Investors, who are understandably concerned about protecting their assets during times of economic challenge, are turning to European commercial properties, according to the latest research from IVG. While most investors are seeing Europe in a pessimistic manner regarding future economic growth, there are some pockets of optimism in the United Kingdom, Germany and Luxembourg.
These markets are economically robust in comparison with other urban centres in Europe, and provide investors with a stable return on investment. The brightest spots for office markets can currently be found in Germany, with Munich, Berlin and Hamburg having the best prospects for a good rate of return over the next 24 months. These markets are distinguished by their large stock of office space and high market transparency combined with a moderate vacancy rate. Rising rental rates are another reason these markets have so much potential for investors, and the upswing is expected to continue as pockets of the European economy continue to improve.
Markets in Belgium, Spain, Portugal, and France are not nearly as positive for office markets in the near future. According to the European Office Real Estate Markets 2012 report, the cities which are most at risk for an economic downtrend are Milan, Madrid, Lisbon and Athens. Athens, Naples, Porto, and Cork were also named as centres which scored poorly for investment growth potential.
Investors who are prepared to take on some risk and be patient over a longer term are more likely to see success over the longer term. Investing in commercial properties, whether they are located in the UK, Germany or other cities in Europe, is best considered a long-term investment. The best bet for investors is to look for opportunities to purchase an interest in core properties which are likely to attract long-term tenants.
