european property outlook

That is the first of what we at Nuveen believe will be one of five big themes of the year: the global economy is awash with cash. We are known for our positive, entrepreneurial culture, and for attracting some of the most innovative, dedicated and knowledgeable people in the business. Indeed, real estate, in some circumstances, particularly office and logistics assets in core locations, can act as an inflation hedge. View Report. 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. Over the next five years, forecasts also suggest strong growth in online sales in the food sector. By Rachel FixsenJanuary / February 2021 (Magazine), The rise of alternatives, a reshaping of the risk premium and muted investment activity. therefore, in a way, if youre going to buy anywhere, you buy in Germany.'. Considering the economic context, this growth of 3% q/q was an outperformance of expectations. At that point, the yield gap between the bank rate and the expected yield on the property closes. Although most of the expected adjustments have already occurred, we think some further repricing is likely in 2023, however . This, in turn, decreased the availability of transactional evidence, making it harder to discern where pricing was at the close of the year and increasing the disparity between sellers and buyers pricing expectations. 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. Dutch offices are predicted to be in the global top five for cross-border active capital flows in 2022, according to our Active Capital Research. Although the war in Ukraine has created another economic shock, the Irish economy, with its much-discussed unique structure, is as well positioned as possible to weather the challenges immediately presented. Find out more about functional cookies here. Emerging Trends in Real Estate: Europe 2021 - PwC Crucially, CPI data from December 2022 shows that inflation appears to have peaked and is now declining in the UK and euro area, as well as the US. Registered Office: 1 Kentish Buildings, 125 Borough High Street, London SE1 1NP, UK REIT Segro commits to 2bn West Midlands development programme, Germany eases tax on Spezialfonds investing in renewables, Ivanho Cambridge, Belfius, Belgiums SWF back co-living firm Cohabs, Patrizia Infrastructure acquires Italian bio-LNG producer Biomet, Dutch pensions PMT and Rail & OV to create new 5bn real estate manager, Ohio SERS issues $265m real estate redemptions, Folium Capital seeks $500m to invest in forestry and agriculture, Longpoint grocery-anchored shopping centre fund beats fundraising target, NYSCRF adds $425m to emerging manager programme, Alaska Permanent Fund to invest up to $360m in US multifamily projects, Top 150 Real Estate Investment Managers 2022, Top 100 Infrastructure Investors 2022: Survey, Kryalos buys 94m Milan office from Cromwell European REIT, Real estate credit company Velo gets initial 136m for fund, Sltt expands Swedish industrial portfolio with SEK455m purchase, Greystar acquires student accommodation site in Paris. 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. Whereas up until 2019, the additional return on secondary assets diminished as the rates of return on core and secondary assets converged, the health crisis should bring a new hierarchy of rates in its wake, highlighting the polarisation of the markets between core assets and secondary assets. With a myriad of approaches being adopted for the post-pandemic workplace, incorporating all aspects of ESG will be a challenge. After the US and the UK, Germany is one of the most targeted destinations worldwide. There have already been several transactions of this type in the Czech market. Zooming in further, the markets with the largest yield movements quarter-on-quarter were London (+75 bps), the Dutch markets of Amsterdam, Rotterdam, Schiphol and Venlo all +50 bps, followed closely by the German markets of Berlin, Cologne, Dusseldorf and Hamburg all +40 bps. While our model forecasts a significant increase in cross-border volumes, this is dependent on supply coming to the market which could remain tight. According to our Active Capital research, within EMEA, Spain will only come second in 2022 for hotel cross-border capital flows, driven by US investors. 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. PDF European Property Outlook - Knight Frank Germany has emerged as a regional beneficiary of the flux this year. 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. Cookies are a small file saved on your computer that help store preferences and other information thats used on the web pages you visit. 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. survey respondents from across 25 European countries, of respondents are feeling a drop in business confidence, have the repurposing of assets on the agenda, anticipate a greater demand for impact investments in the next 3-5 years. Stefan Wundrak: as we enter a period of greater optimism, there will be focus on recovery. Priorities and preferences have changed, but people across the world are reconnecting. Our experience and expertise spans the globe, with over 700 offices across the Americas, Europe, Asia Pacific, Africa and the Middle East. Fri 15 Jul, 2022 - 5:03 AM ET. The logistics sector's fortunes are deeply linked to those of the retail sector, of both the physical and online varieties. 