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European Commercial Property
European Property Forecasts
Based on its latest research, consultancy DTZ is predicting that European commercial property will return an average 8 percent per year for the next five years.
The firm predicts that industrial property will lead returns during the period, with an average 9 percent annually on the forecast, retail in second place with 8 percent and offices in 3rd at 7.5 percent. "We expect the Central and Eastern European markets and Dublin to deliver higher returns compared to core markets," Fergus Hicks, global head of forecasting, said in the firm's second quarter European Property Forecasts report. "This mainly reflects the fact that yields are currently higher in these markets."
Some will be surprised at Dublin's place atop the forecast with 15 percent yields forecast across all sectors. However this is to be expected now that the Irish economy is recovering more strongly, although "some yield compression" will also play a part DTZ believes.
According to the report European commercial property rents are set for slow growth of 2.5 percent during the 5 year period, with retail rents leading growth at 3 percent, followed by office rents forecast to grow 2 percent and the industrial at 1.5 percent. Recent reports have shown the strength of the European commercial market, with CBRE recently reporting 13 percent growth in investment for the second quarter, with a total of over 31 billion Euros, and according to Cushman and Wakefield deals in the region are at a 5 year high.
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