European real estate market.

European real estate market.

The geopolitical pressure created in the last days by North Korea is just one of the variables and challenges that the European markets have had and have ahead of this year (political elections, higher inflation and a progressive return to monetary normality). In a context that is not difficult to define "tangled" the real estate remains attractive, with an increase in activity in most countries. It is the photograph taken from Real Estate Scenarios for Outlook 2018, which will be presented in Santa Margherita Ligure on the occasion of the 25th Society Forum in the charming seaside town, entitled "The City of Men" this year.

According to Mario Breglia, president of Scenari Immobiliari, the growth estimates of the European nations in 2017 are on the rise and the prospects for 2018 have also been reviewed positively, with the sole exception of the United Kingdom, victim of Brexit choices. The flight of private and institutional investors in favor of other European markets such as Berlin, Munich, Milan and Brussels, has slowed down the growth of the sector, also realizing the flight of human capital.

Despite the growing interest for Milan, however, in Italy the positive economic signals are not such as to guarantee a real recovery, also because the country has not managed to exploit, as others, the opportunities deriving from the Quantitative Easing, from the low price of oil and interest rates at historic lows. "The growth is modest, the tax burden is still too high, unemployment, especially youth, is among the highest in Europe and the banking system is always fragile" the outlook recites.

Real estate turnover increased everywhere, with the exception of the United Kingdom, where the sharp slowdown in activity in the post-Brexit period led to a 14% decline. More in detail, real estate markets are doing better than the economy.

However, the last few months have seen a return to normal and, despite the elements of uncertainty, 2017 should close with a positive sign, albeit at a slower pace than the competing nations. Italy and France recorded a similar increase in 2016, but are expected to accelerate in 2017, modest in Italy and more consistent in France. Italy will come to a real estate turnover of 118,550 million euros at the end of 2017, compared to 114,000 million in 2016, while France will settle at 152,000 million, England at 115,000 million, Germany at 215,000 million. In all the five major European countries (Spain will record revenues of 96,0000 million at the end of the year) will record a turnover of 696,550 million euros at the end of 2017 (up 6%, 9% next year). "The real estate market resembles the Italy of Ventura that we saw on the pitch the other night against Spain" says Breglia.

The lack of supply, above all in the top locations, will continue to represent the focus of investors looking for a low level of risk, without however giving rise to accentuated speculative developments. This lack of product in the "safest" markets involves changes in strategy by investors. The opportunistic ones, which can count on high liquidity, concentrate their attention on the buildings abandoned by the funds both in the offices and in the alternative sectors. We also look for secondary locations with high returns, but able to trigger a virtuous mechanism of recovery and growth.

The recession is now behind us, but the intensity of growth changes from country to country. The greatest successes are in the Spanish market, with a strong recovery in 2017, with forecasts for the continuation of the trend in 2018, even if the absolute value of turnover remains lower than in France and Germany.

Residential sales, the largest share of real estate turnover, are growing in most countries. 2017 shows an average increase of between 3% in the United Kingdom and 8% in Spain. Good Italy, which in 2016 marked the highest increase after a long period of stagnation of 14 percent. "But ours is still a contained market, we have half the transactions of France with the same number of inhabitants" says Breglia.

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