Savills real estate experts forecast increased investments in European real estate – not least because they still generate attractive returns compared to government bonds.
That’s what experts say
As the experts at the global real estate service provider Savills report, a trend within the real estate investment landscape will emerge in 2021: non-European investors should increasingly cooperate with asset managers based in Europe in order to benefit from the more attractive returns on investments in European real estate in the Offer compared to government bonds. Marcus Lemli, CEO Germany and Head of Investment Europe at Savills, comments on the forecasts for the real estate year 2021 as follows: “We assume that non-European investors will continue to try to diversify their portfolios within Europe – especially since government bonds currently offer almost no income, which makes the yield margin for real estate still attractive. The attraction of the European markets is underpinned by their relatively high macroeconomic and political stability. Germany in particular continues to be considered the safe haven. “
As Savills continues to forecast, in 2021 European investors should act according to the principle “proximity is the key” and continue to focus on investment opportunities close to their respective home countries. In combination with the increase in transaction capital due to non-European investments, the real estate market should experience additional impetus in 2021, according to Savills. The volume for cross-border investments is expected to increase by a total of 10 to 15 percent compared to the previous year – to around 120 billion euros. As far as real estate within Germany is concerned, there was an investment volume of 19.9 billion euros in cross-border transactions, a decrease of around 40 percent compared to the previous year. The European comparison shows, however, that German real estate was nevertheless able to secure a top position when it comes to cross-border investments. Great Britain landed in first place with a transaction volume of 24.9 billion euros; France secured third place after Germany with 11.3 billion euros.
Investment focus of non-European investors
According to Savills, investors from North America are increasingly focusing their investments on large platform investments in the areas of housing and logistics – but are also present in all traditional sectors. Cash-on-cash returns are still of interest to investors from the Middle East, especially in Germany, the Netherlands and Great Britain.
Persistent market dominance of core products
Domestic investors invested in core products in 2020 – despite the pandemic – and thus once again demonstrated their competitiveness, according to Savills. The real estate service provider also explains that a similar market dominance can also be expected in 2021. The Savills forecast is underpinned by a survey on the subject of investment intentions in 2021 by INREV (European Association for Investors in Non-Listed Real Estate Vehicles): According to the results, the target allocation for real estate within Europe should go from 9.0 to 9.3 percent increase.
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