Study: Investment Climate in Europe (Winter 2018/19)

Study: European real estate investors enter 2019 with subdued expectations

• 41 per cent expect the investment climate to deteriorate
• Germany is the most popular investment destination in Europe
• Outside Europe, US real estate remains top choice

Lower expectations for business performance in 2019 are further dampening the prospects for real estate investment in Europe. That is a key finding of Union Investment’s latest investment climate study, which involved polling 150 real estate investors in Germany, France and the UK. 41 per cent of the property professionals surveyed expect the real estate investment climate to deteriorate over the next twelve months, while only 22 per cent expect a noticeable improvement.

Investment climate


Olaf Janßen
“The subdued expectations of European real estate investors for 2019 suggest that professional investors are very aware of the challenges and risks inherent in a late-cycle market and are unwilling to experiment. For the real estate industry as a whole, this can be seen as a positive indication of conscientious risk management."

Olaf Janßen, Head of Real Estate Research

An investment strategy that accepts a lower return for the same level of risk is correspondingly popular in the current market environment. Around half of German and French real estate professionals are pursuing such a strategy, rising to 86 per cent of professional investors in the UK.

Investment Climate

Looking at the detailed picture, there are significant differences with regard to expectations for 2019 in the individual national markets. While around half of property investors from Germany and the UK rate the outlook as negative, most of the optimists can be found in France. 40 per cent of French respondents expect a noticeable improvement in the investment climate; only 24 per cent are preparing for a slowdown.

Germany and the US are the most popular investment destinations in 2019

The survey participants were also asked which European countries they saw as offering the best overall conditions for real estate investment in 2019 across all property types. At 31 per cent, Germany was the most-named country here. France and the UK followed a long way behind, each garnering around 13 per cent. Spain, the Netherlands, Sweden and Austria are also seen as offering good conditions for investment in 2019.

Investment Climate

“The survey revealed that investors intend to focus very much on their own home markets. At the same time, Germany’s strong position relative to other European property markets is clearly apparent,” said Janßen. “One in three professional investors in France and one in five of their British counterparts name Germany as their market of choice in 2019.”

Investment Climate

Among non-European markets, the US remains the clear leader, with 53 per cent of all respondents with a correspondingly broad investment remit citing the US as their favourite country for real estate investment outside Europe. By contrast, Australia and Japan barely register on European investors’ radar, at 13 per cent and 10 per cent respectively.

Olaf Janßen
"Due to higher hedging costs, European real estate investors are likely to be less active in the US in 2019 than in previous years. Given the similarly difficult conditions in other international markets, the US markets nonetheless retain their stand-out importance.”

Olaf Janßen, Head of Real Estate Research

Low expectations index drags down overall index

The relatively low expectations of European property investors for 2019 are also reflected in the overall index. Compared to the survey conducted a year ago, the investment climate index for Germany has declined to 63.2 points (minus 4.1), France stands at 66.8 points (minus 2.3) and the UK scored 60.1 index points (minus 3.5).

Real Estate Investment Climate Index

About the Union Investment survey

Union Investment launched its Investment Climate Index of European property investors in 2005, with the survey taking place at six-month intervals since spring 2008. The index is based on four indicators: market structure, the general environment, location factors and expectations, each with a weighting of 25 per cent. For the index, market research institute Ipsos conducted interviews between October and December 2018 with 150 property companies and institutional real estate investors in Germany (n=60), France (n=55) and the UK (n=35).

If you have questions regarding the survey please contact

Simon Sahm


Simon Sahm

Communications Manager

Union Investment Real Estate GmbH

+ 49 40 34919 4054