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European Real Estate Strategic Outlook : Mid-Year Review

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European Real Estate Strategic Outlook : Mid-Year Review

Europe’s economic recovery remains on track. Although not without risks, with ongo-ing concerns in places such as Greece and Ukraine, on the whole the outlook for the European economy has improved over the past six months. Confidence is high and jobs are being created. With the ECB undertaking quantitative easing, bond yields are lower than had been previously expected, while the threat of Eurozone bond yields trending considerably higher over the coming years is small.

Economic growth has begun to filter through into the real estate occupier market. The final quarter of last year together with the first quarter of 2015 represented the strong-est six-month office take-up figures since before the financial crisis.

The supply picture is helping to accommodate improvements in the market balance. The near-term pipeline remains relatively low by historical standards and developers are still cautious. Vacancy rates are declining. Across the office sector, vacancy fell from a peak of 10.5% in early 2014 to around 10% at the end of March this year. With this, rents have also risen further, with annual growth of 2.1% recorded in the first quarter of 2015.

Source : Deutsche Asset & Wealth Management

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