Despite the mixed economic backdrop, the case for European property remains strong, with rental growth and yield improvement forecast in key cities across continental Europe, according to Knight Frank which today hosted its European Breakfast.
With the exception of Frankfurt, capital values in all the major European cities remain below their peaks, but are expected to continue rising on the back of forecast rental growth and downward yield shift.
In general, prime yields are expected to hold firm or, in some cases, improve further in places like Amsterdam, Brussels, Madrid and Milan. Meanwhile rental growth is expected to be most significant in the City of London but also positive in Frankfurt, Milan and Madrid. Elsewhere, for Paris, Amsterdam, Brussels and London’s West End, rents are forecast to hold steady.
During a live poll of the 200 investors, Spain was voted as this year’s top target country for investment, chosen by 26% of the audience, knocking the UK off the top spot. This is unsurprising given the strength of the rebound currently being seen in the Spanish market. The UK and Germany again featured strongly, gaining 25.3% and 19.2% of votes respectively.
Chris Bell, managing director of Europe commented: “Europe is very much back on the map. Having bottomed out, the underlying direction of travel remainsand in our opinion will remain, positive over the next 12 months, albeit with variations, both between and within countries.
“The next 12 months will see the continued evolution towards ‘normality’ in the European markets as that critical factor, business confidence, increasingly flows back.”
Andrew Sim, head of European Capital Markets, commented: “The case for European property remains genuinely strong. However, it requires more careful navigation than this time last year due to the fragmented nature of the region, with the fundamentals of each local market acting independently and differently from its neighbours.
“We believe we will see a dramatic increase in the number of investment opportunities starting in the coming quarter and continuing through the next 12 months in tandem with increasing transaction volumes.“