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. A new trend in this field is sale & leaseback. Analysts are understandably cautious about when normality might resume and how it might look when it does. As we previously noted, Oxford Economics forecasts show flat consumer spending growth, a far cry from the negative growth seen in 2009 and 2012. European Outlook 2022 - Knight Frank Green Street's European Commercial Property Outlook Reveals Increasing Bifurcation of European Property Sectors London, United Kingdom - 16 January 2020: Green Street's European Commercial Property Outlook exposes the increasing divergence visible among European real estate sectors. More technology, science and digital services in theeconomy provide an opportunity for real estate to meet their specialist requirements, while generational shifts, such as the need for more healthcare and senior living, or for co-living to suburban private-rented housing, will also continue in the longer term. The relative health of Germanys economy, combined with its effective handling of the virus, has helped the country through this period. One respondent comments that the sense that offices and retail property were safe investment seems old fashioned now., Uncertainty surrounding the future policy landscape has raised further questions. Our integrity, honesty and professionalism is what gives our clients, colleagues, investors and business partners the confidence to work with us. Indeed, 41 percent of survey respondents up from a third last year are concerned about asset obsolescence for 2021. Logistics and housing are particular beneficiaries, with data centres, life sciences buildings, energy infrastructure, and industrial property or warehouses benefitting from relatively stable demand. The pandemic has seen us all fast forward to the future, and laid the ground for a big increase in alternative assets the growth of e-commerce, digital and streaming services, and specialist life-sciences facilities have all benefited. This provides potential inbound investment opportunities through currency weakening as real estate denominated in the euro and sterling looks relatively cheaper. This divergence could continue as investors turn to locations which are perceived to be safe havens. Moreover, the vaccine rollout in Europe has so far been slower than in the US and UK, which could delay the easing of restrictions. This suggests that well-located prime stock will remain in high demand, particularly among occupiers facing rising fuel costs, seeking to increase fuel efficiencies by reducing average journey distance. 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. However, so far, real estate markets have not seen sales of distressed assets, since sellers prefer to take their assets off the market when the prices offered by buyers are too far below their expectations. The Emerging Trends in Real Estate Europe survey reveals that in 2020, this is changing. From 2022 onwards, strong supply of new space will boost letting performance. Household debt is still low by European standards and borrowers are mainly crisis-resistant households with above-average and stable incomes. Tools. One of the consequences will not just be a greater allocation to real estate, but a search for higher yields and an appetite from investors to take on operational risk to achieve those returns. The decline in investment in the latter half of the year is likely to continue into Q1 as buyers and sellers struggle to find common ground in terms of pricing. Moreover, the evolution of the workplace is con current with the ESG revolution. Foreign investors represent nearly half of the volumes invested in the French commercial property market. The industrial sector still seems to be in the focus of most investors. Turning any of these cookies off may affect your experience of the site. Commercial Research, UK & EMEA Logistics Research Analyst The German real estate market confirmed its safe haven position as it saw strong investment and solid leasing results in the first quarter. (Draft) European Property Outlook February 2020 We unravel the various market cycles and offer the most relevant analyses to respond to your needs. While uncertain, the outlook for cost of debt in the Euro area is perhaps not such a seismic shift as in other locations. v. A closer investigation shows that the total industrial investment volume in the last quarter of the year totalled 8.6bn, which is flat quarter-on-quarter (-1%), but represents a fall of 69% compared to Q4 2021 and down by 42% on the five-year (Q4) average. Transactions in these segments will most likely be on a speculative basis and pricing is expected to be adjusted to reflect the additional risks that might further affect the cash flows of these properties. This is expected to translate into higher levels of take-up in the quarters ahead, with total take-up expected to reach 2 -2.5m sq ft for the year as a whole. Our data shows that 62% of the total investment volume in 2022 is related to deals that closed in the first half of the year and 38% in the second half of the year. Knight Frank's outlook for European commercial property in 2019, with a weather map of investor sentiment for individual markets. Not only would this pose a downside risk to our forecast for GDP in H1, but it could also delay the return of international capital to the continent. European Property Market - Outlook H2 2022 16.09.2022 Category Research Reset A pivotal economic year that will transform risk reassessment 2022 is shaping up to be a transformative year for real estate markets in Europe. This is an increase of 74% compared to 2019, and it is likely that a not-insubstantial share of this will flow into European real estate assets. Moreover, its economy is more resilient than many other European countries thanks to its lower dependence on Russian energy confirming its status as a safe haven location in a particularly troubled geopolitical and financial context. On a more positive note, the Eurozone labour market remains tight. With higher inflation, the global economic outlook downgraded, supply chain pressures and the conflict in Ukraine, there is a high level of global uncertainty, which the UK is not sheltered from. While these recessions were self-imposed and no reflection of a weakening economy, the numbers are sobering nonetheless. However, there is a growing risk that headwinds will feed through to investment activity across Europe more broadly. Consequently, the financing can be done in EUR and the current yields are justifiable. One of the