Real Estate
European Real Estate: Prime's Time?
A cooling economic backdrop in Europe and prospects for further monetary policy easing favor core property—given its bond-like investment attributes—over secondary assets.
Economy
- Economic momentum in Europe remains elusive, with hopes for real wage growth and firm labor markets to prevail.
- Financial market attention is now shifting toward disinflation and prospects for further monetary policy easing to boost economic growth.
- The current macroeconomic backdrop favors core real estate over secondary assets.
Property Markets
- The recovery phase of the property cycle has begun. More bond-like core property cashflows should immediately benefit through the lower cost of finance and narrowing in market debt funding gaps.
- Only a gradual pickup in investment transactions volume is anticipated for the rest of the year, partly because of a reduced financeable opportunity set.
- Rents will likely continue to rise for best-in-class CBD office and logistics assets.
- Residential rental growth is broad based, but regulatory risks are higher.
- Retail may see some modest income growth but only where rents have been re-set low (relative to nominal turnover).
