CBRE 2019 Market Outlook: European Real Estate Markets Continue To Build Momentum despite Global Uncertainty
December 17, 2018
The European property sector is expected to grow and bring new opportunities, despite continued downside risks, according to CBRE’s 2019 EMEA Market Outlook report.
CBRE expects economic growth in Europe will remain above-trend rate in 2019 and 2020, although recent indicators suggest some slowing of momentum. Spain, Ireland and the central European countries are expected to see the fastest economic growth, while France’s growth accelerates as recent economic reforms begin to pay off. However, UK growth is expected to remain below-trend, but with better long-term potential once the current uncertainty around Brexit passes.
Hungary “We expect Hungarian investment turnover to be close to last year’s level – in the rnage of 1.7-1.8 billion EUR in 2018. The appetite for property remains high in HU – the only bottle neck is the relatively limited new supply. Strong economic growth remains key to new office occupational demand – which we foresee to be solid in 2019 as well. Looking at the office pipeline, our forecast shows that many projects are delayed and shifted into 2020 therefore we expect office market to remain tight for occupiers with new deliveries declining again under 100k sq m.”, Gábor Borbély MRICS Head of Research and Business Development at CBRE Hungary added.
CBRE also expects a strong European investment market in 2019, though volumes may fall moderately due to an end to quantitative easing, caution about geopolitical risks and a lack of available stock in some countries.
Several sectors are expected to perform well and bring new opportunities for investors and occupiers in 2019. Industrial and logistics is set to be boosted by both economic growth and the ongoing expansion of e-commerce. For the residential sector, most major markets are expected to see robust growth in rents and capital values, with Germany and the Netherlands most prominent.
Office markets around the region are expected to see positive growth in leasing levels in 2019. However, major European cities, including Paris, Berlin, Stockholm and London, are expected to see lower levels of employment growth in office-using sectors. Retail continues to adjust to far-reaching changes in consumer behaviour and more cautious investor sentiment, although assets that offer either experiential retail or convenient local amenities are better placed to withstand these changes.
“Despite ongoing macroeconomic and political uncertainty in many parts of the world, 2019 presents some exciting opportunities for real estate investors and occupiers, from tech and innovation to alternatives and data centres. While some sectors may see more subdued performance, reflecting concerns around the loss of economic momentum in parts of Europe, the overall picture remains relatively positive and we expect the European economy will continue to grow at an above-trend rate in 2019.”,Neil Blake, Global Head of Forecasting and Analytics at CBRE said.
- CBRE expects a strong investment market in 2019, but a moderate decline compared to 2018.
- Main drivers are the end of quantitative easing, caution due to geopolitical risks and a lack of available stock for sale in some countries after several years of very high investment turnover.
- Despite the end of quantitative easing, accumulated savings will keep interest rates low in the long-run.
- Slower growth in leasing levels, but supply-side constraints will support positive real rental growth in most major office markets in 2019.
- Acceleration of the “agile” space agenda, with occupier trends shifting demand towards tech-enabled high-amenity buildings.
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