The CBRE 2018 Europe Real Estate Market Outlook provides insight on the key trends our experts think will affect the European property industry over the next 12 months. Key takeaways: Positive economic environment for most of Europe through 2018 to 2019 The prospect of higher long-term interest rates will start to pose a challenge to property pricing Continued strong growth in assets under management will put pressure on investors to deploy capital Another strong year for office-based employment growth in 2018 Growth in appetite for flexible offices will permeate across European markets Retailers increasingly focused on getting their city strategy correct. This will support rental growth at the prime end of the market Very strong demand growth has cut the availability of large-scale modern space, producing capacity constraints in some of the main European logistic hubs. Coupled with strong e-commerce relate growth this will support further rental increase The evolution of the residential sector will be supported by the sheer quantity of capital available for real estate investment in 2018, increasingly through development in order to build scale Stock shortages and premium pricing in gateway cities for the hotel sector will encourage investors to look further afield at secondary and niche opportunities A key feature in 2018 will be operator consolidation across Europe in the alternatives sector. This will present real estate investors with new partnership opportunities as well as enhancing covenant strength.
The overall European hotel investment volume was up +33% y/y for Q3 2017. This contributed to a +16% y/y increase YTD 2017, with the deal volume topping €14 billion. The size of the Spanish hotel investment market more than doubled in the first three quarters of 2017, with transaction volumes increasing by +112% y/y. The United Kingdom has seen the highest actual investment volume at almost €5 billion so far in 2017. Hotel yields for key German cities continued to decrease, highlighting the strong investment appetite in the market.
CBRE's EMEA Research and A&T teams are pleased to present our inaugural flexible office report, The Flexible Revolution. Four main insights have emerged: Fundamental shifts in technology, economy and corporate behaviour have affected how corporates approach their real estate decisions. This has caused the increase in number, variety and quality of flexible offices in the market, which are tapping into latent occupier demand. There are four key areas where corporate attitudes towards flexible offices differ from those of entrepreneurs and start-ups (who are commonly perceived to be the main users of flexible office space) covering: vibe, scale, model and cost. Corporate occupier sectors sit on a scale between early stage and advanced when it comes to their current and future use of flexible offices. There is scope across this spectrum for landlords to adapt their current office products to meet occupiers’ changing needs. Three models are emerging which landlords can use to access the flexible office market: the traditional lease model, platform model and profit/revenue share model. Regardless of which model investors pursue there are valuation implications, but it appears all future office buildings to some extent will have some sort of flexible space offering.
Now in its fifth year, the EMEA Fit Out Cost Guide is widely regarded as an industry benchmark. It provides market-leading insights and data to clients, providing invaluable support when it comes to location and fit out decisions. The EMEA edition is part of a global suite of guides, designed to support our clients wherever they do business. This year's edition covers 64 locations. Key features including different specifications, technology and furniture costs, and moves and relocations, are continued, while details around workplace have been updated in line with current trends. The traditional and agile layouts featured in this year’s Guide have also been updated, to reflect client demands, including innovative space and furniture solutions.