Investment volumes in the European property sector have increased relatively steadily since 2009, according to Catella, which reported that the current economic boom is the second-longest ever and despite some indications of a future cooldown, the drivers of continued allocation of capital to the property sector still seem strong.

The report stated: “Historically low interest rates have led to a significant inflow of capital in the property market and have driven prices up to record levels, especially in larger cities. When interest rates are raised, the conditions for financing are affected and, to a considerable extent, capital is commonly reallocated from riskier investments in favour of more stable real estate investments with dividend yields and fixed income investments. Nevertheless, the drivers of continued allocation of capital to the property sector still seem strong.”

However, after an upturn in 2017, the European commercial property market levelled off somewhat in 2018. Transaction volumes decreased by 18% to €227.8bn. “2018 was largely another good year and prices have continued to grow in most segments. There is still plenty of equity, markets are not yet overbuilt, and attitudes to debt have become more conservative since the Global Financial Crisis”, Catella added.