Where Do European Property Values Go From Here?

• Economic indicators point to weakness, with the probability of Europe entering a recession rising. • Property values almost always decline during recessions, this one won’t be different. • In our baseline scenario (mild recession), we estimate average (MSCI) property values will decline by ~18% over the next year, ranging from 10% to 20% depending on the product type. • It is important to note that real estate is a long-term investment, with many able to reap healthy cumulative returns even during a recession. • Across all property types, there will be variation at the city and asset level. Not every product type/geography will follow the European path; many assets will outperform in particular the prime end of the market that is largely undersupplied. • Times of volatility creates opportunities for investors. Now is the time to reassess real estate portfolio strategies to diversify and maximise returns.

Key Takeaways

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