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A large part of the real estate sector’s carbon footprint is related to electricity production and so will shrink over time as the use of renewables continues to expand. The biggest challenges to reducing property sector emissions will be in emerging …
9th January 2023
The property repricing in response to higher interest rates has not yet run its course. Coupled with a recession-driven slowdown in rent growth, this means 2023 is shaping up to be another bleak year for European real estate. Given the rapid rise in …
6th January 2023
The latest MSCI data show that prime property values underperformed the wider market last year. But with the rest of the market more vulnerable to the economic recession and as MSCI values catch up, relative performance is likely to shift in 2023. The …
5th January 2023
Although prime property in Turkey saw strong rental gains in 2022, a slowing economy looks set to weigh on occupier demand and cause rent growth to decelerate next year. Meanwhile, the risk of a sharper depreciation of the lira risks pricing out local …
22nd December 2022
The impending recession will hit jobs growth across the office-based sector. But the impact on office demand is likely to be greatest in markets that have a large exposure to the tech sector. This reflects that the recent pace of tech jobs growth looks …
21st December 2022
This is part of a series of reports outlining our key macro and market calls for 2023. Click here to view the full series. Property markets rebounded strongly after 2020, in part boosted by favourable structural shifts brought on by the pandemic. But …
15th December 2022
The sharp fall in employment we expect next year will drag on Italian office rents. While prime rents should hold up better than the wider market as the shift to the best quality space continues, we don’t think that this will be enough to prevent them …
29th November 2022
The latest IPF Consensus survey showed a significant upgrade to 2022 European office rent growth expectations, largely due to strong rent outturns in Q2 and Q3 this year. A slowdown is expected in 2023, but in our view the consensus is still too …
24th November 2022
Falls in Paris prime retail rents are set to continue into 2023 as weaker domestic and foreign spending weigh on tenant demand. And while the prospects for both are brighter for 2024, we think the high level of vacancy will ensure only a modest rebound in …
11th November 2022
Spanish office rental values are expected to be harder hit than the euro-zone average as the looming recession weighs on occupier demand and higher interest rates push up yields. However, at a market level, Barcelona is most exposed given its looser …
9th November 2022
In line with changes in our global economic view, we have made significant downgrades to our commercial real estate forecasts for the next couple of years. As a result, we now expect a much bigger drop in property values next year that will cause annual …
8th November 2022
German prime office rental growth is expected to slow sharply next year as the economy experiences the deepest recession in the euro-zone. Even so, we don’t expect rental growth to underperform as the low level of vacancy means the German markets are in a …
2nd November 2022
An acceleration of the slowdown in European commercial property investment in Q3 is evidence that economic growth concerns, higher interest rates and tightening credit standards are weighing heavily on activity. We expect investment to decline into 2023 …
28th October 2022
Helsinki office vacancy jumped in Q3 and is likely to trend higher over the next couple of years as occupier demand weakens, completions rise and there are fewer office-to-residential conversions. As such, rental growth will slow, with prospects a bit …
27th October 2022
We have downgraded our expectations for Athens prime rental growth over the next two years on the back of a weaker outlook for economic activity. However, with the Greek economy still expected to be relatively resilient, we think all-property rental …
24th October 2022
The deep recession faced by the euro-zone in the coming year will cause a sharp slowdown in prime rental growth, which we now expect to drop to 0% at the all-property level next year. We don’t think any sector will be immune from the rental deceleration, …
20th October 2022
Central banks have the tools to deal with liquidity crises arising from rising interest rates and falling asset prices. Instead, the bigger threat is that higher interest rates produce large and simultaneous falls in asset prices that threaten the …
11th October 2022
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 …
7th 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
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 …
30th September 2022
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
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
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
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 …
1st September 2022
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
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 …
12th August 2022
Comparatively strong demand from flexible offices has helped the CEE occupier recovery from the pandemic. But a more limited flex pipeline this year means it is not likely to provide much offset to the weakening employment prospects in the region. A …
9th August 2022
German prime office yields jumped in Q2 amid early signs that the weakening economic outlook is weighing heavily on the office market. And while there were strong rental gains in the first half of the year, we think growth will slow as economic headwinds …
5th August 2022
