Continental European markets are benefiting from a relative slide in sentiment towards the UK, where, despite some semblance of normality returning to investment volumes in 2017, there is nonetheless widespread concern over the economic impact of Brexit in 2018 and beyond.
In contrast, following the election of Emmanuel Macron, interviewees are more upbeat about France than they have been for years. Germany, meanwhile, is consolidating its position as Europe’s safe haven for capital.
According to Emerging Trends Europe, Germany accounts for four of the top six leading cities for overall investment and development prospects in 2018, with Berlin once again at Number 1. Though values in the German capital have rocketed over the past year, industry leaders believe the growth is sustainable, supported by a rising population and a vibrant technology sector.
Many leaders believe change is long overdue, but Emerging Trends Europe reveals an industry that is beginning to open its eyes to new entrants, new partnerships and new business models
The dominance of the German cities is broken by Copenhagen, which claims second place – jointly with Frankfurt – following an impressive ascent of the rankings over the years. Domestic and international players alike are drawn to the Danish capital for its strong employment growth and lively tourist trade.
Despite the brighter general outlook in this late-cycle market, there are enough warning signals to prevent confidence slipping into complacency. Historically low yields, a collective pressure to invest and a scarcity of available core assets are all uppermost in the minds of the industry leaders canvassed for Emerging Trends Europe. A rise in interest rates is a prospect that was not evident a year ago.
And when it comes to the geopolitical backdrop to business, international instability remains a big concern.
At the same time, the European industry is looking far beyond 2018 – and well beyond traditional real estate boundaries.
Many leaders believe change is long overdue, but Emerging Trends Europe reveals an industry that is beginning to open its eyes to new entrants, new partnerships and new business models.
The rise of co-working has been a notable phenomenon – as part of a wider real estate response to changes in how we work, technology and the in-vogue, “space-as-aservice” movement. A mixeduse approach to development is another noticeable movement undergoing a 21st century re-boot, recognising continued urbanisation trends, changing patterns of urban living and a more sophisticated understanding of the economic benefits of “good” densification. And increasingly, boundaries between real estate, social infrastructure and wider investment in infrastructure are becoming blurred.
Real estate is being reshaped by social, demographic and technological change. And as the industry leaders interviewed for Emerging Trends Europe make clear, they are not simply talking about, but acting upon, this challenge.