The European property market is facing a recovery phase after hitting rock bottom in mid-2024, according to the report Europe’s Real Estate Renaissance? published by Nuveen Real Estate. The management company believes that greater macroeconomic and regulatory stability, together with more contained supply and the maintenance of solid rents in the main markets, will enable the sector to enter a new cycle of growth in the medium term.
The study estimates that values could return to previous levels within 17 to 27 quarters, in line with the cycles observed in previous crises. Nuveen forecasts rental increases of between 11% and 15% in the logistics and residential segments, driven by structural demand, while prime office rents are expected to grow by around 8% and other assets by around 11%. In the case of retail, following the correction resulting from the pandemic, rents would rise again by between 9% and 12% until 2028, both in shopping centres and retail parks.
The report highlights the institutional strength of the European market, with a predictable regulatory framework and a lower administrative burden compared to other OECD countries. In terms of taxation, the European Union has an average deficit of 3.2% in 2024, approximately half that of the United States, and only Greece and Italy have debt-to-GDP ratios similar to those of the US.
Spain ranks in the top half of Nuveen's regulatory competitiveness index, with a score of 1.2 points, ahead of Germany and close to France. Sweden tops the ranking with 0.8 points, while Luxembourg is at the bottom of the table with almost 2 points.
The analysis also identifies better performance in medium-sized investment funds, with capital of between €100 million and €500 million, which have shown greater agility in value-add strategies and a favourable balance in core products. The most attractive returns are concentrated in the eurozone and the Nordic countries, favoured by lower interest rates.
Among the structural fundamentals underpinning the recovery, Nuveen highlights improved employment, institutional stability, a solid legal framework and progress in sustainability and equality. Overall, the study concludes that Europe — and Spain in particular — has the necessary factors in place to consolidate sustained real estate growth in the new phase of the cycle.
