI) and PwC. The report highlights a surge in popularity for real estate investment opportunities in a number of cities that were hit particularly hard during the last market downturn, with dramatic rises in this year’s city rankings for Madrid (up 16 positions), Athens (up 23 positions), Birmingham (up 14 positions), Amsterdam (up 17 positions) and Lisbon (up 17 positions).

The report finds that in spite of economic uncertainties in Europe, property remains fertile ground for investors. 70% of investors expect more equity and debt will flow into their markets this year in a quest for the best real estate. The biggest problem is a shortage of assets, ahead of the challenges of regulation or the cost of finance. A large majority of investors (82%) believe the availability of suitable assets will have a moderate or significant impact on their business this year.

As a result, real estate investors – armed with capital from sovereign wealth funds and pension funds from Asia and North America – are moving into less competitive environments, looking at secondary cities, secondary assets and development opportunities. Berlin, for example, has replaced Munich as Europe’s top market for investment, as it is viewed as less costly than other major German cities.

Top Investment Markets for 2015

The top five European real estate investment markets in 2015 are predicted to be:

1. Berlin – The city has moved up the rankings from last year, knocking Munich off the top spot for investment prospects this year. Historically dominated by domestic buyers, Berlin’s investment climate has now changed as international investors pour capital into the city.

2. Dublin – Ranked again in second place, the city has had another strong year in which investors have jostled for opportunities.

3. Madrid – the Spanish city has shot up the rankings for investment prospects this year and many overseas investors are targeting the city. But whether Spain offers solid, long-term business prospects is hotly debated among opportunistic investors.

4. Hamburg – The city has slipped by one place this year, but this is mainly due to investors looking to smaller, less established markets rather than any real decline in the city’s fundamentals.

5. Athens – Athens is the biggest mover on the list this year, zooming 23 places to number 5. In recent Emerging Trends surveys, investors have indicated a willingness to enter other distressed markets such as Spain, Ireland and Italy, but Greece is starting to gain attention. Although Europe’s hardest-hit economy remains fragile, a few trailblazing investors are moving in to take advantage of pre-rebound opportunities.