Despite macroeconomic headwinds, current market conditions offer ideal conditions for value-add investments in Europe. Liquidity increases, but due to short-term capital constraints, attractive investment opportunities can be found on the market.
The real estate recovery in Europe is now clearly underway: valuations in 2025 have increased by around 4%. Further capital growth is expected in the coming years, driven by continued rental growth as well as yield compression due to improved investor sentiment.
The use of debt capital again contributes more to the transaction market and thus improves the overall return prospects.
In recent years, a clear trend towards operational real estate has been observed, particularly among core investors. For value-add strategies, this represents an exit route after valuations have stabilized.
Operational strategies dominate, for example, in the areas of hotels, rental apartments and storage. But platforms and interaction with customers are also becoming increasingly important for implementing strategies in more traditional commercial areas such as flexible offices, retail and urban logistics.
Demand in the hospitality sector is increasing due to the growing tourism sector. As supply remains subdued, occupancy will reach record levels across Europe in 2025.
Strong growth in overnight stays and increasing occupancy rates were particularly recorded in southern European markets such as Italy, Spain and Portugal.
A notable trend is the resilience of demand for open-air hospitality (camping). With this sector seeing a smaller decline than hotels during the pandemic, low-cost accommodation options have attracted travelers while supply has remained stable or declined in key markets such as Italy, France and the Netherlands.
Occupancy in the open-air area has significantly exceeded pre-pandemic levels and is expected to continue to increase in the coming years. With supply expected to remain tight, there is a continued value opportunity to acquire non-institutional open-air locations and reposition them in the market to benefit from potential increases in occupancy and rental rates.
Von Greg Kane, Head of European Investment Research, Real Estate, bei PGIM
Other popular messages:
Past performance results do not allow any conclusions to be drawn about the future development of an investment fund or security. The value and return of an investment in funds or securities may rise or fall. Investors may only receive less than their invested capital. Currency fluctuations can also influence the investment. Please note the regulations for advertising and offering shares in InvFG 2011 §128 ff. The information on www.e-fundresearch.com does not represent recommendations for the purchase, sale or holding of securities, funds or other assets. The information on the e-fundresearch.com AG website was carefully created. However, unintentionally incorrect representations can occur. No liability or guarantee can therefore be assumed for the topicality, correctness and completeness of the information provided. The same applies to all other websites that are referred to via hyperlink. e-fundresearch.com AG rejects any liability for direct, specific or other damages that arise in connection with the information offered or other available information. The NewsCenter is a paid special form of advertising from e-fundresearch.com AG for asset management companies. Copyright and exclusive responsibility for content lies with the asset management company as a user of the NewsCenter special advertising form. All NewsCenter reports constitute press information or marketing communications.
