With rising interest, sinking deal flows, and a decline in gross domestic products, the real estate market in Europe is expected to see a slowdown. It will include both the real estate economy and the underlying market. A report published by Price Water Copper and the Urban Land Institute identifies that the value of real estate capital will be falling, and 2023 can be a great opportunity for buyers who wish to invest in the real estate market.
The report also noted that the current increase in interest rates and inflation due to the recession in Europe had put the property market at an uncomfortable crossroads. The situation is further worsened by the Russia-Ukraine war. Although industry leaders think that the Russian invasion of Ukraine will not directly impact the property rates, there will be some surge in the costs due to the overall inflation.
Despite the real estate economy being in flux, new real estate trends are emerging in Europe that investors need to know about before considering any property investment.
Top 5 Real Estate Trends For 2023
The repercussions of the COVID-19 pandemic, which was in full swing till 2022, are now waning, but the feeling of uncertainty is still there. Apart from the Russia-Ukraine war, and the recession, the market is moving towards growth; mainly, the European lifestyle is appealing to domestic and international investors, which are developing new trends for 2023.
1. Property inventory is improving
In the last two to three years, the inventory for real estate has been low, which means the number of properties in the market failed to meet buyers’ demand for the sale. The slump was worst during the 2020 phase, but now the tides are turning. Inventory has been reported to grow since May 2022 and is expected to increase in the coming months.
2. A price growth is calming down
Compared to November 2021, the active listing price increased to $416,000, i.e., by 11% in November 2022. However, the actual annual growth rate is trailing behind the growth rate of 16%. The figure signifies that the speed of the growth is falling, and 2023 will see a similar decrease in the growth rate. But with a still shortage of houses and stronger demand, the prices won’t plummet. So, for both sellers and buyers, it can be a good time; one just needs to find the right deal.
3. Millennials interested in real estate investments
There has been a recent trend where millennials are investing in real estate. Whether it is top executives, entrepreneurs, or young citizens, anyone with purchasing power is not attracted to the contemporary European lifestyle. The easy movement within the European continent, the tax benefits, and the Golden Visa of Portugal are some examples that are the alluring younger generation to invest in European real estate. The millennials are no longer confining their real estate purchases to first homes but purchasing properties for investment in the tourism and commercial sectors.
4. Investment properties are on the rise
Despite the high mortgage rates, the monthly payment limit and limited down payment on mortgage types are increasing the purchase of investment properties. These properties in Europe can work as a second home, commercial properties like Air B&B or large ones with a clear separation between family space, workspace, study space and outside. The need for a larger area for children to play and adults to relax has emerged as new criteria post the pandemic lockdown. Hence investment in second homes that have larger space has become a new trend.
5. Virtual tours
COVID-19 boosted the remote work culture in every sector, including real estate. The result is offering virtual tours of the property to the buyers. The process includes real-time property tours with real-time questions and answers between the buyers and the sellers. Buyers no longer have to visit the properties physically; rather, the properties will go to the buyers via the virtual link.
What does The Future Hold?
Creating a sustainable real estate industry is one of the essential changes that has taken place and will continue to rise. According to real estate investor Mr Tej Kohli, a property investment portfolio should focus on innovation, growth, and commercial trends that intersect with cultural factors for long-term growth. It can be witnessed with the Zibel Real Estate.
Mr Tej Kohli understands the need for investment in real estate and how it can be utilized to give back to society as he does with his Tej Kohli Foundation and Tej Kohli &Ruit Foundation. You can learn more about philanthropist and entrepreneur Tej Kohli from his blog.
