Return to Quality
■ The decision of the UK to leave the European Union on the referendum of the 23rd of June has thrown Europe into unchartered territory. While Brexit is likely to have profound political implications for the EU, our economists expect the European economy to be rather resilient.
■ Government bond yields have dropped in the major economies in Europe, reflecting the risks in future economic growth, while global stock markets remain volatile. Against this backdrop income returns of prime European real estate still compare favourably and we believe that it will continue to attract investor interest.
■ We expect to see a return to quality, with prime assets in the German cities, Paris and the Nordic capitals in most demand. We believe that the secondary markets are more exposed to negative impact, weaker demand and price corrections.
■ In addition, some of the cities that are competing to attract a share of the banking sector activity, such as Paris, Frankfurt, Amsterdam, Dublin and even Madrid, could experience some positive effects on their office occupational and investment markets.
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