Property investment volumes fell 12% in the first quarter of the year, according to property giant Savills.
In this European Investment Spotlight, the firm said preliminary results indicated European property investment volumes in the first three months of the year reached €34bn – 12% lower than the same period last year and 51% down on the previous five-year average. It added, however, that while still declining, the investment curve was showing “signs of stabilisation” when compared to the steep downward trend over the previous 12 months.
“In Q1 2024, the rolling four-quarter investment volume is to total €144bn, only 3% down on the €149bn last quarter,” the report noted. “This represents a marked improvement compared with the average change of -16% observed over the preceding four quarters, suggesting a degree of optimism in the investment landscape.”
The firm predicted Europe’s core markets were most likely to see the lowest decreases in investment volumes in the period, being only 5% down compared with the first three months of 2023. Other regions, however, were likely, Savills wrote, to record drops between 20% and 30%.
‘Bright spots’
It was not all doom and gloom, however, Savills suggested, adding: “There are some bright spots across Europe, with a few individual countries predicting promising rebounds in investment volumes. Hungary and Italy anticipate increases of over 50% in Q1 2023, though largely off the back of low volumes transacted last year.”
The firm expected to see a gradual resurgence in investment activity in the second half of the year, estimating that total European investment volumes would land somewhere between €177bn and €182bn. That, it said, would equate to an annual increase somewhere between 19% and 22%.
Savills added: “Despite some regaining confidence in the market in the second half of the year, the 2024 volume remains nowhere near the long-term average – our forecast end-year figures will be down between -36% and -38% against the previous five years.”
The largest growth regions were predicted to be in the Nordic countries, along with central and eastern Europe, with forecast growth rates of between 28% and 40%, and 17% and 35% respectively.
