European Commercial Property
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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.
Yasemin Engin Property Economist
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European Commercial Property Update

CEE yield compression to continue into 2022

After surprising on the upside this year, we think that the broad-based decline in Central and Eastern European (CEE) property yields will continue in 2022, albeit at a more modest pace. But with higher bond yields eventually weighing on valuations, we expect property yields to edge up from 2023.

30 November 2021

European Commercial Property Valuation Monitor

Valuations worsen, but office and retail still fair value

Higher alternative asset yields and falls in office and industrial yields contributed to a further deterioration in property valuations in Q3. The decline in government bond yields since then, which has been reinforced by concerns about the new virus variant, could provide some reprieve in Q4. But looking further ahead we expect government bond yields to rise again and weigh on property valuations. Nevertheless, with the gap to government bond yields still wide, we don’t think this will result in upward pressure on property yields until after 2023. As such, we think there is still scope for property yields to fall before then, not only in the industrial sector where the outlook for rental growth is solid, but also for retail as valuations are supportive and rental prospects have improved.

29 November 2021

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

More from Yasemin Engin

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

European Commercial Property Update

Bucharest industrial rental growth to underwhelm

The positive near-term economic picture means that Bucharest industrial activity will maintain its momentum in H2, but ease further out as spending patterns normalise. But given the city’s large supply pipeline, we expect industrial rents to barely grow over 2022-25.

27 September 2021

Non-Euro European Commercial Property Outlook

Emerging Europe: Industrial loses crown after 2021

Our forecast for the economic recovery to maintain its momentum in H2 bodes well for occupier and investment activity. But while we think industrial rental growth will pick up, we still expect office and retail rents to end this year lower. Beyond 2021, while we expect rents to return to growth across all sectors, large supply pipelines and structural changes will keep a lid on rental growth. And with bond yields trending higher on the back of monetary policy normalisation, we expect broad-based property yield rises from 2023 across all sectors. We therefore think capital values will barely grow over the next five years. As a result, total returns will be driven by income returns, with retail overtaking industrial as the strongest sector after this year.

24 September 2021
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