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November’s surge in German industrial production and the widening of the trade surplus brought welcome reassurance that the economy approached the end of 2017 in very good health. What’s more, the surveys point to further strength to come. … German …
9th January 2018
The main news for the euro-zone economy at the year’s outset has been the further appreciation of the euro. While this might seem like a major headwind to the economy’s upturn, we remain optimistic that the euro-zone will continue to grow strongly in …
5th January 2018
With euro-zone headline inflation falling in December and core inflation still subdued, the ECB will continue to emphasise that interest rate hikes remain a long way off. … Euro-zone Flash CPI …
The final estimate of December’s euro-zone Composite PMI confirmed that the economy finished the year on a high note, but inflationary pressures are building only slowly. … Euro-zone Final PMIs …
4th January 2018
Recent fiscal data revealed mixed performances by the euro-zone’s peripheral countries in the year to November. While Ireland and Portugal are on course to outperform their 2017 state budget balance targets, Spain and Italy are likely to fall short. … …
3rd January 2018
After three consecutive years of mostly yield-driven double-digit capital growth, the outlook for European commercial property in 2018 is less positive – we believe that the prime market has now passed its peak in all aspects – investment activity, the …
The euro-zone economy performed better in 2017 than we and most forecasters had anticipated at the year’s outset. Investment growth picked up despite intense political uncertainty. And while a rise in inflation dampened households’ real incomes growth as …
21st December 2017
The Swedish and Norwegian central banks delivered fairly hawkish assessments of the outlook for monetary policy this month, but that did not stop their currencies from depreciating. Meanwhile, the Swiss franc has weakened to its lowest level since the …
Government bond yields in Portugal started 2017 almost twice as high as those in Italy, but look set to end the year at around the same level. While we think that yields will edge up across the region in 2018, we suspect that Portugal’s bonds will again …
18th December 2017
At this week’s press conference, Mario Draghi confirmed that the ECB’s corporate bond purchases will continue in “sizeable” quantities next year. The exact amount that it intends to buy is unclear, but we suspect that it will keep its corporate …
15th December 2017
Solid economic growth prospects in most of Europe bode well for occupier demand and prime rents in the next few years. However, better growth is likely to be a double-edged sword for commercial property, with monetary policy starting to tighten and bond …
Against a backdrop of solid economic growth, the outlook for occupier demand and rental growth is encouraging. But with prime property yields close to finding a floor, and tighter monetary policy on the horizon, the days of strong, yield-driven, capital …
The Nordic and Swiss Q3 GDP data revealed large differences between the best and worst performing economies. A quarterly contraction of 0.6% meant that Denmark underperformed the rest of the pack by a large margin. The drop in GDP was mainly due to a …
12th December 2017
Macro-prudential policies to cool the housing markets in Switzerland and Norway will allow their central banks to keep monetary policy loose, boosting inflation from its current low rates. By contrast, inflationary pressures in Sweden suggest that tighter …
The recent strength of German house price inflation is a justifiable response to increased urbanisation and a shift towards home ownership there. Given that mortgage lending growth remains moderate, there seems to be little risk to the German economy. And …
11th December 2017
The European Commission’s (EC) latest proposals for euro-zone reform and integration centred on the transformation of the European Stability Mechanism into a European Monetary Fund (EMF). The EC plans to give the EMF a wider remit, with it acting as a …
8th December 2017
Despite signs that core inflation in Germany picked up in November, euro-zone core inflation remained unchanged at 0.9%. This suggests that despite strong economic growth, underlying inflationary pressures in the rest of the euro-zone actually softened …
7th December 2017
October’s drop in German industrial production largely reflected the timing of holidays – high levels of industrial orders and business confidence point to a renewed acceleration to come. … German Industrial Production …
In this Watch, we evaluate the performance of Nordic and Swiss economies in 2017 and set out our key calls for next year. … Reviewing 2017 and looking ahead to …
5th December 2017
This week the ECB released its bi-annual Financial Stability Review in which it cited weak bank profitability, an abrupt repricing of risk premia, and debt sustainability as “medium-level” risks. We do not expect any of these risks to cause a crisis over …
1st December 2017
Concerns about the prospect of a house price correction were felt across Swedish markets in November, with the krona slumping, bond yields declining and equities falling. Most other Nordic and Swiss bond yields also declined, while currencies generally …
With some of the tightest office markets, core European cities are set to see the best rates of rental growth over the 2018-21 period. However, with lower current yields and a weaker outlook for capital values, total returns will be relatively poor. But …
Press reports suggest that the UK will increase its financial offer in a bid to move talks on to phase two at the December EU Council meeting. But the Irish border issue remains unresolved with just over a week remaining before diplomats start drafting …
24th November 2017
Our reading of the minutes of the ECB’s October policy meeting is that the Bank has begun to prepare the ground for an end to its asset purchases. Before long, the ECB seems set to stop promising to buy assets until the inflation target has been met and …
The European economic recovery has been extended into the final quarter of the year, yet inflation remains well below target in most economies. As a result, occupier demand continued in a strong vein, driving office vacancy rates lower, although prime …
23rd November 2017
