According to Cushman & Wakefield's new European Economic Pulse, while some economies ended 2009 on a weaker than hoped for note, indicators in Q1 2010 suggest that growth has restarted for the region and almost all major economies are set to see positive growth over the year.
In the short-term, economies such as France, Germany and Switzerland stand out for offering potential out-performance at below average levels of risk while over a 2-3 year period, The Czech Republic, Poland and Slovakia should be viewed in the same category alongside Nordic Countries such as Sweden and Norway.
However, while macro national-level risk factors are very much in focus as the tragedy of the Greek financial crisis unravels, there are significant differences in the growth outlook between cities within the same country. Looking at economic and labour market trends, some of the top performing city regions for the next 1-2 years are expected to be in central Europe, notably Warsaw and Prague, but Budapest and Bratislava are also expected to fair relatively well as are eastern EU cities such as Sofia and Bucharest. Further west, the top performing cities for 2010/11 are forecast to be led by Stockholm, Luxembourg, Zurich and Oslo.
The impact on real estate of a return to economic growth has been for a firming in confidence, more activity and a stabilisation in prices led by investors but with occupational markets also now more upbeat in many cases at least in prime markets.
David Hutchings, head of the European research group, Cushman & Wakefield, said: "Business has to live with some degree of uncertainty of course and they can't stand on the sidelines for ever. Hence it is no surprise that we are now seeing signs of increasing activity from both occupiers and investors in the European property market. Of course there is less clarity on pricing than many would like - with overly ambitious negotiating positions seen in both investment and leasing discussions and less competitively priced finance than the market needs. Nevertheless, confidence has improved in the fist quarter and both occupiers and investors sense that for grade A property, pricing is now around as good as it will get but for secondary stock, there is no urgency to invest or occupy property which should get cheaper yet."
Source: Cushman & Wakefield