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Europe - CRE 360 report - February 2022

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Economic growth is easing in the Eurozone 

A normalization in growth is expected in Europe, with household spending underpinned by cheap financing conditions, a further improvement in the labour market and faster wage growth. Stronger supply chain disruptions and inflationary pressures may have a negative impact on 2022.

 

Investment back to pre covid-19 levels 

€272.7bn was invested in Europe over 2021, which represents a 15% increase vs 2020, in line with the pre-Covid-19 levels. Investment in logistics (+51%) reached an all-time high while office (+10%) and hotel (+33%) investments are on the road to recovery. However retail investment (-7%) continues its descent. 

 

Office: very dynamic Q3 and Q4 

Take-up at the end of 2021 saw a significant increase (+27%) compared to last year. Slightly more than 10 million sqm was taken-up last year. Even though the pre-covid levels are not reached, take-up showed signs of normalisation in Q3 and Q4.

 

An all time-high for logistics

Market fundamentals are healthy, underpinned by strong economic growth. Low vacancy rates combined with strong demand boosted by e-commerce contribute to rental growth. Investment is setting a new record gaining share on other assets. Prime yields are still compressing, reflecting aggressive pricing on prime products. 

 

Retail industry on the way to recovery 

With retail trade gradually resuming across Europe with restrictions easing, retail investment slightly improved from Q2. Retail warehousing and supermarkets continue to benefit from investors’ rising interest while shopping centres and high street may attract opportunistic transactions in the coming months. 

 

Residential: from alternative to mainstream 

Soaring house prices driven by cheap financial conditions, high saving rates and shift in housing demand. Resilient rental markets challenged by international mobility restrictions and rent regulation. High investors demand continue to compress residential yields
 

Europe_CRE_360_-_BNPPRE_Global_Research_10022022
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