Europe's real estate investment volumes are expected to fall moderately in 2019 due to an end to quantitative easing, caution about geopolitical risks and a lack of available stock in some countries, according to CBRE’s 2019 EMEA Market Outlook report.
The investment market should however remain quite strong next year, with several sectors expected to outperform and bring new opportunities for investors and occupiers in 2019. Industrial and logistics is set to be boosted by both economic growth and the ongoing expansion of e-commerce.
For the residential sector, most major markets are expected to see robust growth in rents and capital values, with Germany and the Netherlands most prominent. Investment is forecast to run ahead of 2017 levels, driven by new investor types being attracted into the sector, and expansion in the geographic spread of investment.
In addition, the European data centres sector should extend its period of strong growth, fueled by an anticipated influx of new occupiers from Asia, particularly Chinese cloud and telco companies, as well as a further wave of demand from the US cloud companies. CBRE forecasts the four largest markets (Frankfurt, London, Amsterdam and Paris) will grow by 17% in 2019, which would make it the third consecutive year of growth above 15%.
CBRE also expects the alternatives sector – student housing, retirement living, healthcare etc.- to expand as more investors pursue genuinely pan-European strategies in these markets.
Office markets around the region are expected to see positive growth in leasing levels in 2019. However, major European cities, including Paris, Berlin, Stockholm and London, are expected to see lower levels of employment growth in office-using sectors. Retail continues to adjust to far-reaching changes in consumer behaviour and more cautious investor sentiment, although assets that offer either experiential retail or convenient local amenities are better placed to withstand these changes.
Neil Blake, global head of forecasting and analytics at CBRE said: 'Despite ongoing macroeconomic and political uncertainty in many parts of the world, 2019 presents some exciting opportunities for real estate investors and occupiers, from tech and innovation to alternatives and data centres. While some sectors may see more subdued performance, reflecting concerns around the loss of economic momentum in parts of Europe, the overall picture remains relatively positive and we expect the European economy will continue to grow at an above-trend rate in 2019.'
See also ProperttyEU's December issue for a special report on the outlook for 2019.