How would you describe the 2023 real assets year from your association’s perspective?

As we entered 2023, there was a cautious sense of optimism and positive signs for the non-listed real estate industry. However, things changed rapidly and this positive feeling never materialised.

It soon became clear that 2023 would test the resilience of all market participants. The geopolitical situation was much more challenging than we had anticipated, with severe repercussions for our industry. And while the monetary policies of central banks may have prevented a full recession in Europe, we were still faced with continued economic challenges. Consequently, the real estate market came to a standstill.

Where do you see the best value and what will be the best strategy in 2024?

In terms of value, I think residential will undoubtedly play a significant role in 2024. The present imbalance between supply and demand for high-quality residential space across most markets makes this a really attractive opportunity. It’s a view that seems to be echoed by many of INREV’s members in our recent Investment Intentions Survey. In fact, residential took the top spot as Europe’s preferred sector for the first time in the history of the survey, rising from 65% in 2023, to 90% in 2024.

Also, those countries and sectors where prices have already corrected will be worth considering. Again, the numbers from the survey provide some useful insight – the UK regained its position as Europe’s preferred investment destination for the first time in six years.

There will be opportunity in added-value strategies, especially for market participants with unlevered capital at their disposal. This could even mean in the less favoured sectors such as retail and office – particularly in relation to ESG-compliant assets and carefully selected secondary markets. It’s worth remembering that while portfolios are being rebalanced, the office sector remains the largest share of European-domiciled investors’ portfolios.

Real estate debt will continue to be a big area of focus. In this year’s Investment Intentions Survey, it retains its position as the preferred access route into European real estate for the third consecutive year.

What are likely to be the chief positive influences on strategy in 2024?

The ongoing review of, and improvement to, key policy areas affecting real estate will have a positive influence on our industry. In particular, the European Commission’s finalisation of SFDR will bring much-needed clarity that will help market participants better align their ESG objectives and real estate investment strategies. 

“Our ambitions when it comes to ESG have not changed, but we are fully aware that net-zero targets have shifted, and we must do all we can to ensure momentum does not slow.”

Lonneke Löwik, INREV

Challenging market conditions also mean that collaboration and the sharing of knowledge is more important than ever, and delivering more of this will also be positive for the industry. It’s something that INREV remains very focused on. At the end of last year we launched the INREV Consensus Indicator, a new diffusion index, designed to measure the direction of trends in the European non-listed real estate market. It is a useful additional source of insight for decision-makers, investors, market analysts and asset allocators.

Of course, technology – and especially AI – will continue to play a key role in helping to support critical challenges.

What do you consider to be the main challenges facing the sector and your organisation/membership in 2024?

It is undeniable that ongoing geopolitical tensions will keep the real estate investment market on a knife-edge.

ESG continues to present both opportunities and challenges. Our ambitions when it comes to ESG have not changed, but we are fully aware that net-zero targets have shifted, and we must do all we can to ensure momentum does not slow.

Closely related to ESG is data and standardisation. This is essential for our members and will remain central to our efforts. Last year, we not only updated the INREV Standard Data Delivery Sheet (SDDS) following our guidelines review, but also introduced a new ESG reporting template (ESG SDDS) designed to standardise the disclosure and reporting of essential ESG data for real estate investment vehicles.

This year, we will continue our conversations with our global partners, ANREV, NCREIF and PREA to promote the use of these standards across the globe. We believe global definitions, and standardisation of data will be imperative in the year ahead.

Looking back at 2023, what has given you the greatest inspiration for the year ahead?

Over the past 20 years INREV has worked hard to put in place some significant building blocks designed to support the industry. Last year felt like a watershed moment that brought many of these threads together.

We undertook various initiatives, such as the IT roadmap linking data sets across the research function, the launch of the INREV Academy, the launch of the Consensus Indicator, and the guidelines review that saw full integration of ESG measurement.

In each of these cases, the outputs are the result of true industry-wide collaboration facilitated by INREV. This sense of communal endeavour to improve the capabilities of the whole industry feels both inspirational and pragmatic, especially at a time when we are facing serious challenges.

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