5 investment trends shaping Europe’s real estate

International investors continue to flock to Europe but their strategies are changing in line with the times.

October 08, 2019

More than 10 years into the current real estate cycle, Europe is one of the most popular regions for global capital.

Yet the reasons behind the region’s popularity have shifted significantly over the last decade – as have the strategies that investors are now following to unlock value and generate income.

In the eyes of international investors, the likes of central and eastern Europe and the Nordics are now on a par with France, Germany and the UK, explains, Fraser Bowen, head of international capital at JLL.

“The European playing field continues to expand,” he says. “Central and Eastern Europe, as well as the Nordic markets, are now absolutely part and parcel of mainstream product for investors. Korean capital and Singaporean capital in particular are investing or voicing interest in those markets. Likewise, more European investors are building a presence in countries they previously overlooked.”

Kildare Partners and BlackRock Real Assets, for example, entered Finland in the past year, while Barings Real Estate took its first steps into Sweden’s housing sector

The shift in thinking is down to increased competition and fund raising at unprecedented levels. Blackstone recently raised its largest ever fund at $20.5 billion. More than €7.2 trillion of real estate assets were added by the world’s 10 largest managers between 2014 and the end of last year, according to JLL.

Stimulating the economy

With the European Central Bank set to re-start quantitative easing (QE) from November, Bowen says investors may find that pricing continues to rise for top quality European real estate.

“There’s of course a caveat to that as investors wait and see with markets such as the UK,” he says. “But with so much of the capital at play being long-term, it tends to look beyond current uncertainty.

“The latest round of QE could keep things rolling along for longer.”

As well as geography, increased competition is also driving investors to consider burgeoning sectors such as Living.

“Healthcare, student housing and professionally-managed apartments are drawing in investors in search of income-producing real estate,” Bowen says. “Capital continues to flow – and that will continue to intensify competition across all asset classes.”

Watch the video to find out more about five key drivers currently shaping the European real estate market.