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Although rent growth has been resilient, as the Swedish economy enters recession and employment contracts, we think the recent slowdown in Stockholm office occupier demand will persist. And with new office supply set to reach record highs in the next few …
5th May 2023
Berlin offices have been outperforming those in other German markets for some time. But Q1 data suggest that growth has begun to falter, and we think that the recent strength of the market won’t last. Berlin office rents have risen rapidly over …
3rd May 2023
The slowdown in European investment intensified in Q1 as transactions more than halved year-on-year. This was perhaps unsurprising given the ongoing price correction amid one of the sharpest tightenings of financial conditions on record. But, with …
28th April 2023
Industrial occupier demand in Spain is set to slow sharply this year and next, as the economy falls into recession. And with both Madrid and Barcelona poised to see a record level of speculative development in the same period, we think Spain’s prime rent …
25th April 2023
The physical risks facing commercial property are substantial with extreme weather events like floods and wildfires set to increase in both the US and Europe over the coming decades. Property markets have yet to fully price these in, especially in areas …
21st April 2023
Listed markets in Europe have been surprisingly downbeat about prospects for real estate relative to other regions. While we think that largely reflects mis-pricing in equity markets, it provides a reminder of the potential downsides as long as the …
20th April 2023
After a strong 2022, we expect Warsaw offices to face a more difficult time ahead. Falling employment and hybrid working practices will limit any revival in demand after 2023 and leave rents underperforming both the CEE and wider European averages. The …
14th April 2023
Are European and UK commercial real estate markets facing the same level of distress as the US? Join our Property Drop-In on Wednesday, 14th February to learn more, Register here for the 20-minute session. Recent turmoil in the banking sector has …
11th April 2023
Real estate exposures have not been central to financial developments in Europe over recent weeks, but, as property prices correct after a decade of steady expansion, some strains are likely to emerge. While not appearing systemic, these fragilities …
6th April 2023
Overview – Property values fell sharply in Scandinavia and Switzerland last year, but with valuations still stretched and financing set to remain challenging, we think yields will climb higher. And with economic activity weakening and supply increasing, …
4th April 2023
Overview – Emerging Europe has seen less steep falls in values than elsewhere so far, but will not be immune in 2023. Higher interest rates and economic weakness mean these markets will have a challenging year and recent financial disruption only …
31st March 2023
Click here to read the full report Overview – With valuations still highly stretched and rent growth likely to slow as the region falls into recession, we think capital values will fall further in 2023. While the 4.5% decline forecast at the all-property …
24th March 2023
While real estate is not the main cause of the current financial turbulence, as it was in the late 2000s, it has played an indirect role and may be implicated in any further instability. And property will also be vulnerable to the effects of recent …
21st March 2023
We have already outlined some different scenarios of how things might evolve from here and it is still possible that the situation calms down quickly. But in this Update , we think through how the more adverse of our scenarios might evolve. There are …
16th March 2023
There were some surprises in the Q4 commercial real estate data from the euro-zone, in particular in how swiftly yields have risen. Taken together with changes to our economic view these imply further downgrades to our forecasts. Notably we now think that …
10th March 2023
The Italian industrial market saw its sharpest fall in capital values on record last year, owing to a surge in yields in Q4. But with valuations still stretched and investor demand weakening, we think yields will climb higher. And with rent growth …
9th March 2023
The current economic downturn will mean that short-to-medium term property performance is under-par. But over a longer horizon, we expect real estate returns to reassert their traditional position somewhere between bonds and equities. Last year was an …
2nd March 2023
A sharp increase in property yields in Q4 helped European property valuations improve for the first time in two years. That said, spreads over alternative assets remained very narrow by past standards and all markets besides Istanbul were still …
The rise in prime property yields accelerated in Q4. Despite gains in all-property rents in most markets, this meant capital values fell across all sectors. Declines were particularly sharp in offices and industrial in Scandinavia and retail in …
24th February 2023
CEE yields continued to rise in Q4, but very strong rental growth prevented all-property capital values from falling for a second successive quarter. (See Chart 1.) This turnaround was driven by retail and industrial performance, while office rents …
23rd February 2023
Capital value falls accelerated in Q4 as euro-zone all-property yields surged higher. And although rents increased in both offices and industrial, the outsized jump in yields meant euro-zone all-property capital values fell by about 8% q/q – the …
17th February 2023
Prague retail saw an unexpected rental uplift at the end of 2022, ending three years of decline. But we think that will be a false dawn and expect that a subdued consumer outlook will combine with existing structural weaknesses to push rents down again …
13th February 2023
Slowing jobs growth, a tech-driven slump in net absorption and a strong supply pipeline underline our view that Dublin prime office rents will fall slightly this year. This would mark a sharp correction from the bumper rent growth in 2022 and is more …
9th February 2023
A stronger than expected end to last year only postpones the euro-zone recession in our view. That will weigh slightly more heavily on property performance this year, as all-property rents may now fall slightly. But with yields rising faster than expected …
7th February 2023
The reversal of China’s zero-COVID policy means Chinese tourists could return to European high streets sooner than expected. While this should help support occupier demand, it seems unlikely it will be sufficient to offset weakness in domestic spending. …
2nd February 2023
