The top ten property hotspots in Europe have been revealed at the MIPIM property fair in Cannes.
Property agent Savills said it had released the list as investors either sought ‘security’ from investments or were ‘risk takers’.
Giles Wilcox, Savills head of European cross border investment, said 2010 is differentiating itself already from 2009 with investors slowly looking higher up the risk curve while rentals in certain prime sectors stabilise and high grade property remains scarce.
He said buyers were polarised between the risk averse and the risk embracing, with development again on the agenda.
Having analysed leasing, development investment trends and pricing, the firm said it recommended offices in the central business district of London for the risk adverse where vacancy rates have fallen from 15.6 percent to 13.5 percent for the City, and from 6.7 percent to 6.5 percent in the West End.
“With no new developments due to complete in 2010 and 2011, the London office market is on the road to firm recovery,” the firm said.
Savills also highlighted Paris central business district offices for risk adverse investors because prime rents are forecast to grow by 8 percent in 2010 due a lack of supply.
Other market hotspots identified for those seeking lower risk investments included German regional city retail assets because rents had grown by as much as 11 percent in the final quarter of 2009 reflecting a stabilisation in consumer spending. This, the firm said, is set to continue.
Pan-European shopping centres were also picked out partly because vacancy rates stayed low in 2009, while Swedish prime offices and retail fitted into the risk adverse category because GDP is forecast to grow by 2.3 percent this year and household spending by 1.9 percent.
However, for those willing to take greater risk, Savills pinpointed Warsaw office property, Madrid offices, Italian retail, speculative development in Tier 1 cities where undersupply is an issue. Other riskier markets included Paris' La Defense and London's non-CBD office markets. Savills said these fringe markets had seen less aggressive yield movement than core property but with a shortage of high quality space in the CBD markets occupiers would be refocusing on the fringes.