As real estate professionals continue to grapple with high interest rates, price adjustments will decline further in 2024 and will keep real estate returns weak in Europe, though in certain markets, such as logistics, opportunities are emerging as pricing stability is being reached. That’s one of the takeaways from a recent report by PGIM Real Estate on the outlook for European real estate markets in 2024.
In most markets and sectors, debt costs are above prime real estate yields, which is putting pressure on pricing. Those pressures are expected to continue until 2025, when pricing adjustments stabilize.
High interest rates also have created challenging conditions for transactions, leading to a low number of transactions close to levels recorded during the global financial crisis (GFC).
PGIM Real Estate expects that falling real estate pricing may overshoot its base as higher rates and liquidity shortages could drag down prices. One sector that may overshoot
