Dublin - ReNews.pl
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Dublin - ReNews.pl
Office Snapshot H2 2014 EMEA The economy: new year, same problems? The beginning of the year is an ideal time to look back, take stock of the situation and make forecasts for the year ahead. After a quite promising start, 2014 has left us with a number of unresolved issues, some old and some new… • Renewed concerns over the solidity of the Eurozone and whether the Euro is effectively irreversible as rumours of a “Grexit” resonate again. • The threat of deflation in Europe and the scale and timing of the ECB’s plans to address that. Prime CBD Net Office Rent Growth; H2 2014 vs. H1 2014 20% 15% 10% 5% -0% -5% -10% -15% -20% -25% -30% Dublin London – City Milan Riga Rome Oslo Antwerp Belfast Amsterdam Barcelona London – West End Madrid Bristol Birmingham Manchester Geneva Munich Wroclaw Berlin Eindhoven Kyiv Düsseldorf Moscow Minsk Saint Petersburg • Timing of the increase in interest rates in the UK and US – though increasingly likely to be pushed back. • The effects of a burst of the property bubble in China on the global economy. …but also a few certainties: Mixed rental growth patterns • Even the sounder European economies cannot withstand a spell of prolonged weakness in key economic partners. In H2 2014, conditions across European office markets continued to reflect the uneven rhythm of economic growth in Europe. That has led us to divide them into four main categories: • The power of politics: how political outcomes, or even simple speculation on those, can drive sudden change in sentiment: e.g. the upcoming elections in Greece. • Outside Europe, the US has reaffirmed its role of economic powerhouse, with annual GPD growth in at 5% in Q3 2014. • Bubble or not, China’s economy is structurally slowing down. How the former play out will shape the European economic landscape in 2015. In our view, a slow growth scenario remains the more likely at present. “Under pressure” markets: these comprise parts of southern Europe and the Eastern fringe of the continent (Russia, Ukraine). Uncertainty and economic weakness have kept rents under pressure here and resulted in increasing vacancies, and this will likely carry over to 2015. Stable/flat markets: these include a mixed bag of markets such as Germany Big 6, Paris, parts of Scandinavia and CEE. In Germany, prime rents increased throughout 2014 and are now at their cyclical peak. Demand has also softened, reflecting the more cautious economic outlook. Despite the more worrying state of the French economy, prime CBD office rents in Paris were unchanged in H2, but downside pressure remains in place across the rest of the market. In most cases, including Paris and Germany, prime rents are forecast to remain stable through at least the first part of 2015. 1 Office Snapshot | H2 2014 | EMEA | Colliers International “CBD-led” recovering markets: these include key office locations in Spain, Ireland and Netherlands, which are benefitting from the economic upturn and improved sentiment. In H2, prime rents rose the most in Dublin (+14.3%) but also in Madrid (+2.0%), Barcelona (+2.9%), and Amsterdam (+2.9%). In the latter, prime rental values are now near their pre-crisis levels. Despite Italy’s continuing economic woes, Milan and Rome have also seen a first glimpse of rental growth in H2, for the first time since 2011 in the former and 2012 in the latter. In Madrid and Dublin rents are nonetheless rising from a very low base, and in virtually all the markets in this category increases are localised and confined essentially to CBDs and the best