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Europe's commercial property sector has been hammered in recent
years by a punishing rise in debt costs and tumbling prices,
exacerbated by some offices and high streets emptying after the
pandemic.
Investors globally are rethinking when they expect central banks
to start cutting interest rates, cooling hopes for a rapid
rebound in rate-sensitive sectors like real estate.
The MSCI data showed the number of property deals worth more
than 5 million euros ($5.4 million) terminated and for-sale
properties withdrawn from the market in the quarter spiked to
110, the highest since 2010 when the sector was still gripped by
the fallout from the global financial crisis.
The total value of European commercial property sales also
slumped by 26% in the first quarter compared to the prior year,
to 34.5 billion euros, the lowest since 2011 and the seventh
straight quarter of annual declines.
"After a very slow 2023, there were hopes that European property
investment would start to pick up...(but) the market remains a
difficult place in which to transact," said Tom Leahy, Head of
EMEA Real Assets Research at MSCI.
"Buyer and seller price expectations have diverged and until
interest rates start to come back down or the growth prospects
for European economies improve markedly, the price gap is likely
to remain in place."
($1 = 0.9348 euros)
(Reporting by Iain Withers; Editing by Kirsten Donovan)
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