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CONTRIBUTORS

Tim Wang, Ph.D.,

Head of Investment Research

Bruno Berretta

Head of Research, European Markets

Clarion Partners

Preview

2022 was a year of change for the European economy and European commercial real estate (CRE). The European Central Bank joined other central banks across the globe and reversed a multi-decade long policy of low interest rates and “cheap” money in a bid to bring ramping inflation under control. Investors and occupiers have had to adjust quickly to this new regime of higher financing costs and lower liquidity, against a backdrop of slowing economic growth. A significant correction in CRE values has ensued.

In this challenging environment, Clarion Partners believes that defensive real estate strategies such as net lease/sale leasebacks can provide an attractive opportunity for CRE investors. These strategies can enable investors to access stable, more secure and inflation-linked cashflows in a volatile market environment, in addition to longer-term capital appreciation potential and diversification benefits. This paper reviews the drivers of the European net lease property market, and explains why, perhaps now more than ever, it is a good time to invest in this asset class in Europe.

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