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2018 - Increasing Allocations to European Real Estate: Would Greece benefit?

2018 - Increasing Allocations to European Real Estate: Would Greece benefit?

INREV, the Association of Non-Listed Real Estate Funds in Europe, recently published the results of their annual survey on investment intentions. This is a survey of INREV’s members to establish trends for appetite on real estate investment, destination, investment styles and risks. We singled out three key messages from the 2018 survey: greater planned allocations to European real estate, increasing preference for opportunistic investment and currency fluctuations. Europe appears a preferred destination among INREV’s members. Cross border investment in Europe will be brisk with more capital coming from the US and Asia. As the US reaches the end of its price cycle and Europe perceived to lag behind investors expect to enhance returns from a bull European real estate cycle that has another couple of years to run.

Core European countries remain the top destination of planned investments. How could Greece benefit? The local market will not experience an immediate impact from the rising appetite for European real estate. Greece’s market can get a confidence boost from this positive attitude towards Europe which will be accompanied by a greater appetite for risk (opportunistic investments) and search for yield. We expect a growing number of investors both national and international - and not just those looking for NPLs – standing by to enter the market. Stronger GDP and employment growth are prerequisites if a surge in liquidity is to occur capitalising on the aforementioned trends. Spain is a prime example of how it works. Higher yield hunters will, however, be watching closely as 2018 progresses.

One of the concerns voiced by the respondent funds this year was that of currency risk and fluctuations. This most likely reflects political uncertainties in the mind of investors. At such periods reserve currencies such as the dollar and the euro provide shelter. In the eurozone investors get exposure to the second most important currency in the world and a reserve currency. Again this is positive news for Greece. Investors can focus on the opportunities without having to worry about currency fluctuations.

We agree it is all soft evidence but definitely such general trends do not represent headwinds for the Greek real estate in 2018.