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The latest euro-zone money figures revealed that lending growth continues to slow. Of course, other things, equal, the ECB’s recent 12-month liquidity injection should help to boost bank lending in the months ahead. But on balance, we still expect lending …
27th July 2009
Recent data show yields stabilised in most euro-zone office and retail markets in 2009Q2. While there are reasons to believe this may be the peak for yields, we are sceptical. Investor demand has picked up, but is still down on 2008 levels. And the small …
23rd July 2009
The recent appreciation of the euro is yet to have had an impact on euro-zone import prices, due to the normal lags between these two variables. But it soon will. What’s more, with spare capacity mounting at home and abroad, the future depreciation of the …
21st July 2009
In its blueprint for the budget law (DPEF in Italian) – the Italian Government reiterated its commitment to fiscal consolidation. Because of Italy’s huge public debt, this is a formidable challenge, especially given the current economic situation. With …
20th July 2009
In the current uncertain environment, any upturn in commercial property investment flows is likely to centre on Europe’s largest, most transparent markets. Yet investors will also be looking for markets with the best chance of delivering a sustained …
16th July 2009
The latest housing market data show that the residential property market downturn is continuing to gather pace. With most valuation measures still suggesting that house prices remain well above their sustainable level, further sharp falls are inevitable. …
15th July 2009
On the whole, signs of recovery have been less convincing in Europe than elsewhere. A relatively cautious policy stance and the delayed effects of the credit crunch suggest that the euro-zone, in particular, will be the last of the major economies to …
14th July 2009
Our forecasts for euro-zone commercial property markets have not been altered significantly from those we released in March. (See European Commercial Property Focus, “Euro-zone capital values to fall by at least a third”, 31 March 2009). … Euro-zone …
13th July 2009
The commercial property correction is already well advanced but we think it has further to run. Indeed, in non-euro-zone Western markets we ultimately expect capital values to fall by between 40% and 50% from their peak. In Emerging European markets those …
The improvement in business and consumer confidence surveys has to date been less convincing in the euro-zone than elsewhere. Economic activity is unlikely to do better than stagnate in 2010 and will remain well below trend in 2011. France looks set to …
9th July 2009
Like some other deficit economies, Spain has so far weathered the global economic slump surprisingly well. But this is unlikely to last. We still expect Spains considerable economic imbalances to lead to a deeper and longer downturn than those of most its …
6th July 2009
Italian banks have so far coped with the financial crisis better than most of their European peers. While this has not prevented a slowdown in lending, the problems in the supply of credit seem manageable. Once demand picks up, the credit channel will be …
2nd July 2009
Despite weaker signs of recovery in the euro-zone than elsewhere, the ECB’s policy support remains considerably narrower than other central banks’. President Trichet suggested today that the Bank is unlikely to adopt a policy of quantitative easing in the …
Despite tentative signs of green shoots appearing, the Swedish Riksbank reduced interest rates to 0.25% and remains committed to keeping them at this rate for a prolonged period. But for now at least, the Bank appears reluctant to follow the Fed and Bank …
Inflation fell below zero for the first time in the post-EMU period in June, probably courtesy of energy related base effects. We expect the inflation rate to remain negative for the next six months or so. But the risk is that the region might enter a …
1st July 2009
Thanks to a comparatively small labour market downturn, rental value falls for prime property in Germany have been mild relative to elsewhere in the euro-zone. However, with growing signs that the Government’s labour market support is becoming less …
The latest euro-zone money and credit figures revealed that, after having flattened off for some time, the monetary base increased again. The hope is that banks will feel encouraged to lend. But there is no guarantee that this will happen. … Euro-zone …
30th June 2009
Since the onset of the downturn, the Irish economy has contracted significantly more sharply than other deficit economies such as the US and UK. Unfortunately, Ireland’s troubles appear far from over and it should be one of the last euro-zone economies to …
The German labour market held up relatively well at the start of the economic downturn, at least partly reflecting Government incentives for firms to retain workers for shorter hours. But the severity of the recession is now causing firms to resort to …
29th June 2009
Weaker currencies will have made commercial property in Sweden and Norway much cheaper for overseas investors to purchase. However, we doubt that this will prompt a surge in foreign capital inflows to these markets nor a floor for capital values any time …
25th June 2009
The ECB looks almost certain to leave interest rates on hold at 1.0% this month, where we expect them to remain until at least the end of 2010. There is little hope that any new unconventional policy support will be announced. The Bank’s attention is …
The German Government’s recent introduction of a law requiring a balanced budget from 2016 has prompted much debate over just how harmful it might be. Our view is that, while the law might place undesirable limits on fiscal policy in the future, it does …
24th June 2009
June’s flash PMIs for the euro-zone showed a modest improvement compared to May, largely driven by a rise in the manufacturing index. Falls in the service sector index, however, suggest that occupier demand conditions in euro-zone office markets got a …
