Daily Management Review

ECB's QE Programme Spurred Real Estate Market


Investors in real estate market are new supporters of the European Central Bank’s quantitative easing (QE), the experts say.

Kieran Pender & Elizabeth Gay 2012
Kieran Pender & Elizabeth Gay 2012
Sales of commercial real estate in the euro zone for the year, ended June 30, jumped 32%, according to the London-based Knight Frank LLP. The volume of investment transactions amounted to 104.2 billion euros ($ 117.5 billion). In Portugal, the transactions tripled, in Spain doubled.

International investors flocked to the property because of its relative cheapness, reports Bloomberg. The ECB's efforts to support the economy have led to a weakening of the euro by 19% against the dollar and 11% against the pound sterling.

In addition, as the economy recovers, rents grow too, as new construction has been limited since the global financial crisis, notes management company M&G Real Estate.

- Investors, receiving double-digit profitability in the markets of Great Britain and the United States for few years, believe that Europe will be next - comments the property manager M & G Real Estate David Jackson. - QE acts as one of the main incentives for this program.

According to him, M & G Real Estate buys grocery stores in Germany and retail property in Milan, Copenhagen and other European cities against the background of growth of consumer credit, which could spur the demand for this type of real estate, leading to an increase in rents and the cost of the objects themselves.

According to MSCI, the profitability of investment in European real estate, taking into account rental income and growth in the value of objects, reached 4.45%in the second quarter.

source: bloomberg.com