Economy & Real Estate Q1 2024

Following a period of very high inflation rates, the focus has now shifted to indicators of recession. Further key interest rate hikes are looking unlikely at present; it is more probable that rates will plateau over the next few months.

The forecasts also show that a return to the zero interest rates of the 2010s is unlikely. The most probable scenario is a return to a level of between 2% and 3%, in line with the long-term average.

The property markets regularly reflect economic developments with a time lag. With interest rates having risen sharply, real estate financing has collapsed. If interest rates remain at these high levels (or continue to rise) in the medium term, this will create potential problems for many follow-on financing arrangements. Banks will have to step up the realisation of collateral, which will delay a recovery in new business.

At Empira, we see striking differences in terms of region and type of use. In our current research, we analyse the conditions and put the performance in the context of other asset classes. In the current environment, real estate as an asset class can deliver the benefits that institutional investors have always valued, namely cash flow generation and the prospect of rising rents in most of the regions we cover.