Filtered by Subscriptions: Europe Commercial Property Use setting Europe Commercial Property
German prime office rental growth is expected to slow sharply next year as the economy experiences the deepest recession in the euro-zone. Even so, we don’t expect rental growth to underperform as the low level of vacancy means the German markets are in a …
2nd November 2022
An acceleration of the slowdown in European commercial property investment in Q3 is evidence that economic growth concerns, higher interest rates and tightening credit standards are weighing heavily on activity. We expect investment to decline into 2023 …
28th October 2022
Helsinki office vacancy jumped in Q3 and is likely to trend higher over the next couple of years as occupier demand weakens, completions rise and there are fewer office-to-residential conversions. As such, rental growth will slow, with prospects a bit …
27th October 2022
We have downgraded our expectations for Athens prime rental growth over the next two years on the back of a weaker outlook for economic activity. However, with the Greek economy still expected to be relatively resilient, we think all-property rental …
24th October 2022
The deep recession faced by the euro-zone in the coming year will cause a sharp slowdown in prime rental growth, which we now expect to drop to 0% at the all-property level next year. We don’t think any sector will be immune from the rental deceleration, …
20th October 2022
The post-pandemic rebound in the Prague office market is likely to prove short-lived. With the Czech economy slowing and employment expected to contract, occupier demand will soften just as new office supply begins to pick up. Accordingly, rental growth …
14th October 2022
We think online demand will continue to be an important driver of relative rental prospects in European industrial markets as we move into the post-pandemic era. But the outlook for traditional demand, rental affordability and supply will also play a …
12th October 2022
Central banks have the tools to deal with liquidity crises arising from rising interest rates and falling asset prices. Instead, the bigger threat is that higher interest rates produce large and simultaneous falls in asset prices that threaten the …
11th October 2022
Recent revisions to our euro-zone interest rate and bond yield view suggest there is upside risk to our forecasts for prime commercial property yields. With the deteriorating economic outlook also set to weigh on rental growth, this suggests the …
7th October 2022
Falls in Paris Centre West vacancy are expected to support a further pick-up in prime office rents in the second half of the year. But this will be short-lived, with the deteriorating outlook for employment growth set to weigh on occupier demand and …
4th October 2022
With no end in sight to China’s zero-COVID policy, the dearth of Chinese tourists visiting Europe will suppress a key revenue source for luxury retailers and poses a downside risk to our already-weak prime retail rental forecasts. And even though …
30th September 2022
While the market reaction to the Italian election was muted, we think that the worsening economic outlook and concerns about debt sustainability will result in increased risk aversion toward Italian property assets. This means that, after a strong H1, …
28th September 2022
Overview – A further deterioration in the economic backdrop is set to weigh on property rental growth, especially in the consumer-facing retail sector where we have revised down our rental forecasts in the near term. This comes at a time when higher …
23rd September 2022
Overview – The latest data suggest that a property repricing is already underway in response to higher interest rates and stretched valuations. We expect a cumulative rise in all-property yields of 35bps-40bps across the Scandinavian and Swiss markets …
22nd September 2022
Overview – The economic backdrop has deteriorated, with the euro-zone set to enter recession this year, while inflation has continued to beat expectations. This will weigh on property demand across all sectors, especially retail, for which we have …
16th September 2022
The rapidly worsening economic backdrop has put the brakes on Germany’s prime retail recovery. After showing strength in the second half of last year, take-up has now slowed in most of the main markets and prime rents are falling in some. Looking ahead, …
9th September 2022
While euro-zone prime industrial rents surprised on the upside in Q2, investor sentiment also turned more rapidly than we expected. Tight supply will support rents this year, even as economic activity worsens. However, the unsupportive interest rate …
6th September 2022
Despite a rise in property yields, increases in alternative asset yields led to a further deterioration in European property valuations in Q2. (See Chart 1.) While industrial and office valuations still look the most stretched, retail has now joined …
2nd September 2022
The outlook for industrial demand in Poland has improved dramatically because of the pandemic and the rapid growth of ecommerce. This is set to keep prime industrial rental growth in Warsaw higher than we had previously expected, especially in the near …
1st September 2022
The Nordic and Swiss economies performed relatively well in Q2, while prime rents showed further rises in Scandinavian office and industrial markets. However, the economic outlook has darkened, which will weigh on rental growth further ahead. And a …
26th August 2022
Higher interest rates and a weaker economic and property outlook contributed to a rise in all-property yields in Q2. While office and industrial rents still made solid gains, this increase in yields resulted in a slowdown in capital value growth. …
25th August 2022
While quarterly rental rises surprised on the upside in Q2, property yields also rose sooner than expected. This meant all-property capital values barely grew on the quarter and slowed to around 5% y/y, from almost 7% y/y in Q1. (See Chart 1.) Given Q2 …
22nd August 2022
Rents in the Dublin prime office market rose rapidly in H1 2022, supported by a continued recovery in occupier demand. However, a cooling jobs market and strong supply pipeline mean that a slowdown is likely in the second half of the year. Having started …
15th August 2022
Commercial property wasn’t initially hit by the worsening in economic conditions at the turn of the year, but there are now growing signs of anxiety. Not only that, but even if the economic gloom is short lived and any downturn is mild, we expect …
12th August 2022
Comparatively strong demand from flexible offices has helped the CEE occupier recovery from the pandemic. But a more limited flex pipeline this year means it is not likely to provide much offset to the weakening employment prospects in the region. A …
