Inflation may take a while to tame but rates will remain low

Investor Nuveen’s view is that the historically low interest rate environment will persist, even if rates are not at the zero-plus-quantitative-easing levels that they were before 2022. The firm’s head of European real estate research Stefan Wundrak says. He said this is in line with most central bank guidance.

Wundrak said that the ECB believes that a neutral level which neither pushes or slows the economy is about one 1.25%.

“If you translate that to financing rates or government bond yields, which are the benchmark for real estate, you still get quite a historically favourable environment for real estate.”

The question is when normality returns, he added.

“It all hinges on inflation and there’s different views how quickly inflation can be brought under control.”

Wundrak said that process will definitely need this year and things might improve from 2024 onwards.

“But it’s not that unlikely that it will take a bit longer than that.”

Please click on the video above to watch the full interview or listen to the podcast below.