Even as Europe flirts with depression, it could be a great time to buy a chalet.Societe Generale’s Marc Mozzi names a few reasons to be bullish on European real estate, starting with debt monetisation by the ECB:
[T]he euro crisis also provides some rare incentives to be bullish on the sector. The first of all is the ECB starting to monetise debt. This should restore confidence within banks, lower risk premiums and keep property prices inflated. Real estate is also one of the last asset classes to offer decent income yield. Global equity-rich investors are desperate to enter the party and are set to squeeze their required return (or cost of equity) barely above the market cost of debt to do so. Finally, our models
suggest that valuations are at fair value and income ratios close to deep-value.
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