Commenting on economic growth in the Eurozone coming in ahead of expectations, Emmanuel Lumineau, CEO at BrickVest, said: “Eurozone growth remains steadily positive having exceeded the 2% year-on-year estimate. Indeed alongside Germany’s year-on-year growth which this week rose to its best rate in three years at 2.1%, this data may fuel a more hawkish ECB monetary tone.
“Investment into the Eurozone and net trade remain strong as the euro depreciates and international demand strengthens. Moreover demand for real estate investment across Europe has seen an abundance of inward international capital. Almost every major European institutional investor globally has been increasing their portfolio allocation to real estate over the last five years mainly because of the lack of alternatives.
“In a low interest rate environment, real estate yields look attractive and the sector serves as a good alternative to fixed income. In this property cycle European real estate investors are using debt more cautiously compared to the leverage levels we saw running up to the global financial crisis. Institutional investors are now going into less liquid secondary and third level cities to get acceptable going-in cap rates. They are also looking at less traditional investment products such as student housing, senior housing or industrial to get better returns.”