The market is predicting that 2023 will be a year full of uncertainties and that the real estate sector will suffer the effects of inflation, interest rate rises, the economic slowdown and the energy crisis. According to forecasts, the coming months will see a slowdown in transactions and an adjustment in property values, although this scenario will also provide new investment opportunities, especially in large cities. Let’s find out what all of this means on a European scale and find out about how Madrid is now the fourth most attractive city in Europe for real estate investments.
In the case of Europe, according to the report ‘Trends in the real estate market’ prepared by the consultancy firm PwC and Urban Land Institute (ULI), based on a survey of more than 1,000 agents in the sector (from banks to real estate companies and investment funds), international capital is going to focus on the most liquid and mature markets.
“Investors are not gambling and are going for stable markets, just as they are looking for the most resilient assets,” says Antonio Sánchez Recio, partner in charge of the Construction, Real Estate and Services cluster at PwC.
Proof of this is that, in the 2023 edition, London leads the ranking of the most attractive European cities to invest in real estate, followed by Paris and Berlin. Madrid is a surprise and is placed in fourth position, after climbing two places compared to last year’s ranking, while Barcelona repeats in ninth position. In both cases, they have improved four positions in the last two years. The 2023 top 10 also includes Munich, Amsterdam, Frankfurt, Hamburg and Milan.
Richard Garey, partner in charge of Deals at PwC Real Estate, says that London remains at the top of the European list because the British capital “is further away from the impact of the war in Ukraine”, considered the main current social and political risk for large international investors, and because it is “the largest European real estate market”.
In the case of Paris, which has moved up one position compared to the 2022 ranking, Garey highlights that the French capital is becoming very attractive due to the celebration of the 2024 Olympic Games and the investments it is attracting. As for Berlin, he pointed out that it benefits from the fact that Germany is considered to be the safest country in Europe and that it is a city that has been little damaged by the impact of the conflict between Russia and Ukraine.
In the case of Madrid and Barcelona, Garey maintains that “those surveyed highlight that they have a lot of urban growth, the lack of supply in the face of high demand in markets such as residential, the quality of logistics and office assets, or the weight and projection of renewable energies”, at a time when energy infrastructures have become the most attractive real estate asset for investment, driven by the current price crisis.