What are the Developing Trends in Real Estate?

In the 20th issue of the Emerging Trends in Real Estate® Europe report, prepared in collaboration with PwC and the Urban Land Institute (ULI), the near-term outlook of the real estate sector and the year 2023 are discussed. European economies are trying to cope with the effects of the war in Europe as they start to recover after the pandemic. Beyond its direct impact on humanity, inflation caused by rising energy costs will change the outlook for the real estate sector in the coming year.

According to the Emerging Trends in Real Estate® Europe 2023 report, expectations for confidence and profitability in the real estate sector have decreased. This reflects widespread industry concerns regarding various indicators for business, politics and real estate. 7 out of 10 respondents believe Europe will go into recession by the end of 2022.

According to the survey, 91% of respondents are worried about inflation. The volatility in interest rates (89%) and economic growth in Europe (88%) come right after inflation. The issues that the participants are most concerned about are; political uncertainties at the global (79%), regional (68%) and national (54%) level. Opportunities for growth and high ROI still exist; However, the rules of the game have changed.

While leasing activity in Europe did quite well in 2022, there is a widespread belief that the recession will lower occupancy rates and rentals, even in formerly strong sectors. The real estate market is constantly evolving; Those who change their portfolios will receive their reward in 2023.

The residential sector continues to see value and income stability is thought to be greater in this sector than in the commercial sector. Certain subsectors are of interest, such as assisted living for retirees, which focus on the aging population.

It is possible to say that the most obvious change dynamic is the rise of the ESG. From construction to finance and operations, the real estate industry incorporates environmental, social and corporate (governance) concerns into company decisions. These include everything from reducing emissions to issues of diversity and inclusion within the company. According to the research, 87% of respondents understand the importance of creating social impact alongside financial returns.

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