European real estate trends 2018

European real estate trends 2018

 

Positive economic environment for most of Europe through 2018 to 2019.

2017 was a year of the confident economic growth in Europe, which remains positive in 2018. UK is the exception. Economy is growing at the fastest rate in decade, which is highlighted by increasing owner-user demand. Leading European countries are Spain, Netherlands, Germany, Sweden, Ireland and countries of Central Europe. According to International Monetary Fund (IMF), EU economies are estimated to increase from 2,1 to 2,3 % in 2018. Therefore, investment in real estate is on the high level. Prices for residential units are rising across continental Europe. The slowdown is expected in 2020.

 

The last year of strong returns for investors

2018 is a final year when investors can expect strong returns from European commercial properties. It is expected that average return will be around 2,6% in between 2019 and 2022. Compared to 6,7% in 2018. The most attractive sector for investments are office spaces, with the 43% of total investments.

 

Growth of private demand

In 2018, private consumption is increasing thanks to the higher consumer confidence and the tourism growth. Prices for residential properties, both for sale and rent, are rising across continental Europe. However, housing affordability in big European cities has worsened in recent years, so the trend towards «microapartments» is expected to evolve.

 

Digitalization

The number of online property transactions will increase. In Europe 66% internet users of all age groups ordered goods or services via internet. The age group of 35 to 44 year old had the highest share of those who bought real estate online (52% from all age groups).

 

Impact of Brexit

Brexit had an effect not only on UK real estate market, but also on some European cities. Frankfurt and Amsterdam became the main beneficiaries of the referendum. Large financial companies and banks are relocating thousands of staff and executives to other European financials hubs. Aside from the direct consequences for capital flows and occupier movements, the industry is concerned, too, about the long-term impact of Brexit. “Brexit has made continental Europe more confident, but that is a false feeling of comfort because the UK is such an important strategic trade partner. It is a really sad thing,” told a Belgian real-estate expert.

 

New types of properties

Technological disruption and social change means occupiers need new and different types of space. We are witnessing the emergence, and fast evolution, of new property types. These are often hybrids of traditional uses, but with a focus on services, flexibility and sharing. Examples include co-working and serviced offices, co-living, micro-living, new leisure uses and student housing/hotels. These are segments, that do not have the depth and liquidity of the established sectors, but it is expect them to lead investment into new property types, some of which have yet to emerge.

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