This paper looks at the optimal holding of European real estate for a UK institutional investor. It starts by making a set of assumptions about risk, correlations, and expected returns for UK and continental European real estate based on a combination of historical analysis and projection. Using these inputs, we compute risks, returns and Sharpe ratios for a range of blends of UK and non-UK exposure under a number of exchange rate assumptions. Although the case for investing in Europe is unclear when exchange rates are ignored, adding currencies produces quite different results. Whether hedged or unhedged, it is shown that under a conservative set of assumptions an investor could substantially improve their risk-adjusted return by taking significant exposure to continental Europe. The results also suggest that partial, rather than full, hedging of currency risk is likely to be the most efficient strategy. This material has been previously published as a white paper by JPMorgan Asset Management.