Investment volumes for European real estate are forecast to reach €34bn in the first quarter of 2024, according to research from real estate giant Savills.
The firm said that investment volumes for the last four quarters stood at €144bn – only slightly down from the €149bn of the previous four quarters. It added that France, Germany and the UK were also predicting the lowest decrease in Q1 investment volumes, down 5% on the corresponding period in 2023.
“As the gap in buyer and seller price expectations is beginning to close, we anticipate seeing a gradual resurgence in investment activity from H2 2024 onwards,” said Tristam Larder, head of European capital markets at Savills. “Logistics and multifamily will remain the preferred asset classes in Europe this year, although there is a growing appetite for retail properties and, given recent price adjustments, we are also seeing more and more investors enquire about offices.”
Savills forecasted that year-end investment volumes for Europe would reach between €177bn and €182bn, which would mark a considerable rebound in investment volumes – up 19% to 22% on that 2023 number of €149bn.
“Central and Eastern Europe and the Nordics are anticipated to see the largest annual growth rates in investment volumes, with increases of 28% to 40% and 17% to 35% expected at year-end, respectively, on the back of relatively low volumes recorded in 2023,” said Lydia Brissy, director of European research at the firm.
“Southern Europe is expected to bounce back by 12% to 21%, while the core markets are forecast to see an annual increase of 16% to 19% and the rest of Western Europe a 15% to 17% increase in year-end investment volumes.”
This new research from Savills follows recent assertions from the company that the Dutch residential market would see three “strategic” shifts this year. Three trends that it said would impact in 2024 were population growth outpacing new developments, the PBSA [purpose-built student accommodation] and co-living boom, and the impacts of investment strategies on the market.
‘Ride the wave’
Savills has been buoyant on the European real estate market for some time. At the start of the year, for example, it argued investors should be targeting this sector in order to “secure prime assets at discounts”.
In European Property Themes 2024, the firm said investors would be “rewarded” if they choose to “ride the wave of yield compression” in the second half of the year. It also laid out its top picks for European investment, forecasting the prime logistics markets in the UK, Germany, the Netherlands, France and Spain should remain appealing to investors.
The firm also predicted that prime office stock within the centre of cities such as Paris, Madrid, London and Copenhagen would perform well, along with property in southern Europe, small-and-mid-sized grocery stores in all areas and prime retail parks across Europe.
