Whether our clients are acquiring, selling, managing or investing in property, good decisions depend on accurate, carefully analysed information. Our team makes a close study of real estate globally, delving into specific sectors and markets as well as exploring broader real estate trends. We report back to our clients via publications, reports and presentations.
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The research team has access to data, market intelligence and human expertise from a worldwide network of CBRE offices. The EMEA research team alone numbers 106 people in 43 EMEA countries and incorporates a specialist cross-border research team. The findings we report to our clients have a depth - and a value - that other firm’s researchers cannot match. It’s how we give our clients a competitive edge.
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Regular local market analysis and reports
Analysis and reporting of regional and global trends
The Irish commercial property market has experienced its busiest January and February in many years
A number of investors appear to be getting more confident about opportunities outside of the core Dublin market on the basis that the clear recovery experienced in the prime market is now starting to filter out somewhat
Activity in all of the occupier markets is also strong with improving economic prospects boosting sentiment over recent months
There is now an expectation that the number and value of loan and asset disposals will increase significantly over the coming months
In addition to the plethora of international funds, loan buyers, Irish REIT vehicles and domestic funds vying for investment opportunities in the Irish commercial real estate market at present, new investors from a range of jurisdictions continue to emerge
Prime office yields in Dublin are now in the order of 5.25%; prime retail yields are 5.25% also while prime industrial yields are in the order of 8.0%
In addition to the positive measures being proposed to remove obstacles to residential development, the Irish Government are also considering the introduction of a vacant land levy, which if not implemented carefully could actually have the opposite effect than the one intended
There are not enough Dublin hotel properties available to satisfy the volume of demand from international investors
An increase in transactional activity is expected in the pub sector over the coming months as the next tranche of receiver sales are launched for sale
Until such time as new buildings are ready for occupation, the scarcity of Grade A office accommodation will become more acute which in turn will continue to drive rental growth in prime locations
Many retailers around the country have been reporting an improvement in consumer sentiment and trading volumes since the beginning of the year on the back of improving economic prospects
A reduced number of cases, higher client expectations, lower fees and increased competition from Legal Process Outsourcing providers have all placed pressure on revenues at Europe’s largest law firms. Within the new economic environment, reducing costs has been the main driver of legal sector real estate activity - primarily this has been achieved through renegotiating existing leases at improved financial terms.
However, as economic sentiment has started to improve an increasing number of firms have signed leases for new buildings, where they are able to reduce expenditure by improving cost efficiency and reducing overall floorspace occupation. Despite the cost-cutting drive, some legal firms have continued to complete transactions at rents which are amongst the highest achieved in their respective markets. The floorspace reduction which is made possible by relocating to modern space is the financial justification supporting this trend.
The vast majority of firms are continuing to operate within a cellular set-up, but are reconfiguring the space to improve efficiency. There have been some examples of firms introducing open plan working, but these are largely restricted to the London and Amsterdam markets.
As the recovery progresses, we expect the sector to become increasingly active in European office markets as law firms have historically been one of the main drivers of the office market in its recovery stage.
This report reveals the six key Industrial and Logistics (I&L) trends to watch in 2014 including:
• The Re-appearance of Rental Growth - The re-appearance of rental growth will have a major impact on the I&L sector in 2014. The recovery from 2013 is expected to continue with GDP and industrial production figures for the EU-28 forecasted to grow by 1.3% and 1.5% respectively
• Continued Investment Momentum - Investment focus shifted to the I&L sector last year and continued momentum is expected in 2014. Partnership arrangements between specialist investor-developers and third party equity capital from Sovereign Wealth Funds and overseas pension funds underpinned a proportion of last year’s turnover growth and this is expected to continue
• Innovation in Order Fulfilment and Delivery - Growth in online retailing has underpinned over 40% of recent logistics leasing transactions in some markets and, with online retailing expected to post double-digit annual growth over the next five years, leasing transactions for e-tailing purposes will continue to increase
• Emerging Markets Grow - increased consumption by trading partners as a result of the economic recovery. Growth forecasts for these markets are some of the strongest in EMEA with the six largest markets in Africa expected to grow by 4.6%, eclipsing the 1.6% and 2.4% of Germany and the UK respectively
• The Search for Supply Chain Efficiency Dominates - With improvements in connectivity between Western Europe and CEE, and the growth of industrial production and manufacturing, there will be greater outsourcing in 2014 to specialist logistics companies. The quest for efficiencies places a premium on highly-accessible facilities and high through-put urban sites
• Resumption of Development - conditions are in place for a widespread resumption of development in 2014. Other than build-to-suit schemes, the I&L development pipeline has been very thin for some time. Improvements in the market and significantly increased investor interest have encouraged developers to begin bringing schemes forward in a number of locations
2014 will see the return of the crane to the Dublin landscape as the next wave of office development in the capital commences.
Prime office rents in Dublin 2/4 are set to increase by a further 15% during 2014 to reach approximately €435 per square metre or €40 per square foot by year-end having increased by more than 25% during 2013.
In addition to some new development an increase in the number of office refurbishment and retrofitting projects is expected this year.
Stronger volumes of activity are expected in the Irish retail property market over the course of the next 12 months.
In addition to existing retailers expanding and relocating, several new retailers are expected to make their Irish debut this year as international retailers increasingly focus attention on Ireland.
While prime high streets and major shopping centres accounted for the greatest proportion of activity in the retail property market last year, this momentum is expected to filter down to secondary streets and provincial locations to some degree during 2014.
