The property leaders in Europe are as relentless as ever, with the firm belief that real estate remains one of the best investment options. With Brexit still on their minds, investors are wary of the looming threat of global recession aggravated by the growing mistrust leading to trade tensions between the US and China.
Platforms like Investable believe that saving grace is the central banks’ decision to maintain current interest rates or cut them further. Market participants are still wary about where they park their funds and prefer cities offering liquidity and connectivity as safer bets.
Besides the temporary shortage of labour due to the COVID pandemic, the increase in wages and material costs is an added concern. The major concern in the industry today is the rise in construction costs.
Locating Quality Assets
Despite the sluggishness caused by the COVID scare, international investors’ focus is still on locating quality assets in Europe. Although property availability is better due to sluggish sales, pricing is still a significant concern. Quality of the assets is another significant concern that dictates where investors are willing to park their funds.
The big question is whether the availability is set to decrease or if increased demand can be predicted for early 2021 until the year-end. The good news is that the financial background remains positive, and sales should pick up sooner than later.
The general rule in stocks and shares seems to be applicable here. Real estate professionals are looking to invest in alternative niches like senior living facilities and student housing to spread the risks. Although this is a vast market, real estate professionals and investors accept modest growth to pick up and continue.
The trick lies in planning for the next ten years rather than looking for short-term gains and profits. Hence, it is vital to have information about population growth and its aging, current shortages in housing, and over-supply of property in select niches and locations.
Today’s motto is a perfect blend of work and play that creates the need to recreate common areas and lobby spaces. Co-working spaces that experienced a bad phase are slowly recovering and hold promise. Flexible working spaces and co-working office accommodation are still trendy and sought after.
Lowest Interest Rates
As mentioned earlier, the central banks’ decision to keep the interest rates static or lower is a welcome gesture. This announcement is yet to have its impact on the real estate business, which remains wary. Investment news from Investable and Europe’s real estate professionals indicate that low-interest rates may not directly impact the real estate business. With interest rates remaining unchanged, the rental prices and inflation are set to keep rising.
Where and How to Invest?
With the real estate market in Europe still going through a transformation phase, the big questions are where to invest and how much? Europe’s main investment target is the UK, which is witnessing a sliding real estate market. As per Frank Knight’s report, real estate prices are unsteady because of the threat of a surge in new cases of the COVID pandemic. The localised lockdowns are not helping either.
The pandemic has forced homes to turn to offices, and the future of the workplace is a big question mark. The onus is on the businesses to rethink their strategy on their business location as multi-location workplaces hold the key. More than half of the working professionals still prefer to work from home.
Affordability is an Issue
With prices rising steadily, affordability is a major issue that will decide which way the market moves. Market trends indicate that 61% of the prospective buyers of property believe that prime assets are overpriced despite the lull caused by the pandemic.
Summing it Up
Even though positive indicators like static interest rates and the likelihood of a vaccine for the COVID pandemic being developed soon, real estate trends indicate continued sluggishness. Experts believe it is too early to speculate on the recent political developments in the US and its impact on the world’s economy.