Press

As European commercial real estate markets adjust, the different asset categories are following diverging trajectories: retail is still in third place, accounting for around 20% of overall investment (vs. 14% at the end of the Covid crisis in late 2021), behind logistics assets, which remain popular, and offices, which are still struggling. Indeed, for the first time, investment in offices and logistics is neck and neck, with each accounting for 25% of overall investment over the last 12 months. After retail premises come hotels, which have flourished on the back of keener investor interest; investment in the category has surged by 40% year-on-year and they now account for 12% of allocations.

Logistics letting markets have generally held up well despite weak economic growth which is expected to remain positive in 2024. Indeed, GDP growth started to pick up in the Euro area at the beginning of the year from +0.5% in 2023 to +0.8 % forecast in 2024.

Occupier concerns about cost control in a still weak economy are slowing expansion. In H1 2024, the market decreased by 5% versus H1 2023. Demand has been lagging and most countries recorded a slow start to the year. Yet, market fundamentals remain healthy despite rising supply in some countries and there are signs of inventories increasing in the second half of 2025.

BNP Paribas REIM presents “The Lighthouse H2 2024 – European Property Market Outlook”, its outlook for the European real estate market using its in-house forecasts, analysis, and the expertise of its local teams. In this nineth edition, BNP Paribas REIM defines its convictions and provides the investment strategies to adopt considering the expected macroeconomic and financial environment for the rest of 2024 and beyond.

BNP Paribas REIM has made three new appointments with effect from July 1, 2024:

• Vincenzo Nocerino is to be made Global Chief Investment Officer,
• Laurence Weydert will become Global Head of Asset Management,
• Swati Srivastava will become Country Head UK.

Although the office sector saw the steepest fall in investment of any asset category in 2023, the market is gradually recovering, underpinned by a consolidation in take-up, a stable vacancy rate and rising prime rents.

The European Impact Property Fund (EIPF) has seen inflows of almost € 378m from European institutional investors and has acquired 10 assets in Europe since its inception in 2020. As per the requirements of article 9 of the Sustainable Finance Disclosure Regulation, the EIPF has demanding environmental targets. It is also seeking to diversify and continues to acquire assets in Europe.

Investment in European retail fell 40% in 2023 vs 2022, to € 26.2bn. Yet investor interest in retail assets is slowly gaining more traction in terms of investment market share (20% in Q4 23 vs 16% in Q4 22). “This level has not been seen for five years (20% in 2018). As a result, retail was the second least affected sector after hotels”, says Patrick Delcol, Head of European Retail at BNP Paribas Real Estate.

The slowdown in rental activity seen from late 2022 in some European markets then spread and was confirmed in 2023. This was due to the uncertain economic and geopolitical context and structural changes in the way offices are used. All told, take-up for the year came to 7.6 million sqm across the 17 main European markets*, down 19% vs 2022. This was 16% lower than the long-term average.