AEW European Research: Prime offices now offer best projected returns

With inflation coming down to near-target levels during the past six months, central banks are widely expected to begin reversing some of their rate hikes in second half 2024, according to AEW in its 2024 Mid-Year European Outlook.

AEW’s base case scenario assumes that inflation, bond yields and real estate borrowing costs will come down. Despite some of Europe’s largest economies — notably the United Kingdom and Germany — being in technical recession, AEW’s modest GDP growth projections remain mostly unchanged from its 2024 Outlook published in November 2023.

“Even with the continued global geopolitical risks, our latest outlook confirms that the recent improvement in investor sentiment is justified,” said Hans Vrensen, head of research and strategy Europe at AEW. “Despite lingering concerns towards the sector, our return projections for new investments into prime offices has now pushed it into the top slot. It should allow more investors to t