Colliers – EMEA CM Snapshot, Q4 2023

The European commercial real estate investment in 2023 experienced a significant decline and reached a ten-year low in the fourth quarter. This was due to the reset of capital values and reduced deal flow caused by market uncertainty. However, as financial conditions stabilize and prices adjust, there are indications of increased activity in the second half of 2024. Despite the overall decline, there were some positive developments. Opportunities and realistic pricing levels are emerging as we enter 2024. Spain and Portugal saw increased activity thanks to private domestic and Latin American investors. Demand for prime London assets remained strong, with private capital being the most active, even though UK transaction volumes failed to reach the £40 billion mark for the first time since the global financial crisis. In the year ahead, private capital and family offices are expected to be at the forefront of buying activity, reflecting a risk-on attitude from investors. Value-add, opportunistic, and development-focused capital will be prominent, aligning with the shift in investors' strategies towards sustainability and energy efficiency requirements. Investor interest is expanding in alternative/specialized and contra-cyclical assets, particularly purpose-built student accommodation, data centers, and life science assets. Although the first quarter of 2024 is expected to remain subdued, a rebound in deals is anticipated in the second half of the year as prices stabilize and interest rate reductions become more likely.