The latest economic data paints a mixed picture. In both the Eurozone and the US, the signal from most confidence surveys in December is encouraging. But it is still too early to conclude to a bottoming out.
Key takeaways from our European report include:
- Investment plummeted in 2023. All asset classes experienced a strong reduction. Offices (-59%) showed strongest declines while hotels (-26%) and retail (-40%) incurred the least declines. Logistics volumes fell 48% though this sector has experienced some of the most rapid repricing and may now be stable.
- Office letting activity remained subdued in 2023. This decline is mostly due to a reduced number of very large transactions. Occupiers are looking for space optimization to meet hybrid working patterns and reduce costs.
- Low momentum for European logistics. The investment market bottomed out; the volumes were reduced by half in 2023. Yield correction is nearly complete in most countries and signs of improvements are expected in the next quarters.
- A mixed picture for the retail market. Despite its difficulties in high street and shopping centres in particular, the occupier market remains resilient, thanks to the continuing strong flow of tourists across Southern/Mediterranean Europe.
- Residential investment plummeted by 46% in 2023 y/y. Housing transaction volume dropped by 13% driven by tight credit conditions. Consequently, house prices in Europe continue to fall at -1.6% vs last year. Rental values are still booming owing to the shift in the monetary policy and the drop of listed property put up for rent.
Download the full report below.
