My subscription
...
Filters
My Subscription All Publications

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.
Amy Wood Property Economist
Continue reading

More from European Commercial Property

European Commercial Property Update

Support from flexible office demand in CEE to wane

Comparatively strong demand from flexible offices has helped the CEE occupier recovery from the pandemic. But a more limited flex pipeline this year means it is not likely to provide much offset to the weakening employment prospects in the region.

9 August 2022

European Commercial Property Update

German office market at a turning point?

German prime office yields jumped in Q2 amid early signs that the weakening economic outlook is weighing heavily on the office market. And while there were strong rental gains in the first half of the year, we think growth will slow as economic headwinds keep a lid on occupier demand and vacancy rates continue to climb.

5 August 2022

European Commercial Property Update

Better transparency provides little respite for yields

While encouraging for the property risk premium, better transparency across Europe is unlikely to provide much support for property yields given the deterioration in the economic and interest rate environment. This is even the case for Emerging European markets, where recent transparency improvements have the most scope to support yields.  

2 August 2022

More from Amy Wood

European Commercial Property Update

Has Athens been pushed off track by COVID-19?

After gaining ground since 2018, the recovery in Athens’ prime property values has stalled. However, we think that the catch up with the euro-zone will continue, albeit at a slower pace than in recent years.

6 July 2021

European Commercial Property Update

Vaccine passport no silver bullet for prime high streets

Lingering restrictions on travel mean that weakness in foreign tourist spending will continue to weigh on retailers’ incomes in tourist-dependent retail markets this year. This supports our view that prime retail rents will fall, even as the domestic economic recovery gets underway.

1 July 2021

European Commercial Property Update

Consensus catching up to the view of a weak recovery

The latest IPF Consensus forecasts are consistent with our view that prime office rents will fall this year and the recovery in 2022 will be weak, even as the easing of virus restrictions allows economic activity to rebound. However, outside of Emerging Europe, we are more pessimistic on the outlook after 2022.

3 June 2021
↑ Back to top