Jan 29, 2017
The business property market in Europe is experiencing a surge — so if you’re deciding whether to expand your portfolio, it’s worth a second look.
Inflated prices in London have kept the market buoyant during tough times, but you’ll find exciting new hotspots in other parts of the UK and across mainland Europe.
So if you need to know where to make a wise investment, here are Europe’s current commercial property hotspots.
According to CBRE Capital Advisors, the commercial sector in Norther Ireland offers a higher prime yield than the rest of the UK and the Republic — this is calculated from the annual rent from a property divided by its value.
The market’s been boosted by an increase in overseas investments from nations like China — and at six per cent, office yields are higher than the four per cent figures currently posted in London and Dublin.
Prime yields for Northern Ireland’s high street shops are also outperforming their London and Dublin counterparts.
Commuting between the British mainland and the province might also be simplified in the future — there are calls for a connecting bridge to Scotland.
This would complement Boris Johnson’s proposed England-France bridge and potentially untangle complex Brexit border issues.
The German residential and commercial property sectors have seen heavy investment from Russian nationals recently.
Cyprus was previously the preferred territory for Russians who wanted to secure investments outwith their national borders — but a banking crisis on the island in 2012 damaged its safe reputation.
Berlin, Munich and Frankfurt are favourite locations, and average deals of one to three million Euros suggest that investors are emerging from Russia’s middle classes — rather than the ranks of super-wealthy oligarchs.
With reasonably low prices for properties in dynamic German cities, this market is worth serious consideration.
The Spanish real estate market is another prime spot —investment in commercial properties has reached its highest levels since the 2007 crash.
Cheap property prices are backed by a healthy banking sector and accessible legal framework — meaning Spanish cities are a more attractive proposition than many of their European neighbours.
The Spanish commercial property market reached a low of 1.9 billion Euros in 2011, but is set to reach 8.9 billion Euros by the end of 2018 — a recovery that’s creeping towards pre-crash levels.
Those looking beyond traditional business centres in Britain and Germany could do worse than considering investment in Spain.
British secondary cities
The commercial property sector across the whole of Britain posted a strong performance in the last quarter of 2017, rising from 27 to 29 per cent in an international survey reported in the Daily Express.
And investment in secondary cities like Newcastle, Birmingham and Bristol has made a sterling contribution — rising from 37 per cent in the third quarter to 41 per cent by the year’s end.
Britain’s performance saw it leapfrog over Germany, while the US and France were pushed into third and fourth places respectively
The UK commercial market is performing well at the moment — but it remains to be seen whether its dominance will continue as the nation moves closer to exit from the EU.
Weighing up the political climate over the next few years may help you decide which of these European commercial property hotspots is the best bet for sustainable investment.
What’s your top pick for European property investment? Share your advice in the comments section.