With slow economic growth throughout Europe, as well as heightened inflation, 2023 was quite uneventful for the property sector in Europe. This weak economic growth resulted in lackluster property market activity and may pose a challenge for the real estate market in 2024. Continue reading to know our performance expectations from Europe’s real estate investment market.
Europe Real Estate Market: A Detailed Outlook
While weak economic growth might cause hurdles, declining interest rates will combat this challenge. Core inflation is also expected to slow down. Additionally, the factors that affect the demand for real estate in Europe, including employment and spending power, won’t be affected. Long-term interest rates have already decreased in 2023, with even more declines predicted for 2024. This shows us that there is a chance that 2024 will emerge as a much stronger year for real estate. Let’s have a more detailed look into what awaits this sector in 2024.
An Improvement in the Investment Volumes
The investment landscape in 2024 seems to be a positive one as values begin to stabilize. This stabilization will likely play its part in narrowing the gap between the price expectations of both the buyers and sellers. Resultingly, this will help improve investment volumes significantly compared to the year prior.
Falling Inflation Rates
While 2023 started off as a strong one for real estate investment, the diminished economic growth brought with it numerous obstacles. The increase in energy and food bills in 2022 and 2023, the delayed effects of high inflation, and the diminished global trade volumes may affect the growth of the investment sector. However, with inflation expected to fall, we can expect its positive effects on the market.
The disruption of the supply chain due to the pandemic, and the Russia-Ukraine War resulted in heightened inflation. Having said that, the expected decrease in inflation in 2024 points toward the growth of real wages and a stop to the rise in interest rates. This will, as a result, aid in the growth of the real estate investment market, particularly in the second half of 2024.
Stabilizing Values & Higher Deal Activity
As capital values begin to stabilize, there will be a lot more clarity regarding the updated price levels which will result in a gradual increase in deal activity. About a 10% boost in investment volume due to increased activity is expected in 2024 compared to the year prior.
Changing Portfolio Trends
Trends such as rightsizing along with quality improvement will become an important part of portfolio strategies. A strong focus will be placed on maximizing the user appeal of properties. This will also cause low-quality properties to suffer and result in them performing poorly in the market.
Higher Role of Sustainability
Sustainability is expected to have an even stronger role in all major industries, especially in the real estate market. A surge in demand for green features by homebuyers and investors is expected. Energy and water efficiency and a reduced carbon footprint will be the new goal for the real estate market.
As a matter of fact, 2024 will see sustainable building take the spotlight with a focus on decarbonization and the incorporation of clean and renewable energy sources. Acquiring green certifications, including the LEED and BREEAM certifications, will also become standard practice.
Sustainable construction materials will be in higher demand. Furthermore, major companies will scrutinize their sustainability policies and their role in long-term profit margins.
Best Tips for Buying Real Estate in Europe
You can start by consulting with a real estate company so you can work with a professional with robust regional knowledge to guide you.
Make sure your stay in Europe is long enough for you to explore all areas extensively. Your consultant can better help you navigate all the options in the market and recommend the one that fulfills your expectations and meets your budget.
Since all European countries have different visa and residency requirements, make sure you do your in-depth research on this. Much like the Turkish Citizenship by Property Investment Program where investors can get citizenship by investing $400,000 or more in real estate and get citizenship, some European countries offer visas based on certain investment amounts.
You should also get professional assistance to find out if you are eligible for any of these to avoid wasting your time and effort.
To Conclude
As we look toward the future, despite all uncertainties, 2024 seems to be the year of growth and progress for real estate investments in Europe. For more details on investment opportunities, you can have a chat with our professional consultants and find out how you can benefit from the ever-evolving real estate market.
