Confidence in the real estate markets slowly returns

Economic growth in Europe has been moderate, but most economic forecasters expect the economy to have recouped its pandemic losses by the end of the year.

The European Central Bank’s (ECB) monetary policy continues to be supportive of the real estate market. We do not expect the ECB to raise interest rates any time soon, but instead to keep them low and to continue with large-scale asset purchases for some time to come.

We believe that urban and last mile logistics, light industrial estates and cold storage sub-sectors offer investors diversification opportunities. These sectors are benefiting from lasting trends towards faster movement of goods and supply constraints on urban land.

We expect particularly older office stock outside CBD locations to possibly face increased risks of obsolescence, while class A offices in prime locations should remain highly popular with both occupiers and investors.

The pandemic has reinforced the defensive qualities of some retail parks thanks to their sustainable income, consumer convenience and stable tenant base. In addition to pan-European food retail formats, we are currently seeing opportunities particularly in UK retail parks.

Please note that we will publish our Outlook 2022 report next week. So we will be back soon with more analysis and views.