Europe’s first quarter investment volumes this year fell 74% on the opening period of last year with a total trading volume of just €11.4bn ‘with no market unscathed’, says Cushman & Wakefield.
In an investment trading update published today it said that prime yields have risen 28 basis points to 7.5%, their highest level for nearly 5 years and 139 basis points up since 2007.
However it said while yields moved out sharply across the region the pace of change was not quite as marked as in the final quarter of 2008. ‘Western European yields rose 18 basis points, compared to a 30 basis points rise in late 2008 – but much of this reflected a stabilisation in the UK,’ it said. ‘ Excluding the UK, countries including Finland, France, Ireland, the Netherlands and Portugal saw the strongest increase in yields.’
Cushman said Europe was also hit by an acceleration in the decline of the occupational sector, with rents under pressure in most areas. Cushman reports that rents are down in 24 of the 32 countries examined and by 14.5% overall, led by falls in Eastern European countries.
It said offices remain under most pressure with rents down 19.3% a year in the first quarter, versus a 12% drop for retail and 9.5% for industrial. Emerging markets led the fall, with Eastern Europe seeing a fall over the quarter of 52% a year, againt a 14.4% drop in Central Europe, a 15.2% decrease in the UK and a 6.2% drop in the rest of Western Europe. Aside from the UK, the most affected Western markets to date are Finland, Greece, Ireland, Norway and Spain.
‘The combination of these factors left capital values across Europe down 18.5% over the year,’ it said.
However, Cushman also said that a number of markets are reporting renewed interest from some domestic high net worth individuals and families, as well as local institutions. ‘These are often investors who have been out of the market for a number of years due to competition from foreign and debt backed buyers, but who now see attractive opportunities to invest, often for assets which may rarely come to the market, albeit often in smaller lot sizes,’ it said.