European Commercial Property
...

Emerging Europe: Retail rental falls still on the cards

In line with the economic recovery, there were growing signs that property markets have turned a corner in Q2. All-property rents rose on the quarter, while the all-property yield dipped on the back of lower industrial yields. On an annual basis, industrial rents rose, while retail rents fell less sharply. Our forecast for the economic recovery to continue in H2 bodes well for occupier and investment activity. But we still expect the retail sector to struggle. Indeed, the weakness of tourist spending and the competition from e-commerce are likely to continue to drag on retailers’ incomes. Therefore, we think retail rents will end this year lower, along with office rents. In contrast, we forecast further industrial rental gains.
Andrew Burrell Chief Property Economist
Continue reading

More from European Commercial Property

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 Andrew Burrell

UK Housing Market Update

Are PDRs the answer to mis-matches in supply?

New plans have extended Permitted Development Rights (PDRs) on commercial property, allowing swifter conversion to residential use. These have been cautiously welcomed, but, in our view, they do not radically shift the outlook for either residential or commercial markets. In view of the wider interest, we are also sending this UK Housing Market Update to clients of our UK Commercial Property service.

18 August 2021

Euro-zone Commercial Property Chart Book

Tentative signs of a turning point for property

All-property capital values rose for the third consecutive quarter in Q2, leaving them less than 1% below their pre-virus level. The improvement was driven by a decline in all-property yields, though rents also rose slightly on a quarterly basis for the first time since Q1 2020. The outlook is encouraging for occupier demand and investment in the coming quarters given economic activity is expected to rebound strongly. However, depressed tourist spending and online shopping will drag on the retail recovery. And higher vacancy and more remote working will limit the improvement in the office sector.

18 August 2021

UK Commercial Property Focus

What will COVID-19 mean for the largest global cities?

Cities are central to property performance. And the largest are seen as hugely important by investors. But the pandemic has turned many received ideas about real estate on their head and we think that performance in gateway markets will remain relatively weak after COVID-19. In view of the wider interest, we are also sending this UK Commercial Property Focus to clients of our US Commercial Property service & European Commercial Property Service

10 August 2021
↑ Back to top