Real estate bond supply has exceeded our expectations so far in 2024, with total euro-denominated real estate issuance amounting to approximately €19 billion as of October 2024. We initially expected annual supply to be 15 billion euros, which was already a significant increase compared to the previous year. 2023 (8 billion euros). However, supply has been even stronger than expected, with many companies taking advantage of improved capital markets and strong demand in 2024.
We expect supply to increase significantly again in 2025, with €30 billion being pumped into real estate. Although €30 billion is a significant increase compared to recent years, it is still considerably lower than in 2020 and 2021 and about the same as in 2018 and 2019. The increase in 2025 can be attributed to five main reasons:
Redemptions begin to increase Volumes expected to improve Bond market conditions improve for more issuers Real estate turns a corner Green bond supply remains strong
Reimbursements and supply are expected to be similar in 2024, with net supply likely to be slightly positive. This follows a negative net supply of €11 billion in 2023, which is a real outlier, as the graph below shows. Net supply in 2025 is expected to be €6 billion, which remains historically low.