The SNB’s pledge to go on purchasing large quantities of corporate bonds while providing generous liquidity to the banking sector and intervening ‘decisively’ in currency markets has left it among the central banks acting most aggressively to support the …
18th June 2009
Norway’s relatively mild downturn should ensure that the latest 25bp interest rate reduction by the Norges Bank is probably the last in the current cycle. But we still think that the Bank will not tighten monetary policy as quickly as its own interest …
17th June 2009
The rate of decline in euro-zone employment accelerated sharply in the first three months of 2009 and, although survey measures of employment intentions have picked up a little, further significant job cuts lie ahead. No euro-zone country will emerge …
16th June 2009
The announcement by the Spanish Government that it plans to set up a fund to provide capital to the ailing banking sector is certainly good news. But on its own, it will not be enough to prevent the Spanish economy from lagging behind the rest of the …
In its latest Financial Stability Review, published yesterday afternoon, the ECB has taken a less gloomy view on the potential losses that euro-zone banks still have to face relative to a previous IMF estimate published in April. Still, even under this …
One simple assumption that we have employed to date in our analysis of European commercial property markets is that, in any given market, the fair-value property/bond yield spread for office and retail property can be assumed to be the same. Evidence from …
11th June 2009
Today’s announcement that the Swedish Riksbank is to borrow €3bn from the ECB confirms that, while the green shoots of recovery may be starting to emerge in parts of the global economy, the Baltic crisis remains a major weight on the Swedish economy’s …
10th June 2009
Today we have revised our key economic forecasts. At the same time, we have updated our projections for currency, bond, equity and commodity markets. The new market numbers are presented in the table at the bottom of page 2. Included for the first time …
8th June 2009
The recent upward revision to our forecasts for the US and UK economies has prompted only a modest increase in our euro-zone forecast given less convincing signs of a recovery so far and a disappointing policy response in the region. However, we still …
Since mid-2007, the yield gap for prime office property in five of the euro-zone’s larger office markets has narrowed sharply. To us, this convergence suggests that, to date, investors have not placed much emphasis on the different demand and supply …
5th June 2009
By leaving interest rates on hold and simply revealing the details of previously announced modest covered bond purchases, the ECB did the least that might have been expected today. Accordingly, the Bank continues to lag far behind others in its support …
4th June 2009
The collapse in euro-zone exports in Q1 – and indeed in Q4 last year – was greater than would be expected from the decline in global demand. Anecdotal evidence suggests that the drying up of trade finance was an additional factor. If the tentative signs …
Concerns about the health of the Swedish banking system have increased further in response to a growing threat of an exchange rate devaluation in the Baltics. While the impact of such a devaluation on the Swedish banking system may be exaggerated, rising …
3rd June 2009
The breakdown of Q1’s euro-zone GDP figures brought little comfort. The record 2.5% quarterly drop was driven mainly by falls in investment and inventories, while a sharp drop in exports was largely offset by a fall in imports. It is broadly encouraging …
The perceived rigidity of euro-zone labour markets will certainly not prevent a brief period of negative inflation in the region. What’s more, with wage growth probably set to drop towards zero in the coming quarters, there is a risk of a more sustained …
2nd June 2009
To date, capital values in Switzerland have held up better than in most other European markets. This seems consistent with the fact that Swiss property did not become significantly overvalued during the boom and that its economy has contracted less than …
April’s data revealed that there was no let-up in the downward trend in both broad money and lending growth in the euro-zone. This further supports our view that the ECB’s injections of short-term liquidity into the banking system have not been …
29th May 2009
Euro-zone interest rates will almost certainly be on hold in June, but the focus has shifted to any developments regarding unconventional policies. The Bank is likely to confirm its intention to start purchasing covered bonds with more or less immediate …
28th May 2009
The recent RICS Global Commercial Property Survey suggests that, within Europe, the Netherlands will see the sharpest falls in capital values over the next few months. With property yields already at a substantial premium to 10yr bonds, and the outlook …
Our analysis suggests that the inventory rundown underway in the euro-zone manufacturing sector has further to go and, crucially, that the pace of destocking is likely to be even greater in Q2 than in Q1. Accordingly, all we can hope for in the short term …
27th May 2009
Recent upturns in business and consumer surveys are not yet robust enough to suggest that recovery is imminent, either in developed or emerging non-euro Europe. At best they suggest a slower rate of decline. So, despite the sharp rises in commercial …
26th May 2009
The financial crisis triggered a synchronised shock that temporarily interrupted most economic activities. However, at some point households and businesses will start making some of the decisions presumably postponed because of heightened uncertainty, …
22nd May 2009
According to Agents’ reports, prime retail rental values have yet to fall in France. While this is far from unique within the euro-zone, recent consumer confidence and retail sales data show the fundamental drivers of the retail property market in France …
21st May 2009
