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.
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.
The European Central Bank (ECB) is carrying out the most comprehensive assessment of the strength of the Eurozone’s major banks. The ECB is requiring the banks to take part in the Asset Quality Review (AQR) to find out how much bad property debt each bank holds; demanding up-to-date reviews of the value of their property portfolios, as well as other areas of banks’ balance sheets. The ECB hopes that the AQR will rebuild confidence in banks by fostering greater transparency and making supervisory practices across European banks consistent. The Asset Quality Review will go part of the way to restore industry confidence in banks. Spain and Ireland’s approach to tackling the debt crisis head-on appears to be a winning strategy. Restraints on time and quality of information may limit the reliance that can be placed upon the Asset Quality Review. Banks need to look to the future to prevent a similar crisis happening again and work with valuers to establish analytical tools and services that will help them monitor their portfolios.
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
Aggregate European take-up bounced back, despite an exceptionally low level of demand in Moscow. An addition to further strong demand in London, was Paris which recorded its highest level of take-up since 2012. Particularly encouraging was the level of demand recorded in southern Europe, with Madrid, Milan and Lisbon all reporting encouraging transaction levels. Despite some decreases in the vacancy rate in western European markets, a large volume of speculative completions in core CEE markets meant the EU-28 vacancy rate remained effectively flat for the second consecutive quarter. Symbolic of the improved economic stability over the past 12 months was an increase in the prime rent in Madrid, the first prime rental growth in a southern European market since the downturn. However, there is a cluster of markets which have moved to the downward curve of the cycle due to an oversupply of newly completed space which is outweighing demand. Although development in western Europe has picked up in 2014 it is heavily focused in a few key markets where the impact on stock levels is less pronounced. In some of the recovery markets there is still almost no development in progress. As demand continues to improve this will further limit the options for occupiers looking to relocate.