UK property market bounce back faster than rest of Europe – FT
The UK’s commercial real estate market is beginning to recover at a faster pace than the rest of Europe after a challenging two-year downturn caused by high interest rates.
According to The Financial Times citing market data, both deal volumes and property values in the UK increased during the first half of 2024, while Germany and France, Europe’s largest markets after the UK, saw less significant gains.
Industry experts attribute the UK’s quicker recovery to hopes for political stability following the general election, stronger economic prospects, rising rents, and a more moderate increase in prices between Brexit and the market peak in 2022.
“The UK has probably been the fastest-recalibrating market.” Mark Ridley, CEO of Savills, noted. “Where there is uncertainty is how fast and how far the recovery goes.”
Across Europe, commercial real estate values have dropped nearly 25 per cent from their peak in 2022.
However, an index from Green Street indicates that prices in the UK rose by about 1.4 per cent in the first half of 2024, outpacing the 1 per cent average increase across the continent.
UK transaction volumes also grew by 7 per cent, with €26 billion worth of properties changing hands, while volumes in continental Europe remained flat.
Despite these positive signs, the recovery remains uneven. Warehouses, residential properties, and hotels have seen modest price improvements, while office buildings continue to experience significant value declines. The UK office market, in particular, had its worst first half since 2001, with only €4.2 billion in transactions.
Ben Sanderson, managing director of real estate at Aviva, described the recovery as “k-shaped,” predicting that while some property sectors will rebound, others may continue to decline.
The cautious optimism is reflected in investor behaviour, with a focus on sectors benefiting from strong demand, such as logistics, residential, leisure, and data centres.
The UK’s faster recovery has attracted significant investment from large US private equity groups like Blackstone, which invested around $3 billion in European real estate during the first half of 2024, with the largest share going to the UK.
Blackstone’s investments included deals for new homes, hotels, logistics warehouses, and luxury retail properties.
As the UK property market continues to reprice in response to current conditions, industry leaders remain watchful of how the recovery will unfold across different sectors.
Attribution: The Financial Times
Subediting: Y.Yasser
