How quickly sentiment can change.

If the mood at Mipim was still cautiously optimistic – despite the fair taking place two weeks after Russia’s invasion of Ukraine – it has since darkened significantly.

Rampant inflation and the prospect of multiple interest rate hikes to curb it, geopolitical conflict, ongoing supply chain disruption and possible new tensions in Europe arising from Brexit – all are clouding the outlook and dampening market spirits.

While European deal volumes over the first five months of 2022 were broadly in line with the five-year average and property prices well ahead of where they were five years ago, the number of properties traded is actually down 16% on the five-year average. And compared with 2021 it is even down 25%, as MSCI’s Tom Leahy points out in our June/July issue.

‘The difference between the more positive picture suggested by the transaction volumes and the more subdued one presented by the count of traded properties tells us something about how the market is evolving is response to a changing world,’ he says.

The picture has also changed on the financing front. As Jane Roberts explains in her analysis, debt costs have increased sharply, and borrowers face being squeezed by both rising swap rates and lenders putting up their margins – all at a time when transaction yields are at historic lows.

Investors and developers, too, are treading carefully and peppering their earnings forecasts with caveats. Some, like Patrizia, have scaled back their full-year expectations for 2022, while others have not dared issue a forecast at all, like German-listed developer Instone or Austrian firm CA Immo.

Of course, there are always sectors offering shelter in troubled times. In this issue we examine residential’s many upsides, via interviews with early mover ‘living specialist’ Round Hill Capital and tech-based SFR firm Immo, as well as an analysis of the changing multifamily landscape in Europe.

And perhaps the best antidote of all in the face of adversity is youthful optimism. The 10 Rising Stars featured in this issue as part of the ULI New Real Estate Vanguard initiative all display the energy, boldness and entrepreneurial flair that we need right now.

Later this year PropertyEU’s Robin Marriott will be hosting a series of podcasts with these talented young leaders, offering fresh perspectives on solving real estate’s most pressing problems.