Continued growth in Q3 2014 with further yield compression across all property sectors The most substantial changes occurred in the industrial and logistics sector Overall rental performance remains patchy, with almost as many locations falling as rising this quarter
European CRE investment totalled €48.4 billion in Q3 2014, a 4% increase on Q2 2014, but a more substantial 27% increase on Q3 2013. Ireland achieved its highest total ever this quarter with €1.6 billion, surpassing the previous high in Q3 2006 of €1.5 billion and in Spain, the €3.5 billion invested in Q3 2014 was the country’s second highest quarter on record. The core markets of UK and Germany continue to show strong growth, with both countries recording increases of over 20% compared to both the previous quarter and Q3 2013.
•Some countries, notably Russia and Italy, have seen their GDP growth forecasts downgraded in 2014 but a number of others, notably the UK, Ireland, Hungary and Spain have seen substantial upgrades. •Office take-up was subdued for Europe as a whole, but a number of Western European markets have seen an improvement. Industrial and logistics take-up had a more general improvement, increasing by over a third in H1 compared to a year earlier. •Vacancy rates have remained high in some locations but rents have generally held steady or improved marginally. •Long-term interest rates have eased back in 2014 despite the threat from the tapering of QE in the USA. This is particularly evident in the Eurozone economies where rates have de-coupled, to some extent, from the USA and UK. This, combined with signs of economic recovery in the main European countries, and a growing supply of funds from the Middle and Far East as well as the USA has driven capital into European property markets. •With the exception of London, where a shortage of stock has hampered sales, investment spending has continued to increase strongly. France, Germany, Sweden, Spain and the UK (outside of London) have registered the biggest increases. Yields have also come in with particularly sharp falls being recorded in Madrid, Barcelona and Dublin. •The central case of a slow recovery in many Eurozone economies points to a gradual rise in rents although a number of economies are showing better prospects. The most rapid rental growth is likely to come in “cyclical recovery” markets. This is already well under way in Dublin and the prospects look good for Spanish cities if the economic recovery continues. •Yields have already fallen sharply in many markets and have a tendency to fall rather quickly when investors show interest. This highlights the importance of identifying cities with sound and improving occupier markets.
Annual benchmarking Fit-Out Cost Guide which details how similar office layouts can be delivered to a high, mid or low specification across 52 of EMEA's major cities. This guide is compiled through intelligence gathered from our regional hubs, local offices and with partners - Gensler, Haworth and WSP. Building on the last edition, this guide captures 14 more cities and includes reinstatement costs/dilapidation data and more specific project related intelligence.
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?