My subscription
...
Filters
My Subscription All Publications

Real Estate

Commercial

Metro upturn continues, but capital growth set to slow

The metro level data confirmed another strong quarter for commercial real estate in Q1, though with the usual wide range of performance across sectors and cities. For offices, rents in the larger coastal markets continued to trail for the most part, while life sciences in Boston and San Diego helped lift their performance to the top of the rankings. Sunbelt markets were the strongest for apartments, as the recent rental growth in major metros such as NYC cooled somewhat. And in the industrial sector, while most markets shone, LA and Riverside saw exceptional capital value growth. The party may soon be over, however, with risk-free interest rates rising and yields set to follow, pointing to much slower capital growth ahead across the board.

24 May 2022

Scandinavia & Switzerland: Value gains set to slow

The recovery continued in the Scandinavian and Swiss economies and their property markets in Q1. It was a record first quarter for investment in Scandinavia. And annual capital value growth was robust for office and industrial, while retail values rebounded from their pandemic lows. However, pent-up demand from the pandemic will wane and the sharp rise in bond yields is already squeezing property valuations. As such, investment activity should slow over the course of the year, while we think property yields will reach their troughs.

24 May 2022

Another punchy quarter, but capital growth set to slow

Setting aside the drag from net exports on GDP growth, Q1 was another strong quarter for both the domestic economy and commercial real estate markets, highlighted by a record first quarter for investment volumes. But occupier demand is slowing in all four sectors (albeit from record highs in industrial) and the sharp hike in alternative asset yields is already squeezing property valuations. As a result, we think that investment totals should slow in H2 and commercial real estate yields, particularly in the apartment sector, will begin to rise.

20 May 2022
More Publications

Interest rate rises hasten property slowdown

The worsening monetary outlook is expected to weigh on property performance. With inflation set to peak at 10% y/y that will force interest rate to 3.0% next year. This will reverse the recent momentum in the commercial property sector, as yields flatten this year and rise from 2023. At the same time, outside of industrial, the rental outlook will remain weak and that means capital value growth will slow sharply this year and move negative in 2023-24. As a result, returns will dip below 5% p.a. in those years, albeit recovering again at the end of the forecast. Within this, we expect retail warehouses, shopping centres and leisure to outperform.

Emerging Europe: Rental growth steps up

CEE economies and property markets started the year on a solid footing. Strong quarterly increases in office and industrial rents supported CEE all-property values in Q1, though yield compression slowed. However, rental growth is likely to drop back further ahead as economic growth decelerates, supply rises and structural changes take their toll. And we expect all-property yield compression to come to a halt, given increases in bond yields and signs of a shift in investor sentiment towards some CEE markets. As such, capital value growth is likely to slow sharply by year end. Property Drop-In (19th May): What will rising interest rates mean for commercial property returns in the US, UK and Europe? Join our 20-minute briefing on the outlook for returns on Thursday. Register now.

Slower yield compression weighs on capital growth

Euro-zone commercial property values made further gains in Q1. Quarterly rental growth was strongest for industrial, though office and retail rents also rose. However, the pace of yield compression reduced, limiting capital value growth. And we expect this slowdown to continue, given the weaker economic outlook and expected rises in interest rates and bond yields, which mean property yields are likely to reach their trough this year. Property Drop-In (19th May): What will rising interest rates mean for commercial property returns in the US, UK and Europe? Join our 20-minute briefing on the outlook for returns on Thursday. Register now.

Commercial Property Lending (Apr.)

Lending growth accelerated in April, seeing the strongest monthly gain in over 12 years. And with transactions having seen a fast start to the year, we think there is more to come in the next few months. Property Drop-In (19th May): What will rising interest rates mean for commercial property returns in the US, UK and Europe? Join our 20-minute briefing on the outlook for returns on Thursday. Register now.

Homeworking to remain key to city retail performance

One of the unforeseen consequences of the homeworking revolution is its negative impact on city centre retail footfall. The evidence suggests that in urban centres there is a link between higher levels of remote work and poorer retail performance, which we think is likely to persist. In view of the wider interest, we are also sending this European Commercial Property Update to clients of our UK Commercial Property Service. Property Drop-In (19th May): What will rising interest rates mean for commercial property returns in the US, UK and Europe? Join our 20-minute briefing on the outlook for returns on Thursday. Register now.

1 to 8 of 1870 publications
See More ↓