european property outlook

Likewise, the residential sector will likely account for a bigger share of the overall volume given the increased interest from institutional investors in projects suitable for long-term leasing, coupled to developers generally being more willing to accept lower margins but with a faster exit. With most major central banks still pumping out stimulus, we expect property's investment appeal to remain strong, particularly among institutions with longer-term liabilities, such as pension funds. Despite the uncertainty due to the Russia-Ukraine conflict, the fundamentals of the French market are solid. Our Active Capital Research finds that the office sector is predicted to attract around one-third of the total cross-border capital coming into Austria in 2022, which will mainly stem from German investors. A year of alternative assetsStefan Wundrak, head of European research at Nuveen Real Estate. Markets are pricing in the first interest rate hike as early as July. Investor preference within the asset class is pivoting towards the living and logistics sectors. Anecdotally, our agents have seen some activity from new entrants to the market who are willing to pay sharper yields than incumbent players in the market. Tools. A positive observation from the survey this year is that capital remains plentiful. Stefan Wundrak: as we enter a period of greater optimism, there will be focus on recovery. European Property Market Outlook - H2 2021, BNP PARIBAS REAL ESTATE is a key player in the Pan-european market, Suppliers: BNP Paribas is committed to its partners and suppliers. All this is reflected in an increasing shortage of space, rising rents and investor interest in the sector. Foreign investors represent nearly half of the volumes invested in the French commercial property market. GDP growth in European countries ranged between -6.9% to -12.4%. Yields are likely to compress further reaching figures close to 3%. Investment activityto remain mutedYasemin Engin, property economist at Capital Economics. Watch the webcast from the annual results presentation held on 16 March 2022. In the longer term, we would expect to see greater take-up in the manufacturing and automotive sectors. One reason is the difficulty of doing adequate due diligence on properties overseas. Lockdowns have been synonymous with consumers shopping locally. Mortgage rates have seen a rapid increase over the last few months: by the end of April, they stood at 4.88%, compared to 2.99% at the end of 2021 and 1.98% only one year ago. Research; Sharing. Below, our local experts give their view on European property and capital markets in 2022. Uncertainty regarding the impact of the Ukrainian war and ongoing sanctions will bring some investor caution. Find out more about strictly necessary cookies here. Nevertheless, the conflict in Ukraine has revealed Germanys exposure to Russian energy. International demand comes particularly from the US, UK, and the German speaking neighbour countries. We provide a full range of property-related services across a range of sectors from retail and hospitality through to healthcare and industrial. European Property Market Outlook - H2 2021 - BNP Paribas UK Shopping Centres were also a standout performer. Investors will also need to focus on micro locations and local innovation-driven growth hubs. For the past 12 months, the world economy has been traumatised by a health emergency and the measures that governments have put in place to tackle it. Many department stores are in great locations and could be converted to include alternative uses, such as parcel delivery or pick up services, data centres, healthcare, or even indoor farming (for example, below-ground). Liquid, safe-haven markets, especially . Vacancy is low for prime office buildings and some new developments coming to the market should help absorb demand. The European property market resurrection - European Pensions Find out more about targeting and tracking cookies here. European Property Market Outlook Q3 2020 Shutterstock.com. These cookies record your activity on the Savills website and our partners may use that information to show you adverts that they think you will be most interested in when you visit other websites. The conflict in Ukraine has brought a slight shift in investor sentiment towards not only the Czech Republic, but across the CEE region. Some respondents this year highlight how radical this development has been, with one saying that "the shift from physical to online retail has condensed a decades worth of change into a couple of years." Commercial Research, European Commercial Research Savills plc is a holding company, some of whose subsidiaries are authorised and regulated by the Financial Conduct Authority (FCA), https://www.savills.com/research_articles/255800/340691-0, Occupational demand edges up in the final quarter of the year, Record lows in vacancy continue to support rental growth, Investment volumes drop from record highs, Market in Minutes: UK Regional Office Investment Market Watch, Market in Minutes: West End Investment Watch. See below for further information about the categories of cookies used on our site and your current preference settings. Whatever your needs, we have someone who can help. Across Europe, prime rents grew by 11% in 