Euro cities capitalize investors’ attention in 2018
RICS confirms that despite prospect of a shift in monetary policy across the EU in 2018, Berlin, Amsterdam, Frankfurt and Madrid continue to be most attractive to property investors and tenants alike across the world, according to the latest RICS Commercial Property Monitor.
However, medium term indicators point to some rotation towards smaller CEE markets with cities such as Sofia, Budapest and Prague also producing firm results.
The RICS Global Commercial Property Monitor suggests that sentiment remained generally positive across the majority of real estate markets covered by the survey during Q4 201. The Occupier Sentiment Index* (OSI) is positive in 28 out of the 34 countries reported on (chart 1) while the comparable figure for the Investment Sentiment Index* (ISI) is 27.
The euro zone is enjoying one of its best moments since the financial crisis. Once again, European markets registered the strongest performance in both RICS investment and occupier sentiment during the last quarter of 2017 and indicators show great perspectives for 2018.
Meanwhile, contributors to the survey from European cities consistently highlight a lack of supply of good quality property with vacancy rates in the office sector, for example, now at their lowest level since 2008. This is clearly having an impact in underpinning the current pricing environment in the more expensive markets; it may also partly explain the relatively sanguine assessment of the prospects in the face of the likely shift in the direction of monetary policy from the ECB as the year develops.
The impact of Brexit
Despite reports suggesting that the UK’s decision to leave the EU is likely to result in the loss of fewer jobs in the former than some earlier estimates indicated, respondents to the survey working in a number of European cities continue to suggest they are receiving enquiries from British businesses regarding the availability of space. This is particularly so in Amsterdam but also in Warsaw, Dublin, Paris and Frankfurt. Meanwhile, around one quarter of contributors from central London continue to report that they have been approached by companies looking to relocate at least part of their business overseas.
In the CEE region, Hungary registers solid market dynamics with positive occupier and investment conditions. Although rental projections for the year ahead were revised down from
The previous report, due to a slightly less upbeat outlook for the prime sectors of the market, respondents still anticipate rental values to post increases in all areas of the market.
Romania experience a solid momentum behind the investment market.
In Poland, demand from occupiers continues to increase strongly but availability is still rising. Elsewhere, the growing global economy helps strengthen outlook for real estate in emerging markets. The results for India, China and Brazil are all a little stronger in the latest survey compared with Q3 with cities such as Bengaluru, NCR, Mumbai, Beijing and Shanghai scoring particularly highly in the forward-looking indicators.