Investing Anxiety: What are the main causes in 2024?
Anxiety permeates the commercial property industry in North America and Europe this year as interest rates and construction costs stand out as the most critical issues, according to a survey from the Urban Land Institute (ULI) and consulting firm PwC.
Defined by a sense of unease and uncertainty, anxiety grips the sector as 94% of North American survey respondents point to interest rates as a significant concern for 2024, marking a substantial increase from 2023's 69%. Additionally, construction material costs and labor availability have risen to the forefront of industry concerns, according to the Emerging Trends in Real Estate Global Outlook 2024.
The ULI and PwC conducted interviews and surveys with senior property professionals across the United States, Canada, and Europe for the recently published global and regional editions of the Emerging Trends report.
In Europe, interest rate movements were cited as the top concern among commercial property professionals, with 86% of respondents considering it a significant issue, according to the ULI-PwC report.
Despite the continued importance of interest rates in Europe, there was a slight decrease from 2023, where 98% of respondents listed it as a major issue. Inflation ranked as the second-largest concern among European respondents for 2024, with 83% identifying it as a potential issue. Construction costs and resource availability ranked third, followed by concerns about the escalation of Russia's conflict with Ukraine.
Respondents expressed cautious optimism about interest rates, speculating that they may have reached a peak and could potentially be lowered this year. However, they acknowledged that money is becoming more expensive, leading to hopes that buyers and sellers will adapt to this higher interest rate environment, facilitating more reasonable pricing.
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