European real estate market expected to heat up in 2013

The climate is looking more favorable for real estate investment in Europe with many viewing the Eurozone debt crisis as a potential stimulus for activity, a new survey from Ernst & Young shows.  Both volumes and transaction size in 2013 are likely to exceed levels seen in 2012.

An article in PropertyWire.com highlights a number of interesting results from the survey.

• More than 500 real estate investors across 15 countries in Europe surveyed in late 2012 by Ernst & Young still view most European countries as attractive investment destinations, particularly for non-Eurozone countries such as the UK.

• The survey also found that investors expect transaction volumes to rise, driven in large part by cross border investments, with a majority of respondents in 12 of the 15 countries surveyed predicting higher levels of interest from international real estate investors in 2013, compared with 2012.

• Speculative project developments are returning only gradually in many markets.

• Overall they expect stability and also some growth potential or rising prices for residential property in most European countries.

• Almost three quarters of investors surveyed say that the continued weakness in the Eurozone economy will strengthen European investors’ activity in the real estate markets. This highlights the ongoing flight into real estate assets by investors around Europe. This is a reversal from a year ago, when the appetite for such transactions was limited as investors waited to see how the crisis would develop.

• Respondents from 13 of the 15 countries also believe that inflationary pressures will propel investors toward real estate assets which are traditionally seen as a natural hedge against inflation in the medium term. More than 80% of investors in Germany, France and Switzerland agree that inflationary fears will underpin real estate investment in contrast to just 20% in Italy.