Real estate contagion to hit Europe

This week, speculation has hit European banks as real estate distress in the US threatens contagion in Europe. The continent is now experiencing the “greatest real estate crisis since the financial crisis.”

• Deutsche PBB, considered the most exposed to the CRE market in the US, experienced record share drops this week, as they try to reassure on liquidity and claims it can cope with US real estate troubles.

On Wednesday (7) this week, the bank reported having increased its risk provisioning for US commercial real estate loans in the fourth quarter of 2023.

Santander is also considered to have notable exposures, while French lenders Societe Generale and Credit Agricole dismiss concerns, and Italy’s Intesa Sanpaolo claims their “exposure is very limited.”

Join the conversation with Europe’s leading real estate market experts to exchange valuable insights into the current tensions within real estate, at GRI UK & Europe Reunion 2024 on February 21-22 at Four Seasons London.

Read more and register HERE.

Abrdn’s Anne Breen: Optimism for 2024

“Real estate, whether it's in the UK or in most European countries, has repriced in line with interest rates, and has therefore started to offer value again for investors,” says Anne Breen, Global Head of Real Estate at abdrn.

• This is the main motive for optimism in 2024, explained Anne when she met with GRI Club to discuss her outlook on the current market and opportunities for 2024, ahead of her participation at the GRI UK & Europe Reunion 2024 later this month.

Other reasons for confidence in the RE market in 2024 include the restricted amount of supply in some sectors, allowing for interesting income growth.

Rental growth is apparent particularly in the living sector and logistics, and now that investments have an extra bit of yield, the story will be more compelling in 2024, Anne explains.

• Going forward “ESG will have the single biggest impact on value,” Anne continues. This is playing an important part throughout the market, but particularly in offices where Anne revealed abrdn’s office approach of scoring offices on a FACTS basis: Flexibility, Amenity, Connectivity, Technology, and Sustainability.

Read more in the complete article, available on the GRI Hub HERE.

Spain’s 2023 tourism rates break records

Spain's tourist numbers were up 18.7% in 2023, totalling 85.1 million travellers, with the most popular region being Catalonia, followed by the Balearic Islands and the Canary Islands.

The country has most certainly bounced back from the pandemic, with 2023 tourist levels measuring 1.9% higher than those of pre-covid in 2019, and this number is expected to rise further in 2024.

• Senior Partner of Grupo Azora, Cristina García-Peri, sat down with Gustavo Favaron, CEO & Managing Partner of GRI Club, last month, sharing her optimism for hospitality real estate. Having invested in hotels since 2012, Azora sees great tailwinds in the sector.?

During the discussion, Cristina also described her outlook on the Spanish real estate market. While larger European markets continue to be attractive, when you compare risk-adjusted returns the opportunities are better in less mature markets such as Southern Europe, explains Cristina.

They are not frontier markets, so you don’t have that element of risk, but their immaturity provides an attractive supply-demand imbalance.

Watch the full interview with Cristina García-Peri HERE.

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