The first quarter of 2011 was one of general stability in values across the European commercial property market, with prime rents and yields seeing little movement, according to the latest figures released by CB Richard Ellis (CBRE).
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The largest yield reduction in offices was recorded in Kiev.
While the direction of prime yield movement is still downward, the pace of change is slow, with falls of less than 10 basis points in each of the main commercial sectors, according to CBRE's latest EMEA Rents and Yields Indices. Prime rents edged up marginally in all sectors in Q1, most strongly in the retail market which saw a 1.4% increase. Year-on-year rental growth remains strongest in the office sector, with a rise of 2.3%.
Richard Holberton, Director of EMEA Research at CB Richard Ellis, said: "The absence of strong movements in either rents or yields this quarter reflects a number of factors that, in combination, are having the effect of delaying a more convincing recovery. Economic momentum remains uneven and, with fiscal strains within the euro zone continuing to loom large, investor concerns persist about the impact of government austerity measures on the shape of any rental recovery. With prime yields having sharpened more significantly in late 2009 and early 2010, some of the capital targeting the prime end of the market may be finding it more difficult to identify value."
Yields
Office yields across Europe fell during Q1 2011. The CB Richard Ellis Office Yield Index for the EU-15 fell by four basis points in the quarter and 23 basis points versus the same quarter last year. 15 of the 56 locations in the survey saw downward yield movements this quarter, 39 remained unchanged, and just two saw an increase. The largest yield reduction was in Kiev (down 100 basis points to 13%), followed by Sofia, Belgrade, Geneva, and Dubai which all saw yield reductions of 50 basis points. The only increases were in Lisbon and Oporto where yields rose by 25 basis points to 7.00% and 8.75% respectively.
Retail yields also fell during the quarter. The CB Richard Ellis Retail Yield Index for the EU-15 fell by five basis points in the quarter and 25 basis points from the same time last year. 13 of the 50 locations saw downward yield movements, 33 remained unchanged, and only four saw an increase. The largest increases were seen in Brussels, Athens, and Edinburgh, with upward shifts of 25 basis points to 4.75%, 7.00%, and 5.50% respectively. The largest yield reductions (of 25 basis points) were in Prague, Milan, Oslo, Bucharest, Madrid, and Barcelona. There were also smaller 10 basis point falls in Zagreb, Helsinki, Dusseldorf, Frankfurt, Hamburg, Munich, and Zurich.
Industrial yields displayed the largest quarterly decrease. The CB Richard Ellis Industrial Yield Index for the EU-15 fell by eight basis points in the quarter and 27 basis points on the year. 12 of the 47 locations in the survey saw downward yield movements, 32 remained unchanged, and only three saw an increase. The largest yield reductions (of 100 basis points) were in Belgrade (down to 12%) and Kiev (15%), while increases were recorded in Lisbon, Istanbul and Dubai.
Richard Holberton, Director of EMEA Research at CB Richard Ellis, said: "The absence of strong movements in either rents or yields this quarter reflects a number of factors that, in combination, are having the effect of delaying a more convincing recovery. Economic momentum remains uneven and, with fiscal strains within the euro zone continuing to loom large, investor concerns persist about the impact of government austerity measures on the shape of any rental recovery. With prime yields having sharpened more significantly in late 2009 and early 2010, some of the capital targeting the prime end of the market may be finding it more difficult to identify value."
Yields
Office yields across Europe fell during Q1 2011. The CB Richard Ellis Office Yield Index for the EU-15 fell by four basis points in the quarter and 23 basis points versus the same quarter last year. 15 of the 56 locations in the survey saw downward yield movements this quarter, 39 remained unchanged, and just two saw an increase. The largest yield reduction was in Kiev (down 100 basis points to 13%), followed by Sofia, Belgrade, Geneva, and Dubai which all saw yield reductions of 50 basis points. The only increases were in Lisbon and Oporto where yields rose by 25 basis points to 7.00% and 8.75% respectively.
Retail yields also fell during the quarter. The CB Richard Ellis Retail Yield Index for the EU-15 fell by five basis points in the quarter and 25 basis points from the same time last year. 13 of the 50 locations saw downward yield movements, 33 remained unchanged, and only four saw an increase. The largest increases were seen in Brussels, Athens, and Edinburgh, with upward shifts of 25 basis points to 4.75%, 7.00%, and 5.50% respectively. The largest yield reductions (of 25 basis points) were in Prague, Milan, Oslo, Bucharest, Madrid, and Barcelona. There were also smaller 10 basis point falls in Zagreb, Helsinki, Dusseldorf, Frankfurt, Hamburg, Munich, and Zurich.
Industrial yields displayed the largest quarterly decrease. The CB Richard Ellis Industrial Yield Index for the EU-15 fell by eight basis points in the quarter and 27 basis points on the year. 12 of the 47 locations in the survey saw downward yield movements, 32 remained unchanged, and only three saw an increase. The largest yield reductions (of 100 basis points) were in Belgrade (down to 12%) and Kiev (15%), while increases were recorded in Lisbon, Istanbul and Dubai.
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