Draghi's QE Boosts Property Returns More Than Stocks, Bonds

Mario Draghi’s quantitative-easing program has a new set of supporters: real estate buyers.

Commercial property purchases in the euro area surged 32 percent in the year through June, according to London-based broker Knight Frank LLP, with investment transactions totaling 104.2 billion euros ($117.5 billion). Deals tripled in Portugal and more than doubled in Spain.

International investors are plunging into the market as the European Central Bank president’s attempts to jump start economic growth triggered a 19 percent slump in the value of the euro against the dollar and 11 percent against the British pound, making property look cheap. Rents are also set to climb as the economy recovers, because there’s been a shortage of new construction since the global financial crisis, according to asset manager M&G Real Estate.

“After a couple of years of double-digit returns in the U.K. and the U.S., investors feel Europe is next,” said David Jackson, who manages 1.2 billion euros of European property at M&G Real Estate. “One of the key stimuli for that has been the QE package.”

M&G Real Estate has been buying food stores in Germany and retail properties in cities such as Milan and Copenhagen to benefit from increases in consumer credit that should boost demand for retail property, raising rents and values, he said.

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