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Real Estate

European Real Estate: Prime's Time?

October 2024 – 6 min read

A cooling economic backdrop in Europe and prospects for further monetary policy easing favor core property—given its bond-like investment attributes—over secondary assets.

Economy
  • Economic momentum in Europe remains elusive, with hopes for real wage growth and firm labor markets to prevail.
  • Financial market attention is now shifting toward disinflation and prospects for further monetary policy easing to boost economic growth.
  • The current macroeconomic backdrop favors core real estate over secondary assets.
Property Markets
  • The recovery phase of the property cycle has begun. More bond-like core property cashflows should immediately benefit through the lower cost of finance and narrowing in market debt funding gaps.
  • Only a gradual pickup in investment transactions volume is anticipated for the rest of the year, partly because of a reduced financeable opportunity set.
  • Rents will likely continue to rise for best-in-class CBD office and logistics assets.
  • Residential rental growth is broad based, but regulatory risks are higher.
  • Retail may see some modest income growth but only where rents have been re-set low (relative to nominal turnover). 

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Paul Stewart

Head of Research & Strategy—Real Estate
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Joanne Warren

Director, Real Estate Research
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Benjamin Thatcher

Associate Director

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