European commercial real estate: play the re-opening with quality assets

The European economy is emerging from its worst economic slump since the Great Depression. As the vaccine rollout progresses quickly across the continent, mitigation measures and travel bans are being lifted, allowing growth to revive. As the European economy recovers, the real estate sector should join the rebound after a tough year, although the pace of this recovery will be uneven across sectors and subsectors.

Beyond cyclical consideration, European commercial real estate could play a key role in investor portfolios for different reasons. Firstly, monetary policy is likely to stay accommodative for a long time, especially in Europe. While the Federal Reserve (Fed) is “talking about talking” about tapering plans, at its June meeting the ECB confirmed its dovish stance. Its asset purchase programmes should help keep government bond yields low, prompting investors to look beyond traditional sources of income.

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