Despite the EPC rating system’s straightforward scale ranging from A to G, the EPC rating system varies significantly in terms of scope, methodology, assumptions, and rating across different countries, and sometimes even within the same country, as is the case in the United Kingdom and Belgium. This variance makes consistent and meaningful evaluations and comparisons difficult to achieve. As concluded in the European DataWarehouse (EDW) EPCs across Europe analysis, common conversion factors are needed to make sure that an “A” rating in one country corresponds to a similar level of efficiency in the others. This will benefit stakeholders who work cross border, which is a “must” in today’s globalised world.

Going forwards, our conviction is that real estate investors need to adopt a stock picker’s mindset rather than a sector allocation focus. Asset selection is key, as we are clearly seeing a bifurcation of returns within sectors and markets.

How can investors differentiate among managers? Proven managers that can invest up and down the capital stack and have a tenured team and track record transacting across cycles will be well positioned to find distress and outsized returns. Look closely at the timing of the historical track records, at the team responsible then and now, and at the creativity of the deals that were done to generate the prior track record.

The constellation of enormous demand for finance and very limited supply in the German real estate market has been closely monitored by private equity investors, insurers and family offices from throughout Europe, the United States, Middle East and Asia. In response to the highly cautious approach adopted by the banks, these actors have entered the German real estate market in larger numbers — often not as buyers, however, but as financiers.

London is leading an office value pricing correction in Europe as prices adjust at the fastest pace ever recorded, according to the latest research from Savills.

Catella Residential Investment Management’s latest Markets Overview report says that the wide gap in price expectations between buyers and sellers remains in place in many European locations, maintaining valuation uncertainty. At the same time, interest rate hikes continue to stall investors who rely on financing. By the end of 2022, transaction volumes had fallen sharply in numerous submarkets within the European residential real estate market. The manager expects the general conditions on the European transaction markets for residential real estate to remain tense for the rest of 2023.