Strong Q1 expected for European real estate investment despite geopolitical events

Preliminary figures compiled by Savills suggest that the total real estate investment volume in Europe for the first quarter of the year will reach approximately €70 billion, a 19.5 percent increase y/y. Despite geopolitical events, the real estate advisor expects solid European investment activity for the remainder of the year, notably fuelled by large portfolio and entity deals. 

Savills anticipates total European real estate investment volumes for 2022 to reach between €300-330 billion, which would be 5-10 percent above the five-year average, as long as the Russia/Ukraine crisis doesn’t last too long and doesn’t have a long-term impact on the European economy.

“The hostilities in Ukraine are having a stronger impact on the Polish real estate market than on Western European markets. Developers are facing severe disruptions to supplies of building materials and the reduced availability of construction workers. Tenants have already suffered from rising inflation and energy charges, further fuelled by the weakening Polish złoty relative to the euro, a currency in which rents are denominated. We are, however, seeing a surge in demand on the residential rental market and more inquiries for office and warehouse space from companies wanting or forced to relocate operations to Poland. Cross-border investors are likely to remain more cautious in the coming weeks, leading to a short-term dip in real estate investment volumes, albeit with a potential for a strong rebound if the armed conflict is quickly resolved peacefully,” Tomasz Buras, CEO, Savills Poland, said.

(WBJ)