Skip to Content (press ENTER)
North America
Investor Type
United States
Latin America
Asia Pacific
Investor Type
China (中国)
Investor Type
Hong Kong (香港 – 中文)
Investor Type
Hong Kong - English
Investor Type
Japan (日本)
Investor Type
Investor Type
Investor Type
Taiwan (台灣)
Investor Type
Investor Type
Real Estate

European Real Estate: Frightening Tightening?

November 2023 – 9 min read

While further capital declines are still occurring, we are now technically past the trough of the European property cycle. The Barings Real Estate team discusses how this is shaping both opportunities and challenges in the asset class.

  • Interest rate adjustments continue to slow the Eurozone economy to a crawl.
  • Despite renewed energy price volatility, inflation in the Eurozone continues its steady downward trajectory, but is proving more stubborn in the U.K.
  • Dovish comments from the ECB contrast with more hawkish “higher for longer” rhetoric from the Fed.
Property Markets
  • While further capital declines are still occurring, we are now technically past the trough of the property cycle.
  • Upward yield movements have been indiscriminate to investment fundamentals, with the best sectors and assets seeing the largest negative re-pricing.
  • A considerable opportunity has emerged for those with capital to employ for the next property cycle.
  • A deeper second leg to the correction would likely require interest rates to remain elevated for a very prolonged period or ratchet up even higher.
  • Offices: CEOs have strong aspirations to get employees back to the office, but this won’t solve Europe’s rising office obsolescence problem.
  • Retail: Steady retail vacancy in the first half of 2023, although the rate will likely rise as further store/portfolio rationalizations appear inevitable.
  • Industrial: Ongoing supportive industrial market fundamentals will likely drive future positive rental growth performance, albeit at a more moderate pace.
  • Residential: Rental property shortages are unlikely to ease, new schemes are being delayed, and higher mortgage rates are locking out would-be buyers; rental growth prospects remain strong.

Want to read the full article?

View PDF

Paul Stewart

Head of Europe & Asia Pacific Real Estate Research & Strategy

Joanne Warren

Director, Real Estate Research

Benjamin Thatcher

Associate Director

Any forecasts in this material are based upon Barings opinion of the market at the date of preparation and are subject to change without notice, dependent upon many factors. Any prediction, projection or forecast is not necessarily indicative of the future or likely performance. Investment involves risk. The value of any investments and any income generated may go down as well as up and is not guaranteed by Barings or any other person. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

Any investment results, portfolio compositions and or examples set forth in this material are provided for illustrative purposes only and are not indicative of any future investment results, future portfolio composition or investments. The composition, size of, and risks associated with an investment may differ substantially from any examples set forth in this material No representation is made that an investment will be profitable or will not incur losses. Where appropriate, changes in the currency exchange rates may affect the value of investments. Prospective investors should read the offering documents, if applicable, for the details and specific risk factors of any Fund/Strategy discussed in this material.

Barings is the brand name for the worldwide asset management and associated businesses of Barings LLC and its global affiliates. Barings Securities LLC, Barings (U.K.) Limited, Barings Global Advisers Limited, Barings Australia Pty Ltd, Barings Japan Limited, Baring Asset Management Limited, Baring International Investment Limited, Baring Fund Managers Limited, Baring International Fund Managers (Ireland) Limited, Baring Asset Management (Asia) Limited, Baring SICE (Taiwan) Limited, Baring Asset Management Switzerland Sarl, and Baring Asset Management Korea Limited each are affiliated financial service companies owned by Barings LLC (each, individually, an “Affiliate”).

NO OFFER: The material is for informational purposes only and is not an offer or solicitation for the purchase or sale of any financial instrument or service in any jurisdiction. The material herein was prepared without any consideration of the investment objectives, financial situation or particular needs of anyone who may receive it. This material is not, and must not be treated as, investment advice, an investment recommendation, investment research, or a recommendation about the suitability or appropriateness of any security, commodity, investment, or particular investment strategy, and must not be construed as a projection or prediction.

Unless otherwise mentioned, the views contained in this material are those of Barings. These views are made in good faith in relation to the facts known at the time of preparation and are subject to change without notice. Individual portfolio management teams may hold different views than the views expressed herein and may make different investment decisions for different clients. Parts of this material may be based on information received from sources we believe to be reliable. Although every effort is taken to ensure that the information contained in this material is accurate, Barings makes no representation or warranty, express or implied, regarding the accuracy, completeness or adequacy of the information.

Any service, security, investment or product outlined in this material may not be suitable for a prospective investor or available in their jurisdiction. Copyright in this material is owned by Barings. Information in this material may be used for your own personal use, but may not be altered, reproduced or distributed without Barings’ consent.

Contact Us to Learn More.


The form was successfully submitted.

There was a problem submitting the form.


Any data collected will be processed according to Barings’ Privacy Notice. You can unsubscribe at any time by clicking the link at the bottom of any promotional message we send, or by contacting us using the contact details set out in the Privacy Notice.


Related Viewpoints