office districts. In 2015, we expect continued improvement for these markets, subject to the economic recovery remaining on track, with greater downside risks for Italy. “Ahead of the curve” markets: this grouping is dominated by the UK, where there are signs of rental growth becoming increasingly broad-based and filtering through to the regions. In H2 2014, prime rents increased in London West End (+2.1%), London City (+8.3%), Manchester (+1.6%), Birmingham (+1.8%) and Bristol (+1.8%). Forecasts point to CBD rents increasing further in a majority of centres in the next 12 months as business confidence continues to improve. Capital markets ahead of fundamentals In H2, we saw the weight of capital targeting European real estate pushing prime office yields lower across a diverse number of locations. With the leasing market generally still lacking vigour, this means pricing continued to move faster than fundamentals, especially in recovering markets 2 (see previous section) where the rental recovery has been so far primarily driven by a shortage of good quality space rather than a convincing upturn in demand. Indeed, virtually all those markets have seen prime office yields moving in by varying degrees in H2 2014: Amsterdam (-20 bps), Madrid (-75 bps), Barcelona (-75 bps) and Dublin (-50 bps). Yield compression continued to be observed in the so-called “safe-haven” markets of London (West End and City; -25 bps), Paris (-10 bps), Munich (-25 bps) and Frankfurt (-10 bps), but also across regional UK cities (Manchester, -50 bps; Birmingham, -50 bps; Edinburgh, -25bps; Glasgow, -25 bps), testament to the positive sentiment around the UK economy and property market, and expectations of rental growth. Other cities that recorded downward movements in yields over the same period include Brussels, Dusseldorf, Oslo, Prague, Budapest, Sofia, Tallinn and Vilnius. By contrast, reflective of the weaker economic prospects, prime office yields rose in Moscow and Kiev. Going forward, expectations of a lasting ultra-low interest rate regime in Europe suggests that the yield spread even for prime office properties will remain appealing despite the degree of yield compression that has already occurred. This, combined with the sheer volume of domestic and cross-border capital seeking real estate investments in core and now, increasingly, in more peripheral and cyclically recovering markets, point to further yield compression in 2015, particularly in the latter. Office Snapshot | H2 2014 | EMEA | Colliers International CITY COUNTRY MEASUREMENT PRIME CBD 6 MONTHS RENT CHANGE % ANNUAL CHANGE % OUTLOOK AVERAGE CBD RENTS PRIME YIELD 6 MONTHS CHANGE BPS ANNUAL OUTLOOK CHANGE BPS Tirana Albania EUR/sqm/month 24.5 0.0 0.0 tu 17.0 9.50% 0 0 Vienna Austria EUR/sqm/month 28.0 0.0 7.7 p 19.5 3.80% 0 30 tu Minsk Belarus EUR/sqm/month 34.0 -8.1 -8.1 tu 28.0 13.00% -150 -150 n/a Antwerp Belgium EUR/sqm/month 12.5 4.2 7.8 tu 10.5 7.00% 0 -25 Brussels Belgium EUR/sqm/month 22.1 0.0 5.2 tu 15.0 5.75% -25 -25 q Sofia Bulgaria EUR/sqm/month 13.0 0.0 8.3 p 10.5 9.00% -50 -50 tu Zagreb Croatia EUR/sqm/month 15.0 0.0 0.0 tu 8.50% 0 0 tu Prague Czech Republic EUR/sqm/month 19.5 0.0 -4.9 tu 12.0 n/a 6.00% -25 -50 tu Copenhagen Denmark DKK/sqm/year 1,800.0 0.0 0.0 tu 1,300.0 5.50% 0 0 Tallinn Estonia EUR/sqm/month 16.0 0.0 0.0 tu 14.4 7.10% -40 -40 Paris France EUR/sqm/month 62.5 0.0 -3.8 tu n/a 3.90% -10 -10 Tbilisi Georgia USD/sqm/month 21.0 0.0 0.0 tu 13.6 12.00% 0 0 tu Berlin Germany EUR/sqm/month 27.0 -1.8 -1.8 tu 19.0 4.50% 0 0 tu Düsseldorf Germany EUR/sqm/month 26.0 -5.5 -5.5 tu 19.5 4.90% -20 -20 tu