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2018 European market outlook – Fundamentals driving fears away

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2018 European market outlook – Fundamentals driving fears away
  • With recent political uncertainty and the prolonged unwind of the GFC, focus remains on downside risks.
  • Our outlook shows robust economic fundamentals are driving occupier and investment markets in a positive direction over the next 2-5 years, with little risk on new supply, rising interest rates and leverage. 
  •  Occupier markets are showing better market rental growth as new supply remains modest and net absorption steps up with improving consumer spending and employment growth. E-commerce is a key driver for both the bifurcation in the retail markets and the new record take-up across logistics.
  • With the recovery in capital values and tightening of yields across the most liquid core investment markets, investors should consider adjusting their focus for the medium term to:
    - Consider a broader range of European markets, as implied by our market scoring;
    - Focus on income returns, as marginal yield widening and limited upside in capital value is projected;
    - Given the low systematic market risks at the moment, expand into value creation assets. 

Source : AEW Europe

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