In recent months, most central banks across Europe have shifted from a hawkish stance to a more accommodative monetary policy, marking the beginning of an interest rate-cutting cycle. In the Eurozone, after an intense period of rate hikes in 2022 and 2023, the ECB implemented four 25-basis-point cuts in 2024.
In the UK, the movement was much more moderate, with just 2 movements by the Bank of England totaling a reduction of 50 bps, while the Swiss and Swedish national banks started the cutting cycle earlier and cut the interest rates by 125 bps and 150 bps respectively. This shift not only aims to avoid impacting economic growth under easing inflationary pressures but also brings renewed optimism to the listed real estate (LRE) sector, a key beneficiary of lower marginal borrowing costs. Under this new dynamic on interest rates, cost of debt becomes a key variable to analyze.
Although most central banks in Europe increased their rates by more than 400 bps in 2022 and 2023, the average overall debt costs for European property companies increased by only 91 bps, then making clear that the sector was well prepared for such changes, therefore, the easing cycle opens new opportunities and brings new dynamics to the sector (see our latest EPRA in-house report).
Read the full ‘Thought Leadership’ article at the link below
Supporting documents
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