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Chile’s central bank is likely to hike by 50bp later today (22.00 BST) We think consumer price inflation in Sweden climbed higher in September… (07.00 BST) … but headline CPI probably eased in the US last month (13.30 BST) Key Market Themes A generous …
12th October 2022
On the cusp of recession The 1.5% m/m increase in industrial production in August was partly due to an out-sized rise in Ireland and was not enough to reverse the fall in July. All the evidence suggests that euro-zone industry is heading for a …
We think online demand will continue to be an important driver of relative rental prospects in European industrial markets as we move into the post-pandemic era. But the outlook for traditional demand, rental affordability and supply will also play a …
Its widely accepted that the jump in mortgage rates from 1.5% last autumn to 6% means that a significant fall in house prices is now inevitable. In this Update we set out how we came to our forecast that prices will fall by around 12% in nominal terms, …
10th October 2022
A raft of economic data for Sweden published this week added to the evidence that its economy is slowing and, like most of Europe, heading for a recession this winter. The 1.3% fall in Statistics Sweden’s monthly GDP indicator in August was the biggest …
7th October 2022
Strong case for even bigger rate increase The case is growing for the ECB to step up the pace of tightening further at its meeting in three weeks. The account of last month’s ECB meeting, published on Thursday, showed that policymakers expect to keep …
Recent revisions to our euro-zone interest rate and bond yield view suggest there is upside risk to our forecasts for prime commercial property yields. With the deteriorating economic outlook also set to weigh on rental growth, this suggests the …
Halifax confirms that house prices have stalled The 0.1% monthly fall in the Halifax house price index in September echoed the message from Nationwide earlier this week that house prices have now stalled. Given the sharp rise in mortgage rates over the …
A recession has looked unavoidable for some time and we now think it will be deeper than most anticipate. Manufacturing output is already declining and services activity is slowing. What’s more, inflation is in double-digit territory and does not seem …
6th October 2022
Account shows hawks still ruling the roost The account of the September ECB meeting confirms that there was a strong consensus in favour of rapid policy normalisation. Since the September meeting, inflation has again increased more than expected, …
Improving supply chains temporarily boost construction activity The surprise increase in the construction PMI reflected an improvement on the supply side, as easing demand cut delivery times and improved contractor availability. But a slowing economy …
Retail sales sliding The 2% year-on-year decline in euro-zone retail sales in August will probably look mild by the end of the year. Measures of consumer confidence point to sales falling much further, which seems quite plausible given that nominal wage …
Germany’s huge off-budget facility designed to compensate households and businesses for the increase in energy prices is bigger than measures announced elsewhere. However, we don’t expect actual spending to be that high, and nor do we think it will be …
5th October 2022
Falls in Paris Centre West vacancy are expected to support a further pick-up in prime office rents in the second half of the year. But this will be short-lived, with the deteriorating outlook for employment growth set to weigh on occupier demand and …
4th October 2022
Looser-than-expected fiscal policy following the mini-Budget means we now expect Bank Rate and gilt yields to be higher. All else equal, that would push the spread between the 10-year yield and all-property equivalent yields to its lowest since the GFC. …
Jump in approvals likely a rush to beat soaring rates The surprise jump in mortgage approvals in August probably reflected a rush to lock in mortgage offers as interest rates surged. There is a possibility that could be repeated next month, but …
30th September 2022
With no end in sight to China’s zero-COVID policy, the dearth of Chinese tourists visiting Europe will suppress a key revenue source for luxury retailers and poses a downside risk to our already-weak prime retail rental forecasts. And even though …
With the winter fast approaching and concern about natural gas supply from Russia looming large, we reviewed the relationship between temperature and gas demand in the EU. The key point is that the temperature, whilst important, will be a weaker driver of …
The stall that precedes the fall The stall in house prices in September was little surprise given the growing downward pressure on demand from rising mortgage rates. We suspect that, despite the reduction in stamp duty announced last week, this marks …
While the market reaction to the Italian election was muted, we think that the worsening economic outlook and concerns about debt sustainability will result in increased risk aversion toward Italian property assets. This means that, after a strong H1, …
28th September 2022
Although the latest sell-off in Gilts has been driven in part by expectations for higher interest rates, the accompanying fall in sterling suggests the risk premia attached to UK assets has risen. In our view, in the absence of a concerted attempt to …
27th September 2022
We think US durable goods orders fell in August (13.30 BST) Hungary’s central bank will probably raise its benchmark rate by 100 bp (12.00 BST) Sign up here for our Drop-In on Tuesday to discuss recent moves in FX markets Key Market Themes Italy’s …
26th September 2022
Overview – The latest data suggest that a property repricing is already underway in response to higher interest rates and stretched valuations. We expect a cumulative rise in all-property yields of 35bps-40bps across the Scandinavian and Swiss markets …
22nd September 2022
Data released this week brought yet more evidence that the euro-zone is heading for recession. The energy crisis was already weighing on industry in July, with output in the sector contracting sharply, especially among energy-intensive producers. And …
16th September 2022
European policymakers have been discussing how to tackle skyrocketing energy prices in the region to ease the financial pain for households and firms this winter. In this Update , we answer five key questions about Europe’s plans to deal with surging …
12th September 2022
