Fifty per cent of European real estate investors are sticking to their investment strategy despite the marked rise in interest rates. That is the finding of a recent survey of 150 property companies and institutional real estate investors in Germany, France and the UK by Union Investment. Some 39 per cent of respondents intend to invest less in real estate over the coming 12 months. However, only 3 per cent of survey participants plan to stop purchasing property altogether.
“The long era of ultra-low interest rates ended abruptly at the start of the second quarter. Naturally, this also affects the real estate markets. In theory, a combination of rising interest rates and declining demand should cause real estate prices to fall significantly. But that has not been the case across the board, at least up to mid-2022. European real estate investors are evidently still in a pricing phase,” said Olaf Janßen, head of real estate research at Union Investment.
Investment climate in a downward trend: Uncertainty about the future direction of interest rates, energy costs and the economy is dampening sentiment among European real estate investors. The Real Estate Investment Climate Index compiled by Union Investment in Germany, France and the UK has fallen in all three countries. The mood in France has deteriorated the most: here, the barometer dropped by 8.8 to 60.3 points in the first half of 2022. In Germany, the index currently stands at 59.7 points, a fall of 4.3 points. In the UK, the barometer declined by 3.2 to 65.6 points.
If you would like to know how the real estate investors surveyed assess the development of returns, which investment priorities they are setting or whether project developments are still being purchased, download the complete study free of charge via the link below:
