After a tumultuous year in 2023, during which house prices in the euro area experienced a decline of 1.2%, the European real estate market is beginning to exhibit signs of recovery. In the latter half of 2024, house prices have rebounded, showing increases of 1.9% in the second quarter and 1.4% in the third quarter. This resurgence is primarily attributed to improved household purchasing power and favorable financing conditions, laying the groundwork for a more optimistic outlook ahead.
Globally, Europe is witnessing a robust recovery marked by a divergence in sector performance. The residential, industrial, and hotel sectors are flourishing, while the office and retail sectors are experiencing a more uneven recovery. In these latter segments, capital values of prime assets are on the rise—office properties up by 5.6% and high street retail by 4.4%—primarily driven by increasing prime rents and yield compression. In contrast, secondary assets continue to face significant challenges.
To gain further insights, we invite you to watch a video featuring our Real Estate & Hospitality experts: Delphine Clerjaud and Lorraine Ecot from Origination, along with Romeo Yombo-Nguitongo from Research.
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Additionally, delve deeper into the evolving dynamics of the European real estate market in the latest Quarterly Report by Natixis CIB Thematic Research. In this report, Thibaut Cuillière, Sylwia Hubar, Thierry Cherel and Romeo Yombo-Nguitongo provide a comprehensive analysis, highlighting the varying experiences of different countries across Europe.
While nations like France and Germany faced declines in residential prices through Q3 2024, the overall sentiment remains increasingly positive. Projections suggest that France may see a recovery in house prices by Q2 2025, bolstered by declining interest rates and attractive price discounts in major urban centers. Meanwhile, Germany is expected to experience a 3.1% increase in prices in 2025, driven by rising wages and lower borrowing costs. Furthermore, Spain and Portugal are forecasted to enjoy substantial price growth, fueled by strong demand amidst limited supply.
The report also explores the investment landscape, indicating a 2.8% increase in global investment volumes in Q4 2024. It underscores the necessity for differentiated investment strategies, particularly in light of recent trends in bond markets and the growing interest in sustainable investments.
To fully understand the implications of these findings and the exciting developments anticipated for 2025, we encourage you to read the full report!