2022. There was 736mn invested in the sector, its strongest first quarter since 2016 and 881% above investment in Q1 2021. Savills | Spotlight: European Logistics Outlook - March 2023 Our experience and expertise spans the globe, with over 700 offices across the Americas, Europe, Asia Pacific, Africa and the Middle East. In the last four quarters, vacancy rates have tightened to 6.3% in Madrid (-300 bps), 4.0% in Romania (-250 bps), and 2.3% in Norway in the final quarter of 2022. The so-called Ampel Coalition of parties in government faces the challenge to make Germany less dependent on Russian oil and gas. In the office leasing market, it is still unclear to many companies what long-term impact home working will have on their space requirements. The change in outlook in the face of real estate risks has led to a flight to quality. In the near term, supply chain disruption has seen many occupiers expand their footprint to accommodate a shift from just-in-time to just-in-case inventory strategies, with our own research pointing to increasing inventory sizes as a major challenge amongst occupiers in 2022. The labour market remains tight with the unemployment rate falling to 5.0% in April 2022. Most of the top seven office leasing markets outperformed last years results, with the increase in vacancy slowing down. But in the second half of this year, assuming the vaccine rollout allows restrictions to be lifted from Q2 onwards, we expect that investment activity will start to recover. In annual terms, declines in take-up have been only mild and relatively even across the board, with the exception of large year-on-year increases in smaller markets like Dublin, Madrid and Romania. Based on more than 50 years of real estate expertise, we are present in 30 countries . Last updated: May 19th 2022. The logistics sector's fortunes are deeply linked to those of the retail sector, of both the physical and online varieties. 2021 HOUSE VIEW EUROPEAN PROPERTY MARKET OUTLOOK TABLE OF CONTENTS Executive Summary 1 I. Monthly imports of intermediate goods increased by 17% YoY in October 2022 and by 40% compared to the same period in 2019. The second is the government response. As we have previously noted, slowing leasing activity will probably be offset by the historically low levels of available space, which are likely to continue to drive rental growth in the short term. From a real estate perspective, offices have been one of the sectors most affected by the health crisis, but the occupier market is expected to see an increase in demand as workers return to the office. European Property Market Outlook - H1 2022 01.03.2022 Category Research Searching for value The high level of inflation will not disappear anytime soon We have seen significantly high levels of inflation across European countries in recent months. European property outlook In the year ahead, relative market performance is likely to reflect economic performance as investors have become increasingly discerning about fundamentals. The vacancy rate rose to 3.9% in the UK (+100 bps), and 3.8% in Budapest (+60 bps), and rebounded from a series low in Dublin to 1.6% (+80 bps). The shift towards net zero is also driving the attractiveness of buildings which are as self-sufficient as possible, for example generating their own power or processing their own wastewater. Amsterdam prime office rents have remained stable and are still low in an international context which helps attract international businesses in combination with its high-qualified and multi-lingual workforce. The influx of more than 2 million Ukrainian refugees will raise public spending. The Spanish economy has started to recover from the pandemic, but the outlook is impacted by the conflict in Ukraine. While European real estate investment volumes held up well in the first quarter of 2022, there has been a shift in investor sentiment towards certain markets in the CEE region. Demand for residential properties to rent saw a massive boost with the inflow of Ukrainian refugees who seek standard accommodation (the current figure is approximately 316,000, which is 3% of the Czech population). One of the big priorities for asset managers and policymakers in 2021 will be the repurposing of retail spaces and department stores, with a broader range of uses introduced to the high street and reduced retail. Investor demand is expected to remain strong in 2022. CONTACT INTERNATIONAL RESEARCH. Many property market segments should still offer attractive risk-adjusted returns for investors that know how to select assets matching users evolving requirements. In the UK, for example, a government-approved moratorium on rent payments has, in the words of one institutional player, threatened the sanctity of income. This perception threatens the stability of real estate as an asset class. While the remainder of the year will still likely see robust growth due to fewer pandemic-related restrictions and case numbers, renewed supply chain bottlenecks will affect the industrial sector and high inflation will put a strain on private consumption. Despite the acute challenges faced by the retail sector over the pandemic, there are reasons to be cautiously optimistic. Rental growth slowed to 2.0% YoY in Warsaw, Madrid, and Stockholm and was flat in Vienna and