Region Spotlight: Europe

This quarter, we’re shining the spotlight on Europe! We’ve gathered some of the major headlines and initiatives to give you an idea of what’s happening in this region.¹

Here are few questions and headlines from around Europe . . .

What are the key issues the European real estate industry is grappling with at the moment?²

• Continued uncertainty about the war in Ukraine
• Energy market developments and sustainability
• Inflation and cost of living increases

What’s happening with the housing market across Europe?³

There is a lot to keep track of in Europe, and some conditions are quickly changing. Sweden recently had some of the highes and most steadily growing house prices in Europe.⁴ But now, we’re seeing prices plummet across Europe, including a steep decline in Stockholm.

According to the Guardian,⁵ Germany is experiencing its biggest price decline in two decades. Spain has had a healthy year, but declines are now being reported in Mallorca and Ibiza. France is also expected to experience declines imminently.

Why the sudden changes? The answer is the variable cost of money. In some countries mortgage rates vary often (for instance, Sweden), while others remain steady for five years or so. These changes combined with inflation and the global uncertainties cause fluctuations in the real estate market.

New home sales in Europe
(in units, Spain thousand units)

European Developments and Infrastructure⁶

Major infrastructure projects are taking place, aiming to connect European countries, create sustainable travel networks, and potentially drive opportunities for investors.

Two examples are:

• Fehmarn Belt Tunnel is an underwater tunnel to link Germany and Denmark.
• Seine–North Europe Canal is a wide-gauge canal to link France and Northern Europe. This is of great interest to investors and developers alike, particularly as decarbonization targets encourage more sustainable networks.

There are also major urban developments breathing new life into city centers. Here are a few from around Europe:

• HafenCity⁷ Hamburg is Europe’s largest urban development, which was completed in 2021. This development has injected diversity and many layers of activities, living and working directly in the center of Hamburg. One of the main missions of this development is sustainability, with the investors contributing over €10 billion.
• Madrid Content City is set to be Europe’s second-largest production center (the first being in the UK). Plans for  this complex include production and post-production studios, auditoriums, meeting rooms, dressing rooms, and classrooms, to name a few amenities! Phase 1 is now complete, with Phases 2 and 3 ongoing.
• Warsaw Breweries⁸ is “a flagship for urban renewal.” One of the largest breweries in the world has been transformed into a cultural hub of Warsaw. This complex boasts activities for the entire family—outdoor film screenings, bakeries, a wide range of restaurants, a barbershop, gym, wine bar, and of course...craft beers!

Which country in the eurozone is predicted to have among the most positive economic growths in 2023?

So far, Ireland is expected to experience growth of 1.7% in 2023.

The Sustainable Finance Disclosure Regulation (SFDR)⁹

The SFDR is a European Union regulation introduced in March 2021. Its aim is to increase transparency surrounding sustainability claims. How does this affect the real estate industry?

• Disclosure Requirements: Real estate companies that fall under the SFDR regulations must disclose information about their sustainability policies, including how they manage environmental risks and opportunities.
• Investment Decisions: Real estate investors must consider the sustainability of their assets and the risks associated with climate change and other environmental factors.
• Green Financing: Green financing can include investments in green buildings and energy-efficient technologies, which can benefit the real estate sector.

¹ knightfrank.com/research/article/2022-12-15-european-real-estate-outlook-2023

² oecd-ilibrary.org/economics/oecd-economic-outlook/volume-2022/issue-2_d14d49eb-en

³ data.oecd.org/price/housing-prices.htm

⁴ euronews.com/2023/03/07/europes-hottest-property-markets-where-have-house-prices-risen-the-most

⁵ theguardian.com/money/2023/feb/25/house-prices-falls-uk-us-europe-property-markets

⁶ canal-seine-nord-europe.fr/en/channel-essentials/

⁷ hafencity.com/en

⁸ inyourpocket.com/warsaw/browary-warszawskie_168880v

⁹ propertyeu.info/Nieuws/Reflections-on-the-Sustainable-Finance-Disclosure-Regulation/72dfceab-d43c-4968-819c-8b6564cac9b6