UK leads Europe for real estate investment
DWS has said a “fragile” UK economy has nonetheless outperformed all other European markets for real estate investment this year.
In an outlook paper, the asset manager said growth has been supported by a notable fall in inflation and two interest rate cuts, adding that the Labour government’s focus on public investment should promote economic recovery.
“The UK has been by far Europe’s most active real estate investment market over 2024, despite volumes remaining well below average,” the team said. “Improved sentiment is a result of attractive pricing, a recovering economy and a more stable political environment.
DWS has said a “fragile” UK economy has nonetheless outperformed all other European markets for real estate investment this year.
In an outlook paper, the asset manager said growth has been supported by a notable fall in inflation and two interest rate cuts, adding that the Labour government’s focus on public investment should promote economic recovery.
“The UK has been by far Europe’s most active real estate investment market over 2024, despite volumes remaining well below average,” the team said. “Improved sentiment is a result of attractive pricing, a recovering economy and a more stable political environment.
“With liquidity increasing, there is growing evidence of early price recovery in select markets, and we expect this trend to broaden over the coming months. With that in mind, returns for UK real estate look slightly weaker over the forecast period, as some upside has already been realised in 2024.”
The firm sees “robust fundamentals” in the office market, with repriced trophy assets in London “a key strategy”. Sentiment towards logistics remains strong, the team added, while deals are picking up in retail, with retail parks “attractively priced and well placed to outperform”.
However, DWS noted headwinds for the PBSA market after years of “exceptional performance”, adding that operators “are reporting weaker occupancy, as lower international student numbers, alongside growing affordability constraints, dampen demand”.
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