Europe
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Report Summary:
Europe’s real estate leaders are slowly coming to terms with a market burdened by inflationary pressures and high interest rates while addressing the ever-growing commitments around environmental, social and governance (ESG) issues. Meanwhile, central bank interest rate increases in 2022 and 2023 have left large sections of the industry forsaking dynamic strategies for a more passive monitoring of policies that affect the price of debt, valuations, construction costs and distress risk. A wedge continues to be driven between market prices and valuations. One acknowledged consequence has been record-low investment volumes. But the relative risk-adjusted return outlook in a higher-for-longer interest rate environment is also raising questions about real estate’s status as a favoured asset class. Though the survey indicates greater business confidence and profits for 2024 than a year ago, this is from a low base and is still well below the optimism of previous years. The industry is paying close attention to economic forecasts for Europe that suggest sluggish growth at best.

Report Summary: Europe’s real estate leaders are slowly coming to terms with a market burdened by inflationary pressures and high interest rates while addressing the ever-growing commitments around environmental, social and governance (ESG) issues. Meanwhile, central bank interest rate increases in 2022 and 2023 have left large sections of the industry forsaking dynamic strategies for a more passive monitoring of policies that affect the price of debt, valuations, construction costs and distress risk. A wedge continues to be driven between market prices and valuations. One acknowledged consequence has been record-low investment volumes. But the relative risk-adjusted return outlook in a higher-for-longer interest rate environment is also raising questions about real estate’s status as a favoured asset class. Though the survey indicates greater business confidence and profits for 2024 than a year ago, this is from a low base and is still well below the optimism of previous years. The industry is paying close attention to economic forecasts for Europe that suggest sluggish growth at best.

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