Winter Issue 2022 - 73

OUTLOOK2022
Emerging Trends: Europe
London tops rankings, leading over Paris and
Berlin.
Despite an uncertain longer-term outlook, with many
still coming to terms with the radical changes to the business
of real estate brought about or accelerated by COVID-19,
Emerging Trends in Real Estate®
Europe 2022 finds a significant
leap in confidence going into 2022.
The 19th annual survey by the Urban Land Institute and
PwC of European real estate sector leaders' expectations for
OVERALL REAL ESTATE PROSPECTS
the year ahead reflects a broad sense of relief and short-term
optimism that the industry has remained resilient during the
pandemic and that real estate remains a favored asset class.
Around half of respondents think that business confidence
(52 percent), profitability (49 percent), and headcounts (53
percent) will rise in 2022, the highest business confidence
level reached since 2014.
For many, this means that the performance of real estate
looks relatively strong for 2022, with higher forecast returns
than a year ago. This level of confidence is further supported
by continuing strong investor demand with both the availability
of debt and equity expected to be plentiful, albeit with
significant differences between sectors, depending on which
performed well during the pandemic and those that suffered
significantly.
However, there also is a sense that the short-term relief
regarding getting back to a more normal business environment
is masking uncertainty and volatility in the mid term.
" European real estate is coming to learn that the exit from
the pandemic is not a straight line, " says ULI Europe CEO
Lisette van Doorn. " There is pent-up demand from which to
benefit, but it also needs to get to grips with what 'restarting
the economy' really means. "
In the short term, respondents say that wider business
uncertainties relate to cybersecurity (67 percent) and a mix
of inflation (59 percent) and interest rates (55 percent). The
most concerning real estate business issues for 2022 are
construction costs and resource availability (88 percent),
availability of suitable land and assets (66 percent), and
sustainability and decarbonization requirements (61 percent).
Many of these concerns will affect construction prices and
delivery schedules, just at a time when the industry wants
to resume delayed developments or advance repurposing
initiatives.
This uncertainty also grows for the longer term with the
knowledge that the industry needs to restructure for resilience
on many fronts, including adopting an ever-stronger
environmental, social, and governance (ESG) agenda, digitalization,
and changes to business and financial models.
Against this mix of uncertainty and relief, 59 percent of
survey participants expect to be net buyers of real estate
assets. This is up on last year (55 percent), partly reflecting
the confidence factor and partly the inherent attraction of real
estate versus other asset classes.
" Having hopefully seen the worst of the pandemic, real
estate businesses are looking forward with confidence, " says
Angus Johnston, U.K. and EMEA real estate leader at PwC. " A
major part of the recovery and future shape of the industry
in Europe will be driven by the response to net zero and the
ESG agenda more broadly. "
WINTER 2022
URBAN LAND
71
Winter Issue 2022

Table of Contents for the Digital Edition of Winter Issue 2022
