By: Marie Hunt, Executive Director, Head of Ireland Research, CBRE There has been much discussion recently about pricing trends in a number of European real estate markets—in particular, those where prime yields have contracted sharply over the last 12-18 months. What is the best methodology to determine appropriate pricing in a real estate market that is constantly evolving?
RETAIL SECTOR LEADS YIELD IMPROVEMENTS ACROSS EUROPEAN COMMERCIAL PROPERTY MARKET Rental levels remain stable Ireland boasts strong numbers across all sectors CBRE expects more widespread rental growth in H2 2014
France and Germany drive growth in European real estate investment market Total commercial real estate investment reached €46 billion in Q2 2014, taking the total for the first half of the year to €84 billion (compared to just €67 billion in H1 2013). H1 2014 saw a significant increase in buying activity from U.S. based investors, with acquisitions reaching nearly €11.5 billion in H1 2014, compared to €6.3 billion in H1 2013. France and Germany were the main drivers of growth, while the Netherlands, Sweden and Spain made significant contributions to H1 2014 investment total.
European retail investment sharply higher in H1 2014 European retail investment jumped to over €12 billion in Q2 2014, taking the H1 2014 results to €21.7 billion, 30% increase on H1 2013; France made by far the biggest contribution to the growth in investment activity, with Southern Europe also boosting the results, led by significant improvements in Spain and Italy; H1 2014 saw a marked shift in the type of buyers active. Unlike in 2013, institutional buyers were much less active, with the REITs and listed property companies buying activity picking up strongly as a share of the European retail market.
A combination of stable letting activity in the second quarter and an exceptionally strong Q1 has resulted in colocation take-up for H1 reaching unprecedented levels. A total of 38MW was sold in the first half of 2014, 68% higher when compared than at the equivalent stage in 2013 and the highest total recorded for an opening six month period. Connectivity-led demand continues to be the principal source of larger transactions with cloud and associated companies particularly active this year. A build-up of enterprise demand is now also beginning to generate new market interest.