Real Estate
European Real Estate: So, We Survived Til '25?
Global geopolitical uncertainty has postponed the hoped-for European real estate recovery this year. However, while macro risk is high, property market risk is low—and the pause in recovery arguably extends the opportunity to invest near the start of a new property cycle.
Executive Summary
ECONOMY
- Eurozone economic momentum remains elusive, with growth struggling to reach 1% per annum.
- Export surplus generating economies are potentially more impacted by global trade tensions, than those that are service sector and more domestically focused.
- While energy prices have ticked up of late, two more ECB rate cuts are expected in 2025.
PROPERTY MARKETS
- Speculation that real estate investment capital may be diverted from the U.S. is highly anecdotal and isn’t evident in data like USD/EUR exchange rates in a meaningful way to date.
- In an increasingly volatile world, the local nature of property income and its relative stability may be set to become increasingly attractive.
- A tight supply of modern buildings will intensify, as new development remains constrained by high development finance and construction costs.
- Prime best-in-class real estate should continue to offer real inflation adjusted rental growth, despite a tepid European economy.
