Navigating the Property Market: Cautious Positivity amidst Unpredictable Conditions

The European real estate market is currently experiencing a robust recovery, with varying experiences across different countries. According to the latest Quarterly Report by CIB Thematic Research, this recovery is largely due to improved household purchasing power and favourable financing conditions.

In the residential sector, France is expected to see a recovery by Q2 2025, with prices remaining roughly stable compared to the previous year. This stability is attributed to declining interest rates in France, which are expected to bolster the residential market recovery. Attractive price discounts in major urban centers could also contribute to this recovery.

Germany, on the other hand, is forecasted to experience a 3.1% increase in house prices in 2025. This growth is driven by rising wages and lower borrowing costs.

Spain and Portugal are predicted to enjoy substantial price growth in their residential markets. The growth in these countries is attributed to strong demand and limited supply.

However, secondary assets in the European real estate market continue to face significant challenges.

The office and retail sectors in Europe are experiencing an uneven recovery. While the industrial and hotel sectors are thriving, the office and retail sectors are still struggling to regain their pre-pandemic levels.

Capital values of high street retail assets are increasing by 4.4%, but this growth is not uniform across all regions.

The growing interest in sustainable investments is a significant trend in the current real estate market. Differentiated investment strategies are necessary in the current market due to recent trends in bond markets.

In 2023, house prices in the euro area declined by 1.2%. However, house prices in the euro area rebounded in the latter half of 2024, with increases of 1.9% in the second quarter and 1.4% in the third quarter.

Global investment volumes in the real estate market increased by 2.8% in Q4 2024. To gain further insights into the evolving dynamics of the European real estate market, watch a video featuring Real Estate & Hospitality experts from Origination and Research.

In conclusion, the European real estate market is showing signs of a robust recovery, with varying experiences across different countries. It is essential for investors to stay informed and adapt their strategies to the current market trends.