U.K. and European real estate is moving into a new growth phase as interest rate cuts begin to feed into a yield premium on the asset class, according to abrdn.
The investment manager has upgraded its investment view on real estate from neutral to overweight for the first time since June 2022 and forecasts U.K. annual total returns of 8.6 percent over the next three years.
Confidence in a recovery is backed up activity in the REIT space, where abrdn says there is a focus on capital raising for growth, rather than balance sheet repair. It says direct real estate usually benefits from a pick-up in the REIT market, some six to nine months later. In Europe, REITs have been steadily issuing equity and unsecured debt as well — signaling the end of the era of refinancing challenges and the start of the expansion era.
In direct real estate, meanwhile, bidding pressures are rising. Rents continue to grow across sectors, and the lower cost of capital supports a much mor
