A NEW survey suggests that Germany and Spain could overtake UK as preferred real estate investment markets for 2018 due to pricing and supply issues rather than Brexit.
The poll of 148 leading real estate investors representing organisations with an excess of £300 billion of real estate assets under management conducted by Knight Frank shows that based on a three to five year hold some 28.5 per cent of investors identified Germany as their preferred investment market in 2018, up from 27 per cent in 2017.
This was followed by Spain, identified by 20 per cent, despite the current political instability caused by the referendum on Catalonian independence. Just 12 per cent of investors, most of whom are London based, identified the UK as their preferred investment market, ahead of France at 9 per cent.
The survey indicates that political uncertainty caused by the UK’s exit from the European Union is not the primary concern for investors. Just 16 per cent of those surveyed identified continued geo-political uncertainty as their primary challenge.
“In this low yield environment, demand for commercial real estate assets shows little sign of abating. Indeed, investor sentiment suggests we could see transaction volumes in 2018 exceed the €220 billion recorded this year,” said Chris Bell, managing director for Europe, at Knight Frank.
“It is also encouraging that European investors are divorcing politics from the underlying economic and market fundamentals, which remain good, when setting their strategies for 2018. In Spain, for example, investors recognise that uncertainty around Catalonia independence risks masking a resurgent Spanish economy, and growing demand for office and industrial space in particular,” he pointed out.