Virginia Wallut, Director of Real Estate Research and Sustainable Investment, La Française Real Estate Managers.
In the first half of 2024, the European commercial real estate market showed signs of recovery, with an increase in investment volume year-on-year. The recovery commenced amid expectations that the ECB would gradually loosen monetary policy.
In June, the ECB made its first rate cut since September 2019, reducing its key interest rates by 25 basis points. This marks a turning point in monetary policy and fuels the prospects for recovery in the real estate sector.
Contrasting patterns of recovery across Europe
Other than France, where the real estate market is in limbo due to the political context and its impact on French sovereign yields, the volume of European commercial real estate investment was up 11% year-on-year in the first half of 2024. Though below its ten-year average, the increase in volume nevertheless marks a major change in the direction of real estate markets across Europe. For example, countries that corrected sharply in 2023 such as BeNeLux, Germany and the United Kingdom posted increases in investment volume of 73%, 23% and 9% respectively, while France was down 25% over the same period.
All asset classes registered an increase in investment volume in the first half of 2024: tourism (+62%), logistics (+7%), healthcare (+4%) and offices and retail (with +1% respectively). However, “core” and diversification assets (logistics, healthcare, tourism and managed residential) remain the most sought after.