Publications

- June 1, 2010 Vol. 4 No. 6

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The Case for Core: After Two Years of Downturn, European Real Estate Markets Are Nearing an Inflection Point

by Christian Delaire and Mahdi Mokrane

Since the mid-1980s, European real estate markets have experienced three expansionary cycles and three downturns. AEW Europe's research indicates that we are now at the inflection point for entering another upswing. We don’t believe that this upward leg in the cycle will be as strong as those seen in the late 1990s and between 2002 and 2006, but we do think it will be robust enough to sustain a decent performance for a core investment strategy — generating IRRs in the area of 6 percent to 8 percent per year over the medium to longer term.

There has been a lot of talk in the market about fund managers launching new core investment vehicles, as there was about opportunistic funds at the height of the boom a few years ago, but surprisingly few are actually out there or being actively marketed. There have also been concerns about the speculative “froth” b

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