Prime multifamily and logistics assets, trophy office buildings, mid-size food retail units and data centres in Europe should attract core and core+ real estate investors in 2023, according to Savills.
The adviser anticipates a number of multifamily transactions in key cities in Germany, the UK, the Nordics, Spain and France where the imbalance between supply and demand may result in rapid rental increases.
With historically low vacancy rates in logistics and a projected drop in speculative development, the UK, Germany, the Netherlands, France, and Spain will continue to see rents rise.
Prime retail parks and shopping centres in Southern Europe, where inflation and stock per capita are relatively low compared to the rest of Europe, are Savills' top recommendation for value-add investors.
Repositioning lower-rated office buildings to higher standards is another possibility, particularly in cities with a high stock, like Paris and Frankfurt, and in countries where the window for obtaining high EPC ratings is limited, like the Netherlands.
New PBSA assets in Spanish and Italian cities, where the offer of beds per student is among the lowest in Europe and where student populations are anticipated to increase, are further investment possibilities.
Savills also sees prospects for the life science sector in Western Europe, particularly in the UK, Germany, France, the Netherlands, Belgium and Switzerland.
Marcus Lemli, CEO Germany and head of investment Europe at Savills, said: ‘We are already starting to see an easing off of some of the external factors that have brought the European investment market to a standstill in some countries this year, including interest rates stabilising, and energy prices and inflation starting to level off. As a result, we are expecting a game of two halves next year with owners and buyers becoming more realistic as the year progresses. As pricing becomes more transparent, this should encourage more sellers to bring product to the market at the right price, unlocking liquidity.’
Lydia Brissy, director European research at Savills, added: ‘While the market has undoubtably become more challenging as the year progressed, next year promises more opportunities for investors who are ready to take on some risk by repurposing distressed real estate assets after strong price correction.’