2022 House View: European Property Market Outlook

Contributors

Will McIntosh, Ph.D
Global Head of Research

Karen Martinus
Senior Associate, Research

Justin Hildebrandt
Managing Director, Development

Max von Below
Managing Director, Global Investors Group

January 2022

Executive Summary

We are pleased to present our 2022 European House View. This publication is produced annually and serves two essential purposes. First, it highlights our outlook for the economy, the capital markets and the commercial real estate (CRE) sector. Secondly, it provides a forward-looking framework regarding our investment themes and strategies. Highlights from the report include:

  1. Europe is on track for another year of solid economic growth, although the evolution of the pandemic will continue to influence the outlook.
  2. Despite the risks of higher inflation, we expect the European Central Bank (ECB) will accommodate moderately higher headline inflation to deliver a more robust recovery, delaying rate increases.
  3. There is a compelling opportunity to invest in areas where technology and real estate are converging, and we can capture demand as digital transformation continues to accelerate.
  4. The logistics sector continues to outperform, with dynamic leasing activity and robust investor demand, while undersupply of housing creates opportunity within the residential-for-rent sector.
  5. Dislocation in debt markets as a result of regulatory changes (Basel III and other liquidity/regulatory constraints) creates opportunities for more flexible nonbank lenders.
  6. Countries across Europe have committed to being climate-neutral by 2050, with the decarbonization of buildings expected to play an essential role in achieving this objective.