European Real Estate Market: Forecasts and Trends
The European Union Statistics Office published the report according to which the residential property sale price in 28 countries, including the euro zone, had increased by 4.3% compared to 2017, despite the deterrent policy. The best figures are in Slovenia (+13.4%), Ireland (+12.6%), Portugal (+11.2%) and Hungary (+10.4%). In Greece the prices are unchanged, but in Italy and Sweden they have decreased by 0.2% and 1.7% respectively.
Meanwhile, the volume of investment into the European commercial real estate in the first half of 2018 decreased by 5% as compared to the second half of 2017. According to the international consulting group “Savills”, this figure exceeded 97 billion euro, which was 42% as high as the average rate for the first six months of the last decade.
Previously, PwC organization in partnership with the Urban Land Institute has published scenario on the development trends of the real estate industry in the European countries in 2018 and future years.
About 50 % of the respondents expect increasing economic growth of this industry. The real estate sector will become more affordable and transparent, though more complex.
Most of the respondents are ready to invest in social housing which could potentially bring income, such housing as nursing homes, student dormitories and the like, as well as in office and logistics premises, quickly-built hangars.
Traditional interest in office premises reflects current market condition. In the segment of office premises in the European countries there is the deficiency in supply. The growth rate of housing production does not respond to the rapidly increasing demand. Today, the average profitability of premium-class buildings in remote areas is 4.9%, which is by 0.1% lower than the profitability of business-class buildings in business areas. This attracts investors to the assets located outside the city centres.
At the same time, analysts predict a further increase in demand on alternative assets and logistics premises. The volume of investment in warehouses has grown by 11 % as compared to the average rate for the last five years.
PwC research workers state that the European real estate market is in its critical phase. Fierce competition, clear tends to the growth of investment along with the owners’ desire to keep their property – commercial, office, logistics and residential one.