Assetz® News - Further boosts for European property investment

Further boosts for European property investment

28th April 2006 |

Property investment opportunities in Europe have been boosted again this week, with two key pieces of news in relation to the economies of Spain and Germany.

As picked up by the Associated Press (AP), Spain will on Monday lift restrictions on the entry of workers from some of the newer members of the European Union (EU), which analysts have suggested will have a significant impact on the country's economic growth.

It follows similar moves from Britain, Ireland and Sweden, all of which now allow workers from eight former Soviet-bloc nations, Malta and Cyprus, to enter the countries to work with immediate effect.

The AP points out that Spain requires foreign workers because of huge shortages in various sectors. While the Spanish economy has performed adequately for a number of years, it has one of the world's lowest birth rates and there are key gaps that need to be filled.

The overriding ambition, according to EU officials, is to allow Europe to compete with the US and emerging Asian powers as what the AP refers to as "a seamless economic dynamo". Individuals from EU member states were originally allowed to work wherever they chose to do anyway, but when the EU expanded in 2004, 12 members imposed two-year restrictions.

Spain's decision to lift its own restriction is likely to be particularly welcomed by the real estate sector, with property investment in the country as popular as ever.

Francisco Gonzalez de Lena, from the Spanish Labour Ministry, told the AP that the property market has been so hot for the last ten years that demand for manual labourers has far exceeded the availability of these workers from within Spain itself.

Looking at the issue from a slightly different angle, an influx of workers from abroad will actually boost demand for housing, but a combination of the two factors will presumably contribute towards the sustainability of Spain's astounding property boom.

Purchasing an investment property in the country is popular enough anyway, but improvements to the economy and to the general infrastructure can only improve this.

In Germany, meanwhile, there are numerous indications that the economy is beginning to turn a corner after several years of decline.

Firstly, leading German economists have decided to raise their growth forecast for 2006 to 1.8 per cent. This is in response to not only strong exports but also distinct signs of higher consumer spending, with German residents seemingly rediscovering some kind of faith in the ability of their economy to perform.

Encouragingly, German unemployment fell in April and this has also boosted morale in a country desperate for a period of sustained growth.

The adjusted jobless total in April was around 4.7 million after unemployment fell from 11.4 per cent to 11.3 per cent, representing a 40,000 month-on-month improvement.

Unsurprisingly then, German consumer sentiment has also improved, with the forward-looking GfK sentiment index rising to 5.5 points in May from 5.3 in April. This could prove crucial in terms of higher levels of spending in the remainder of the year and property investors will be hoping it has a knock-on effect on the property market.

Stuart Law, managing director of Assetz, recently pointed out that with low interest rates, there is relatively little risk in investing in the German property market. Furthermore, with only 43 per cent of the population owning a home, there is great potential for growth.

UK investors looking to acquire a property in Europe will certainly be pleased with the signs of improvement in two of the biggest markets.