- January 2012: Vol. 24, Number 1

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Has the Time Arrived?: Avoid the Pitfalls and Investors Can Earn Attractive Risk-Adjusted Returns in Europe

by Eric Adler and Greg Kane

Rather than being one homogenous market, residential real estate in Europe is fragmented, comprising a host of local markets with complex and varied drivers. Government planning regimes, legal frameworks and local customs are among the factors that differ significantly across locations. The disparity extends to the investment side, as markets are usually dominated by small local players.

Nevertheless, the case for residential investing is well established across most of Europe. Many pension funds and insurance companies hold large domestic residential portfolios, being attracted to the sector’s stable income returns, diversification against other real estate sectors, and long-term growth potential. The benefits of exposure to residential were highlighted in the recent downturn, when values outperformed the wider property markets.

Investors seeking to embrace the challenge of building a pan-European residential portfolio will have to avoid a number of pitfalls along t

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