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FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Europe's Best Real Estate Investments for 2016

Housing-Market / European Housing Sep 08, 2015 - 10:30 AM GMT

By: Boris_Dzhingarov


With the global stock markets currently in uncertain territory, many investors are once again turning toward bricks and mortar as a preferred place to put their money. The chaotic Chinese economy and ever-falling oil prices are two of the main factors making many other types of investment look particularly risky right now. However, the recovery in European property prices has been one of the major success stories of the aftermath of the global banking crisis, so savvy investors will be studying where to buy real estate in the coming year.

Of course, many European nations are still experiencing difficulties, being at varying stages of economic recovery, so finding the best property investments in the region for the next year might not be straightforward.

Adapt and survive

The turmoil caused by the banking crisis hit the European property markets hard, with Ireland, Spain Portugal and Greece suffering badly.

However, one attraction of real estate as an investment is that cycles of recovery can bring great returns over short periods. There is also room for longer term planning, with rental yields often far outstripping even the best performing stocks and shares markets.

In Europe in recent years recovery has been fuelled by outside investment, in particular from Asian sources, with record levels of cash having been injected. Top-level destinations such as London, Paris and Milan have seen their skylines visibly change in a trend that sees no sign of slowing down over the next 12 months.

As the EU is made up of 28 separate nations and the idea of 'Europe' as a whole contains even more, there is no 'one size fits all' answer for anyone looking to make the most of the property opportunities currently available. Indeed, the coming year is likely to see things become even more complicated as the core Eurozone member states decide on how to move forward and major players such as the UK debate their very membership of the Union itself.

This is why it is essential for any level of investor to seek the best advice available. Pierre & Vacances Property Investments are leaders in the construction and management of tourist residences, offering a range of properties located in some of the most beautiful regions of Europe.

Working with private investors they look after every aspect, from identifying suitable land right through to constructing projects to completion.

Up and coming

Although investing in already popular hotspots is a sure way to capitalise in the long run, knowing which up and coming areas to target is key to bigger returns over shorter timescales.

London prices are rocketing, pricing out many locals but also making it hard for private-equity investors to achieve high returns. Germany is still one of the preferred real estate markets as the stable economy offers many advantages; however, the stability can mean investors choose to go after riskier investments such as distressed assets in order to chase higher yields and this might not suit everyone.

Spain, on the other hand, was one of those countries worst hit by so called 'bad bank' assets based around the mortgage markets. Even today, it is perceived to be near the bottom of the European property market but this means opportunities exist for property companies that have the experience and are willing to take the risk of working with less attractive and more complicated assets.

Bargain basements
Although Spain took a big hit in real estate after the banking crisis, the quality of stock and the diverse range of buyers mean it is a European destination ripe for picking up property bargains.

The major cities such as Madrid and Barcelona are already seeing a recovery in prices, as quality housing stock and increasing demand means prices are going up. However, it is in some of the coastal areas popular with tourists that some of the best bargains are to be found.

Ranging from high end inland villas through to more compact coastal apartments, there is plenty of scope for investors looking for quick turnaround sales as prices rise, or longer term high yield rental investments.

Major cities

Any projection for 2016's property markets is subject to so many variables, especially in light of the international scale of real estate investment all over Europe. However, emerging trends can always be used to see which way the wind is blowing and the 'Emerging Trends in Real Estate Europe 2015' study published jointly by Urban Land Institute and PwC is a good indicator of how things might develop.

This year's report shows that Berlin topped the rankings as the best city in Europe for real estate investment and development, with Dublin and Madrid, capital cities of Ireland and Spain, making up the rest of the top three.

There are several other hotspots likely to continue to burn brightly, although depending on your view of the property markets they may be surprising or blindingly obvious. Athens in Greece and Lisbon in Portugal are two of the cities in question, being the fastest rising pair for property investment figures.

Perhaps the most surprising entry in the top ten cities highlighted in the report is the UK's official 'second city' of Birmingham. Often overlooked at home, the city is attracting investment levels that put it above London, which only just scraped in at tenth place.

With the report stating that nearly 70% of investors expecting more equity and debt to flow into their real estate markets this year, the projections for 2016 look likely to continue the positive trends.

Building bases

Although individual investors may have a more fluid approach, for most companies there is a need for a central HQ location.

Establishing a base of operations can come down to many factors. Sometimes a company will have a heritage in a location that makes it an ideal base, other times local differences in corporate taxation or regulation can play a large role.

For many larger corporations the legitimacy of being based in a prestige city can be the most important factor, which is one of the reasons London continues to see such drastic development.

Future prospects

Although many observers are extremely concerned about the state of global markets and property has a reputation as a 'boom and bust' investment area, the European real estate market offers an intriguing mix of possibilities for a wide range of investors.

Whether you are open to riskier investments in regions still at early stages of economic recovery, or want to take a slice of major world cities such as London, Paris or Berlin, the opportunities in Europe offer something for everyone.

By Boris Dzhingarov

© 2015 Copyright Boris Dzhingarov - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

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