Early data indicate that German offices saw the steepest increases in yields on record in late 2022. And we think that with policy rates set to go higher, it is too early to rule out further rises in 2023. That suggests a peak-to-trough fall in German …
31st January 2023
Euro-zone investment contracted sharply in Q4 2022 and we think further interest rate rises will prolong this weakness throughout much of this year. But we expect a recovery in transactions towards the end of the year, when economic activity should be …
27th January 2023
S ince the end of last year, developments have been more positive in the retail sector. However, we still think 2023 will be a difficult year. The weak outlook for consumer spending and more spending online and in out-of-town shops point to rising high …
25th January 2023
Near term economic headwinds suggest the slowdown in investment activity in Scandinavia will continue in 2023. However, with policy rates near a peak, and improving economic activity and falling bond yields expected later in the year, we think that the …
23rd January 2023
Office markets started to lose momentum at the end of last year and the expected weakness in employment this year suggests the slowdown will continue. That said, we think prime rents will avoid falls in most euro-zone markets, though the risks to this …
17th January 2023
The recent commencement of stricter office EPC legislation in the Netherlands has raised concerns that Dutch office valuations may be on the edge of a regulatory precipice, given the large proportion of non-compliant stock. However, we think the …
13th January 2023
Real estate equity prices pointed to around a 10% fall in euro-zone all-property capital values in 2022 and we expect a similar size fall this year. But while the latest REIT data show landlords were in a better financial position than before the GFC, the …
11th January 2023
A large part of the real estate sector’s carbon footprint is related to electricity production and so will shrink over time as the use of renewables continues to expand. The biggest challenges to reducing property sector emissions will be in emerging …
9th January 2023
The property repricing in response to higher interest rates has not yet run its course. Coupled with a recession-driven slowdown in rent growth, this means 2023 is shaping up to be another bleak year for European real estate. Given the rapid rise in …
6th January 2023
The latest MSCI data show that prime property values underperformed the wider market last year. But with the rest of the market more vulnerable to the economic recession and as MSCI values catch up, relative performance is likely to shift in 2023. The …
5th January 2023
Although prime property in Turkey saw strong rental gains in 2022, a slowing economy looks set to weigh on occupier demand and cause rent growth to decelerate next year. Meanwhile, the risk of a sharper depreciation of the lira risks pricing out local …
22nd December 2022
The impending recession will hit jobs growth across the office-based sector. But the impact on office demand is likely to be greatest in markets that have a large exposure to the tech sector. This reflects that the recent pace of tech jobs growth looks …
21st December 2022
Click here to read the full report. Overview – Property values in Scandinavia and Switzerland have taken a hit as yields jumped in recent quarters. With valuations still stretched, we are forecasting a further 50bps and 30bps of rises at the …
16th December 2022
This is part of a series of reports outlining our key macro and market calls for 2023. Click here to view the full series. Property markets rebounded strongly after 2020, in part boosted by favourable structural shifts brought on by the pandemic. But …
15th December 2022
Click here to read the full report. Overview – Property yields have risen on the back of higher interest rates and have started to drag materially on values. We expect this to continue in 2023, as valuations are still highly stretched. Given downgrades to …
14th December 2022
Overview – Higher interest rates have already resulted in a sharp property repricing in 2022. And with valuations still highly stretched and rental prospects weaker given the imminent recession, we think values will fall further next year. However, as …
9th December 2022
Despite a sharp rise in property yields, renewed increases in alternative asset yields led to a further deterioration in European property valuations in Q3. (See Chart 1.) All markets were overvalued except for Istanbul, where sharp falls in Turkish …
30th November 2022
The sharp fall in employment we expect next year will drag on Italian office rents. While prime rents should hold up better than the wider market as the shift to the best quality space continues, we don’t think that this will be enough to prevent them …
29th November 2022
The latest IPF Consensus survey showed a significant upgrade to 2022 European office rent growth expectations, largely due to strong rent outturns in Q2 and Q3 this year. A slowdown is expected in 2023, but in our view the consensus is still too …
24th November 2022
Property yield rises stepped up in Q3, causing all-property capital values to fall on a quarterly basis in the CEE markets except for Bucharest. (See Chart 1.) This was despite solid office and industrial rental growth. Looking ahead, stretched …
23rd November 2022
Prime property yields rose significantly in Q3. (See Chart 1.) This caused a sharp slowdown in capital value growth, even though rental growth was solid in the Scandinavian office and industrial sectors. Stockholm and the Swiss markets fared worst, with …
22nd November 2022
Higher interest rates and a weaker outlook for economic activity led to a more significant rise in property yields in Q3. While quarterly rental rises remained solid, particularly for offices and industrial, this meant that all-property capital values …
18th November 2022
Falls in Paris prime retail rents are set to continue into 2023 as weaker domestic and foreign spending weigh on tenant demand. And while the prospects for both are brighter for 2024, we think the high level of vacancy will ensure only a modest rebound in …
11th November 2022
Spanish office rental values are expected to be harder hit than the euro-zone average as the looming recession weighs on occupier demand and higher interest rates push up yields. However, at a market level, Barcelona is most exposed given its looser …
9th November 2022
In line with changes in our global economic view, we have made significant downgrades to our commercial real estate forecasts for the next couple of years. As a result, we now expect a much bigger drop in property values next year that will cause annual …
8th November 2022
