Increased property yields and rising rental prices are creating attractive investment opportunities across various real estate segments in Europe, according to Real I.S.
In its Research Realometer, the German real estate investor forecasts that property returns are expected to reach their peak in 2024, signifying the end of the market's price correction phase. A property shortage is anticipated to push market rents upwards in the coming years.
In the Office market, reduced construction activity may lead to a shortage of high-quality office space in the near future. At the same time, the gap between office property yields and government bond yields has increased.
The Retail market outlook indicates that weak consumer spending and industry restructuring are ongoing pressures on the sector. Early indicators suggest a potential rebound in retail performance, with rental prices for prime retail spaces possibly set for an increase.
The Logistics sector remains a desirable investment due to anticipated rental growth, even in a sluggish economic environment.
In the Hotel market, properties are currently generating higher prime yields compared to other real estate sectors.
Finally, in the Residential market, a shortage of housing supply is driving up rental prices, while the difference between residential property yields and bond yields has widened.
The research also highlights that ongoing geopolitical tensions are hindering economic growth prospects and a significant economic rebound appears unlikely in the near term.
Ireland and Sweden have emerged as the most competitive nations, according to the International Institute for Management Development (IMD). On the other hand, Italy, Poland, Spain, and Portugal are facing challenges in maintaining competitiveness. Eight of the twenty countries analyzed experienced a slight decline in their rankings, while three (Ireland, Australia, and Norway) improved.
Sven Scherbetitsch, Director Research and Investment Strategy at Real I.S, commented: ‘Our latest Realometer analysis shows that the market environment for property investments remains complex. While we see attractive opportunities in some segments, the risks remain, in particular due to geopolitical uncertainties and a weak economy. We observe trends carefully and adapt our investment strategy accordingly, both to take optimum advantage of the opportunities and to monitor risks.’
Published every six months, the Realometer analyzes various factors using statistical data to assess both potential returns and associated risks for potential investments.