Frankfurt Germany EUR/sqm/month 38.0 0.0 0.0 tu 32.5 4.75% -10 -10 tu Hamburg Germany EUR/sqm/month 24.5 0.0 2.1 tu 22.5 4.50% 0 -20 tu Munich Germany EUR/sqm/month 41.0 -1.2 0.0 tu 30.0 4.00% -25 -25 tu Stuttgart Germany EUR/sqm/month 25.0 0.0 n/a tu 18.0 5.10% 0 -10 tu Athens Greece EUR/sqm/month 16.0 0.0 -11.1 tu 11.0 8.25% 0 -25 tu Budapest Hungary EUR/sqm/month 18.0 0.0 0.0 tu tu Dublin Ireland EUR/sqm/year 480.0 14.3 Milan Italy EUR/sqm/month 38.6 Rome Italy EUR/sqm/month 34.8 Riga Latvia EUR/sqm/month Vilnius Lithuania EUR/sqm/month Amsterdam Netherlands EUR/sqm/year tu q q tu q 12.5 7.25% -25 -50 21.2 p 430.0 5.00% -50 -125 7.2 -3.5 p 32.3 5.90% 0 0 tu 5.5 4.4 p 26.6 6.50% 0 30 tu 17.0 6.3 6.3 tu 14.0 8.00% 0 0 tu 17.4 0.0 0.0 p 14.8 7.50% -25 -25 q 350.0 2.9 4.5 p 245.0 -20 -60 tu q Eindhoven Netherlands EUR/sqm/year 185.0 -2.6 -2.6 q 135.0 5.90% n/a n/a n/a n/a Rotterdam Netherlands EUR/sqm/year 235.0 0.0 0.0 tu 148.0 6.80% 0 -20 tu Oslo Norway NOK/sqm/year 4,500.0 4.7 12.5 3,800.0 4.80% -20 -40 Krakow Poland EUR/sqm/month 15.5 0.0 0.0 tu 13.7 7.50% 0 0 tu Warsaw Poland EUR/sqm/month 24.0 0.0 0.0 q 16.0 6.00% 0 0 tu Wroclaw Poland EUR/sqm/month 14.8 -1.3 -1.3 tu 13.5 7.00% 0 0 tu Lisbon Portugal EUR/sqm/month 18.8 0.0 1.4 p 14.9 8.00% 0 0 tu Bucharest Romania EUR/sqm/month 17.0 0.0 0.0 tu Moscow Russia USD/sqm/month 70.0 -7.3 -6.7 q Saint Petersburg Russia USD/sqm/month 40.6 -25.2 -25.1 Riyadh Saudi Arabia SAR/sqm/year 2,300.0 0.0 Belgrade Serbia EUR/sqm/month 17.0 0.0 Bratislava Slovakia EUR/sqm/month 14.5 Barcelona Spain EUR/sqm/month Madrid Spain EUR/sqm/month Stockholm Sweden Geneva p q 14.5 7.75% 0 -50 n/a 9.00% 50 50 tu 31.2 9.00% 0 0 tu 15.0 tu 1,400.0 10.00% 0 50 tu 3.0 tu 15.5 9.00% 0 -50 tu 0.0 0.0 tu 11.0 7.50% 0 0 tu 18.0 2.9 2.9 p 14.5 5.25% -75 -100 25.0 2.0 3.1 p 19.0 5.00% -75 -100 SEK/sqm/year 5,650.0 0.0 0.9 tu 4,700.0 4.50% 0 0 tu Switzerland CHF/sqm/year 825.0 -1.2 -2.9 tu 580.0 4.50% 0 25 tu Istanbul Turkey USD/sqm/month 45.0 0.0 0.0 q 33.4 7.00% 0 0 tu Kyiv Ukraine USD/sqm/month 31.0 -3.1 -11.4 tu 17.0 13.00% 100 200 tu Abu Dhabi United Arab Emirates USD/sqm/month 39.0 0.0 0.0 tu 30.9 10.00% 0 0 tu Dubai United Arab Emirates USD/sqm/month 60.0 15.7 27.8 tu 40.9 10.00% 0 0 tu Belfast United Kingdom GBP/sqft/year 14.5 3.6 3.6 p 13.0 6.25% 0 0 q Birmingham United Kingdom GBP/sqft/year 29.0 1.8 1.8 p 23.0 5.25% -50 -50 q Bristol United Kingdom GBP/sqft/year 28.0 1.8 1.8 p 24.5 5.75% 0 -50 q Edinburgh United Kingdom GBP/sqft/year 27.5 0.0 0.0 tu 21.0 5.75% -25 -25 q Glasgow United Kingdom GBP/sqft/year 29.0 0.0 0.0 tu 27.0 5.75% -25 -25 q Leeds United Kingdom GBP/sqft/year 27.0 0.0 3.8 p 21.0 5.50% 0 -75 q London – City United Kingdom GBP/sqft/year 65.0 8.3 8.3 p 53.5 4.25% -25 -50 q London – West End United Kingdom GBP/sqft/year 122.5 2.1 2.1 p 95.0 3.50% -25 -25 tu Manchester GBP/sqft/year 32.5 1.6 8.3 p 25.0 5.00% -50 -100 tu United Kingdom Prime CBD Net Rent The top open-market tier of rent that could be expected for a unit of standard size (500-1,000 sqm), and of the highest quality and specification (Grade A), in the best location in the market at the survey date. The figure excludes service charges and taxes, and does not reflect tenant incentives. 3 q p q q Prime Yield The yield an investor is prepared to pay to buy a Grade A building, fully-let to high quality tenants at an open market rental value in a prime location. The size of the building and lease terms should be commensurate with the market. The yield quoted will reflect local market practice, which can differ by country. Office Snapshot | H2 2014 | EMEA | Colliers International