Credit: wirestock | FreepikUK & Europe Reunion 2024: A vintage year or clouded by caution?
Exclusive report following GRI Club’s annual UK flagship event with 200+ senior real estate executives
March 12, 2024Real Estate
Written by Helen Richards
The post-GFC real estate cycle has ended. While there has been a decline in property values similar to past cyclical adjustments, this decline is purely due to higher interest rates, not an economic recession.
The question asked during discussions was if the next cycle will resemble the previous one or the one preceding it. Although they may appear similar initially, the last two cycles differed significantly.
The new cycle begins with exceptionally robust demand and supply fundamentals, particularly in terms of the former. This can be attributed, in part, to capacity constraints within the construction sector which have hindered significant supply growth over the last 15 years. Previous resets have typically stemmed from recession and excess capacity, whereas employment today is above trend.
So, are we nearly there yet? Real estate equity prices seem to have passed the turning point, and the private market typically follows suit.
Read more in the latest GRI Club report, including all takeaways from UK & Europe Reunion 2024.
Real estate investors active in 2024 are likely to be those with long term horizons. Credit: GRI Club
Real estate investors active in 2024 are likely to be those with long term horizons. Investments are expected to centre in the liquid, transparent and high-density markets in Europe and the Asian-Pacific region, particularly in Offices and Retail, where occupiers provide a stable cash flow.
Investors are showing a clear preference for value-add and opportunistic strategies, among other higher-yield approaches, although the core market is also expected to thrive in this vintage year.
The obstacles to overcome will be clarity on geopolitical risks, inflation, and the cost of debt, as well as the need for a reassessment of the permanent loss of demand in certain sectors where physical factors have come into effect.
Read the complete report with all takeaways from the UK & Europe Reunion 2024 in the latest GRI report, including insights on development finance, beds and hospitality, ESG, UK economic outlooks, and more.
Read the GRI report here now.
The post-GFC real estate cycle has ended. While there has been a decline in property values similar to past cyclical adjustments, this decline is purely due to higher interest rates, not an economic recession.
The question asked during discussions was if the next cycle will resemble the previous one or the one preceding it. Although they may appear similar initially, the last two cycles differed significantly.
The new cycle begins with exceptionally robust demand and supply fundamentals, particularly in terms of the former. This can be attributed, in part, to capacity constraints within the construction sector which have hindered significant supply growth over the last 15 years. Previous resets have typically stemmed from recession and excess capacity, whereas employment today is above trend.
So, are we nearly there yet? Real estate equity prices seem to have passed the turning point, and the private market typically follows suit.
Read more in the latest GRI Club report, including all takeaways from UK & Europe Reunion 2024.
Real estate investors active in 2024 are likely to be those with long term horizons. Credit: GRI ClubReal estate investors active in 2024 are likely to be those with long term horizons. Investments are expected to centre in the liquid, transparent and high-density markets in Europe and the Asian-Pacific region, particularly in Offices and Retail, where occupiers provide a stable cash flow.
Investors are showing a clear preference for value-add and opportunistic strategies, among other higher-yield approaches, although the core market is also expected to thrive in this vintage year.
The obstacles to overcome will be clarity on geopolitical risks, inflation, and the cost of debt, as well as the need for a reassessment of the permanent loss of demand in certain sectors where physical factors have come into effect.
There is expectation of more pain before gain, with the accumulated impacts of such an extended period of elevated rates. (Credit: GRI Club)
Read the complete report with all takeaways from the UK & Europe Reunion 2024 in the latest GRI report, including insights on development finance, beds and hospitality, ESG, UK economic outlooks, and more.
Read the GRI report here now.
