In this eighth edition, “The Lighthouse H1 2024 – European Property Market Outlook”, BNP Paribas REIM presents its outlook for the European real estate market using its in-house forecasts, analysis and the expertise of its local teams. Here BNP Paribas REIM defines its convictions and investment opportunities for the beginning of 2024 and beyond.

The European real estate market experiences a transition period but remains resilient

2023 was a pivotal and challenging year for the real estate market which faced many issues: a decrease in global capital, fundamental changes in working and living patterns, high interest rates, a fall in prices for all property types, a wariness from investors and a slump in market liquidity with a 60% decrease as of Q3 2023. The misalignment between buyers’ and sellers’ expectations resulted in less transactions and significantly impacted the market activity.  

However, the outlook looks quite different. Throughout 2024, real estate investors will have more opportunities to implement new strategies as they will have a clearer picture on price adjustments and on the direction of the monetary policies.

Real estate fundamentals are still robust and megatrends will continue to influence occupier demand and to have an upward pressure on rents.

Investors should gravitate towards property types poised for growth in the next 5-10 years. These primarily include the living segment (apartments, senior housing, healthcare), buoyed by demographic shifts and an ageing population; logistics facilities, fueled by the relentless rise of online shopping; and leisure properties like hotels, where the post-pandemic recovery presents attractive return prospects. The office sector will also continue to attract investors, with a larger spectrum of strategies. Core investors will be focusing more on CBD offices, with returns mainly driven by the scarcity of supply and a strong rental growth. Value-add investors will have interesting opportunities, either in secondary locations or on stranded assets, to create values through asset management.

“This report explains that the global economy has proved resilient and European countries have avoided the predicted recession in 2023. This year, we should see a gradual recovery, due to different factors such as: a lower inflation, strong labour markets, an increase in wages, investment related to the green transition… All this will positively impact the real estate market and create new opportunities for investors” comments Laurent Ternisien, Deputy Head for BNP Paribas REIM.

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In the rest of the article, we highlight five areas that we will pay close attention to in 2024. 

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