Real estate convictions Europe

3rd quarter 2020 and outlook

Just as the global economy was beginning to recover from its historic post-lockdown drop,

uncertainty surged with the enacting of tougher measures to slow the spread of new Covid-19 infections in many countries. However, a major turn in fighting the pandemic may have occurred with the announcement early this month by Pfizer and BioNtech regarding the likely efficacy of their vaccine candidate, which is currently in phase 3, the last stage before certification. For the moment, the latest projections are for a 4.4% global contraction in 2020, slightly better than expected, thanks to the strength of the recovery after the lockdown and during the third quarter. But pandemic uncertainties in the fourth quarter of 2020 could undermine the recovery in 2021 (projected at +5.2%).

With 160 billion euros invested in the first nine months in 2020 (-19% year-on-year), including 99 billion euros in the euro zone (-22%), the European commercial property market* did shrink but is still above its 10-year average. This shows that it remains attractive in the long term. Germany (41 billion euros, -2% year-on-year) is a resilient market; France (21 billion euros, -23%), the Netherlands and Belgium (15 billion euros, -25%) are still far above their 10-year average; and while Spain (6 billion euros, -51%) and Italy (5 billion euros, -34%) have dropped precipitously. On the whole, most prime office, residential and healthcare yields were stable between the second and third quarter 2020. Second-generation shopping centres and retail parks continued to widen but at a slower pace than previously. High street shops have been mostly spared, especially in prime locations of large metropolitan areas. Lastly, after a correction early in the pandemic and during the second quarter, hotel yields levelled off in the third quarter 2020.

* Commercial property means offices, retail shops, logistics, real-estate services
and residential property for institutional investors.
Source of quantified data: CBRE, RCA, Oxford Economics.

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Couverture Note Marché immobilier europe bureaux commerce résidentiel santé hôtel

The team

Daniel While Research, Strategy & Sustainability Director

With a university education in local economic development, Daniel While began his career as business establishment consultant to local authorities. In 2006, he joined the Institut de l’Epargne immobilière et Foncière as analyst, and specialised in the world of unlisted real estate funds (SCPIs and OPCIs for France).

He is co-author of the book Les OPCI published by Delmas (September 2008). He joined Primonial REIM in 2017, where he held the position of Development Director, then Research & Strategy Director from 2019.

Henry-Aurélien Natter Research Manager

Henry-Aurélien Natter joined Primonial REIM as Research Manager in January 2018. He has the mission of developing the analyses of the Research & Strategy Department on the real estate markets, the economy and capital in France and in Europe.

Henry-Aurélien Natter began his career at Les Echos Etudes (formerly Eurostaf), then at C&W (formerly DTZ), and lastly at BNP PRE, where he acquired solid and varied experience in real estate research, strategy and finance. He is qualified with an AES degree in Business Management, a Masters Decree in management and SME management, and an International Master in commerce and marketing.

Adrien Isidore Economist Statistician

More than a year after the start of the Covid 19 pandemic, around EUR 115 billion were invested in commercial real estate in the first half of 2021, again confirming the relatively good resilience of this asset class. The dynamics differ both between European countries and between the asset classes we examine in this publication: we’ll take a closer look at office, retail, residential, healthcare and hotels, in all of which we’ll also highlight the outlook the respective asset class.

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