The property investment market in the EU reached around €22.8 billion in Q1 2024, down by approximately 26% compared to the same period of last year, although some markets have rebounded significantly in this period, according to an Arnold Investments report.
On the growth side, Italy saw a 84% year-on-year growth in investment, while the Netherlands and Sweden were up 42% and 26%, respectively. By contrast, a continuing downward trend was observed in Germany, Spain, and the CEE-based countries.
"We expect that the increase in transaction activity observed in some markets will solidify across Europe in the coming quarters," says Markus Arnold, CEO of Arnold Investments. There are particularly attractive opportunities for equity-strong investors to (re)enter the market, he added.
In Q1 2024, industrial and logistics properties were the most sought-after asset class with a share of around 25% (€5.6 billion). Significant declines compared to last year were also recorded in the residential sector with -28% (€4.0 billion), hotels with -17% (€2.5 billion), and retail with -14% (€4.1 billion).
Looking at prime yields, the average for office properties in EU-12 markets rose by 10 basis points to around 5.15%. EU average yields in the retail segment also rose by 10 basis points. The prime initial yields for investments in the most desirable high street locations on the continent amounted to around 4.85% in Q1 2024.
Average prime yields in the logistics (EU-12: 5.25%), residential (EU-10: 4.35%), and hotel (EU-12: 5.70%) sectors remained stable in most markets, showing only marginal increases of up to 5 basis points.
Arnold Investments’ analysts are optimistic about the outlook of the investment market considering the combination of attractive supply, further rising rents, significantly reduced price levels, and lower financing costs in the long term.
