Real estate in Europe: major challenges 2024

Construction costs, capex requirements, and the environmental sustainability/decarbonization requirements were the main real estate related concerns among industry experts in Europe according to a 2023 survey. Construction costs have been on the rise since the coronavirus pandemic because of the high demand and inflation. About 79 percent of respondents feared that the escalating costs will continue to be an issue in the next year.

Investment and development prospects in Europe

According to the survey, London was the European city with the highest real estate investment and development prospects, followed by Paris and Madrid in 2024. To calculate the scoring, the source considered the following factors: transport connectivity, forecast real estate returns, city’s economic performance, availability of assets/opportunities for new development, market size and liquidity, regulatory environment, digital connectivity, attractiveness to talent, city leadership, housing affordability, affordability of space for new/small/growing businesses.

Investments and return

In 2022, the United Kingdom, Germany, and France were the top three countries in Europe by total value of commercial real estate investment. In terms of profitability, the industrial and retail warehousing real estate sectors in the UK are estimated to bring the highest returns in the next five years.

Issues impacting European real estate according to industry experts in 2024

Characteristic	Share of respondents
Construction costs	79%
Capex requirements	67%
Environmental sustainability/decarbonization requirements	67%
Market liquidity issues	65%
Availability of (re)finance	65%
Increased regulation (national/international)	63%
Cap rate expansion	55%
Asset obsolescence	54%
Availability of suitable assets/land for acquisition and development	49%
Covenant and loan servicing issues for existing loans	49%

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Release date

November 2023

More information

Region

Europe

Survey time period

2023

Number of respondents

1,089 respondents

Age group

18 years and older

Special properties

industry experts, including investors, fund managers, developers, property companies, lenders, brokers, advisers and consultants.

Method of interview

Face-to-face interview, online survey

Supplementary notes

1,089 property professionals completed surveys, were interviewed or took part in a series of roundtable meetings across Europe as a part of the research for this report.

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