Investors gear up for 2025 although mood still vulnerable

The mood among real estate professionals is improving. That at least is the impression Pertti Vanhanen, MD, Europe, Cromwell Property Group gained at the recent MIPIM real estate event, staged in Cannes.

“It’s been more optimistic than last year even though there were less people,” he told Real Asset Insight’s Richard Betts. One reason for the lift in spirits was the prospect of possibly three cuts in base rate. “That should improve the liquidity for the markets,” Vanhanen said. 

There may be some fragility to this sentiment, however. “Geopolitics eats economics for breakfast,” he warned. “If the situation in Ukraine gets worse then, of course, people will start to be more concerned and maybe investment will go back to the sidelines.”

Nevertheless, there is considerable liquidity around. “When the time is right then people will enter the market so this is maybe a good time to start to think about investment in real estate again.”

 Vanhanen said Cromwell is very confident about the logistics sector in particular. “We believe that in the next five years logistics will outperform other sectors.”

There is also a good appetite for residential and living as a whole, as well as new economy-type investments such as data centres and student housing.

“What is out of scope is offices. They are not really the flavour of the month, but some investors are maybe thinking about entering now because it might be possible to buy cheaply.”

“People understand that we have a lot of obsolete office buildings and they are trying to improve those. They will sell some and some of those will be refurbished, so that they fit ESG requirements in the future.”

“A lot of investors are saying that later this year, or in early 2025, they will start to really put money into this work.”