26 January 2017 – Cinco Días
According to the findings of the Real Estate Market Trends in Europe 2017 report, prepared by PwC and the Urban Land Institute, the real estate market is currently preparing itself to face a 2017 full of geopolitical uncertainties, just like it had to last year when Spain had an acting Government for more than 10 months. The RE report has been compiled on the basis of a survey of 781 of the main players operating in the sector.
In this way, the year that has just begun is probably full of more uncertainties across more countries than ever before (Brexit and up-coming elections in France, Germany and The Netherlands, as well as potential repercussions from the new policies of Donald Trump in the USA) and in the face of such situations, investors tend to react with caution.
In the real estate sector, experts forecast that the market will continue to evolve in a positive way because it will remain attractive thanks to the relationship that exists between risk and return. Within Europe, Spain stands out amongst the major markets thanks to its attractive prices and the potential it has across many segments, such as the hotel sector, residential segments (including halls of residence for students, nursing homes for the elderly and the health sector) and offices for shared services.
In this way, the experts that participated in the preparation of this study agreed that whilst the returns offered by the real estate sector in the main countries in Europe will grow at a slower rate because this business is starting to stabilise, Spain will continue to be one of the most attractive destinations.
In terms of the potential effect of Brexit, most investors agree that its impact is going to be limited to the British real estate sector and will not have a significant impact on property-related investments in other EU countries. What’s more, 76% of those surveyed said that, in their opinion, such investments will be maintained or may even increase. Nevertheless, the expectations in terms of returns from the real estate sector as a whole across Europe are more moderate this year following several years of extraordinary growth.
Moreover, 35% of those surveyed expect to receive lower returns on their assets over the next 12 months and 53% recognise that it will be very hard to improve upon the returns achieved last year. Another aspect described in this report is that the European market in general and the Spanish market in particular is characterised by a scarcity of prime or premium assets and the feeling is, according to 58% of those surveyed, that those assets that are available, are starting to become over-valued. In this environment, “the importance of asset management intensifies as it is the key element for managing risk and return”, explained Rafael Bou, Partner responsible for Real Estate at PwC. (…).
Looking ahead to the future, 91% of those surveyed said that technology “is going to change” the way we use real estate assets. The most important trends between now and 2030 relate to: the boom of the collaborative economy, robotisation, teleworking, self-driving cars and new buying habits.
According to the report, Berlin leads the ranking of European cities with the best investment prospects for the second year in a row. Madrid and Barcelona occupy 9th and 16th positions, respectively, given the “strong outlook for rents and the improvement in the country’s overall situation”.
Original story: Cinco Días (by Raquel Díaz Guijarro)
Translation: Carmel Drake