Marktbericht Europa May08

The majority of Europe’s economies posted weaker economic growth in 4Q07, reflecting the turmoil in the credit markets and the effects of a stronger euro on consumer spending.

Executive Summary

• Economic growth in Europe, which slowed in the fourth quarter of 2007, will remain weak this year, particularly in the UK, Ireland and Southern
  Europe.
  
• The credit market problems that are slowing economic activity will cut into real estate transaction volume. With banks tightening credit standards, property owners will be hard-pressed to maintain yields.
  
• Property values across Europe are expected to fall by 10% or more this year. Consequently, returns are likely to be weak for the year and possibly longer.
  
• Investor demand for property remains mixed. While interest is increasing in the emerging markets of Central and East Europe (CEE), demand for properties in the core Western markets outside the UK fell by 10% or more in the first quarter.
  
• Although tenant demand has weakened in many markets as economic growth slows, property market fundamentals remain robust across most markets. CEE markets, particularly in Russia and Turkey, are seeing strong growth in rents, while the UK is experiencing declining rents.