Market Insights reveal first signs of imminent European real estate recovery

INREV Market Insights indicates that the significant market correction of European real estate seems to have slowed down, with the Q1 2024 INREV Fund Index total return of 0.00% and Asset Level Index total return at 0.41%. While European transaction volumes declined, near-term sentiment improved for most markets and sectors.

Key highlights:

• The Consensus Indicator, a forward-looking diffusion index, reported a headline reading of 53.6, a substantial improvement from 50.2. All five subindicators improved since March, except leasing and operations, although both metrics remain net positive. 
• Despite ongoing corrections in the European non-listed real estate market, the net view on performance has improved for the second consecutive quarter, and the perceived risk continues to diminish. Stronger European GDP growth is anticipated over the next 12 months, marking a substantial positive shift from 2023.
• Positive sentiment prevails across most geographies in H1 2024, with Germany emerging from three consecutive quarters of negative territory. The UK and Spain are now equally preferred investment destinations, reinforcing their appeal. Residential remains the most preferred sector, capturing the highest interest among participants. The retail sector has surged to second place, showing a notable increase since March 2024. Conversely, the office sector remains deeply negative, continuing its downward trend from previous quarters.
• Performance dispersion among the index’s four main markets has narrowed compared to last year. Dutch and UK assets led with returns of 1.08% and 0.49%, respectively, while Germany (-0.09%) and France (-0.43%) showed more nuanced results after significant adjustments in Q4 2023. 
• Retail assets led returns in the UK and France, delivering 0.83% and 0.98%, respectively. European office assets improved in Q1 2024, though affected by seasonal and valuation effects, with a total return of -0.88%.

Download the Market Insights June 2024 report, the Consensus Indicator and the INREV Sentiment and Valuation Survey Q1 2024 Infographics below.