DWS presents its outlook for the real estate market in France and Europe.
The US elections and the breakthrough of the Covid-19 vaccine have caused upheaval in financial markets. Euphoria prevails, with foreseeable pitfalls.
Outlook for the European market
According to DWS, Deutsche Asset & Wealth Management company,
- The European real estate market is entering a period of recovery. Initially led by yield compression – supported by a weight of global liquidity – before supplemented with the return of rental growth in 2022, DWS foresee a period of above average total returns running into the middle of the decade.
- This rising tide should be supportive for all parts of the market, yet we continue to see a marked divergence between sectors over the coming years. The current positive momentum for logistics and residential will once again propel these two sectors to the top of our hierarchy.
- There could be interesting investment opportunities across almost all major city markets, but over a long hold period DWS see the most attractive risk-adjusted returns in markets such as Dublin, Amsterdam and Berlin residential, Paris logistics, and Warsaw and London office.
Outlook for the French market
- After a difficult year, the French real estate market is now well placed to recover.
- DWS remain positive on logistics, particularly urban locations around Paris, and we feel there is a strong case for residential.
- The outlook for offices is less certain, although pricing for core product is holding up. The disruption to the retail sector continues, with the sector vulnerable to further price corrections.
The European Real Estate Outlook Report is available here
The French Real Estate Outlook Report is available here