Traditionally, during periods when inflation is breaking records, investors turn their attention to the real estate sector. First of all, because everyone needs housing and always needs it, so there is always demand and there is always growth from deposits.
Real estate, at the same time, is growing. Including commercial real estate. Thus, in the field of logistics real estate and real estate for light industry, a record volume of investments was recorded — 67 billion. euro, due to the expansion of the e-commerce sector and the expected increase in rental rates. General commercial assets and leisure spaces have also revived over the past 12 months. Their growth was 63% and 3%, respectively.
When comparing the indicators of real estate markets by country, record sales volumes are shown by France and Norway — the leaders of the list. Spain has got off to a good start this year in the holiday real estate sector. Lifting restrictions after the pandemic helps the local market to recover actively.
The ROI in the premium segment remains low
The ROI of premium real estate remains low throughout Europe. However stable. At the same time, the financing rate for such facilities increased by 1.5% over the past year. In general, due to the growth of interest rates on lending, the profitability and volume of investments in this segment may decrease significantly in the future. The acquisition of such assets is extremely costly, the cost of paying interest on loans is growing, and the demand for such a category of real estate is still migrating to other regions of the world.
Trends in the real estate market
Since the beginning of the year, there has been a slight decrease in unemployment rates in Europe, an increase in the numbers of hiring new employees. This is especially pronounced in major European cities such as Dublin and London. But it is also noticeable in smaller settlements, such as, for example, the French city of Lille. In the first quarter of 2022, an increase in hiring rates of more than 100% was recorded.
The growth in the number of permanently employed workers leads to an increase in demand for commercial real estate, especially for offices. In Europe as a whole, this market segment showed an annual growth of 52% by the end of April this year. This leads to an increase in prices, however, in healthy, stable indicators, since there is a sufficient number of offers on the market, which prevents the formation of a déficit.
Also, on average, across all key real estate markets in Europe, there is a high increase in the purchase of real estate in prestigious, popular areas and a decrease in sales in the suburbs. However, on a larger approximation, in the regional dimension, in many countries, the opposite trend can be noted.