Emerging Trends in Real Estate in Europe 2018

Berlin has been ranked the top city for investment and development for the fourth year in a row by Europe’s real estate community.

A joint survey by PwC and Urban Land Institute provides an outlook on real estate developments throughout Europe in 2018. The forecast is based on the opinion of more than 800 property professionals.

Some of the results:

German cities have four representatives in the TOP 10 with Berlin at No.1 coming as no surprise. Some of the other interesting placements:

2. Frankfurt and Copenhagen

4. Munich

5. Madrid, performing a jump up by 4 places

6. Hamburg and 7. Dublin, both kicked out of the top 5

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14. Paris

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27. London

The survey demonstrates growing optimism in view of the general macroeconomic development. Especially Germany and Berlin are highlighted:

'Germany has been steady state for a long time now. With Berlin, people truly believe it’s going to become a major city', a pan-European financier says.

The placement of London at the bottom of the ranking seems in contrast to predictions Savills published only recently: Savills: 2017 central London investment set to hit £20 billion – and could set new record.  But the uncertainty of BREXIT clearly reflects the outlook of the panel and could contribute to a self-fulfilling prophecy during 2018.

The DO and DON'T for 2018

Logistics and niche residential sectors such as student housing, senior living and healthcare are seen as the front-runners whereas anything retail is seen very critically.

The survey also addresses non-quantitative issues driving discussions and developments in the real estate community with Technology being top contender:

Key features of the report:

Major non-quantitative topics covered by the survey:

• Risk and return in today's business environment
• Alternative platforms
• Markets to watch
• Impact of Brexit - UK
• Space as a service

The survey:

Emerging Trends in Real Estate®: Europe 2018

is available for download here.

Emerging Trends in Real Estate in Europe 2018

AFIRE Foreign Investors Survey 2017: 1. NYC, 2. Berlin, 3. London

US RE Grabs Foreign Investors’ Intentions!
 95% Will Maintain or Increase Investment Levels in 2017

NYC is Big Winner as London and DC Slip
  Washington, DC (January 3, 2017) – Ninety-five percent of the respondents to the new survey taken among the members of the Association of Foreign Investors in Real Estate (AFIRE) and released today say they will maintain or increase their investment in the US.  New York City is in its seventh year as the number one US city among foreign investors and is in its third year as top global city.

Both globally and domestically, Washington DC has fallen out of favour. For the first time since the survey began in 1992, it has dropped from the list of investors’ top five US cities. It has not been among the top five global cities since the 2013 survey and dropped in rank again – from eighth place last year – to fifteenth this year.
 
AFIRE members are among the largest international institutional real estate investors in the world and have an estimated $2 trillion or more in real estate assets under management globally. The survey was conducted in the fourth quarter of 2016 by the James A. Graaskamp Center for Real Estate, Wisconsin School of Business.

Brexit Woes
With concerns about the effects of Brexit on investors’ minds, London, which had been ranked either first or second among global cities for the last five years, slipped into third place. In terms of its potential to offer stable and secure real estate investments opportunities, the UK slipped into fifth place.

Among foreign investors, the top five US cities are New York, Los Angeles, Boston, Seattle, and San Francisco. The top five global cities are New York, Berlin, London, Los Angeles, and San Francisco.

The US: A Strong Market but Not Without Concerns
By wide margins, the US continues to rank as the country offering the most stable and secure opportunities for real estate investment and the country providing the best opportunity for capital appreciation.  Investors cited the country’s sustainable economic growth, strong rule of law, transparency, and relative overall security for investments.  More than 50% of survey respondents said Brexit would have a positive effect on the US real estate market.

Despite investors’ investment intentions, 33%, or one third of respondents said their sentiment about the US market had become more pessimistic; 60% felt their opinion was unchanged, and only 6% considered themselves more optimistic. In last year’s survey, 8% felt pessimistic, 85% had an unchanged opinion, and 8% felt optimistic.

“As uncertainty rises with a new government in Washington and interest rates that have risen dramatically, it is no surprise that investors have signaled a note of caution,” said James A. Fetgatter, chief executive officer, AFIRE. “Previous, comfortable spreads between cap rates and interest rates have narrowed making the investment criteria more selective and difficult. Increased market research and discipline will be required.”

