Europe catches up with UK commercial property
UK investment property is performing well compared to other markets but no longer leads the pack in Europe, says RICS’ Global Property Survey. Investor and business demand has started to pick up in other major European centres, notably in Germany and Italy, and investment in commercial real estate worldwide is rising at its fastest pace in 18 months. The sector is shaking off the pressures of high oil prices and renewed investment competition from strengthening stock markets. RICS has forecast total returns on UK commercial property to attain a healthy 17% in 2006, falling to 9% for 2007. Investors are piling into European commercial property regardless of sluggish, static, or even negative rental trends.
Business property demand is firm in Germany and France but high levels of vacant space are still holding back rents. In the UK, rents are picking up, primarily due to a stronger London office market which has benefited from rapid growth in the financial sector.
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