Wednesday, May 24, 2006

European Cap Rates
Today's Wall Street Journal has an article on European real estate. If you think cap rates are low in the United States be lucky your not buying real estate in Europe. Yields on retail property in Dublin are 3%, the lowest in Europe. London office yields are 3.75% to 4.75%, depending on location. How do or how can investors finance properties at these cap rates? These cap rates make US cap rates downright frothy. A European can invest in US properties, take a slight hit on the Euro conversion (which is expected to continue to appreciate against the dollar) and still outperform home real estate markets.

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