The European real estate landscap is about to wake up. After years of slumbering, the Atlus Group reports a negligible 0.5% dip in commercial property values for Q1 2024. In comparison, the number was at 3.4% in Q4 2023.
Senior Vice President at Atlus Group, Phil Tily, couldn’t help but express optimism following the latest findings, saying:
As we usher in 2024, we’re witnessing encouraging signs in the European commercial property market, with value declines moderating significantly across all sectors.
Industrial and residential properties were particularly immune from market challenges as they retailed most of their value for the entire quarter. Further good news comes in the form of office valuations – the decline slowed to just 0.8% compared to the 5.3% drop from the last quarter.
High interest rates have posed a substantial obstacle for European property valuations, as investors sought enhanced returns to counteract escalating yields. Nonetheless, the adverse impact has been partially alleviated by mounting rents, which have aided in curbing the decline in real estate prices. Specifically, in the industrial domain, asset values contracted by a mere 0.2% during the first three months of the year, while market rental rates surged by an impressive 1.9%.
Defying the trends of the four principal property classifications, valuations climbed by 3.3%, chiefly propelled by student housing properties. The report ascribed this upward trajectory to “the persistent lack of superior student lodging in European metropolitan areas, exacerbated by a robust demand for overseas education.”