Directions Europe 2003 makes three other key predictions for 2003. It says real GDP growth will accelerate from 0.7% in 2002 to 1.3% this year. It expects the recent strength of the euro against other key currencies to continue. And it believes that slow growth in 2003 will erode an already low inflation rate, with overall inflation softening from 2% to 1.5%.
Lend Lease predicts that Germany will remain one of the slowest-growing euro-zone economies in 2003. France will continue to experience slow growth until recovery takes hold in 2004. and Italy will continue to suffer from relatively high inflation.
The effect all this will have on the office market is bad. 'It is hard to see office vacancy rates and rents stabilising, let alone improving, until late 2003 or even 2004,' says the report.
Lend Lease's good news for property is that prime and upper secondary retail is likely to perform well this year.
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