Aviva Investors raises five-year total return forecast for European real estate

Aviva Investors raises five-year total return forecast for European real estate to 9% per annum

* German industrial and Swedish retail most attractive markets on risk-adjusted basis

* High spread between European prime property and bond yields to be maintained 

Aviva Investors has revised upwards its five-year annual total return forecast for European real estate to 9% gross of fees.  Chris Urwin, global research manager at Aviva Investors, comments on the outlook for the region and the countries best equipped to handle another dip in growth:

“Following strong investment into prime European assets, we raised our forecast for European Real Estate annual returns between 2015 and 2019 to 9%, from 8.7% previously. These projected returns, however, are front-loaded to the first half of the forecast period.

German industrial and Swedish retail most attractive markets on risk-adjusted basis:

“Our latest macro risk-rating shows that Germany, Sweden and Poland have the strongest macroeconomic fundamentals and are best positioned to handle any future potential dips in growth.

“Unsurprisingly, the macro-economic risk is more elevated in the southern European economies of Spain, Portugal, Italy and Greece. However, there are pockets of value to be found.  The Spanish and Dutch office markets look relatively attractive on a risk-adjusted basis, and as some peripheral markets are seeing more rapid economic growth than other European countries, we expect them to outperform their peers over our five-year forecast period.

“However, caution is required as these countries rank quite poorly when macroeconomic risks are considered. An investor with a downbeat view of European prospects may prefer Swedish industrial and retail sectors along with German retail assets.”

High spread between European prime property and bond yields to be maintained:

“Although we expect Europe’s fragile recovery to continue, it’s subject to a number of risks including the Greek debt crisis and a China-led slowdown in global growth. Taken as a whole, Europe is poorly positioned to deal with another economic downturn.

“European government bond yields have increased since the start of the year but they remain at historic lows and are not expected to start rising for at least two years. This means the current high spread between European prime property and bond yields will be maintained, underpinning investor demand for some time to come.”

Source: Aviva Investors Macro Risk Ratings, June 2015

For more information contact:

Steve Ainger

Aviva Investors Media Relations

+44 (0)20 7809 8452

 

Grant Bather

Aviva Investors Media Relations

+44 (0)20 7809 6252

Notes to Editors

The information and opinions contained in this document are for use by the financial press and media only, and do not purport to be full or complete. No reliance may be placed for any purpose on the information or opinions contained in this document nor should they be seen as advice.

The value of an investment and any income from it may go down as well as up and the investor may not get back the original amount invested.  

The press release is provided on the basis that Aviva Investors Global Services Limited is not causing the communication of a financial promotion under exemption of the Financial Promotion Order, as Aviva Investors Global Services Limited has no control over the way in which an article based on this press release is prepared and published by the financial press and media. 

Except where stated as otherwise, the source of all information is Aviva Investors Global Services Limited (“Aviva Investors”) as at 20 October 2015.

Unless stated otherwise any views, opinions and future returns expressed are those of Aviva Investors and based on Aviva Investors internal forecasts. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature. 

Aviva Investors

Aviva Investors is the global asset management business of Aviva plc. The business delivers investment management solutions, services and client-driven performance to clients worldwide. Aviva Investors operates in 15 countries in Asia Pacific, Europe, North America and the United Kingdom with assets under management of £247 billion as at 30 June 2015.

AVIVA PLC

  • Aviva provides life insurance, general insurance, health insurance and asset management to 34* million customers, across 16 markets worldwide
  • In the UK we are the leading insurer serving one in every four households and have strong businesses in selected markets in Europe, Asia and Canada. Our shares are listed on the London Stock Exchange and we are a member of the FTSE100 index.  
  • Aviva helps people save for the future and manage the risks of everyday life; we paid out £24.6 billion in benefits and claims in 2014.
  • By serving our customers well, we are building a business which is strong and sustainable, which our people are proud to work for, and which makes a positive contribution to society.
  • The Aviva media centre at http://www.aviva.com/media/ includes company information, images, and a news release archive.
  • For an introduction to what we do and how we do it, please click here http://www.aviva.com/about-us/aviva/
  • For broadcast-standard video, please visit http://www.aviva.com/media/b-roll-library/
  • Follow us on twitter: www.twitter.com/avivaplc/

* Before the deduction of Aviva and Friends Life overlapping customers.