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Before the virus outbreak, falls in prime retail rents were expected to be concentrated in Northern European markets. Now rental falls are likely to spread throughout Southern and Central Eastern Europe as well. The impact of the virus outbreak is highly …
14th May 2020
Data from Europe suggest that the relationship between working from home and office space per worker is weak. And even if working from home becomes more prevalent in the next few years, we think that the most important driver of occupier demand will be …
11th May 2020
The lack of clear movement in the Q1 commercial property data has put other indicators into focus. These paint a much bleaker picture, particularly for the retail sector. The key Q1 commercial property data have so far held up well. Indeed, prime rents in …
7th May 2020
In light of the pandemic, our forecasts for developed market commercial property returns have been revised lower. Nevertheless, the relativities between the key markets are broadly unchanged, meaning that we still expect the US to outperform the UK and …
6th May 2020
As Germany cautiously eases its lockdown, despite the significant hit to economic activity, the tight supply picture should help support prime office rents across the four main cities this year. Preliminary data for Q1 showed that office take-up across …
1st May 2020
Despite reasonable levels of capital ready to invest and an expected loosening in credit conditions, the sharp deterioration in investor sentiment reinforces our view that euro-zone investment activity will drop by around 40% over the rest of this year. …
30th April 2020
We think that, for the industrial sector, any short-term gain from an increase in online shopping will be outweighed by the plunge in demand and subsequent collapse in global trade. While the industrial sector appears to be more insulated from …
24th April 2020
The uneven economic impact of the coronavirus disruption suggests that property values in Southern European markets will be hit hardest and may take longer to recover than elsewhere in the euro-zone. The data for the first quarter has started trickling …
23rd April 2020
Although retailers in Sweden remain open, early indications suggest that the Stockholm retail sector will still be hit hard in Q2. In fact, we think that the virus outbreak will only accelerate falls in retail rents already expected as a result of the …
16th April 2020
While COVID-19 has forced consumers in southern Europe to shop online, we think that e-commerce penetration will remain lower for structural reasons, which is one reason why prime retail rents in these markets will be more resilient in the long-term. …
14th April 2020
Although property valuations and rental prospects remain supportive, the higher risk premium associated with CEE markets means that property yields are likely to increase more in the near term and to unwind more slowly than in Western European markets. In …
8th April 2020
While COVID-19 related delays to construction might reduce supply in some markets, we think that the drop in occupier demand will far outweigh any potential benefits to rents. The euro-zone headline construction PMI for March, revealed that the index fell …
7th April 2020
While COVID-19 will hit co-working hard, given the relative size of this subsector, we don’t think it will be large enough to impact rents in the overall office sector. WeWork has been gracing headlines again this past week as the co-working firm is …
2nd April 2020
The past relationship suggests that the recent 10% to 50% fall in real estate equity prices provide an indication of the direction values will move in the direct market, but not the likely extent of the falls. Over the past month, real estate equity …
1st April 2020
Overview – Given the uncertainty surrounding the impact of COVID-19 on the economy, the hit to real estate markets is still uncertain. The drop in economic output expected in the first half of this year, along with deteriorating investor sentiment will …
27th March 2020
Overview – The fast-moving pace of developments means that the impact of COVID-19 on Emerging European real estate is highly uncertain. We expect the sharp decline in economic activity and deterioration in sentiment to weigh on rental values and cause …
Property has generally been at the centre of the most severe economic downturns in recent decades. But this time it is different. Although we think the commercial market is likely to experience a sharp jolt in 2020, provided the spread of the virus can be …
26th March 2020
Overview – The ever-changing economic effects of COVID-19 mean that the impact on real estate markets is highly uncertain. It is clear that the sharp contraction in economic activity and deterioration in sentiment over the first half of the year will …
20th March 2020
Further falls in yields coupled with robust, albeit slowing, rental growth point to Helsinki offices outperforming the rest of the euro-zone and its Nordic peers for total returns. Commercial property investment in Finland started the year on strong …
11th March 2020
The recent market meltdown reflects concerns about the economic impact of the COVID-19 virus. This will inevitably hit commercial property, but in our view, the downside is likely to be relatively modest. The spread of the coronavirus from Asia into …
6th March 2020
The uptick in government and corporate bond yields in Q4, coupled with the continued decline in property yields, resulted in a deterioration in the relative valuation of commercial property markets in Europe. (See Chart 1.) That said, less than a third of …
5th March 2020
In light of the accelerating spread of the coronavirus – and the economic disruption that is likely to follow – we are pulling down our GDP growth forecasts for Q1 and Q2 of this year. Growth is likely to rebound over the second half of the year, but most …
2nd March 2020
The recent strength of Milan office take-up has not prevented rental growth slowing and isn’t likely to be sustained in 2020. Indeed, we expect a slowdown in employment growth to weigh on occupier demand. Combined with supply increasing twofold, prime …
All-property rental growth eased across most markets in 2019, but the slowdown was concentrated in the retail sector. Admittedly, the Swiss markets remain a bright spot as prime retail rents increased in 2019. But there is no denying the retail sector in …
27th February 2020
Consistent with softer economic growth, annual rental growth for office and industrial property in CEE markets slowed in Q4. However, rental growth picked up for retail, bucking the downward trend seen elsewhere in Western Europe. (See Chart 1.) And …
26th February 2020
