Yields on offices and industrial properties in Greece are seen dropping in the next year as a low interest rate environment drives investors to riskier investments, says consultant Savills.
In a report, Savills says that it expects traditionally 'alternative' sectors to come to the mainstream as investors increasingly search for long, secure income.
"The weight of money targeting European real estate will keep yields low for the foreseeable future and we feel that the underlying risk of holding property ahead of bonds has not materially changed, which will continue to keep the yield spread with bonds stable. Rental growth, rather than capital growth will be the main driver of returns in 2020," says Savills.
Elsewhere in Europe, yields are also dropping on offices in Belgium, Czech Republic, France, Italy, Romania and Sweden. In regards to industrial property, yield compression i also on the cards for the Czech Republic, France, Germany, Greece, Italy, Portugal, Romania, Spain and Sweden.
"With debt so comparatively cheap across Europe and office occupational markets remaining tight, we believe there is an opportunity for property companies willing to take on development risk to secure long income and sell on to institutional landlords," says Savills.
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