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European Real Estate Returns Outpace U.S.
Real estate returns are now more attractive in Europe than the United States, according to research by Green Street Advisors. Researchers developed valuation frameworks focused on European and U.S. public and private real estate markets that can help investors spot opportunities across sectors and geographies.
Green Street’s Cedrik Lachance, director of REIT Research, writes “Today, real estate returns are far more attractive in Europe than they are in the United States when compared to local bond rates. Europe’s relative attractiveness is true in both the private and public markets.”
Lachance notes, that’s because REIT discounts to Green Street’s estimated private market value of the properties they own are roughly similar across continents. In fact, researchers found discounts are often comparable across sectors within different regions, suggesting that while real estate is a local game, broad trends can transcend borders.
Three sectors stand out as having the best risk-adjusted return expectations, all of which are in Europe. Green Street’s favorite sector in Europe is self-storage, followed Swedish-listed property companies, and London Specialist property companies, which encompasses a mix of office owners and retail-focused companies.
Shifting focus to the U.S., Green Street likes the residential sector in the public market, where manufactured homes and apartment assets are attractively priced.
For comments, questions or concerns, please contact Dennis Kaiser
