Investors expect European real estate to peak from 2019
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Over three quarters of real estate investors in Europe expect the market to peak in 2019, with others forecasting market prices to peak later, according to the latest study from investment manager Union Investment.
Published twice each year, the firm's study demonstrated that 75 per cent of the 168 professional property investors surveyed in Germany, France and the UK expect the market to gain traction in 2019, while 43 per cent expect the peak to be delayed until later.
According to the study, 71 per cent of property investors based in Germany and 74 per cent of UK based real estate investors are currently pursuing a "same risk – lower return" approach to their investment opportunities, with percentages up by 15 and 14 per cent, respectively, from the survey published six months previously.
However, in France investors were found to be more likely to push ahead with their investment plans, with only 59 per cent of respondents stating that they're expecting to receive lower returns, while 41 per cent even revealed that they were taking on even more risk in order to up their yields on the previous year.
Although some investors were pessimistic about the number of investment opportunities they were likely to encounter within the office and retail market within the next 12 months, the survey also revealed that many investors were expecting to have success in alternative sectors.
Olaf Janßen, head of real estate research at Union Investment Real Estate in Hamburg, said: "In recent months, high prices for office and retail real estate in the core markets have sparked the creativity of professional investors and caused them to take a broader view of the property market."
Specifically, many real estate investors were looking to student and social housing as key sectors, with a quarter of all French property investors, 67 per cent of UK investors and 29 per cent of German investors surveyed now considered these sectors as an option for future investment.
Logistics properties, hotels and residential property were also found to be targets of the shift in focus. Of these markets, logistics were found to be the most popular, drawing interest from 83 per cent of respondents considering alternative markets, while hotels and residential sectors drew interest from 61 per cent of respondents.
Overall, the Union Investment study found that the German market is one of the most stable in Europe with an improvement of 1.2 points to 67.7, while France has seen an even greater increase of 3.3 points to reach 70.3.
The UK has seen the smallest growth of the three following the announcement that Britain will be leaving the European Union. However, the survey revealed that it has still seen a slight increase to 61.4 points.