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European Commercial Property

European Commercial Property Update

Why are prime industrial rental values not taking off?

Despite strong demand, we think that high capital values have kept development profitable and have prevented an acceleration in euro-zone prime industrial rental value growth. However, as capital value growth slows there is a risk that some markets will see more upward pressure on rents.

15 October 2021

European Commercial Property Update

Wider market confirms recovery in prime data

The latest MSCI data show that the wider market has moved roughly in line with our prime data since the onset of the pandemic and provide support to our outlook for property values.

14 October 2021

European Commercial Property Update

CEE investment recovery to pick up from 2022

We think a greater reliance on foreign capital and tighter monetary conditions will leave CEE investment activity lagging the euro-zone in H2. Overall, transactions are set to end the year 5% lower than their already weak 2020 levels, before catching up with the euro-zone recovery next year.

8 October 2021

Our view

The continued rebound in European economic activity will support the property market upturn, albeit offices and retail face structural challenges that will limit the rental recovery. Stronger rental prospects for industrial mean that yields are expected to fall by the most in the near term. However, we think retail assets will look increasingly attractive by year-end, prompting small yield falls further ahead. This means that, while industrial is expected to outperform over the next couple of years, we expect retail to emerge as the strongest sector beyond 2022.