di Thomas Beyerle, Managing Director Catella Property Valuation GmbH
At the end of the summer, a lot can be read on the risks in Europe and the effects on real estate markets. For this reason, the question arises of how market participants will react to the change of mood. Particularly as in the fundamental analysis, most national economic experts see themselves in a positive cycle of the economy.
Today, we would like to present to you the current yield figures, based on the data for August – as it was last done in February of this year. For a total for 40 European locations, we have gathered the prime yields for the asset class’s office, retail and logistics and analyzed them on their further progress until the end of the year.
Did you know that:
– Until the end of the year, no further price increases will occur in the clear majority of European markets across all asset classes?
– Especially for retail properties, the dynamics of the price rally so far seem to be over?
– Only for office properties the purchasing mood of investors is unbroken? In 26 of 40 analyzed locations, the yield expectation for the end of the year remains stable.
This is, of course, primarily an aggregated view, but in the more detailed analysis of the entire European market no exceptions can be found but Helsinki. Helsinki is the only location, which can record decreasing yields in all asset classes by the end of the year.
– Germany remains in the focus of investors, followed by France. In the UK, however, the investors continue to act reserved. The insecurity regarding the implications of Brexit can still be sensed.
– In general, the activities of investors are defined by very rational and calculated decisions. The first clear indications of a structural shift of investments away from retail towards logistics properties can be seen.
Following developments are shown by the analysis:
– Asset class office:
In 26 locations the yields remain stable until the end of the year, while in the remaining 14 locations the prime values further decrease, including in Brussels, Helsinki, Paris, Berlin, Frankfurt, Munich, the Baltic States, Luxemburg and Oslo. At the same time, investors see growth potential in these locations and remain in a purchasing mood.
– Asset class retail:
In the asset class retail, the yield remains stable in almost all locations. Only in Helsinki, Munich and Stuttgart we expect decreasing yields. As a whole, a widespread easing is expected. Merely in the South of Germany, increasing prices seem possible. The topic “online shopping” seems to have reached many investors.
– Asset class logistics:
For the logistics segment, the respective regional cluster for each location was considered, due to the particularities of this asset class. For 24 of the remaining 39 locations, we expect a stable prime yield. Decreasing rents are registered for the remaining 15 locations, including Vienna, Helsinki, all inspected German regions, Rome and Milan, Amsterdam, Lisbon, Barcelona and Zurich. In total, the dynamics in the European investment market for logistics remain high. The main factor is the identification of growth zones with a focus on European urban centers. Germany is the main target market, followed by the Netherlands and, besides Paris, certain regions of France.
Because of the expectations towards a potential price easing tendency in Europe, a very rational investor perspective can be seen, which especially considers the mid- to long-term exit timing of investments made today. Many of the supposed political insecurities and risks are considered in the values. The mood seems to be carried by the good current economic situation.