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European Markets Offer Investors 'Lots of Potential'

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Commercial Property Investment  Confidence in Property Investment  Real Estate Market Performance 

By - Wednesday 18 August 2010

Property markets around Europe currently offer real estate investors "lots of potential", it has been suggested.

According to housing portal Property Abroad, prospective purchasers have plenty of options when it comes to choosing a destination in which to buy property. "I think it really depends on what level of exposure you want to receive and there is lots of investment potential available throughout Europe - it is the hand cherry-picking them that is difficult to pin point," said Les Calvert, director of the firm.

Confidence in Property

Indeed, the real estate expert's comments follow the recent publication from the Worldwide Property Group which suggests that confidence among buyers is high.

The organisation found that, out of its members, 80 per cent are currently considering buying a property abroad, with 90 per cent of the opinion that the current market also offers excellent opportunity overseas. Kevin Wilkes, managing director of the Worldwide Property Group, said that the confidence was reflective of the increasing affordability of property.

"Confidence in property as an investment continues to ride high as it offers great stability when compared to other investment categories and can provide much greater returns and safety in the long term," he added.

Changing Face of Property Markets

Rightmove Overseas reported that the foreign property market had become radically different since the recession.

The average change in search activity per location between July 2008 and July 2010 was minus 37 per cent, although some European destinations have posted marked year-on-year improvements.

Germany saw a 31.72 per cent increase and the Netherlands saw activity rise by 36.99 per cent.
Robin Wilson, head of overseas at Rightmove, said: "Two years on from when the credit crunch first started to really bite, it's clear that the overseas property market is radically different.

"Many of the market dynamics that used to be in place have gone, some would argue for good. For example, you'd be hard pushed to find a casual investor looking to make a quick buck by flipping off-plan apartments in out of the way places, availability of mortgage finance is much harder and many businesses have failed to adapt to the new conditions."

Commercial Investment Opportunities in Europe

Many real estate tracker surveys would suggest that European commercial real estate is performing strongly at the moment. Commercial property investors have been advised to choose countries in Europe for their next investment venture.

Property economist at Capital Economics Ed Stansfield believes that France and Nordic countries offer good potential as they "stand out in terms of the economic prospects". Mr Stansfield added that the country with the biggest investment opportunity is Germany as it is "going to be one of the best performing economies in Europe over the next couple of years".

The recent Global Investment Perspective Report released by HSBC earlier this week revealed that the picture for European property investment potential was "mixed".

It noted that there were "wide variations" between the countries with the opportunities in France and the Nordics looking attractive, while suggesting that investors be more wary of putting money into eastern European properties.

Increase in Speculators

Added to this, the latest data from CB Richard Ellis suggests that during the second quarter of 2010 the commercial sector has seen a rise in interest from commercial property speculators. Total turnover in the commercial market reached EUR 23.5 billion during the time period, which represents a 15 per cent increase compared to the EUR 20.3 billion traded in the first three months of the year, the report said.

Again, prime office properties located in the Germany and France proved to be popular, which when added to UK transactions accounted for 62 per cent of all European market activity. "With a growing number of larger transactions in Europe, we are also starting to see an increase in cross border activity," Jonathan Hull, executive director of EMEA capital markets at CB Richard Ellis, confirmed. "This is already evident in Germany, where cross border investment grew to 44 per cent of the market in the first half of 2010 compared to only about ten per cent in the second half of 2009."

The same can be said about the UK market, with a large percentage of prime property purchasers coming from overseas. "Middle Eastern and overseas investors have been particularly prominent this year, concluding a number of large deals," Mr Hull added.ADNFCR-3415-ID-800028523-ADNFCR

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*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.

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