more challenging trends to emerge from this years survey is the recognition that fundamental market shifts are still playing out. The survey also highlights a growing focus on environmental, social and governance concerns, including net zero strategies and diversity and inclusion. However, Dublin remains well positioned to attract its share of the weight of international capital seeking prime assets. European Property Market Outlook Q3 2020 Shutterstock.com. The conflict in Ukraine has brought a slight shift in investor sentiment towards not only the Czech Republic, but across the CEE region. The occupational markets growth story has been characterised by the pandemic era boom in e-commerce, and while this trend has weakened in the last year, we still believe that e-commerce growth is an inevitable progression due to demographic trends, albeit at a slower rate than during the pandemic. The UK shows one potential example of this trend, with manufacturing accounting for its highest-ever share of take-up last year. CONTACT INTERNATIONAL RESEARCH. There is a sense of re ordering of priorities among investors, with more allocation towards alternative assets, such as residential, and away from retail. Even in the face of the unprecedented shock caused by the health crisis, real estate is still as attractive as ever thanks to a high real estate risk premium the difference between the rental yield on real estate assets upon their acquisition and the risk-free rate. European logistics take-up reached 8.3m sq m in the final quarter of the year. It is telling that euro-zone offices have seen the sharpest fall in investment so far, while demand for industrial assets has held up. Up-to-the-minute news from our press teams providing the latest developments within Savills, and across the property industry. Communication towers/fibre have also benefited as life continues to shift online. With the sovereign bond rate close to zero in Europe, the European real estate risk premium stood at 316bps at the end of September, which is 68% higher than its long-term average of 188bps. Although total investment activity may not be as dynamic as before the pandemic, the number of international investors active in the French market remains stable, while sums invested by domestic players may decrease again after the sharp fall already witnessed in 2021. In particular, our forecast expects US private equity companies to be the largest deployer of capital, targeting a wide range of UK sectors. Below, our local experts give their view on European property and capital markets in 2022. As we enter a period of greater optimism, there will be focus on recovery and how those assets that have become outdated as a result of the pandemic can be repositioned or make space for new uses. At present, occupiers are having to make do with their existing space or attempt to secure the next possible available space through pre-letting. Turbine producer DTEK is building what is planned to be eastern Europe's biggest wind farm in the southern Mykolaiv region. Now in its 20th edition, the survey provides an outlook on real estate throughout Europe for the near-term and 2023. 23rd June 2023. European Property Market Outlook - H2 2021 - BNP Paribas Savills plc is focused on climate-related risks and working together with its clients, suppliers and the local communities to deliver a more sustainable future. The impact of rising interest rates and inflations strain on households became increasingly clear in the years final quarter. According to our Active Capital research, German real estate will remain popular in 2022. Some non-European capital will continue to hit the European property investment ground through equity deals, international funds with a good network of European offices or fund managers. European monetary policy should prolong the low levels of sovereign rates in 2021, and therefore maintain the attractiveness of real estate. MIPIM: It is not 2008, but 2023 is just as challenging, Guest view: Lets have easier fund access rights for UK managers in Europe, US real estate: pencils sharpened, not pencils down. Only three markets: Sweden (+79%), the Netherlands (+56%), and Denmark (+17%) saw industrial investment volumes increase quarter-on-quarter. Prime rents have increased to 65 psf and are expected to reach 67.50 by the end of 2022. European Property Outlook - 2015. 2 | EUROPEAN PROPERTY MARKET OUTLOOK - 2018 AEW EUROPEAN PROPERTY OUTLOOK Rob Wilkinson, European Chief Executive Officer "We are delighted to share with you our first European Property Market Outlook for 2018. Over a five-year time horizon, that number increases, with many believing that the pandemic has provided renewed impetus to the push for sustainability. The labour market remains tight with the unemployment rate falling to 5.0% in April 2022. EUROPEAN COMMERCIAL PROPERTY OUTLOOK 2019 2018 was a year of rising uncertainty but Europe still saw significant cross border investment activity. At the same time, the market rumour is that despite the very low vacancy rate, developers will limit speculative construction as the building materials prices are rising rapidly. The prime yields in the CEE and Southern Europe regions remained relatively stable only moving out by 10 bps and 9 bps to 5.86% and 5.45% respectively compared to last quarter and 11 bps and 40 bps year over year. The change in outlook in the face of real estate risks has led to a flight to quality. Find out more about upcoming and past financial events, including results announcements and ex-dividend dates. Emerging Trends in Real Estate - An uncertain impact. One of investors concerns has been the increasing inflation rate and the Monetary Policy Councils answer to this trend in the form of interest rate hikes since October 2021. This upward pressure on rents is a result of high levels of demand, combined with a tighter supply pipeline, rapidly rising costs and continued supply chain problems in the construction sector.