Prime European property is expected “to hold up” despite economic upheaval, according to Jones Lang LaSalle.
The agent said barring the worst scenarios, the outlook for investments in prime offices, retail and industrial property remains positive, with strong demand across European cities.
JLL head of forecasting Andrew Burrell said: Against a sharp deterioration in economic sentiment, it is no surprise that there has been some downgrading of the outlook. However, while 2012 won’t be a vintage year, our forecasts show modest rental growth across major prime property sectors will continue.”
JLL forecasts also suggest prime commercial sectors will have much greater resilience to economic fluctuations than during the previous global downturn, with capital values expected to be maintained in all sectors.
Robert Stassen, Head of Capital Markets Research EMEA, added: “We are still seeing strong interest across prime property in traditional centres like London, Paris and Munich.
“Because these areas are perceived to be low risk, prices will remain high. Growth will be driven primarily by markets in north and eastern Europe, with CEE centres such as Moscow and Warsaw having the most exciting prospects next year.”
Whilst investment sentiment has suffered due to economic uncertainty, prime property yields are also forecast to remain steady over the next 12 months.
Burrell said: “Yields look relatively attractive and hold a premium compared to other assets, with bond prices at rock bottom levels in many markets. Despite this upbeat picture, significant threats remain.
“The risks are firmly on the downside in 2012, with the clearest one being uncertainty surrounding the eurozone crisis where much still needs to be done to regain market confidence.”
bridget.oconnell@estatesgazette.com
