European property “responding to lower uncertainty”

The UK residential property sector is tipped to “materially outperform”, a report that highlights the best real estate investment themes in Europe says.

Property investor La Salle Investment Management said the “chronic undersupply” of housing in many parts of the UK will see the sector show capital growth above the market average.

La Salle’s report also said European property asset yields were falling as the market was in a mature part of the cycle – but the real estate market in Europe remained active as much of the region “throws off the economic and political uncertainty seen in recent years”.

Real estate fundamentals were responding to positive economic data in Europe in the first half of the year and the office and industrial sectors were seeing the strongest performance, La Salle said.

“Even in the UK, suffering from weaker-than-expected growth and political uncertainty due to Brexit and the recent general election, [there has been] a resurgence of investment activity driven by international capital attracted by weaker sterling and more willing sellers,” the firm said.

Among other findings were that over the past 18 months, Germany had overtaken the UK as the main driver of investment activity in the region.

The details are in LaSalle Investment Management’s ‘Mid-Year 2017 Investment Strategy Annual’.

Mahdi Mokrane, the firm’s European head of research and strategy, said: “We have seen political events across Europe continue to shape the way investors should look at the region’s medium-term outlook for real estate fundamentals. Since the start of the year, the news flow has been quite positive and the political risks we were highlighting last year have receded significantly, particularly in Continental Europe.”

©2017 funds europe

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