Construction Cranes Spring Up Across Europe as Development Soars
According to experts attending Mipim, a conference known as the Davos of the real-estate industry, commercial-property development is on the rise, spurred by Europe’s strengthening economy and investors’ appetite for real estate.
Large listed companies are ramping up activity. The French real-estate investment trusts followed by Green Street Advisors are expected to deploy about €2.75 billion in development in 2018 and 2019 each compared with about €1.75 billion in 2017, according to Jesse Freitag-Akselrod, an analyst with the firm attending the conference.
Growth in development and greater leverage have caused pain for the real-estate industry in the past. Mr. Freitag-Akselrod said Green Street found it “quite concerning” that some of the French REITs “aren’t lower leveraged as they increase their operational risk.”
Still, analysts also point out that new supply has been constrained since the financial crisis, so there is little risk of a glut for now. Demand and rent trends justify the new development, they said.
“What we’re seeing is smart risk-taking,” said Mr. Freitag-Akselrod.
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