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Central & Eastern European Property to deliver strong medium term gains - 27 May 2011

The recently published Invesco Real Estate Spring 2011 House View report is demonstrating that the property markets in Central and Eastern Europe are due to deliver the strongest medium term returns on investment. They have analysed property markets throughout Europe and their data shows that there is a distinct schism between the returns that one can expect in Germany, Italy or in France. During the next five years the anticipation is that the growth in the property market will spread from the Central European markets to their neighbours markets as their economies see further growth in GDP.

There are 3 distinct groups that will each offer a different level of growth, from 1% to 3%, depending on the group. The highest level of growth is set to be around the 3% mark, which would be yielded by property markets in Switzerland, the Nordic group of countries and Germany. The next group of property markets are those of France and Benelux, which form the core European markets and these will probably offer between 1.5% and 2% growth. Offering slightly lower levels of growth are markets like the UK and Italy where one would expect to see growth of 1% and upwards, to approximately 1.5%.

The Invesco report also advises putting more emphasis on retail properties when looking for a medium term investment with a good return. While the market for these properties may soften due to austerity measures, the increased wealth in the middle class will drive higher returns over time. Office properties, which have become popular investments, are more likely to provide short term gain. The structure of any property portfolio will need to be closely monitored, regardless of country, to ensure that the balance of properties provides sustained and consistent returns.

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