MIPIM 2016: Savills has revealed its top ten hotspots for investment in Europe: five sectors for risk-taking investors and five for those hunting for secure returns.
Marcus Lemli, Savills’ head of European investment, said: “Investors are looking to diversify their portfolios and therefore volumes are likely to be less concentrated in a handful of key locations, and spread more evenly across the Continent this year. For both the opportunistic and the cautious investor there are multiple opportunities available, often within the same city.”
Targets for risk avoiders:
• Shopping centres in prime cities: dominant shopping centres in cities set to experience strong population growth and attract large numbers of tourists will continue to prove attractive. Berlin, London, Madrid and Milan all fit this criteria.
• Prime green offices in “smart cities”: flexible, sustainable buildings in innovative or smart cities, such as Berlin, Dublin, Stockholm, Barcelona, Madrid and Warsaw, will be increasingly attractive to young workforces and occupiers and should therefore see continued rental growth.
• Pan-European e-commerce logistics: e-commerce grew by 22% in Europe in 2015, and further innovation in the retail sector will drive continuing demand for warehouses and distribution networks in all large urban areas across Europe, particularly the Continent’s largest cities: London, Madrid and Paris.
• Prime high streets in tourist cities: Milan, Paris, Madrid, Amsterdam and London will continue to experience high footfall from overseas visitors. These cities offer a variety of cultural attractions and attract tourists with high disposable incomes, and will therefore remain popular destinations for international retailers.
• Student housing in markets with rising international student numbers: student accommodation in the UK, Germany, France, the Netherlands and Spain has become an established investment asset over the past few years. Pockets of undersupply allow for more space for new developments and additional investment.
Targets for risk embracers:
• Healthcare in France and Germany: Europe’s aging demography will drive a need for private care homes and facilities, particularly in markets with affluent populations such as France and Germany.
• Offices in central and eastern Europe: as more western companies seek to “near shore” – bring their back-office functions closer to home – lower labour and property costs in locations such as Poland, Hungary, Romania and Slovakia make these attractive destinations, and therefore potential opportunities for investors.
• Micro-apartments in top and second tier cities: in prime cities, such as London, Paris and Madrid, where younger generations are already being priced out of the housing market, and growing innovation hubs in Berlin, Dublin, Barcelona, Amsterdam and Stockholm, where affordable residential accommodation is set to struggle to keep pace with demand, micro-living developments are set to see increased demand.
• High-performing shopping centres in fringe, recovering markets: consumer spending in markets such as Greece, Portugal and Romania was hit by the global financial crisis, but these markets are gradually entering a recovery phase. High-risk premia are applied at the moment even on well-performing assets.
• Public assets in markets where governments are forming public-private partnerships: in the UK and Sweden, or indebted countries that are privatising, such as Italy and Greece, the inability of the public sector to maintain high-quality services or the need to improve liquidity is leading to sales of potentially profitable public assets.
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