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2022 is shaping up to be a transformative year for real estate markets in Europe. It has been a tough few months in macroeconomic terms, with a slowing economy, high inflation and an elevated cost of debt. The age of abundance – cheap money, labour and energy – appears to be over. Meanwhile, monetary conditions are normalizing, leaving behind the ultra-loose rates that were a legacy of the great financial crises, with implications for real estate values. The near term promises : a price correction that will set a base camp for the next cycle.

Retail investment picks up in H1 2022 though slowdown is on the horizon with looming economic uncertainties. Investment volumes in H1 2022 are the highest in three years, but implication of inflation for lower consumer spend suggests investors may show restraint over the rest of 2022. Stability in prime rents characterizes most markets. Rents in luxury streets are pointing upwards again yet the emphasis for mass-market streets is still downward.

An all time high for the logistics market though Q2 suggests slowdown is happening
Demand faded slightly in Q2 though supply remains the variable adjusting the market

In 2021, investment in the residential sector hit an all-time high of almost €100bn (+60% vs the previous year and +47% vs its 5-year average). The residential sector represented 29% of total real estate investment vs 19% in 2019.

The outbreak of the pandemic has imposed a mass telecommuting experiment by companies on their employees everywhere around the world. Over the short term, office markets are on hold and prompting rethinking about how the future office will work.

The global economy is now gradually reopening. The leading indicators are positive and suggest that a V-shaped recovery is still on the table.