Publications

- January 1, 2015: Vol. 9, Number 1

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Whatever it takes: How Europe fares in 2015 will be down to the European Central Bank

by Sabina Kalyan

2015 will be the year when Europe realises that if everyone acts like Germany, then Germany can’t be Germany anymore. And if Germany can’t be Germany, Europe can’t grow, unless Germany lets the European Central Bank buy European sovereign debt. Except that wouldn’t be very German! This matters because without growth and low interest rates, European real estate will not be an attractive proposition.

So, in this year’s real estate outlook article, I am going to spend longer than usual looking at the German constraints on central bank policy in order to try to figure out if Europe is headed for a deflationary boom or a deflationary bust. The honest answer is that I do not know, but we can at least look at which types of real estate might do well under each scenario. And if that sounds like a more equivocal statement than I have given in previous years in these articles, I think it truly reflects the fork in the road at which Europe now stands.

Let me explain.

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