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Post-war Europe begins rebound in investments.

Post-war Europe begins rebound in investments

Following the general downturn in business activity as experienced during the Gulf War in the first quarter of 1991, normal levels of property activity has resumed in most European markets according to Jones Lang Wootton's just released Quarterly Investment Report, Summer 1991.

Investment and occupier activity both suffered as decisions were deferred and markets temporarily stagnated during the war. But the JW report contends that despited the setbacks, international cross-border investment and development activity is a growing feature in most European markets, although such activity is relatively limited in France. The strongest new source of investment money is German, with private and institutional funds keen to diversify into other markets. The United Kingdom is a popular target at present.

Many of the larger Scandinavian property companies and institutions that dominated Europe's investment markets in recent years are reappraising their strategies, and the earlier flood of Swedish investment capital has now dwindled to a trickle, albeit temporarily.

Following substantial investments in London in 1990, Japanese activity this year has not been great across Europe as a whole, although there have recently been several spectacular deals in Germany.

Dutch and French investors and developers are active right across the continent, with French developers having scored some high profile successes, particularly in Germany.

The London office market remains in a downturn at or near the bottom of its cycle. Despite the absence of rental growth potential in the short term, there is now considerable investor interest keen to exploit yields which are at an all-time high.

In Germany, the boom in the leading markets continues, with rental growth across the board and firm investment yields. Hamburg and Dusseldorf seem well-placed to benefit from reunification and the Single European Market respectively. Berlin's spectacular growth has also continued in the context of an extremely undersupplied letting market: rents have doubled in the last year.

In contrast, the market in Paris is now well past its peak, with prices significantly lower than 12 months ago. A severe downturn is not forecast however and there should be good opportunities to buy contra-cyclically in the near future. The Lyon market remains robust with strong leasing and investment activity.

In Belgium and the Netherlands the markets remain healthy, with continuing rental growth in the major centers, notably Brussels and Amsterdam. Environmental issues and restrictive planning policies are now starting to raise rents and values in the major Dutch markets. Brussels continues to attract international corporate occupiers and to benefit from burgeoning take-up from EC related activities.

Internationally, Jones Lang Wootton has over 60 offices in 22 countries and a staff of 3,500. In Europe, it has 28 offices in 11 countries and a staff of 1,500.
COPYRIGHT 1991 Hagedorn Publication
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Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Real Estate Weekly
Date:Sep 4, 1991
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