Discover our Pan European market reports

Occupier demand remained lively in 2022 despite challenging environment: letting volumes are back to their 10-year average in most of main European markets. The year-end showed the first signs of normalization in activity while the post Covid rebound seems to be fading. The demand is currently driven by an increasing focus on quality over quantity.

The drop in gas prices, the decline in headline inflation and the improvement of survey data in December are giving the impression that for the Eurozone, 2023 might be better than expected. However, it is most likely that in twelve months’ time we will look back at 2023 as a recession year, a year of disinflation, and a year when central bank interest rates reached their terminal rate and stabilized.

Despite the strong growth of the beginning of the year, we observe credit production and residential activity starting to slow down gradually because of the rise in financing costs. House prices rose by 9.9% in Europe and rents increased by +5.2% across the European markets we monitor. Investment volumes remain resilient. €45.5bn have been invested in the first 9 months of 2022 i.e. +15% regarding the 5-year average but -8% compared to last year. We expect residential markets across Europe to slowdown owing to the sharp increase in financing costs, the drop in affordability and the risk of overvaluation in some markets.

We are expecting a significant slowdown of the economy in 2023

We are expecting a significant slowdown of the economy, but not a deep recession.

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.