Providing the real estate research you need to make informed decisions.
Property Research and Consulting - What we do
Whether you are leasing, acquiring, selling, managing or investing in property, good decisions depend on accurate, forward looking, carefully analysed information. Our experienced, globally integrated research team provide a full range of information, research and consultancy services covering all aspects of the property market.
Aggregate European office take-up fell by 5.2% on the previous quarter, and remains well below pre-recession levels. Demand remains very uneven, with some cities namely London, Moscow and the five main German markets continuing to witness robust levels of demand. Conversely, take-up in other markets, such as Madrid and Paris, fell to the lowest quarterly level in recent years.
The EU-27 vacancy rate was effectively flat in the quarter. Some new completions have come through to boost prime stock levels in a few core markets, but in most cities the quality of available space has continued to deteriorate as occupiers have vacated poor quality space to upgrade to more modern accommodation.
Until there is a more widespread recovery in demand, prime office rents are likely to continue to stagnate in the majority of European markets. As was the case in the first two quarters of the year, some rental growth in a few of the best performing markets was offset by further marginal declines in weaker markets.
Some major speculative office completions will continue to come through to the market in the final quarter of 2013 and into 2014, in a few core markets. However, early forecasts suggest the volume of completions will dip back again in 2015, as very few schemes were started at the height of the eurozone crisis.
European retail investment grew to €8.2 billion in Q3 2013 - a quarterly increase of 10.2%. A broadening of investor demand was the key theme in the market – backed by recent economic improvements, with relative pricing and lack of core product being the main push factors.
Southern Europe made it back on to the investor map. The latest results for Italy and Spain combined show a three-fold increase on the previous quarter, each reporting around €600 million in retail investment in Q3. Growing investor demand and increased deal flow is certain to have an impact on pricing in the region.
Western Europe, constrained by limited availability of core product, saw an investor shift towards second-tier markets and value-add, secondary product.
Energy demand is increasingly shifting from OECD to non-OECD countries, meanwhile technological advances and new innovations are unlocking new sources of energy, creating new markets as well as prolonging the life of existing energy fields. This has the potential to impact directly on the operational decisions of firms in the energy industry
Shifts in energy demand, supply and price impacts on the real estate markets in cities where, due to proximity to oil and gas fields, a high proportion of the occupier base work in the industry; energy-dependent markets
The ‘energy-dependent markets’ are seeing rental growth that exceeds growth in both the CBRE Global Rent Index, and rental growth among other more established office markets, such as those which are considered financial centres
In the more mature office markets, rents are generally higher, but growth lower, and conversely, in the emerging markets, rents are lower but growth rates higher.
Economic, legal, demographic and socio-economic changes will result in substantial changes in cross-regional capital flows in the next decades;
This is particularly important for Europe, which is the region most exposed to cross-border investment in the global property market;
Looking ahead, flows from Asia in particular are expected to grow as China, Japan and Taiwan, and then countries such as Thailand, Indonesia and ultimately India, become sources of cross-regional capital flows.
Also potentially significant are sovereign wealth funds from countries where natural resources are only now starting to be exploited, such as Kazakhstan and Azerbaijan, with a number of African counties also showing some potential.
Take-up levels rebounded in the second quarter, as positive economic news in some key cities instilled sufficient confidence into occupiers to reignite the leasing market. Elsewhere, although the eurozone saw positive GDP growth in Q2, the economy in many markets remains in a fragile state and until a sustained recovery emerges occupiers are likely to continue to exercise caution in their real estate decisions.
The overall vacancy rate increased at the sharpest rate since 2010 as major speculative office schemes completed in a few key cities. Outside the core markets, vacancy fluctuations were predominantly driven by occupier activity. In some non-core western European markets steady levels of demand and very low levels of speculative completions have eroded some of the vacant space.
In some of the weaker markets there have been further downward adjustments to the prime rent to bring values closer in-line with the revised expectations and spending capacity of occupiers. In most markets, prime rents continued to be stable, however in some locations where demand has been improving, the shortage of high quality space has placed upward pressure on prime rents.
Further speculative schemes are due to complete in some core markets in the second half of 2013 and into 2014. However, following the rise in completions early forecasts suggest there will be a sharp dip in 2015, as very few schemes were started during the height of the eurozone crisis. This is likely to strengthen landlords negotiating position on prime buildings, and may restrict the options available to prospective occupiers going forward.
The economic background to European real estate markets has improved during 2013 with the Eurozone starting to emerge from recession and the UK recovery gaining momentum.
European occupational markets have shown only selective improvement in 2013, but reduced uncertainty has bolstered sentiment and liquidity in European property investment markets amid signs that polarisation has begun to ease. Prime-secondary yield spreads have levelled off and there is more interest and activity in a broader range of assets and markets, especially in the UK. Turnover in southern Europe has lifted from a low base.
Bond yields have risen in anticipation of the US winding down its QE programme. The response of prime property yields to higher bond yields will vary across European markets. Prime yields in recovering markets and secondary yields generally will be less affected by bond yield normalisation than prime yields in some ‘safe haven’ markets previously bid down to low levels by extreme risk-aversion.