Market volatility as a result of the credit crunch and subsequent market adjustments will offer investors in Continental European property the opportunity to maximize returns, according to LaSalle Investment Management, which earlier this month launched a new pan-European fund, LaSalle European Ventures Fund III. The company believes the overall economic outlook is positive for Continental Europe, with a stable interest rate environment and an improving labour market, which has resulted in unemployment being at the lowest rate for 25 years across the Eurozone, at just 7.1%. Meanwhile industrial production in the Eurozone remains strong, in spite of the current global slowdown.
LaSalle believes Continental Europe is home to some of the world's largest, most active property markets offering strong investment prospects. Cities such as Paris, Munich, Stockholm, and Hamburg should continue to see strong take-up of office space, while restrictive zoning regimes and a limited supply pipeline are expected to result in upward pressure on rents for grade A space.
The European office sector is benefiting from improving vacancy rates and low supply levels for grade A space and positive rental growth forecast over the next three years, says LaSalle. It expects solid tenant demand in the best shopping centers and retail parks across Continental Europe as major retailers look to expand their networks. Likewise, the logistics market is expected to witness strong demand across Western, Central and Eastern Europe. Growth rates for Central and Eastern European hotels, particularly in the capital cities, will remain strong, driven by growing demand from business travellers.
With this view in mind, LaSalle recently launched LaSalle European Ventures III, a closed-end opportunistic fund which benefits from being a single-asset class platform, and will invest across Continental Europe. With leverage, the Fund will have a buying power of