The rapidly worsening economic backdrop has put the brakes on Germany’s prime retail recovery. After showing strength in the second half of last year, take-up has now slowed in most of the main markets and prime rents are falling in some. Looking ahead, …
9th September 2022
We don’t think Europe will be forced to widely ration natural gas this winter because the sky-high price should attract sufficient LNG from abroad to replace reduced imports from Russia, whilst also weighing on demand. However, we do see a few risk …
8th September 2022
While euro-zone prime industrial rents surprised on the upside in Q2, investor sentiment also turned more rapidly than we expected. Tight supply will support rents this year, even as economic activity worsens. However, the unsupportive interest rate …
6th September 2022
We expect Australia’s central bank to hike by 50bp (04.30 BST) We think the ISM Services Index fell back a bit in August (15.00 BST) Chile’s central bank could raise its policy rate by a further 75bp (21.00 BST) Key Market Themes The indefinite closure of …
5th September 2022
We continue to expect euro-zone “peripheral” spreads to rise over the remainder of the year, owing to a combination of deteriorating appetite for risk, higher policy rates, and ambiguity about the ECB’s willingness to support the peripheral bond market. …
Gazprom’s decision to shut Nord Stream 1 indefinitely has added to the risks facing Germany’s economy, but the size of the economic damage is still highly uncertain. And the €65bn fiscal package announced by the government will soften the blow to …
Despite a rise in property yields, increases in alternative asset yields led to a further deterioration in European property valuations in Q2. (See Chart 1.) While industrial and office valuations still look the most stretched, retail has now joined …
2nd September 2022
While US and euro-zone 10-year government bond yields have surged over recent weeks, we think this sell-off has mostly run its course – we expect these yields to end this year a bit below their current levels. The yields of 10-year government bonds in the …
ECB likely to raise rates by 75bp next week. Further bumper rate hikes to follow even as economy falls into recession. But the hawks’ hopes to shrink the balance sheet will go unfulfilled. There is a case for the ECB to raise rates by 1% next week. …
1st September 2022
The outlook for industrial demand in Poland has improved dramatically because of the pandemic and the rapid growth of ecommerce. This is set to keep prime industrial rental growth in Warsaw higher than we had previously expected, especially in the near …
Caixin manufacturing PMI likely to suggest that China’s recovery lost steam (02.45 BST) Euro-zone unemployment rate may have risen for the first time in two years (10.00 BST) US ISM manufacturing survey will probably point to sluggish growth in August …
31st August 2022
While attention has understandably focused on Fed Chair Jerome Powell’s Jackson Hole speech made last Friday, there were also important interventions over the weekend by ECB policymakers. These suggest that the risks to our above-consensus forecasts for …
29th August 2022
The surge in natural gas prices is a key reason why we expect Italy to fall into recession soon. If Russia stopped exporting gas to Europe entirely, Italy would suffer more than most but less than Germany. Even before the latest surge this month, the …
26th August 2022
The Nordic and Swiss economies performed relatively well in Q2, while prime rents showed further rises in Scandinavian office and industrial markets. However, the economic outlook has darkened, which will weigh on rental growth further ahead. And a …
We expect the spread between the yields of 10-year German and Swiss government bonds to widen further over the remainder of this year. The spread between 10-year German and Swiss government bond yields has widened sharply this year , with the former …
25th August 2022
We have revised up our forecasts of the European natural gas price due to the scale of Russia’s supply cuts and the likelihood that these are permanent. Prices should ease back in 2023 as Europe imports more LNG and demand falls, but we think they will …
24th August 2022
We think August mid-month figures will show inflation fell sharply in Brazil (13.00 BST) Core durable goods orders in the US probably edged up last month (13.30 BST) Clients can register for our upcoming Drop-In on the outlooks for China and Japan …
23rd August 2022
While quarterly rental rises surprised on the upside in Q2, property yields also rose sooner than expected. This meant all-property capital values barely grew on the quarter and slowed to around 5% y/y, from almost 7% y/y in Q1. (See Chart 1.) Given Q2 …
22nd August 2022
We expect a 50bp rate hike from Israel’s central bank (Monday) August Flash PMIs for the euro-zone and UK may point towards recession (Tuesday) We doubt that Fed Chair Powell will spring a surprise at Jackson Hole (Friday) Key Market Themes Dividend …
19th August 2022
Economy comes roaring back The stronger-than-expected 6.8% q/q annualised expansion in Israel GDP in Q2 confirms that the Q1 contraction was just a blip. Economic activity remains strong and alongside the red-hot inflation figures for July, the risks are …
16th August 2022
The latest figures suggest that Build to Rent (BTR) investment has continued to expand rapidly. Despite this trend, which predates COVID-19, the sector remains under-developed by international standards. But with plenty of opportunities for investors, we …
Rents in the Dublin prime office market rose rapidly in H1 2022, supported by a continued recovery in occupier demand. However, a cooling jobs market and strong supply pipeline mean that a slowdown is likely in the second half of the year. Having started …
15th August 2022
Overview – Tight supply has supported house prices so far, but they now appear to be stalling. Demand will only deteriorate further over the coming quarters as rising mortgage rates, high inflation, and the recession weigh on buyers’ budgets and …
12th August 2022
Drought conditions add to woes By far the biggest problem afflicting Europe’s energy markets is Russia’s decision to cut its natural gas exports, but extreme weather conditions are making things worse. Water levels on the Rhine are already close to their …
Commercial property wasn’t initially hit by the worsening in economic conditions at the turn of the year, but there are now growing signs of anxiety. Not only that, but even if the economic gloom is short lived and any downturn is mild, we expect …
