LONDON-Despite fear of an economic double dip, Europe continues to offer substantial opportunities for major property investors. Key-country strategies and cycle-resistant sectors will play a crucial role, says Jos Short, chairman of locally-based Internos Real Investors. He identifies German cycle resistant assets as offering the best opportunities.

Short says many property investors expect a second cyclical downturn. However, the Internos strategic view of short, mid and long term provides a “safe cycle path to counterbalance that perception.” This identifies countries and, more broadly, sectors that will achieve stability, even growth through the feared economic downturn. Beyond this, it also considers regions and sectors likely to have steady or exciting progress in a two-to-five year window.

While Asia may currently be a popular investment destination, Europe’s clarity of property laws, security of title and rental yields make it an essential element in any large portfolio, Short says. In the next two to five years, an economic double dip would not apply to all European countries - or all sectors - as many fear. He singles out Germany, the world’s second largest exporter, as his overwhelming favourite for core real estate investment. A second dip would also be largely confined to parts of Europe at a time when the rest of the world is still restocking German goods, and the weak euro greatly benefits German exporters.

Short anticipates a healthy upward revision in Germany’s 2010/2011 export and GDP figures, a position that no other European country of any size shares. “For the most cautious investor in Germany, logic suggests core investment in relatively shock-immune assets such as non-luxury retailing. Rental yields in this sector are still higher than we would expect,” he says. “By early autumn it is fair to expect clear opportunities in other core assets in Germany such as offices, and a renewal of interest in heartland Eurozone, especially France and the Netherlands.” Outside of the Eurozone, Norway, Sweden and Finland should recover well. 

Founded in 2008 by Short and Andrew Thornton to invest in and manage real estate opportunities in Europe for institutional investors, Internos acquired the former Halverton business last December. It now has $1.9 billion of assets AUM in five funds and two separate accounts through offices in London, Amsterdam, Luxembourg, Frankfurt and Berlin.

Allan Saunderson is a managing editor of Property Investor Europe and a contributor to GlobeSt.com.