European real estate could see a surge in investment as a result of quantitative easing, according to research from M&G Real Estate.
The European Central Bank is injecting €1.1tn (£716bn) into the eurozone economy, a move that will help to weaken the euro, which has already fallen to a 12-year low versus the dollar and a seven-year low against sterling, says M&G.
The boost from a weaker euro and ongoing positive structural changes to European export industries will boost rental growth in e-commerce-related real estate such as logistics and distribution hubs, particularly in Germany.
The research from M&G found that six years after monetary easing programmes were introduced in the UK and US, both countries benefitted from increased output, employment growth and private consumption as well as buoyed financial data.
The report suggests this effect will be mirrored in continental Europe, given that the latest stimulus plans mark the largest injection in the region by far – equal to almost three times the total purchases made between 2009 and 2014.
Richard Gwilliam, head of property research at M&G Real Estate, said: “In both the UK and US, government bonds have reached new historic lows. This trend then developed in the property markets as a search for yield got underway. Over time, investors became more comfortable paying lower yields because of a growing economy and likely rental growth, which came later on.”
