European Commercial Property
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Zurich office returns rank poorly over next five years

Weak near-term rental prospects and squeezed valuations mean that we expect Swiss office returns to perform poorly in the coming years, particularly in Zurich.
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

UK Commercial Property Data Response

IPF Consensus Forecasts (Aug.)

The upgrades to the IPF Consensus views for this year still leaves them below our forecast. However, our more downbeat view on the outlook for offices because of the shift to more remote working means that we expect weaker total returns beyond 2022.

3 September 2021

European Commercial Property Update

Spanish retail rents to rebound from next year

We expect a recovery in domestic and foreign spending along with online penetration rates below most other euro-zone markets to support moderate growth in Spanish prime retail rents over the 2022-25 period, though this is not enough to reverse the decline during 2020-21.

31 August 2021

European Commercial Property Update

Retail yield stabilisation not a sign of a turning point

Following larger-than-expected falls in Q2 and positive near-term developments, we expect prime office and industrial yields to end the year lower than previously forecast. However, we think prime retail yields will trend upwards again as the impact of e-commerce has not yet been fully priced in.

11 August 2021
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