Although euro-zone rental value growth slowed in 2019, further falls in property yields supported capital values. Despite the soft economic backdrop, capital value growth should hold up in coming quarters. (See Chart 1.) However, a further slowdown in …
21st February 2020
Despite softer occupier activity and an increasing pipeline of supply, we think that demand will be strong enough to prop up office rental growth over the next two years. That said, given that we now expect bond yields to be higher, capital value growth …
18th February 2020
Softer office occupier demand is expected to weigh on German prime office rents this year. But we still think that rents can grow at a decent pace because, even though office supply is expected to increase significantly, office occupier demand will still …
14th February 2020
Indicators suggest that Irish industrial rental growth will remain healthy in Q1. However, as economic growth slows and uncertainty about the UK’s future relationship with the EU continues to impact decision making, we expect that industrial rental value …
13th February 2020
The latest data revealed that commercial property investment in the euro-zone held steady at a record high level. And with favourable relative pricing and capital readily available, we think that investment will reach a similar level this year. Following …
6th February 2020
A reduction in Chinese tourism as a result of the coronavirus will lead to lower spending on prime high streets, particularly in Rome, Paris and London. If tourism reduces on a global scale, the impact on spending would be greater. But so long as the …
4th February 2020
We still think that the ECB will loosen policy this year, albeit by a little less than we had previously pencilled in. But with interest rates and bond yields still set to remain at historic lows, property will continue to look fairly priced. As such, it …
31st January 2020
Although economic growth in Budapest is expected to remain robust this year, weakness in tourism is likely to weigh on prime retail rental values. However, improving global growth should support foreign tourist arrivals from mid-year. Combined with the …
28th January 2020
After holding up despite the slowdown in economic activity, we expect jobs growth in office-based sectors to lose momentum over the next two years, weighing on occupier demand. This underpins our forecast of a slowdown in growth in euro-zone prime office …
22nd January 2020
Although the share of global capital raised by European-focused funds has reduced in the last couple of years, there are indications that investors are starting to view real estate in Europe as increasingly attractive. This supports our view that demand …
20th January 2020
As the slowdown in household spending and the growth in e-commerce weighs on prime retail rents, we think that rents will fall in all Nordic cities this year. While most of continental Europe has been grappling with weakness in the retail sector, much of …
15th January 2020
Despite Spain’s relatively strong economic outlook compared to its European peers, with real prime rents at high levels and the economy losing momentum, we think that prime retail rents will fall in 2020. After growing by around 7% in 2018, there was …
13th January 2020
With interest rates set to stay lower for longer, we think that property yields will decline further in 2020. The exception is retail where, outside of Emerging Europe, yields are expected to rise in response to the bleak rental outlook. Nonetheless, even …
8th January 2020
While we could have been bolder with our forecast for rental growth in Europe, in particular Nordic offices, on the whole our forecasts for 2019 proved to be correct. With 2019 now behind us, it is worth looking back to see how our predictions for the …
7th January 2020
Despite a weaker lira, Istanbul prime office rents have, perhaps surprisingly, held up in the last two years. We expect them to hold steady over the next two years, but beyond 2021, we forecast positive, but feeble, rental growth. Despite 2018’s recession …
23rd December 2019
Although the anaemic performance of the euro-zone economy is expected to weigh on occupier demand, real estate equity markets suggest that confidence in property markets has held up. We think that this will spark an improvement in investment activity next …
18th December 2019
Overview – A weaker outlook for bond yields in Scandinavia and Switzerland means that falls in office and industrial yields are likely to extend into 2021. However, with rental prospects weak and yields rising, retail property is expected to underperform. …
13th December 2019
Set against other asset classes, European commercial property looks fairly valued. Our returns forecasts for 2020-23 of around 5% p.a. on an MSCI all-property basis will look relatively attractive in a multi-asset context. However, comparative total …
9th December 2019
Overview – We expect a further slowdown in euro-zone economic growth in 2020 to weigh on rental growth. However, with interest rates set to be cut next year and remain at this low level, there isn’t likely to be much upward pressure on bond yields over …
5th December 2019
In view of the wider interest, this UK Commercial Property Focus is made available to clients of the European Commercial Property service as well. After a sustained upturn in commercial property, yields are well below their historic lows and there are …
2nd December 2019
We think that while yield compression across CEE markets has further to go in the next two years, property yields will rise beyond 2021 as tighter monetary policy in the region feeds through. In our recent Valuation Monitor , a fall in bond yields last …
29th November 2019
While the manufacturing downturn has not helped the industrial sector in Germany at a national level, growing e-commerce means that prime industrial rents will still muster some growth over the next few years. Nevertheless, Germany will lag markets like …
22nd November 2019
Lower government bond yields improved the relative valuation of commercial property markets for the third consecutive quarter. (See Chart 1.) Less than one fifth of markets look overvalued, with more than half of industrial markets fairly valued. Since …
21st November 2019
Despite the softness in economic activity, occupier demand generally held up in Q3. And while there are signs that the cyclical slowdown in the euro-zone is starting to hit CEE markets, given their historically low vacancy rates, we think that rents could …
15th November 2019
A fall in office and industrial yields supported all-property capital value growth in Q3. However, the slowdown in the retail sector weighed on all-property rental growth. With economic growth softening, we think that rental growth will slow further. …
