Real estate performance across much of Europe continues to weaken further in 2012. We forecast capital values to be stagnant in the north of the continent and fall in the south over the coming 12 to 24 months. A slow and muted recovery is unlikely to begin before 2014.
Prime shopping centres are expected to outperform in the near term driven mainly by a more stable yield outlook combined with moderate rent growth. In particular, the retail sector in the CEE region offers attractive opportunities.
The stronger income component of logistic properties can prove attractive in times of uncertainty. Along with a more flat yield profile in the outer years, it will boost the sector’s performance in the outer years of the forecast.
London offices are likely to perform well over a five year horizon.
Germany is once again expected to substitute higher returns for greater resilience and the lowest levels of downside risk.
In the second half of our forecasting period, markets such as Dublin office or Spanish shopping centres have the potential to perform strongly from their current low base. However, the risks to this forecast are obviously the highest with significant variability around this view.
Source : RREEF Real Estate