Savills Reveals Top 10 European Investment Hot Spots For 2017

Northwest Europe at night
Northwest Europe At Night

This year will largely be a game of comparative risk in a search for sustainable income streams, according to Savills.

Savills UK and Europe CEO Mark Ridley said despite a Brexit referendum, a Trump election and the uncertainty surrounding upcoming European elections, the second half of 2016 and the start of 2017 has proved property remains a fundamentally safe and attractive asset class. Real estate continues to give strong income returns and, in many cases, a refuge for capital preservation in the longer term.

These geopolitical events have influenced more caution and risk aversion amongst investors, however, so Ridley expects secure income streams will perform best in 2017.

Below are the 10 property segments poised for a strong year.

Core And Core-Plus Hot Spots

London Skyline

Offices in non-CBD locations and in regional markets

Heightened competition for the same assets in the same locations has driven prices up. In 2017 it is time to look elsewhere.

Forward funding of speculative projects

Speculative development will be strong in core markets where prime products are becoming scarce for both the occupier and investor. The office pipeline planned for 2017 suggests a 25% rebound in development activity across Europe, most of which has been pre-let, offering both tenants and investors some new opportunities.

Multifamily housing in the UK, the Nordics, Germany and The Netherlands

These areas are undergoing a strong urbanisation trend. Combined with low development activity, there is a large supply-and-demand imbalance.

Prime retail in prime locations

The online retail sector is expected to grow by approximately 16% across EU28 in 2017, so units that can serve as drop-off and collection points to service quick delivery times will be in hot demand.

Value-Add Hot Spots

Dusseldorf at night

Urban logistics

Property close to large European urban hubs and particularly small units “near-shoring” the city centres of London, Paris, Stockholm and Dusseldorf will be in demand.

Student housing in markets with rising international student numbers

The UK, Germany, France, The Netherlands, Spain, Austria and Portugal will be particularly active. Low levels of supply in the face of growing demand is driving development activity.

Healthcare in Germany, France and the Nordics

Medical property will be boosted by aging demography, strong urbanisation and above affluent populations. Most notable will be care homes in Germany, France and Finland, where record high investment volumes were reached last year; senior housing in Germany; and clinics in France.

Co-working office accommodation

This sector continues to mature against an office supply/demand imbalance backdrop. Key locations include Spain, Germany, France, the UK, Italy, The Netherlands and Belgium.

Opportunistic Hot Spots

Downtown Warsaw, Poland

Data centres

This sector is driven by cloud growth and its offset need for supersized infrastructure support. The growth area is particularly noteworthy in the Nordics, the UK and Belgium, where there are natural cooling efficiencies, high connectivity, lower power costs, abundant resources of green energy, and taxation incentives.

Offices in Central Eastern Europe

In locations such as Poland, Hungary, Romania and Slovakia there is a pool of well-trained, competitive talented labour and an increasing number of companies seeking to nearshore their back-office functions.

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