EUROPE – The introduction of the physical euro will have a significant symbolic impact on investor confidence in the European real estate market, suggests Lasalle Investment Management’s (Lasalle IM) latest ‘Investment Strategy Annual’ report.
According to Lasalle IM, there will be an increase in cross-border investments within Euroland as investors exploit their newly expanded domestic markets, with property expected to produce greater price stability than equities and higher yields than bonds in the coming year.
Nonetheless, Lasalle IM also warns that investors need to be aware that they will be affected by the global economic slowdown and that successful investors will need to follow a “careful balancing act” with their portfolios.
Moreover, the relatively positive prospects of the European property markets vis-à-vis the US are being hampered by the disappointing economic performance of both Germany and France, the report claims.
Says Gerald Blundell, head of investment strategy at Lasalle IM: “Property in Europe is not immune to the effects of the global slowdown, and investor expectations for 2002 are very different from those of 12 months ago.”
Elsewhere, Lasalle IM’s report suggests that the UK should be viewed as a separate property market within Europe due to its position outside the Euro-zone, and that the UK market is likely to avoid the worst of the downturn. However, Euro-zone investors will consider the UK market expensive, despite its greater transparency and liquidity.
The report also anticipates that the Central and Eastern European property markets will improve once serious negotiations for entry into the European Union get under way.