3,882
edits
Commercial Real Estate: Europe: Difference between revisions
no edit summary
No edit summary |
|||
| Line 185: | Line 185: | ||
| -4.85% | | -4.85% | ||
|} | |} | ||
Oxford Economist predict additional property value declines in 2023:<ref>https://realassets.ipe.com/news/oxford-economics-downgrades-real-estate-forecasts-amid-banking-turmoil/10065752.article</ref> | Oxford Economist predict additional property value declines in 2023:<ref>https://realassets.ipe.com/news/oxford-economics-downgrades-real-estate-forecasts-amid-banking-turmoil/10065752.article</ref> | ||
| Line 191: | Line 190: | ||
* The economic consultancy now expects capital values across commercial real estate sectors in Europe to fall by 10% in 2023 – after an 11% correction in the UK and 3% correction in continental Europe last year. | * The economic consultancy now expects capital values across commercial real estate sectors in Europe to fall by 10% in 2023 – after an 11% correction in the UK and 3% correction in continental Europe last year. | ||
* Sharper decline for continental Europe than the one experienced during the global financial crisis | * Sharper decline for continental Europe than the one experienced during the global financial crisis | ||
Citi anayst forecast a 20%-40% decline in asset values over 2023 and 2024.<ref>https://www.bloomberg.com/news/articles/2023-03-27/european-real-estate-stocks-face-50-downside-citi-analysts-say</ref> | |||
== Office Outlook == | |||
=== Demand<ref name=":0" /> === | |||
* European office take-up reached 9.9m sq m during 2022, 2% above the pre-pandemic average. | |||
* Looking to 2023, some occupiers are holding off on decision-making, prudently not committing capital at a time of geographical uncertainty, | |||
=== Leasing === | |||
* Leasing activity continued to recover, rising by 14% YoY, as business confidence rose and occupiers resumed activity. | |||
* Southern Europe leasing activity performed strongly against the pre-pandemic average, led by Lisbon (+80%) following a number of pre-lets from professional services companies and Milan (+51%). Conversely, Amsterdam’s take-up fell by 44% against the pre-pandemic average. | |||
* European office lease incentives remained stable between Q1 2022 and Q4 2022, at 10.3% of total lease value | |||
* Average conventional lease lengths remain largely in line, although do vary across the board, with three-/five-year leases more commonplace in mainland Europe and ten-year leases in the UK and Ireland. | |||
== Vacancy Rates == | === Vacancy Rates === | ||
[[File:CRE 1.PNG|thumb|377x377px|'''''Lease incentives as a percentage of total lease value''''']] | [[File:CRE 1.PNG|thumb|377x377px|'''''Lease incentives as a percentage of total lease value''''']] | ||
Vacancy rates have been increasing since last year:<ref>https://www.savills.com/research_articles/255800/340337-0#:~:text=Vacancy%20rate%20nudges%20up%20to%208%25,-Rental%20growth%20still&text=Vacancy%20rates%20increased%20by%20an,220%20bps%20to%207.8%25</ref> | Vacancy rates have been increasing since last year:<ref>https://www.savills.com/research_articles/255800/340337-0#:~:text=Vacancy%20rate%20nudges%20up%20to%208%25,-Rental%20growth%20still&text=Vacancy%20rates%20increased%20by%20an,220%20bps%20to%207.8%25</ref> | ||
| Line 201: | Line 215: | ||
== Financing Rates == | == Financing Rates == | ||
The all-in interest for a loan on a prime stable asset across European cities now ranges between 4-6%, up from between 2-3% just a year ago.<ref>https://www.bayes.city.ac.uk/news-and-events/news/2023/march/new-bayes-european-lending-report-finds-that-borrowers-are-paying-up-to-6-all-in-interest-for-loans-on-prime-european-properties</ref> | The all-in interest for a loan on a prime stable asset across European cities now ranges between 4-6%, up from between 2-3% just a year ago.<ref name=":0">https://www.bayes.city.ac.uk/news-and-events/news/2023/march/new-bayes-european-lending-report-finds-that-borrowers-are-paying-up-to-6-all-in-interest-for-loans-on-prime-european-properties</ref> | ||
* Loan interest charged on opportunistic and repositioning assets differ more widely, especially among debt fund lenders. It can range between 5.5-7.5% | * Loan interest charged on opportunistic and repositioning assets differ more widely, especially among debt fund lenders. It can range between 5.5-7.5% | ||