While encouraging for the property risk premium, better transparency across Europe is unlikely to provide much support for property yields given the deterioration in the economic and interest rate environment. This is even the case for Emerging European …
2nd August 2022
After a strong start to the year, European investment weakened in Q2. And we expect only lacklustre activity over the second half of the year as rises in the cost of debt, tightening credit conditions and concerns about a recession in Europe weigh heavily …
29th July 2022
A rebound in tourism will cushion some of the blow to Spanish prime retail demand caused by falling real incomes this year. But once inflation eventually eases, we expect rent growth to outperform other European markets, supported by a rebound in consumer …
25th July 2022
The Q2 ECB bank lending survey showed a tightening in credit standards for commercial property lending in the first half of the year, with expectations for a further squeeze in H2. With the cost of debt also higher, more restrictive credit will weigh on …
20th July 2022
Despite the Q1 surge in investment activity, we think a weak rental outlook and stretched valuations will deter a sustained increase in investment, limiting the scope for further falls in prime industrial yields. There was strong investor demand for prime …
18th July 2022
We doubt the fall in the euro will lead to a material increase in overseas investment this year. Rather, we think investor demand will be underpinned by the euro-zone’s economic and property fundamentals, for which the outlook has weakened sharply. The …
13th July 2022
The slowdown in the Swedish housing market has the potential to delay the recovery in the retail sector this year, as it weighs on retail sales and makes conversions to residential even less viable. This would add to what is already a weak outlook for the …
12th July 2022
As recession fears grow in Europe, we think that weak employment growth, home-working and strong completions will weigh on office rents in Warsaw. This means rental prospects will provide little offset to office values as property yields climb. Having …
8th July 2022
Our updated yield model points to a quicker rise in property yields than our forecast suggests. While we still expect the correction to be mild, not least because of the lower share of property debt this cycle, this poses a downside risk to capital values …
7th July 2022
A recent MSCI article speculated that real estate investment could buck the deglobalisation trend given distinct features of the asset class, though we are not convinced that will bring many benefits. We have been writing about the end of globalisation …
14th June 2022
Both our view and that of the IPF Consensus is that prime office rental growth will slow as hybrid working shifts take their toll. However, we also think it is likely that a quality gap will emerge, though the evidence of this is not conclusive so far. …
31st May 2022
The risks of a recession in the euro-zone have risen. While we think a contraction will be narrowly avoided, this will remain a concern for property investors already facing the prospect of higher yields in the near term. Our recent European Economics …
26th May 2022
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 …
13th May 2022
Italian prime property values continued to make solid gains in Q1. However, with the economic outlook downgraded and larger increases in property yields expected over the next couple of years, capital value growth is set to slow sharply and by more than …
11th May 2022
With economic concerns worsening in the euro-zone, we expect that the Danish economy will not be immune. And we think that the shifts in the interest rate outlook in particular will have the most significant impact on Copenhagen office performance. Our …
5th May 2022
While the low level of prime industrial yields compared to history leaves the sector vulnerable to rising interest rates, a fair value analysis that incorporates our expectations for rental growth suggests that office yields could come under more upward …
4th May 2022
While Q1 investment data showed further strength, the impact of the war in Ukraine on investor sentiment, economic growth and interest rates support our view that pan-European (excl. UK) investment activity will slow further ahead. There was little impact …
29th April 2022
A weaker economic outlook and larger increases in interest rates this year and next mean that we now think euro-zone all-property yields will reach their trough by the end of this year and will come under more upward pressure than previously expected. In …
28th April 2022
Past delays in development projects mean that office completions will exceed demand in Budapest this year and next. As such, having held broadly steady in 2021, office vacancy is set to rise again and put downward pressure on rents over the next couple of …
22nd April 2022
We think the recent upturn in office market performance is largely down to the one-off release of pent-up demand and remain downbeat about future prospects. With occupancy still languishing and remote working firmly established, we think that the risks to …
21st April 2022
While economic growth is forecast to slow, limited supply and further strong growth in e-commerce-related demand mean Belgium industrial rental growth is expected to outperform its pre-pandemic average as well as most other euro-zone markets. Industrial …
14th April 2022
While prime industrial rental growth in the German markets is expected to slow in the next couple of years, it will remain above its past averages. But the risks are to the upside given the rise in land and construction costs, which are likely to further …
11th April 2022