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Investment past the worst but still faces uphill struggle

The Q2 data showed that pan-European (excl. UK) transactions improved after their Q1 lows. But international travel restrictions, structural shifts in the office and retail sectors and tougher credit conditions mean that the recovery in investment activity will be lukewarm.
Yasemin Engin Property Economist
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More from European Commercial Property

Non-Euro European Commercial Property Chart Book

Emerging Europe: Rental growth steps up

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. However, rental growth is likely to drop back further ahead as economic growth decelerates, supply rises and structural changes take their toll. And we expect all-property yield compression to come to a halt, given increases in bond yields and signs of a shift in investor sentiment towards some CEE markets. As such, capital value growth is likely to slow sharply by year end. Property Drop-In (19th May): What will rising interest rates mean for commercial property returns in the US, UK and Europe? Join our 20-minute briefing on the outlook for returns on Thursday. Register now.

19 May 2022

Euro-zone Commercial Property Chart Book

Slower yield compression weighs on capital growth

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. And we expect this slowdown to continue, given the weaker economic outlook and expected rises in interest rates and bond yields, which mean property yields are likely to reach their trough this year. Property Drop-In (19th May): What will rising interest rates mean for commercial property returns in the US, UK and Europe? Join our 20-minute briefing on the outlook for returns on Thursday. Register now.

18 May 2022

European Commercial Property Update

Homeworking to remain key to city retail performance

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 we think is likely to persist. In view of the wider interest, we are also sending this European Commercial Property Update to clients of our UK Commercial Property Service. Property Drop-In (19th May): What will rising interest rates mean for commercial property returns in the US, UK and Europe? Join our 20-minute briefing on the outlook for returns on Thursday. Register now.

13 May 2022

More from Yasemin Engin

European Commercial Property Update

Prime Brussels offices to fare better than most

More remote working is pushing all occupiers to reassess their office space, but we think that rental growth for prime offices in Brussels should hold up better than the wider market.

22 July 2021

European Commercial Property Update

High construction costs unlikely to curb 2021 supply

With price pressures in the construction sector likely to prove transitory, we think that the hit to activity will be small. That said, we expect construction activity to slow over the coming years on account of lower office completions as the sector undergoes structural change.

14 July 2021

European Commercial Property Update

CEE office occupier activity past the worst

Despite poor employment prospects, we are cautiously optimistic on the outlook for CEE leasing activity as the economic recovery gets underway. However, large supply pipelines mean that improving occupier demand will not be enough to prevent further rental falls.

8 July 2021
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