OVERVIEW As we move towards the busy 4th quarter trading period, this report highlights some of the major trends seen in European commercial property markets so far in 2016. The big event in the political sphere was undoubtedly the surprise result in the UK referendum but excluding the UK, the demand for real estate in Europe has remained strong. Of the 35 largest non-UK office markets in Europe, prime office yields have continued to fall in 22 of them so far in 2016 with yields remaining stable. The pattern of office leasing across the European markets continues to reflect the economic situation: positive but slow growth with some marked differences from place to place reflecting offsets in the timing of cycles; all tempered with a degree of caution from the lead-up to, and result of, the EU referendum in the UK. The increased attraction of prime property is linked to the policy adopted by the ECB over the past two years. We now have negative short-term policy rates and very low long-term government bond yields. This has pushed investors towards alternative “near bond-like” assets which offer some characteristics of fixed income and security. Prime property goes some way to fitting the description and steadily rising rents and falling vacancy have helped to make the case. The majority of retail markets across Europe have seen positive retail sales volume growth so far in 2016 and the EU average growth rate has been a healthy 3.2% . The industrial & logistics markets have also performed well so far in 2016 even in the UK, where logistics occupier demand was surprisingly strong amidst a general referendum-linked slowdown. Although uncertainty around the impact of the referendum will weigh on parts of the UK market, continuing economic growth and an ongoing very low interest rate environment will continue to drive real occupier and investor demand over the rest of 2016 and into 2017 despite the plethora of elections and referenda still to come.
• E-commerce growth, changing consumer requirements, and a rise in automated technology are restructuring supply chains and changing the logistics landscape in Europe • Making maximum use of a site is critical with strong pressure to store and handle as many units as possible whilst being in close proximity to core markets • Not only can operations save on cost of land, they can also benefit from a cut in labour and transportation cost if they build vertically as opposed to outwards, or searching for cheaper space further afield • CBRE has identified two main categories of vertical solutions likely to dominate the European logistics sector; high-bay structures and multi-level warehouses • The uniformity of the goods handled in an operation is identified as the main factor in deciding on one of these vertical solutions
CBRE’s EMEA Investment Guide 2016 is the definitive introduction to investing in commercial property in Europe, Middle East, and Africa and explores the investment trends and the terms of buying, selling, and leasing commercial property across 36 countries.
•Commercial Real Estate investment in Europe totalled €51.6 billion in Q3 2016, down €15.1 billion; 23% on Q3 2015. •Germany accounted for 29% of all European investment this quarter, overtaking the UK as Europe’s largest market. •Aside from the UK market, investment in Europe is moving at a similar pace to last year. Over the last four quarters; investment in Europe excluding the UK equalled that of the previous four quarters. •Outside of the UK; investment in industrial ticked up 13% in the last four quarters compared to the previous four.