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Insights

DNA of Real Estate Q1 2022

DNA of Real Estate tracks prime rents and yields in 46 cities across Europe, covering the key office, logistics and high street destinations. It has an overview of quarterly performance, and a summary of prime rents and yields for the cities and markets.

Office

Office rental growth across Europe accelerated to +1.1% quarter on quarter in Q1 2022, up from +0.8% in Q4 2021 and from (0.0%) in Q1 2021. This pushed annual growth to +2.9% with all core regions now witnessing an uplift in rents, with rent levels now above pre-pandemic levels in most regions. 

Office yields were broadly flat, down 1bp to 3.95%, with the average across continental Europe at 3.70%, and German office yields  averaging 2.65% versus 4.56% for centres across the UK and 3.59% in France.


Retail

Stresses in the retail sector continue to ease, with rents turning positive (quarter on quarter) for the first time since Q4 2019, albeit a very most +0.1% rise. Only three markets registered a fall this quarter, with four registering an increase. Out of the 41 centres monitored, rents are on average 13.9% below pre-pandemic levels (at Q4 2019).

Improvements in occupational markets is filtering into investment markets with prime yields falling 4bps over the quarter to 4.18%, leaving them 10bps lower than a year ago. The UK (-25bps) and Nordics (-10bps) saw the biggest quarterly falls. No market registered a rise over the quarter.

Logistics

The logistics sector continues to maintain its strength in both occupational and investment markets. Logistics rents rose 2.7% over the quarter taking annual growth to 7.7%, its strongest year on year growth since Q4 2000 (8.0%). All regions saw rents increase (quarter-on-quarter) led by the UK (+8.3%), Central and Eastern Europe (+3.4%) and Germany (+3.3%).
Investors continue to compete for best in class product. Prime yields across the 43 European centres monitored now average 4.12% (8bps lower over the quarter and 63bps lower over the year). Prime yields across Germany average 3.0% and just 3.03% in France. Logistics yields in the UK (3.75%) and France (3.03%) are below levels in the office sector (4.56% and 3.58% respectively) for comparable centres.

 


Notes:

DNA of Real Estate tracks prime rents and yields in 46 cities across Europe.

Nordics covers markets in Denmark, Finland, Norway and Sweden. Benelux covers Belgium, Luxembourg and the Netherlands. Semi-core covers markets in Ireland, Italy, Portugal and Spain. CEE covers markets in the Czech Republic, Hungary, Poland, Romania and Slovakia.

 

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