Budapest. However, there is a growing risk that headwinds will feed through to investment activity across Europe more broadly. Many more people are working, shopping, and socialising from or nearer to home. UK and EMEA Real Estate Industry Leader, Partner, PwC United Kingdom, ETRE Leader, Director, PwC United Kingdom. European property market outlook - August 2020 - BNP Paribas And, in the United Kingdom (UK), whilst the government has committed to build, build, build, details of the programme are yet to be published. As one interviewee says, such uncertain and at times conflicting market conditions can lead to 'imperfect decision-making', making the overall industry outlook for 2021 one of caution. It also reveals an emerging bias towards domestic markets, as investors increasingly favour locations where they have more existing expertise, rely less on local experts and can more easily assess potential investments when travel restrictions are in place. Household debt is still low by European standards and borrowers are mainly crisis-resistant households with above-average and stable incomes. As Eurozone inflation reached a record high, the ECB has confirmed to conclude its net asset purchases in Q3 2022. Property yields have risen significantly across all sectors on the back of the increased cost of debt. The need for flexibility means occupiers are looking for less desks but more meeting space. Thesetopics feature prominently as part of an ongoing re-evaluation of real estates place in society and how it impacts the very fabric of how people live, work, consume and spend our leisure time. However, the pandemic has forced millions to work from home, closed retail stores and accelerated structural changes impacting three mainstay sectors of the real estate world - office, retail and hospitality. But given the weakness in H1, investment will end the year only 5% higher than in 2020, which would still leave it around 20% below its 2019 outturn. Indeed, 41 percent of survey respondents up from a third last year are concerned about asset obsolescence for 2021. With the expertise of our ever-expanding specialist international network of offices we can help find you the perfect home anywhere in the world. The pace of structural change in the retail sector has quickened and we can see a floor in the ongoing repricing within the forecast period. To fight inflation, the CNB increased the base interest rate by 50bps to 5% at its March meeting and by another 75bps to 5.75% in its May meeting. 2023 commercial real estate outlook - Deloitte US Berlin has moved up to take the number one spot in Overall real estate prospects index (Table 3-1), particularly because of the stability of its office market and the upward potential in rents. In fact, the IMF downgraded its global growth forecasts for 2022 to 3.6%, while it now forecasts Euro area growth of 2.8% in 2022. Moreover, the vaccine rollout in Europe has so far been slower than in the US and UK, which could delay the easing of restrictions. Join Liam Bailey for insights into the latest trends in the world of real estate and economics. Updated quarterly, the European real estate outlook is brought to you by our regional experts analysing the latest news, trends, risks and opportunities in each region. Judith Fischer, European research, summarises the European outlook for capital investment in commercial real estate markets for 2023. Relocation processes have also been resumed and therefore office take-up in 2022 may be close to levels seen in 2021. uncertainty to the European economic outlook and a downside risk to the forecast as presented here. Investors relative lack of interest in secondary assets should lead to a correction in the value of these segments which would open up opportunities for value-add investors. There were no markets that showed yields moving inwards, and we only recorded yields stabilizing in Warsaw (5.20%), Madrid and Barcelona (4.75%) and Bucharest (7.50%). Learn more about Savills Plc's leadership, corporate governance and sustainability policy. 25.02.2021. Improving occupier demand is also positive news for the investment market and within EMEA, our Active Capital research predicts that Spain is in the top ten for office cross-border capital flows in 2022. For a start, financing conditions are set to remain tight. The outward shift was more modest this quarter compared to the +31bps movement in Q4. More than 60% of mortgages have a fixed rate of interest which means that they are also well protected against rising interest rates. The German real estate market confirmed its safe haven position as it saw strong investment and solid leasing results in the first quarter. European logistics take-up reached 8.3m sq m in the final quarter of the year. PDF SEARCHING FOR VALUE OUTLOOK H1 2022 - BNP Paribas With over 40,000 people working across more than 70 countries around the world, we'll always have an expert who is local to you. The outlook for the office occupier market in Poland is relatively optimistic. After the US and the UK, Germany is one of the most targeted destinations worldwide. Real estate is generally still seen as one of the few investment asset classes to generate acceptable returns at a time of low or negative interest rates.
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