European property markets reported a widespread outward yield shift in 3Q22, with more anticipated in 4Q22. High debt costs place equity buyers in a strong position as discounted opportunities start to emerge.
Zachary Gauge, Head of Real Estate Research & Strategy – Europe ex DACH
The economic outlook for Europe remains extremely challenging. Inflation in both the eurozone and UK has exceeded 10%, resulting in negative real wages across the board and consumer spending being impacted accordingly. Higher borrowing costs are also starting to impact households and businesses. The UK and eurozone are expected to be in a shallow recession by early 2023, with a weak recovery thereafter. Inflation should start coming down next year as base effects come into play and the impact from energy costs becomes deflationary in 1Q24. But core inflation will keep CPI above target in both markets at an annual average of 5.3% in 2023, before dropping to just above 2% in 2024.
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