Madrid climbs Europe’s financial table

Madrid climbs Europe's financial tableMadrid has been named as the fifth most attractive European city in which to invest in the annual rankings of Price Waterhouse Cooper. This has seen the city climb four places in the table from last year thanks to good economic expectations and the potential for rent increases.

For the third consecutive year, Berlin has topped the table, with Copenhagen, Frankfurt and Munich occupying next three places.

Other cities named in the top 10 are Hamburg, Dublin, Stockholm, Luxembourg and Amsterdam. The report was put together in collaboration with the Urban Land Institute and was based on interviews with 818 managers of real estate, funds, institutional investors and financial institutions.

An even brighter future

Among investors there is a general feeling of optimism for 2018 with favorable macroeconomic and political perspectives, and the continuing strong availability of capital.

In the case of Spain, the macro perspectives are said to be even better with investors able to see is a clear path to increasing margins and rents in the country. This is leading to confidence in available business opportunities.

On the other hand, while there is widespread optimism regarding the European market, investors are quietly cautious about the greater difficulty in achieving profitability objectives mainly due to the scarcity of prime products.

Dodging the pitfalls

In addition, there are potential macroeconomic and social risks, such as a possible rise in interest rates in the short term, along with the increase in international political instability. These continue to worry 81 per cent of investors and agents in the sector.

Of particular concern is Brexit, with many of those polled believing that the departure of the United Kingdom from the European Union could lead to a drop in investment and the value of the British real estate sector in 2018.

However, it is thought that some of that slack could be picked up by an increase in other markets of the European Union, such as Germany, France, Spain and Luxembourg.

The report also highlights the logistics sector, saying it has the greatest growth potential for 2018, both for investment and for development. This is largely due to the growth of electronic commerce.

In addition, the residential sector, traditionally unattractive to investors because of its complexity, is now seen as an opportunity owing to the needs of the European market.

Niche markets could also start to see benefits. More than half of those interviewed for the study said they were considering investing in projects such as residences for students, hotels, and residences for the elderly due to their attractive profitability.

For more information, please contact corporate law firm Argali Abogados

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