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Our outlook for Europe remains one of gradual recovery. However, unlike previous years and notwithstanding macro shocks, Europe seems on a firmer footing due to a combination of factors, namely; Quantitative Easing, a weaker Euro, the stimulating effects from immigration, lower energy costs and structural reforms in certain labour markets. Although the continent hasn’t been immune to recent global uncertainty, consumers and businesses seem so far undeterred, leading to an acceleration of GDP growth in 2015.
The underlying drivers of the real estate occupier market continue to improve. The market balance remains fragile and there are still risks to the recovery, but occupancy is improving across a number of locations and rental growth is starting to accelerate.
Across the major commercial sectors, development activity has been exceptionally low for a number of years now. For both offices and shopping centres, the past four or five years have represented the lowest levels of net completions for more than two decades. And while activity in the construction sector is slowly beginning to pick up, it is still subdued by historical standards, and therefore vacancy rates should continue to decline over the coming years.
Source : Deutsche Asset & Wealth Management
