According to the conclusions of the meeting organized by The District in London this week, the European real estate market will start stabilizing from mid-2024. The event featured presentations from industry executives such as Massimo Saletti, Managing Director and Global Co-Head of Real Estate at JP Morgan, and Jonathan Hull, Head of EMEA Clients at CBRE. The experts analyzed the future outlook for the financial sector in the midst of uncertainty across European countries.
The conclusions of the meeting suggest that the market will rebound in two or three quarters, although significant activity is not expected by the end of the current year. Inflation and high interest rates have been the main factors slowing down real estate operations in recent years, leading investors to adopt a «wait and see» approach.
Jonathan Hull noted that the situation currently revolves around price increases and interest rates, with stubborn underlying inflation and higher-than-expected interest rates making investors cautious. Massimo Saletti, on the other hand, expressed optimism, stating that market movements and transformational ideas are being observed. For example, Asian capital entering cities like London is an indication of change.
Real estate experts believe that alternative assets hold the most potential in the real estate market. Data centers are seen as a high-yield investment opportunity, alongside the growing demand for luxury hotels. Jonathan Hull also highlights the opportunity presented by the repricing of retail properties, as retail assets are currently experiencing price adjustments.
Logistics assets are recognized for their strength and growth, as they have been revalued faster than any other market. Residential properties are also experiencing a strong market, attracting deep capital seeking business opportunities.
Regarding office assets, Massimo Saletti believes that the situation in Europe will differ from the asset reconvention observed in the United States. He suggests that new office projects should have added appeal to attract employees and investors.
Lastly, the professionals discussed the importance of meeting ESG (Environmental, Social, and Governance) criteria, as investors now seek advice from sustainable consultancies to obtain environmental, social, and governance certifications in order to be more competitive and profitable. Adhering to these criteria is crucial, as assets that do not meet them may not attract the necessary capital.
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