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Real Estate

28 January 2014

European Real Estate Revives 

European real estate markets battered by the collapse of housing bubbles are showing signs of a return to health.

Eurostat, the EU statistics office, says home prices across the euro zone rose 0.6% in the third quarter of last year. While real estate values in Ireland and Spain remain down by one third from their 2007 peaks, both markets saw prices increase, Spain by 0.8% and Ireland by no less than 4% in three months.

Real estate prices have held their strength in the wealthier northern European nations, especially Germany, France and Belgium. In Switzerland, housing prices are rising so quickly that the government is taking action to avert market overheating, ordering banks to hold extra reserves against their mortgage assets.

With interest rates at record lows to keep the currency from rising and hurting exporters, Switzerland’s vibrant economy and high levels of immigration have helped lift home prices by as much as 75% since 2000.

Investors are looking at commercial and residential real estate in Spain and Ireland because prime markets such as Munich and Paris have become overpriced. According to Emerging Trends in Real Estate Europe 2014, a report by the Urban Land Institute and PricewaterhouseCoopers, investors now see Dublin as one of the best places to invest; it was ranked 20th two years ago. Two-thirds of investors see promising opportunities in Spain.

Another highlight: smaller metropolitan areas may produce better yields than larger ones; office space in Stuttgart is expected to yield 6.5% this year, compared with 4% for Munich.