Data this week confirmed that the euro-zone had a very good Q3, with a 0.6% rise in quarterly GDP pushing the annual growth rate up to 2.5% – the highest since early 2011. This was stronger than the 2.3% expansion recorded in the US and significantly …
17th November 2017
House price inflation in several Nordic economies is slowing, and in some cases sharply. In Sweden housing inflation fell to 6.7% in October, its slowest in four years. And in Stockholm, where prices have risen much more than the national average in …
16th November 2017
Falls in many government bond yields and in equity dividend yields this quarter meant that despite small falls in property yields, overall valuation scores improved slightly this quarter. Nevertheless, more than a third of all markets that we cover look …
15th November 2017
The latest euro-zone data have brought signs of a slowdown in activity in the services sector compared to that in manufacturing. But we suspect that the slowdown in services will be modest. After all, the very high level of consumer confidence and a …
10th November 2017
The monthly data suggest that consumer spending was behind the slowdown in quarterly euro-zone GDP growth in Q3. But September’s rise in retail sales provided a strong starting point for Q4. And the improving labour market should support spending. Indeed, …
8th November 2017
Taking account of the ECB’s dovish tone at its last meeting, we have lowered our Bund yield forecasts for the next few years. As a result, the Bank’s stance bodes well for commercial property yields, which are likely to come under less upward pressure in …
7th November 2017
The drop in German industrial production in September did not reverse August’s sharp rise. The sector performed well in Q3 as a whole and surveys point to an acceleration to come. … German Industrial Production …
The ECB’s decision last week to extend its bond-buying well into 2018 means that it will probably need to change the composition of its purchases. After all, it has already had to reduce its purchases of bonds in some countries as it is approaching its …
3rd November 2017
Recent fiscal data suggest that most of the euro-zone’s peripheral countries are continuing to improve their budgetary positions. But Italy is an exception and has come under fire for a lack of fiscal effort. … Euro-zone Fiscal Monitor …
2nd November 2017
October’s Swiss, Swedish and Norwegian manufacturing PMIs are consistent with strong growth in industrial output. But only in Sweden do we expect this to put sustained upward pressure on inflation. … Manufacturing PMIs …
1st November 2017
In October, a combination of rising bond yields in the US and lower bond yields at home pushed Nordic and Swiss currencies down against the dollar. Weaker exchange rates, as well as decent economic growth and strong monetary policy support, gave equities …
30th October 2017
While the ECB’s announcement that its asset purchase programme will now run until September 2018 and at a slower pace from January was largely in line with consensus forecast, its decision to keep the programme open-ended struck a dovish note and pushed …
26th October 2017
Q3 investment in mainland European commercial property was the highest on record for a third quarter, despite pricing concerns. At the same time, a lack of prime assets in key markets appears to be lifting demand in second-tier markets. … Valuation …
24th October 2017
Politics are in focus yet again, with the German and Austrian elections revealing reduced support for mainstream parties and the push for Catalan independence creating much uncertainty. But business and consumer confidence have been encouragingly …
August’s surge in German industrial production was in line with the positive message from business surveys and puts the economy on course for a strong Q3. … German Industrial …
9th October 2017
August’s labour market data won’t deter the ECB from announcing later this month that it will taper its asset purchases next year. But the only gradual recovery in the labour market suggests that the Bank will wait a long time before tightening policy …
2nd October 2017
Among the wide range of proposals for the EU put forward by French President Emmanuel Macron this week was the introduction of a euro-zone finance minister and a euro-zone budget. In principle, we think that this would be a good idea. Indeed, we have long …
29th September 2017
September’s weaker-than-expected euro-zone inflation data won’t stop the ECB from announcing in October its plan to taper its asset purchases next year. But the data suggest that the Bank will proceed cautiously when it comes to normalising monetary …
Tighter monetary policy in the UK, US and euro-zone in the next couple of years will undoubtedly cause risk-free rates to rise. However, given that property’s yield spread against risk-free rates is still elevated, we think there’s room for a gradual …
21st September 2017
The next stage of monetary policy normalisation in the developed world – balance sheet reduction by the US Fed, and the shift towards QE tapering in the euro-zone – will not have a major impact on Emerging Asia. Instead, domestic factors will determine …
15th September 2017
European occupier markets have continued to benefit from the strengthening economic environment. Low risk-free rates still provide some limited scope for prime yields to fall. But as government bond yields eventually rise further, this will start to put …
11th September 2017
Retailers in Lisbon are currently benefiting from a number of tailwinds. With occupiers focusing more on high street locations and limited prime vacancy, we have revised up our rental growth forecasts. … Increasing focus on high streets boosts prime rents …
1st September 2017
A slowdown in German employment growth is set to take to the edge off office occupier demand growth. But with supply staying tight, prime office rental growth will ease, rather than grind to a halt. … Softer demand isn’t a disaster for German office …
25th August 2017
Small rises in core government bond yields, along with similar-sized falls in equity dividend yields and limited commercial property yield falls mean that property valuations were mostly unchanged. That said, around a third of the markets we cover look …
18th August 2017
Demand for office space in Madrid’s CBD has seen prime rents rise by 5% so far this year. And while completions are on the rise, this is being offset by withdrawals. With the market likely to tighten faster than previously expected, we have increased our …
17th August 2017
