Last year showed the world a vulnerability that shook markets across the world ranging from real estate to the stock market, almost all in some response to the COVID-19 pandemic. The remainder of 2021 seems to be fairly predictable in terms of recovery, as vaccines are being distributed and administered at incredible rates, but the question of how this will affect next year remains up in the air. The real estate market in particular has seen consequences from the pandemic unlike other markets however, and this article will try to make sense of what could happen in 2022.
A large portion of the real estate market in Europe comes from commercial properties, like retail buildings or office space. The presence of online commerce has completely shifted the value in such properties. For example, companies on every part of the economic spectrum have had to adjust and learn how to conduct their business meetings, work, and trade online via apps like Zoom and Google Drive. As working from home has become more popular, less companies are outwardly seeking purchases of office space. While retail space is not as large of a portion as office buildings, the increase in online shopping during the pandemic has rendered certain aspects of in-person shopping useless. Less people are going into stores to shop, even grocery stores, and rather buying online. Values of some retail buildings in Europe have decreased as well. With these two particular commercial real estate entities decreasing in value over the last year and a half, it is expected that their values may begin to trend upward, but not come close to a full recovery during the 2022 fiscal year. Vaccinations and large-scale changes will hopefully bring back in-person commerce, but there is no certainty of a full shift back to normal in just one year from now. That being said, it is not a terrible time to invest in such properties as their prices are bound to increase in the future. Cities like Paris, Berlin, London, and Madrid will continue to excel in being economic hubs and in the long run properties in these cities, along with other rising ones such as Copenhagen and Oslo, will rise.
The European real estate two-headed monster also contains the housing market and other residential properties. In comparison with commercial real estate, the housing market is expected to be less affected in the near future by the crazy year. Lending in the EU is easy for consumers in the housing market as there are generally low interest rates based on current monetary policy. Due to this, demand is high still and 2022 expects to continue this trend. With almost an opposite effect to commercial real estate, people stuck in their homes in 2020 and early 2021 began to realize how essential it is to live somewhere they enjoy being. With that being said, personal investment into better homes is something that is expected to continue as other aspects of the economy recover over the next year.
Another market to keep in mind is the hotel industry, which will hopefully recover smoothly once traveling becomes more accessible via the pandemic slowing down. Commercial and residential real estate make up the European real estate market, and in 2022 countries are expected to see recovery in the upward direction of value for these two property types. While there is still some uncertainty regarding the speed at which our world will recover from COVID-19 overall, 2022 has a brighter outlook than 2020 and 2021, and should hopefully continue to move in the right direction.
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