9th August 2022
German prime office yields jumped in Q2 amid early signs that the weakening economic outlook is weighing heavily on the office market. And while there were strong rental gains in the first half of the year, we think growth will slow as economic headwinds …
5th August 2022
While encouraging for the property risk premium, better transparency across Europe is unlikely to provide much support for property yields given the deterioration in the economic and interest rate environment. This is even the case for Emerging European …
2nd August 2022
After a strong start to the year, European investment weakened in Q2. And we expect only lacklustre activity over the second half of the year as rises in the cost of debt, tightening credit conditions and concerns about a recession in Europe weigh heavily …
29th July 2022
A rebound in tourism will cushion some of the blow to Spanish prime retail demand caused by falling real incomes this year. But once inflation eventually eases, we expect rent growth to outperform other European markets, supported by a rebound in consumer …
25th July 2022
The Q2 ECB bank lending survey showed a tightening in credit standards for commercial property lending in the first half of the year, with expectations for a further squeeze in H2. With the cost of debt also higher, more restrictive credit will weigh on …
20th July 2022
Despite the Q1 surge in investment activity, we think a weak rental outlook and stretched valuations will deter a sustained increase in investment, limiting the scope for further falls in prime industrial yields. There was strong investor demand for prime …
18th July 2022
We doubt the fall in the euro will lead to a material increase in overseas investment this year. Rather, we think investor demand will be underpinned by the euro-zone’s economic and property fundamentals, for which the outlook has weakened sharply. The …
13th July 2022
The slowdown in the Swedish housing market has the potential to delay the recovery in the retail sector this year, as it weighs on retail sales and makes conversions to residential even less viable. This would add to what is already a weak outlook for the …
12th July 2022
As recession fears grow in Europe, we think that weak employment growth, home-working and strong completions will weigh on office rents in Warsaw. This means rental prospects will provide little offset to office values as property yields climb. Having …
8th July 2022
Our updated yield model points to a quicker rise in property yields than our forecast suggests. While we still expect the correction to be mild, not least because of the lower share of property debt this cycle, this poses a downside risk to capital values …
7th July 2022
Overview – Weaker economic activity and higher interest rates as a consequence of the war in Ukraine will weigh on property performance in Central and Eastern Europe (CEE). Shifts in investor sentiment and a sharp deterioration in valuations are expected …
30th June 2022
Overview – The rapid turnaround in the interest rate environment has led us to revise down our expectations for property performance in Scandinavia and Switzerland. Property valuations deteriorated sharply in Q1 and are expected to come under more …
27th June 2022
Overview – The weaker economic outlook and larger increases in interest rates are expected to weigh on property performance. With valuations under increasing pressure from sharply rising bond yields, we think that property yields will reach their troughs …
23rd June 2022
A recent MSCI article speculated that real estate investment could buck the deglobalisation trend given distinct features of the asset class, though we are not convinced that will bring many benefits. We have been writing about the end of globalisation …
14th June 2022
Higher alternative asset yields drove a sharp deterioration in European property valuations in Q1. (See Chart 1.) Valuation scores declined across all sectors, though retail remained in fair value territory. With the surge in bond yields continuing into …
9th June 2022
Both our view and that of the IPF Consensus is that prime office rental growth will slow as hybrid working shifts take their toll. However, we also think it is likely that a quality gap will emerge, though the evidence of this is not conclusive so far. …
31st May 2022
The risks of a recession in the euro-zone have risen. While we think a contraction will be narrowly avoided, this will remain a concern for property investors already facing the prospect of higher yields in the near term. Our recent European Economics …
26th May 2022
The recovery continued in the Scandinavian and Swiss economies and their property markets in Q1. It was a record first quarter for investment in Scandinavia. And annual capital value growth was robust for office and industrial, while retail values …
24th May 2022
CEE economies and property markets started the year on a solid footing. Strong quarterly increases in office and industrial rents supported CEE all-property values in Q1, though yield compression slowed. (See Chart 1.) However, rental growth is likely to …
19th May 2022
Euro-zone commercial property values made further gains in Q1. Quarterly rental growth was strongest for industrial, though office and retail rents also rose. However, the pace of yield compression reduced, limiting capital value growth. (See Chart 1.) …
18th May 2022
One of the unforeseen consequences of the homeworking revolution is its negative impact on city centre retail footfall. The evidence suggests that in urban centres there is a link between higher levels of remote work and poorer retail performance, which …
13th May 2022
Italian prime property values continued to make solid gains in Q1. However, with the economic outlook downgraded and larger increases in property yields expected over the next couple of years, capital value growth is set to slow sharply and by more than …
11th May 2022
With economic concerns worsening in the euro-zone, we expect that the Danish economy will not be immune. And we think that the shifts in the interest rate outlook in particular will have the most significant impact on Copenhagen office performance. Our …
5th May 2022
While the low level of prime industrial yields compared to history leaves the sector vulnerable to rising interest rates, a fair value analysis that incorporates our expectations for rental growth suggests that office yields could come under more upward …
4th May 2022
While Q1 investment data showed further strength, the impact of the war in Ukraine on investor sentiment, economic growth and interest rates support our view that pan-European (excl. UK) investment activity will slow further ahead. There was little impact …
29th April 2022
