Insurance Strategy

Continental European real estate –The right time to capitalise on stable rental income

The rental income offered by Continental European real estate has remained stable despite extraordinary monetary policy pushing yields down elsewhere.


With improving economic conditions and a lack of supply means the asset class now looks attractive, particularly for insurance companies, given:

  • The rental yield, adjusted for capital charges, generated by property is over 2% higher than that of corporate bonds
  • Real estate income has historically remained very stable
  • Supply and demand dynamics are supportive of property valuations

To help insurance company CIOs decide whether they should take advantage of this relative value opportunity, this paper answers the following three questions:

  1. How is real estate treated under Solvency II?
  2. Is the European commercial real estate market in bubble territory?
  3. Is the rental income from commercial real estate stable?