Geopolitical uncertainty moderates profitability expectations in the real estate sector in Europe

Geopolitical uncertainty moderates profitability expectations in the real estate sector in Europe

This is one of the main conclusions of the report Tendencias del Mercado Inmobiliario en Europa 2017 (Real Estate Market Tendencies in Europe 2017), published by PwC and the Urban Land Institute, taken from a survey of 781 managers from the principle sector agencies – real estate companies, funds, institutional investors and financial entities.

The unstable political climate, as a consequence of Brexit and with upcoming elections in France, Germany and Holland, and the risks derived from immigration and social inequalities are the biggest sources of anxiety for the business world which will significantly affect economic development. However, investors believe that the impact of Brexit will be limited to the British real estate market and will not significantly affect investment in the rest of the EU, which for 76% is equal to that of 2016 and will grow. As a consequence of all this, the expectations for profitability in the European real estate sector in 2017 will moderate somewhat after several years of extraordinary dynamism. 35% of those surveyed in the report expect that the return from their assets will be less in the next twelve months and 53% recognise that it will be very difficult to improve on yields attained last year

In this context, furthermore, a real estate market marked by the lack of prime or quality assets is joined by a sensation, felt ever more acutely, according to 58% of those surveyed, that those assets that are available are overpriced.

This does not mean that the European real estate sector has lost its attractiveness. The study concludes that the continuing backdrop of low inflation and low interest rates in Europe is still conducive to the aims of investors, ahead of the fixed rent and the alternative investment markets.

Iberian Property logoIberinmo logo
Iberian Property is the best platform for investment in Spain & Portugal. Created for those who seek reliable information about players and deals happening in Iberia. Through updated database, reports, market indicators and daily news, we report “Who’s Who” in Iberian Real Estate!. Iberian Property is also proud to organize the most important international real estate investors’ meeting in Iberia - Portugal Real Estate Summit!