Infographic: five headwinds to a European commercial real estate recovery
Recent European valuations data from MSCI for Q2 confirmed that capital values are still falling, but at a slower pace than they were last winter. This raises the question as to whether we have reached a turning point in this downturn? Do we expect capital values to start their recovery imminently, or is it still too soon to claim that we are now out of the woods?
What you will learn:
- Our view is that it is too soon to declare a recovery, but things are looking better than before the summer.
- We still expect all-property values to decline 11% this year in Germany and 7% in France, with less of a drop in the UK, at around 5%, because of the larger correction last year.
- We contend that there are five key reasons why valuations won’t recovery strongly in the near term: tight credit conditions this year, record-low sentiment from investors, high debt costs, inadequate risk premia, stagnant economy in the near term.
Tags:
Related Posts
Post
Easing financial conditions offer CRE some respite
Our measure of financial conditions has become less restrictive in the US and started to loosen in the eurozone and the UK, reflecting investors' expectations that interest rates have peaked. This should aid the outlook for commercial real estate (CRE) on the margins, although the scale of past rate hikes, sluggish economies, and structural headwinds mean the sector still confronts challenging fundamentals.
Find Out More
Post
Is Australian office property a bad investment? That depends on timing
The office sector in Australia is facing several headwinds, including reduced demand from hybrid working arrangements, slowing economic and employment growth, and rising bond rates and yields. However, it may still present an attractive cyclical investment opportunity with astute timing and management of vacancy and incentive risks.
Find Out More
Post
Commercial real estate relative return index signals opportunities in 2025
Our new global relative return index (RRI) signals that commercial real estate (CRE) investment opportunities should slowly and selectively emerge next year before becoming more widespread in 2025. At this point, our baseline expected returns move higher than required returns, pushing the global all-property index above the 50 mark.
Find Out More