Evolution of the European Real Estate Market: Outlook for 2024

According to global research by Savills World Research, real estate investment worldwide is expected to increase in 2024, reaching its peak in the third quarter. Portugal stands out as one of the most sought-after destinations due to its tourism potential.

29 Dec 2023 min reading

Portugal Stands Out as one of the Top Destinations for Real Estate Investment!
According to global research by Savills World Research, real estate investment worldwide is expected to increase in 2024, reaching its peak in the third quarter. Portugal stands out as one of the most sought-after destinations due to its tourism potential.

Savills researchers anticipate a more positive investment environment in 2024, with 57% of respondents expecting a moderate to strong increase in investment activity next year. This optimism rises to 70% for multifamily residential properties and 66% for industrial and logistics properties.
Savills predicts an increase in investment activity in the third quarter of 2024, driven by major markets, including the US and the UK. The consultancy highlights the multifamily sector, where demand outstrips supply, and the logistics sector, driven by its strong fundamentals.

Challenges in the European Real Estate Market and Portugal's Position
The European real estate market faces significant challenges due to rising interest rates, resulting in a slowdown in investments and asset prices. BNP Paribas RE predicts a recovery in 2024, especially as investors adopt strategies tailored to a more stable macroeconomic environment.
In the first half of 2023, European investment hit its lowest point in a decade, with a 57% reduction. The top five markets, including the UK, Germany, France, Spain, and Italy, experienced significant declines. Spain was the exception, registering an increase in investments.

Outlook for the Residential Market in 2024
In the first half of 2023, residential investment in Europe decreased by 62% compared to the same period in 2022. Savills emphasizes the need for price adjustments to resume transactions, especially due to refinancing, posing a risk to some investors.
Despite a decline in prices for used homes over the next five years, demand for rentals remains high, driven by decreased affordability due to rising mortgage rates and home prices. Southern European cities and Vienna demonstrate resilience, maintaining upward price trends, while a reversal of the trend is expected by the end of the year.
In summary, while the European real estate market faces challenges, there is an expectation of a gradual recovery in 2024, with Portugal standing out as one of the most attractive destinations for real estate investments due to its rising tourism potential.

Author: Paulo Lopes