«THE HOUSING CRISIS IN EUROPE WITH AN INCREASINGLY RESTRICTIVE REAL ESTATE SECTOR»
According to the latest report published by Deutsche Bank, the housing crisis in Europe continues to worsen, posing a problem for citizens and, on the contrary, a great opportunity for investors.
The European housing market is experiencing serious supply problems in the residential segment. As it is the sector with the most supply restrictions, with a vacancy rate of 2%, this shortage of available housing is exacerbated by the fact that new home completions remain significantly below 1% annually, resulting in a pronounced housing crisis.
Deutsche Bank predicts a worsening of the situation.
“If we project that future supply will be approximately 35% lower than needed, we can anticipate an even more severe supply shortage crisis, which could inevitably lead to escalating rental pressures and greater hardship for potential tenants.”
An opportunity for investors
Deutsche Bank emphasizes that, although forecasts point to moderate economic growth in Europe, lower than that of other major economies such as the US, from a real estate perspective, Europe is benefiting from historically lower supply levels, less land availability, and stricter planning regulations, which translate into lower vacancy rates.
The reality is that the market in Europe appears to be stabilizing with solid occupancy figures, limited supply, and stable yields, generating growing liquidity and a more flexible interest rate environment. This leads the bank to conclude that 2025 holds promise for the European real estate sector, as the sector could generate attractive returns commensurate with risk.
The cities with the greatest potential are the more established ones that suffer from a supply deficit, where projects such as the conversion of offices into shared housing or student residences can be developed.
Rental Regulation
In the case of rentals, the study maintains that the rental market in Europe still has significant room for growth. However, rental regulation is a critical factor to consider when investing in Europe, as it requires understanding local laws, complying with regulations, and adapting investment strategies.
All of this leads to the need for well-designed rental regulation that can offer long-term stability, given that it is currently causing an imbalance between supply and demand.
The company insists that “successfully navigating operationally in more regulated markets presents both a potential opportunity and a significant barrier to entry; therefore, while for some it is a threat, it should be viewed as an opportunity.”