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A poll of 148 leading real estate investors conducted by Knight Frank strongly suggests that Spain and Germany will overtake the UK as the preferred investment markets during 2018. This has nothing to do with Brexit, the survey reveals, but more to do with property pricing and supply.

Spain is set to overtake UK in real estate investment

The investors polled represent organisations managing in excess of £300 billion in property assets, which means they are the bigger players in the property market. Almost one-third of them indicated that Germany would be their preferred place for investments in 2018, representing an increase of 27% over 2017.

Some 20 percent of the organisations identified Spain as the other market attracting them in 2018 and stated that any issues in Catalonia would not put them off buying into the Spanish market. This would seem to suggest that political uncertainty is not a major factor for the larger investors, if they can put aside both Brexit and the Catalonian independence movement as potential problems. In fact, only 16% of those surveyed said that geo-political instability was a concern.

Both the UK and France trailed some way behind Germany and Spain on the investment league table, with the UK getting 12% of investors and France 9%.

The survey revealed that 66% of respondents see pricing and lack of available stock as the main barriers to investing in Europe overall in 2018, plus 11% of those looking to place capital in European property believe that they will have competition from more overseas investors this year.

Over half of them also pointed out that they believe demand in the commercial real estate market will be stronger than in 2017 and suggested that key areas to watch are student accommodation, healthcare facilities and automotive factories will be the most targeted specialist assets.

With regard to this sector of real estate, Spain has a resurgent economy and there will be an increased demand for office and industrial space in 2018, which investors are aware of and watching with interest, according to a spokesperson for Knight Frank. It would seem that excessive competition in the UK, which was previously a market leader, has opened a new investment door for Spain.

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