Drooms has surveyed 229 real estate experts in Europe on their predictions for 2023. According to the research real estate professionals anticipate business growth despite high interest rates and growing inflation. Over 37 pct of real estate companies in Europe expect revenues to increase this year.
The survey respondents see rising interest rates (42 pct) as well as payment defaults by buyers and tenants (24 pct) as having the biggest impact on revenues. Inflation (15.7 pct), high construction costs (10 pct) and the shortage of skilled workers (4.4 pct) play only a minor role. Only 1.75 pct of the respondents expect climate protection regulation to have an impact on revenue.
Twenty-four pct of respondents see the biggest opportunities in residential investments in 2023, followed by logistics (21 pct), healthcare (15.7 pct), office (11.4 pct), retail (10 pct) and industrial real estate (9.6 pct). Real estate professionals are most sceptical about the hotel asset class, with only 8.3 pct seeing the greatest opportunities there in 2023.
Defensive investment strategies seem to be on the rise again. Residential is a relatively risk-proof asset class. Logistics is very strongly supported by an occupier market that has been propelled by e-commerce demand and is therefore a safe investment. Fuelled by demographic change, investors are also exploring the healthcare market. Retail is taking a hit due to the shift to online shopping and the squeeze on consumer spending in the face of rising inflation. Investors are continuing to lose faith in the office as the market deals with the ongoing fallout from lockdowns and the growth in home working. The office space also has challenges facing lower quality assets that do not meet investor and occupier environmental requirements. It is interesting that very few of our survey participants expect the topic of climate regulation to have a significant impact on revenue, especially as ESG will continue to be one of the biggest topics of 2023.
Alexandre Grellier, CEO and Co-Founder of Drooms
Thirty-eight pct of the respondents said they were still at the very beginning in terms of preparing for ESG compliance. As many as 19.7 pct have already informed themselves about the requirements but have not yet started the implementation process. 32.75 pct are already comprehensively prepared for the implementation of ESG measures to be able to comply with future regulation.
More than 78.6 pct of respondents said they want to increase their innovation budget in 2023. In contrast, 21.4 pct want to spend less money on innovation and digitisation.
