Catella: European office markets 2015 – another tidy year ahead
A research report compiled by Catella shows that the office markets in Europe face a year of transformation. “Solid growth”, “Lack of new product”, “Strong and solid occupier demand” and “Investor appetite for core is still high” - a brief analysis of Catella's description of the European office markets for the coming months.
Most of the 32 markets1covered in the report are registering further yield compression and a stable environment for top rents. There is uncertainty in the interest rate policy for 2015 - but with no short-term effect on investment markets.
With an expected investment volume of around EUR 50 billon in European office investments by end of this year in the covered investment centers, and a further increase in money flows expected, the good market environment is predicted to continue. In particular, new sources of capital from the Middle East and Asia will be seen within the period, but also the catch-up effect of SWF, pension funds and insurance companies.
“We expect a further expansion of investor interest in secondary locations and increasing interest in refurbishment properties. No doubt they will all look for quality in the markets and for a strategy of how to create value in their portfolios,” comments Dr. Thomas Beyerle, Group Head of Research on the investor sentiment. “The traditional focus on core property has to change due to the price increases of the past four years. This is mainly described as a value-add investment style, but developments in particular will be a stand-out factor in investment policy for the coming years.”
Graph 1: Risk-return profiles of European investment centres
The risk return chart shows the correlation between average expected return 2015 -2019 and the predicted risk level for the same 5-year period, in the different investment centres. The returns in London, Paris but also Munich, tend to be described as low compared to the rest of Europe, whilst Madrid and Barcelona are expected to give clearly higher returns in the next years. These investment centers currently have highly attractive yields, but the size of these markets differ considerably. In contrast to these “higher risk higher yield”-cities the Nordic investment centers shows again a very stable environment for investments by total returns, headed by Helsinki, followed by Copenhagen and Stockholm.
Catella also predicts a second sign of change for 2015: The main impact will be the expected interest rate increases – mid-2015 by the Fed and maybe followed by the ECB.
“The consequences for the real estate markets will be lagged and extenuated, which means that the boom will continue – before subsiding but in a further positive way,” says Thomas Beyerle.
Download the entire report from catella.com.
Catella provides high-end market analysis products and services for the property market. We use our perspectives from the financial markets and experience from investment banking to create truly forward-looking research. Catella’s research operations are led by Dr. Thomas Beyerle, Group Head of Research.
For more information, please contact:
Thomas Beyerle
Group Head of Research
+49 69 31 01 930 220, +49 172 52 55 909
thomas.beyerle@catella.de
Press contact:
Ann Charlotte Svensson
Head of Communications
+46 8 463 32 55, +46 72 510 11 61
anncharlotte.svensson@catella.se
About Catella: Catella is a financial advisor and asset manager with specialist expertise within property, fixed income and equities. We have a leading position in the property sector and a strong local presence in Europe, with some 500 employees in 12 countries. Catella is listed on First North Premier at Nasdaq Stockholm. Read more at catella.com.
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