Growth in EuropeÂ's real-estate market is expected to slow in the second half of 2002 as the economy slumps, with the market for office space likely to be the worst hit, said Italian real-estate research group Scenari Immobiliari in an annual report.
Residential sales remained the growth engine of the market, with stable prices for homes forecast in the next 12 to 18 months, the report said.
Spain bucked the overall trend with sharper growth in its tourist, business and commercial real-estate sectors than in the residential sector.
The Italian real-estate market was described in the report as one of the strongest in Europe and is expected to end 2002 with revenue growth of 7.8% year-on-year, compared with average growth of 4.2% in the European Union. The report forecast 5% revenue growth for 2003, with a decline in the residential market balanced by growth in other sectors.
Belgium, Poland and Portugal were also among the strongest markets in Europe, with consistent growth in outlying districts due to high quality new construction.
The report said the residential market was slowing in the U.K., and to a lesser extent in the Netherlands and Denmark, after years of strong growth. In Germany, by contrast, the market was said to be picking up after touching its lowest point in the cycle.
In the east, the Russian market was said to be growing, despite a difficult economic environment, while the Czech and Hungarian markets remained weak.
In Athens, where construction activity is strong ahead of 2004 Olympic Games, is at present the most dynamic market in terms of growth, and the study sees the trend continuing for the next 18 months.
The office-space sector has suffered the most from the global economic downturn, with both purchase and rental prices have declined. France, in particular, is facing a new crisis in this area, which is expected to last though 2003, the report said.
Office rentals in Brussels fell due to the completion of numerous construction projects, while, by contrast, the German market remains stable, even though difficult economic conditions are limiting growth. Spain bucked the trend, with consistent growth in the office market of both Madrid and Barcelona, along with Lisbon and Athens.
In all European cities, companies are moving their offices from the city center to outlying districts, the report noted.
The retail market posted reasonable growth in the first half 2002 and is expected to improve in 2003-2004, as consumer spending is seen growing faster than the gross domestic product of individual countries, boosting rental contracts for shopping centers as a result, said the report.
Industrial real-estate suffered less than expected from the international economic crisis, with revenue growing in all main European countries. Prices for new and old real estate grew 3% to 4% in U.K. and Germany, 7% in France, and 10% -12% in Spain.
(source: Dow Jones Newswires)