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European markets are still coming to terms with structurally higher interest rates. Yields are moving out, but for some sectors there is some distance before an equilibrium between buyers and sellers can be reached.

Zachary Gauge, Head of Real Estate Research & Strategy – Europe ex DACH

The European economy is currently defined by a number of contradictory forces. Firstly, the positive. GDP growth has continually surprised on the upside over the past six months. The eurozone economy is now expected to grow by 0.8% in 2024, compared to expectations of around 0% growth at the start of the year. The UK has seen even bigger swings – in November 2022 the BoE was anticipating “the longest recession on record” and a decline in GDP of -1.5% in 2023. In their May 2023 forecasts, this was upgraded to +0.25% growth. The BoE was somewhat of an outlier in the scale of its negative expectations, but other forecasters have generally moved from a modestly negative expectation to between +0.5% and +1% for 2023.