US Investment Market Broadens
Industrial property edged out multifamily to take first place among property types; hotels remain the least favored property type. While “core” properties predominate as an investment strategy, more than half of survey respondents report plans to increase both value-added and opportunistic allocations in the coming year. Similarly, several new cities, including Nashville, Portland, Charlotte, San Antonio, Madison, and Pittsburgh, representing smaller urban markets with strong job growth and young, affluent populations, were cited as having investment potential.

“Washington, DC is a global gateway city with good leasing activity and a growing economy bolstered by a young workforce. The combination of those stable fundamentals will continue to attract capital from around the world," said Catherine Pfeiffenberger, AFIRE chairman and senior vice president of Skanska USA Commercial Development. "The new administration's focus on the defense and aerospace industries is also expected to benefit the DC area in the coming years."

Global Highlights
For the second year in a row, Berlin ranked among the top five global cities, moving to second from fourth place last year. Germany retained its second-place ranking in terms of providing stable and secure investment opportunities; it ranked third in terms of countries offering the best capital appreciation. In terms of providing an opportunity for capital appreciation, Australia joined the ranks in fifth place. China, Mexico, Brazil, India and Chile were again named as investors’ top five emerging markets, although their order shifted from last year.

Survey Snapshot -- US

 
Top Five US Cities

1. New York (#1 last year)
2. Los Angeles (#2 last year)
3. Boston (#5 tied with Seattle last year)
4. Seattle (#5 tied with Boston last year)
5. San Francisco (#3 last year)

Ranking of US Property Types

1. Industrial (#1 tied with multifamily last year)
2. Multifamily (#1 tied with industrial last year)

3. Office (#4 last year)
4. Retail (#3 last year)
5. Hotel (#5 last year)

Survey Snapshot – Global

Top Five Global Cities

1. New York (#1 last year)
2. Berlin (#4 last year)
3. London (#2 last year)
4. Los Angeles (#3 last year)
5. San Francisco (#5 last year)

Most Stable and Secure Countries for Real Estate Investment

1. US (#1 last year)
2. Germany (#2 last year)
3. Canada (#4 last year)
4. Australia (#5 last year)
5. UK (#3 last year)

Countries Providing the Best Opportunity for Capital Appreciation

1. US (#1 last year)
2. Brazil (#2 last year)
3. Germany (tied with the UK this year; #7 last year)
4. UK (tied with Germany this year; #4 last year)
5. Australia (unranked last year)

Top Emerging Countries

1. China (#2 last year)
2. Mexico (#3 last year)
3. Brazil (#1 last year)
4. India (#5 last year)
5. Chile (#3 last year)

AFIRE members have a common interest in preserving and promoting investment in cross-border real estate. Founded in 1988, AFIRE currently has nearly 200 members representing 22 countries. AFIRE is located at 1300 Pennsylvania Avenue, NW, Washington, DC 20004, 202.312.1400. www.afire.org

Interviews:  James A. Fetgatter, chief executive officer, AFIRE.

AFIRE Foreign Investors Survey 2017: 1. NYC, 2. Berlin, 3. London

Real Estate Market in Berlin and Germany - Outlook After Brexit

The outcome of the UK referendum on membership in the European Union (i.e. the vote to exit the union known as Brexit has led to many discussions and wild speculations regarding the impact this will have on the economies of the UK and indeed the remaining EU members. Most statements and predictions are based more on emotions than economic facts but emotions have a significant impact on market developments as we see demonstrated by the global financial markets every day.

A clear economic downturn in the UK and political reactions to this development have already manifested themselves.

Alongside financial services, the property market in the UK has been a destination for international investors. There are uncertainties linked to Brexit with regard toall aspects of how and when the procedures will start and what the impact on investments will be. There already are negative risk aspects attached to investments in the UK without any decision actually having been made. This will cause a diversion of investments to other destinations in Europe. On a city level the winners will most likely be Frankfurt, Berlin, Paris, Luxembourg, Dublin and Amsterdam. On a country level the biggest winner is most likely Germany. This is the conclusion a recent study made by Cushman & Wakefield comes to:

Brexit & The European Property Investment Market.

Our market observation in Berlin confirms this development as we see an increased activity by international investors from large residential property package deals in the housing market to investments in commercial and development properties.

For information on current investment opportunities in all property market segments in Berlin please contact us using the contact facility on our website: http://berlin-portfolio.com/feedback.html

 

Real Estate Market in Berlin and Germany - Outlook After Brexit