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5 possible events that could influence European Real Estate market in 2017

18 January 2017  ·  ORDO Capital
Coming year is going to be rich of significant events beginning with elections in the biggest European economies and ending with sequences after BREXIT and Trump’s win in the U.S. presidency race. Of course, all those events will influence the Real Estate market, and here you can see a list of five possible events in the European property market in the coming year.

1.       Angela Merkel stands aside from the race for German chancellor

There is a probability, that the longest-serving political leader in Europe can leave a race for a place in Berlin office. As Angela Merkel during 11 years have become as a synonym for “Stability”, new leaders coming will hit DAX Index very hard. The real estate market will feel a downturn in the demand side as well.

2.    The Euro will fall below parity with USD

The euro is depreciating because of several new risks appeared in 2016 namely, BREXIT, Dutch Bank recession, elections, refuges and etc. Meanwhile the U.S. economy with its anti-immigration and anti-trade policies strengthen the Dollar. In this way, we can assume strong depreciation of the pair EUR/USD below parity. Depreciation of euro will cause increase in demand in the real estate market because for foreign, particularly, U.S. investors property will become cheaper.

3.    BREXIT will decrease UK’s real estate prices

What effect has the United Kingdom's vote to leave the European Union had on commercial real estate investments? Economists expect this year to see a continuation in the trend of fewer transactions and slower, but still positive average growth. London, however, could buck the trend and see prices fall on average. Halifax predicts annual house price growth will drop to between 1 – 4% by the end of 2017.

4.    Continental Europe will have growth in real estate market

The impact of the Brexit could boost the demand for space in Amsterdam, Dublin, Frankfurt, Paris and other European cities. Together with the fact that emerging economies showed high GDP growth for the last year, the prediction is becoming more real. The best destinations for the further business are becoming Nordic countries, Germany, France and several Eastern Europe countries as Poland.

5.    Real estate market in Russia will recover

S&P predicted the recovery of the housing market in Russia to 2017. Analysts believe that the recession bottom of the Russian real estate market has passed. However, a recovery will be in 2017 — after the improvement of the economic situation in the country. In the field of residential real estate, greater role for the primary market played the extension of state subsidies for interest rates on mortgage loans. This helped to stimulate demand, analysts said S&P. 

Sources: marketwatch.com, poundsterling.com, theweek.co.uk, cazenovecapital.com, sevendaynews.com

Photo: shutterstock.com

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