Despite the geopolitical uncertainties looming in the year ahead, the outlook for European real estate remains positive with a broadly supportive economic backdrop and bullish market sentiment. Even Spain, one of the hardest hit European countries during the 2008 financial crisis, has come back strongly and is now seen as one of the stable investment bets in the region.

"Germany replaces the UK as Europe's Number 1 safe haven'' A number of institutional investors are betting on Germany as one of the winning locations and they are not alone. Transaction volumes in Germany overtook the UK for the first time in 2016 since 2012, due to the cooling down of the London market in particular. Thomas Barrack, CEO of US private equity company Colony Capital, and incidentally one of Trump's key advisors, believes that Europe as a whole represents a big opportunity. Interestingly, his firm has also been targeting Germany, in particular Berlin, as well as markets such as Ireland, our CapitalWatch editor Robin Marriott writes in his monthly.

For 2017, Hutchings sees room for prime yields in Western Europe to tighten by 30- 40 bps while rents are set to rise by 2-3% across the board. Spain in particular is well positioned for the coming years, our Madrid briefing heard. Following its new-found political stability, the country is heading for a period of sustained and sustainable growth as it continues to move from being one of the most uncertain to the most stable market in Europe. As David Brush, chief investment officer of Merlin Properties, put it: 'Spain is the adult in the room.'

Despite the many political and economic uncertainties clouding Europe's future, the real estate industry is upbeat about most of its major markets. But Brexit is re- shaping the European real estate map.

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