Get to know us and follow our latest adventures both in the office and further afield
Emerging Trends in Real Estate 2014 Report shows Property Frontiers is ahead of the game
January 30, 2014Article by Ray Withers
The latest property predictions to land on my desk come in the new Emerging Trends in Real Estate Europe 2014 Report, published by Urban Land Institute (ULI) and PwC Legal. In keeping with growing confidence in the market, the report reveals how investors are turning to recovering markets, regional cities and secondary property as the European real estate markets heats up.
We at Property Frontiers have been looking at these sectors for a while now and getting involved with the hotspot areas – such as city living apartments and developments in Liverpool and Bradford, plus our best-selling hotel room investments in Germany. We’ve also had our eyes on Spain. This report goes to show further that we’ve been right to put our money where our mouth is.
Sustainable returns from quality assets in good locations
Simon Hardwick, real estate partner at PwC Legal, explains: “We believe the real estate investment market in 2014 will be dominated by a battle for assets. International capital will continue to flow into Europe, seeking to acquire prime assets in core locations. Intense competition for the limited supply of suitable property will inevitably continue to have an impact on prices – particularly in global gateway cities, including London.”
He continues: “This will result in investors having to look at other opportunities and to accept more risk. This is reflected in the renewed interest in development, as well as the fast improving outlook for “non-prime” locations and properties. Investors’ interest remains focused primarily on sustainable returns from quality assets in good locations.”
Risk is no longer a dirty word
I couldn’t have said it better. Risk is certainly not a dirty word in investment, although of course you need to know the difference between higher-risk higher-reward, or just downright risky. In our article Revealed: New Year’s resolution secrets of high net worth investors we reported that a number one priority of high net worth investors was to diversify their investment with riskier opportunities. Sometimes, this means stepping off the beaten track and looking to recovering and emerging markets.
Spain and Germany take the lead
Spain is one such recovering market which is attracting a lot of investor interest. The report highlights that 67% of respondents believe there are now profitable opportunities in Spain.
This confidence has been boosted by the acquisition of the Parque Principado mall in Oviedo by Intu Properties and Canada Pension Plan Investment Board (CPPIB). This €162 million joint partnership in the 800,000 sq ft prime retail space also highlights the popularity of commercial and retail investments, as covered in our Why and where in the world should you buy commercial property? article, along with our Mongolian retail development opportunity.
Germany also tops the list, with three of the top five European real estate investment markets for 2014. Munich comes in at number one, with Hamburg at number three and Berlin at number four. Dublin, Ireland is number two and London number five. You can read more about investing in Germany in our article German Tourism Skyrockets as Europe’s Strongest Economy Takes the Lead Once Again.
Regional hotspots and developments on the up
However, the reported “competition for core assets” leads investors to look further than major Euro markets such as London, Munich and Paris – thus the regional hotspots, both in the UK and across Europe.
Development is another buzz word in the report with 71% of respondents believing this is a great way to acquire prime property, whether residential buy-to-let or commercial. The report also reveals there will be “significant capital” available in Euro real estate during 2014, with 71% saying they expect an increase in equity for refinancing or new investments and almost 80% looking to Asia Pacific for capital.
More good news for the property market!
All in all this report heralds yet more good news for property – and you heard it here first!
We will be keeping a close watch on these markets during 2014 and I will keep you all updated with what to watch and where as we go along. Get in touch on +44 1865 202 700 to find out which hot locations you can invest in right away and what and where we have coming up over the course of the year.