Â鶹ӳ»­

The renewed investor interest in Southern European real estate markets of the last few months has not been a flash in the pan but is likely to continue as economic fundamentals improve, experts agreed at PropertyEU’s Southern Europe Investment Briefing, which was held in London on Tuesday.

‘Southern markets have been lagging behind but they will make a strong recovery, as international investors quite rightly take an interest in them, and transaction volumes will stay strong,’ said Vanessa Muscara, senior research analyst at M&G Real Estate.

‘Northern Europe is a very heated and competitive area, while Southern Europe presents huge opportunities,’ said Arvi Luoma, executive director of international development at WP Carey. ‘We invest in 25 different countries and we are location agnostic: there is a reason we are in Spain and have also bought in Italy and Croatia. We are long-term investors and we believe these markets have longevity. Even Greece is worth looking at, because as the saying goes where there is fear there are opportunities.’

The European Central Bank’s quantitative easing programme has given a short-term impetus to the economy and the signs are already positive: bank lending is picking up in southern markets, consumer confidence is increasing and even unemployment, the bane of countries like Spain and Portugal, is now edging down.

‘The QE package has been quadrupled and is now significant, so it is likely to lead to economic growth and benefit property investments in the short term,’ said Muscara, ‘while in the longer term fundamentals will play a bigger role. We expect QE, the cheap euro and the premium over bonds to support further yield compression, up to 80bps, in Southern markets by 2018’

The good news is that this time the recovery of the market is more sustainable, experts agreed, because the lessons of the crisis have been learnt. Nowhere is this salutary caution more apparent than in Spain, said Alfonso Fernández Puebla, partner at Gómez-Acebo & Pombo Abogados: ‘It is not an overheated, crazy market like in the past. The approach of clients, banks and developers is different and there is no risk of a bubble or of liquidity drying up.’

The availability of financing has improved in Spain but also elsewhere, allowing the market to grow and investors to be bold. ‘The pool of capital is getting deeper and in this low interest rate context it will continue to get deeper,’ said Alexandre Fernandes, head of asset management at Sonae Sierra. ‘This encourages investors to go into secondary locations and in alternative markets.’

Portugal is also beginning to appear on international investors’ radar screens, said Fernandes: ‘In the past everyone was focused exclusively on Spain but now Portugal is catching up, helped by the recovery and the presence of significant opportunities.’