According to the latest MSCI Barometer, real estate transaction volumes will remain at low levels next year. Falling values will continue to affect all sectors. They will a priori be less pronounced on hotels and healthcare properties. Studies.
Results from 34E releases of the MSCI Barometer, produced in collaboration with BPCE Real Estate Solutions, are hardly encouraging. At least in terms of investment volume. Interview with real estate players(1) note the very sharp drop in transactions in 2023. In the French market, they estimate it at around 13.9 billion euros. Recall that between 25 and 29 billion euros per year for the last three years. They do not expect a significant recovery even in 2024. The volume of transactions would then not exceed 16.5 billion euros.
61% of investors plan to reduce their real estate allocation in 2024
The reasons for investor reluctance are well known. Uncertainty about the development of interest rates, about the prospects for economic growth: concerns about the state of real estate markets and their opportunities remain. Consequences: 61% of the subjects surveyed expect a reduction in real estate allocation in 2024. Operators also fear even greater illiquidity in the market. Caused mainly by the withdrawal of actors who have animated it significantly in recent years: SCPI. Because one element is troubling: “ uncertainty about collection, which could cause a decrease in investments made by SCPI or even sales to meet liquidity needs », notes the MSCI Barometer.
Forced sales and declines in real estate values on the agenda…
Subject ” forced sales » also became central. ” 6 months ago, 10% of respondents did not he did not foresee. 93% now expect forced sales for 2024 », notes the barometer. These sales will be at the level caused by the need for liquidity of funds. Or refinancing problems. On the yield side, everyone expects another hike in base rates in 2024. Across all sectors. Those from main offices in the Paris CBD could therefore rise to 4.4% next year (4.2% at the end of 2023). Those of shopping centers to 6% (5.9% at the end of 2023). Or to 5.4% (5.2% at the end of 2023) for logistics platforms. Corollary: the capital gain on real estate is “ not only now negative is expected for all sectors. But the forecasts are also getting worse », notes the MSCI Barometer.
Already heavily discounted West Crescent office and logistics assets in 2023
The asset types most affected by these price declines in 2023 are Croissant Ouest La Défense offices. According to the players interviewed, their average annual discount would already range between -13% and -30%. Compared to what is expected for CBD offices in Paris, between -7.9% -20%. Logistics would still be the second most affected sector this year. Knowing that though the biggest declines were recorded as early as 1E part of the year “. In terms of attractiveness, investors therefore favor the hotel and healthcare sectors for 2024. More than half of the operators surveyed expect an increase in the volumes invested there.
Head office remains a safe bet…
Opinions are more mixed on the residential and logistics segments. But they too could see an increase in interest, at least in terms of volume. When we ask investors what types of assets they intend to prioritize for purchase or sale in 2024, their answers are, however, more classic. Offices still take the lion’s share…
About MSCI
MSCI is a leading provider of critical decision support tools and services for the global investment community. With over 50 years of expertise in research, data and technology, we ensure better investment decisions by enabling clients to understand and analyze the key drivers of risk and return and build more efficient portfolios with confidence. We create cutting-edge, research-enhanced solutions that clients use to gain insight and improve transparency throughout the investment process.
About BPCE Real Estate Solutions
BPCE Real Estate Solutions, a subsidiary of the BPCE Group, supports large owners, developers, investors, financial institutions and individuals in their real estate projects and the appreciation of their assets. With a national presence in 23 locations across the country and 15 European offices, BPCE Real Estate Solutions cultivates a strong proximity to its clients and offers a wide range of services in 3 areas of expertise: Expertise and Consulting, Residential and Investments and Transactions.
(i) Information taken from an official company document
(1) Investors who responded to Barometer, in October 2023, manage more than 280 billion euros of real estate. These investors are as follows: Abrdn, Advenis REIM, AG2R LA MONDIALE, Amundi Immobilier, Assurances Du Crédit Mutuel, AXA IM Alts, BNPP CARDIF, Caisse Centrale de Réassurance, CDC Investissement Immobilier, Ceetrus, Colliers Global Investors, EDF Victim Guarantee Fund, Groupama Gan REIM, Icade, Immobilière Dassault, Invesco Real Estate, La France Mutualiste, La Mutuelle Générale, La Française REM, LBO France, Novaxia Investissement, OFI Invest Real Estate, Primonial REIM, Société de la Swiss Tour Eiffel, Life Asset Managers, Union Investment, URSSAF CN.