European commercial property market shows signs of recovery
Over the past year, the European real estate sector has seen a decline in investment. The volume of investment is at its lowest level in 10 years. However, experts believe that the situation may improve significantly in 2024. The European commercial property market will likely recover due to rapid technological development.
In addition, the possibility of a key interest rate cut contributes to the positive outlook. This will reduce the cost of borrowing and make it more attractive to investors. The interest rate review is particularly important for commercial property, as the sector depends on credit availability.
Outlook for the commercial sector
Despite optimistic expectations, experts remain cautious about the recovery of the EU economy. Its momentum depends on several factors, including:
– tighter monetary policy in individual countries and the EU as a whole;
– geopolitical tensions;
– the risk of climatic disasters;
– the slowdown in China’s economic growth.
According to Deloitte’s analysis, core inflation will continue to fall in 2024. Positive changes in employment and increased consumer spending will influence demand in the property sector.
Surveys of significant market players show that most see great potential in innovation. It is the technology sector that can provide a strong impetus to the development of commercial property.
Knight Frank predicts that the number of data centres in Europe will grow by around 11% a year until 2030. Such trends offer excellent opportunities for investment in local facilities.
However, we should not forget about other factors that limit market growth. For example, people are still reluctant to return to the office, preferring remote or hybrid working formats. This is forcing space owners to lower prices to attract tenants.
Overview of commercial property markets in different EU countries
Experts say demand for logistics space will be as high as in previous years. This sector is one of the most attractive for investors. Germany remains a famous market for buying such properties. Demand for office space was low last year but has picked up recently.
In contrast to many European countries, the residential sector in Denmark remains stable. Logistics facilities are also developing well.
The active development of the tourism segment is having a positive impact on the countries with holiday resorts. These include Spain, where the volume of investment in the hotel sector has reached record levels, exceeding the total for the previous four years.
CBRE is optimistic about the UK market. According to its experts, 2024 will be an ideal year to invest in local commercial property.
Positive changes are generally expected in the European market, especially in the commercial sector. As for the residential sector, the recovery will be weak.