After two disappointing years, commercial property values have stabilised. However, the recovery is set to be weak. We think yield falls in the coming years will be small compared to previous recoveries, given narrow spreads to risk-free rates. And rental gains will be limited by structural headwinds in the office and retail sectors. Strong demand for prime offices should allow the sector to achieve slightly stronger returns than retail. But euro-zone returns of 6.5% p.a. and 6% p.a. for offices and retail respectively over 2024-28 will trail industrial, where returns of 8% p.a. will outshine in this recovery.
After two disappointing years, recent data suggest Europe’s commercial real estate market is stabilising. But will recovery follow and how strong will it be? Join our 20-minute online session on Wednesday 25th September at 10:00 BST as we discuss the outlook across the region. (Register here.)
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