Some rental growth expected to re-emerge in the Irish retail market for the first time in more than six years during 2014, albeit limited to certain prime high streets and shopping centres for the foreseeable future.
Following several years of no new development, this year will see some selective retail development coming on stream around the country, primarily in the form of additional phases in existing schemes.
There is a likelihood of matching, if not exceeding, the record level of transactional activity that occurred in the Dublin industrial and logistics sector in 2013 over the course of the next 12 months considering the volume of demand to purchase and rent prime buildings in this sector.
Now that we are entering a phase of stronger economic growth, some property investors are expected to selectively move up the risk curve from core real estate to secondary properties in an effort to boost returns.
An increasing number of global investors who lack local market knowledge and don’t have the management resources to manage Irish assets directly will look for alternatives to direct sole ownership such as partnerships and joint ventures as well as indirect investment through REIT’s and property funds.
Following the establishment of two Irish REIT’s last year, other Irish REIT vehicles are expected to emerge in 2014 although the Irish market is too small to sustain a large number. In addition to new REIT vehicles being established, 2014 could see some existing Irish entities converting to REIT structures and the existing Irish REIT’s undertaking additional rounds of fundraising.
Some significant land parcels are likely to be offered for sale during 2014, some of which will form part of larger mixed-used portfolios. Some land that originally formed part of loan sales during 2012 and 2013 are expected to be offered for sale this year.
2014 will see a notable increase in the volume of house building in the Dublin market, albeit from a very low base. This in turn will boost demand for small residential zoned sites, particularly those with planning for between 50 and 100 housing units. There is also likely to be strong demand for office sites in the capital.
Although the majority of land sales over the last 12 months have been acquired by cash purchasers, there will now be pressure on banks to provide development finance to support the beginning of the next development cycle. Demand from private equity houses to fund or partner with local developers on development projects will increase.
Outside of Dublin, a significant amount of provincial land will be traded in 2014 although buyers are likely to comprise local purchasers in the main. Only lands that are appropriately priced will attract buyers however with little or no premium payable for the benefit of zoning or planning permission.
A number of Dublin city centre hotel properties are likely to be offered for sale during 2014 as well as some good quality provincial hotels. Demand in this sector will continue to be dominated by overseas purchasers. Many of the buyers that purchased Irish hotel properties over the last number of years are likely to transact again in order to increase their exposure to the Irish market while a number of new entrants from jurisdictions that have not yet invested in Ireland are expected to emerge.
Economic sentiment has lifted across Europe and the Eurozone has begun a slow but still fragile recovery. The UK economy‘s stronger momentum points to robust growth in 2014.
Leasing activity is expected to rise modestly overall in 2014. London and Dublin offices have already seen strong upturns and offer the strongest rental growth prospects in the short term. Retail rental growth will continue to be focused on the best quality stock in prime locations.
Real estate investment activity gathered pace sharply over the second half of 2013 with the strongest growth driven by inflows of global capital to London and by the return of opportunistic investors to the Eurozone peripheral markets.
The inflows of global capital will continue, with a rising wave of Asian investment now in train. Much global investor demand will remain focused on prime assets in core markets, potentially pushing prime yields down a little further. Larger movements in value are likely to appear in particular types of non-prime property attracting interest from more risk-tolerant investors.
Commercial real estate activity in Europe finished the year on a high. The €53.4 billion of investment deals closed in the final quarter of 2013 represented a 46% increase on the previous quarter and was 19% higher than volume in the same quarter in 2012. This growth in activity is taking place in the context of a generally improving economy. Although the euro crisis remains in the background, concerns over a major resumption now seem to have passed. Economic growth expectations are improving across most of the region, and the UK figures are particularly strong. Rather oddly, however, the strongest growth in investment activity is coming at the two extremes of the market.
In 2012, the property industry experienced perhaps the most restrictive financing market of recent decades. The situation could therefore only improve in 2013
However, the last 12 months exceeded the expectations of all market participants: banks have returned to more aggressive financing, even though there has been little improvement in their equity capital reserves
The capital and refinancing market as economic drivers - robust fundamental data as a precondition for more new business
Consumer sentiment improved steadily in 2013, rising by 10.9 percentage points. A number of markets saw confidence levels strengthen throughout the year including the Netherlands and Ireland and although the EU indicator is still in negative territory it is above the long term average.
Renewed confidence has not done enough for sales
Improving confidence levels in the Autumn did not translate into a bumper Christmas for retailers in most markets, as consumers retain an element of caution when it comes to spending on discretionary items. The volume of retail sales in EU-28 grew marginally (0.1% in December 2013) but was 0.8% lower than November 2013.
Shopping Centre rents see significant growth in Q4
The CBRE EMEA Shopping Centre rent index rose by 2.9% in Q4, mostly as a result of significant rental growth in France where occupier demand for the best, most established centres remains high. This trend is not confined to shopping centres however. The gap between prime and secondary remains firmly in place in prime high streets too. Whilst the High street Index only rose by 0.8% in Q4, on a year-on- year basis this was 4.0%
Investment in Retail in Q4 highest since Q4 2006
2013 was the strongest year for retail investment in Europe since 2007 with €41.3 billion transacted. This also represents a 20.4% increase on 2012 investment volumes (€34.3 billion). Shopping centre yields moved down by 7bps and high street yields moved down by 10bps as investor demand for retail increased.