Lower interest rates in Europe are helping to restore the real estate yield premium while lower or more stable funding costs will also draw investors back, according to Moody’s.
Previously reduced prices also offer more attractive investment opportunities, likely fostering more transactions. European real estate transaction volumes will start recovering in the second half of the year even if they remain subdued compared with historical levels. Lower interest rates also boost the macroeconomic environment, benefitting valuations for retail, office and logistics properties.
The European transaction market recovery will bolster issuers' deleveraging and refinancing. A recovery in transactions will support issuers' deleveraging and access to liquidity. Issuers' improved capacity for executing disposals will quicken deleveraging. Reviving investor sentiment could gradually improve access to the equity market, facilitating further deleveraging and enhancing liquidity.
