Real Estate
Opportunities Persist in European Real Estate Despite Geopolitics
The duration of the Ukrainian conflict and its macro-economic impact on the rest of the world remains key to assessing market pricing prospects—but the current significant property yield bond spread will soften any fallout. The Barings Real Estate team discusses.
Economy
- Uncertainty remains elevated surrounding the growth outlook for the Eurozone economy, resulting from the Russia-Ukraine conflict, with negative implications for inflation, private consumption and business investment.
- In line with other central banks, the ECB is prioritizing controlling inflation, despite the economic headwinds from the conflict.
Property Markets
- The duration of the Ukrainian conflict and its macro-economic impact on the rest of the world remains key to assessing market pricing prospects—but the current significant property yield bond spread will soften any fallout.
- This year will see corporates audit the suitability of their office space, testing market consensus that tenants will pay for higher quality buildings that are able to meet rising staff wellness and sustainability benchmarks.
- Despite a pandemic re-opening retail renaissance, and even some renewed property investor interest, physical retail still faces technological headwinds.
- Rising logistics land prices and development costs will limit the ability of the development pipeline to meet surging demand for storage space, until rental levels significantly ratchet upward.
- The need for large deposits for house purchases will continue to frustrate market entrants. Ongoing poor buyer affordability will likely continue to boost and sustain future rental demand.
