European Commercial Property
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Looser measures won’t stop retail rent falls in Stockholm

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 structural shift to online shopping and looser supply conditions.
Amy Wood Property Economist
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Non-euro European Commercial Property Chart Book

Scandinavia & Switzerland: Values to rise further

The rebound in economic activity and robust investor demand paved the way for a continued improvement in Scandinavian and Swiss property markets in Q3. Office and industrial values rose further, as strong competition pushed down yields. Retail yields also fell in Stockholm. But we think its too soon to call a turning point for retail. Indeed, retail rents also fell, indicating that conditions in the sector are still weak. Nevertheless, the better outlook for the other sectors means we think that all-property values will rise further. That said, with economic growth expected to slow in the coming months and structural shifts weighing on retail and office sectors, the pace of improvement is likely to moderate.

23 November 2021

Non-euro European Commercial Property Chart Book

Emerging Europe: More positive on near-term pricing

CEE property values completed the final leg of their recovery in Q3, fully reversing the nearly 5.5% peak-to-trough drop in 2020. With rents barely moving on the quarter, falls in yields did all the heavy lifting in driving capital values higher. CEE yields across all sectors have now dropped back since the start of the year, with the decline in retail yields a notable exception in Europe. Therefore, in contrast to our forecast in our last Outlook, we no longer expect office and retail yields to end the year higher. And with both office and retail rents expected to return to growth next year, there is a risk to our forecasts that yields could fall further. That said, given the cooling economic recovery and structural shifts from e-commerce and remote working, the rebound in rents will be modest at best. Moreover, after 2022, rising property yields on the back of higher bond yields mean that the next few quarters are likely to be as good as it gets for property values.

22 November 2021

Euro-zone Commercial Property Chart Book

Rental recovery picks up pace

The recovery in euro-zone commercial property values picked up in Q3, supported by a small fall in yields and an improvement in the pace of rental growth. While retail rents held steady, the quarterly rise in both office and industrial rents was the largest since 2019 Q4. Demand for prime assets and low interest rates will continue to support the property sector. However, with economic activity expected to slow over the next six months or so, and the outlook for the retail and office sectors still clouded by structural change, we think that the property recovery will struggle to maintain its current pace.

16 November 2021

More from Amy Wood

European Commercial Property Valuation Monitor

Rise in bond yields weighs on property valuations

The marked rise in government bond yields drove a deterioration in property valuations in Q1, particularly in industrial markets where property yields also fell steeply. And with government bond yields edging up further in Q2, valuations will continue to be squeezed. That said, we expect most euro-zone government bond yields to edge lower in the second half of the year and think the economic recovery will support equities. As such, there is scope for some improvement by year-end. This will support lower office and industrial yields. However, without further rises in retail yields, this is unlikely to be enough to attract investors to retail assets.

2 June 2021

European Commercial Property Update

Hamburg office rental growth set to outperform

As the recovery in occupier demand gets underway, we think that the low amounts of vacant modern space, limited supply pipeline and comparatively cheap rents will mean that prime office rental growth in Hamburg outperforms the other main German markets in the coming years.

11 May 2021

European Commercial Property Update

In which cities will WFH have a larger impact?

More working from home will inevitably change cities as we know them. However, cities are more than just workers. This means that cities where a higher share of jobs can be done remotely are not necessarily the ones where the impact of remote working on the city’s real estate is likely to be the greatest.

5 May 2021
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