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2023 was a year of weak economic growth across most of Europe, with households and businesses burdened by the effects of elevated inflation and a sharp interest rate hiking cycle. Property investment activity slackened for some of the same reasons. But what can we expect from 2024?

It will be another year of weak growth, although somewhat stronger than the previous one. Risks are still skewed to the downside, and mainly centre around geopolitical tension and stubborn core inflation. Policy interest rates look as if they have peaked, and inflation will continue its downward path over the year. Long-term interest rates started to fall in October and further moderate declines are forecast for 2024.

Against this background, we see an improving landscape for property investment. Values look set to bottom out in 2024, and stabilising values will gradually bring some convergence in buyers’ and sellers’ price expectations. We expect investment volumes to rise by about 10% compared with 2023.

Occupier markets will present a mixed picture, with growing polarisation between the best assets and the rest. We expect office leasing to pick up, but it will be slow progress. Logistics take-up will continue to ease down from earlier record highs, while in retail, better consumer fundamentals should improve footfall and sales figures. The living sector will continue to face structural undersupply challenges and strong occupier demand. Similar demand-supply imbalances will be apparent in other sectors such as hotels and data centres. 

Finally, sustainability will be a growing influence on real estate decisions across all sectors. Different players in the market will be looking harder for alignment in their ESG agendas, and the quest for better data on the costs and benefits of sustainability decisions will accelerate.

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