S&P: where economic recovery has taken hold, Emea’s real estate markets will benefit in 2016

"Europe does not offer a unified real estate market, but one of its key unifying factors is the historically low interest rate environment. So far, this has supported credit quality in the Europe's various real estate markets". In a report published Thursday, Standard & Poor's Ratings Services considers the tremendous variation in demand and supply dynamics, average price levels, and the regulatory environment across Europe, the Middle East and Africa. 
 "The picture for the European real estate market is one of contrasts", said the ratings agency in a statement. Widespread indexation of rents on various measures of inflation suggests that revenue growth for Europe-based REITS will likely be in the low single digits in 2016. Our base-case scenario for REITS in Europe foresees stable or moderately improving interest coverage ratios in 2016.

S&P also indicated three main trends that should support operating performance in 2016:
· U.K. real estate companies will continue to benefit from strong market conditions;
· The market for continental office lessors, although tougher, will benefit from improving financial ratios; and
· German residential property players will flourish amid strong industry trends and favorable funding conditions.

For developers, Standard & Poor's Ratings Services forecast robust housing markets in the U.K. and Germany.  Market conditions in the rest of continental Europe, especially in Spain, are also recovering.