EUROPE EUROPE COVID-19 CRE 360 COVID-19 REPORT CRE 180 SITUATION
SITUATION AFTER LOCKDOWN OUTBREAK SITUATION OVERALL SITUATION REAL ESTATE PERSPECTIVES ECONOMIC OUTLOOK SANITARY MEASURES ECONOMIC OUTLOOK ECONOMIC OUTLOOK REAL ESTATE PERSPECTIVES SUPPORT SCHEMES REAL ESTATE PERSPECTIVES OUTBREAK SITUATION CITY FOCUS ECONOMIC OUTLOOK CITY FOCUS MEASURES SANITARY SUPPORT SCHEMES GLOBAL RESEARCH JULY 2021
AGENDA CONTENTS 1 Overall Situation 01 2 Economic Outlook 02 3 Real Estate Perspectives 03
4 10 16
E X E C U T I V E S U M M A RY IN A NUTSHELL
rising again at the beginning of summer 2021, forcing governments to slow down the removal of health restrictions. However, as more and more people are now fully vaccinated, the link between infections, hospital admissions and deaths has been broken.
A new wave of infection is hitting Europe
A two-speed vacancy in Europe
CK LE I CYKMTEOS S EA DG I TE S A NEW WAVE OF INFECTION IS HITTING EUROPE MA S TtheEnumber R ofTnew ECovid-19 X T cases began In many countries
THE ECONOMY IS BOUNCING BACK
KEY MESSAGES
The economy is bouncing back
Europe has the greatest room for growth to exceed market expectations, powered by an accelerating vaccine programme and supportive policy mix. We expect a prolonged accommodative stance from the ECB and a valuable pro-cyclical growth boost from the Next Generation EU recovery fund.
REVERSAL OF DECLINE FOR INVESTMENT Q2 2021 witnessed reversal of decline in commercial real estate investment, which was created by the positive context of vaccination and release from lockdowns.
INCREASED LETTING ACTIVITY IN Q2 Increased letting activity in Q2
Reversal of decline for investment
Thanks to a much more dynamic take-up in Q2, almost 4 million sqm was taken-up in Europe’s 26 main markets, which is in line with the same period last year (-1%), despite significant discrepancies among markets.
A TWO-SPEED VACANCY IN EUROPE Vacancy stood at 7.3% on average in Europe, which remains manageable. This figure hides very different realities between extremely low vacancy rates in CBDs and in new offices and much higher levels in peripheries and 2nd hand buildings.
3
OVERALL SITUATION
RESTRICTIONS ACROSS EUROPE EUROPEAN BREAK
COUNTRIES
HOLD
THEIR
As of July 27th
BREATH
DURING
THE
SUMMER
Total lockdown High level of restrictions / curfew “Health pass” required to visit some indoor places or to attend public events
STOCKHOLM
Health Pass
Low / moderate level of restrictions Corona Passport
Covid Passport
DUBLIN
While curfew has been lifted almost everywhere in Europe, more and more countries are implementing a Health Pass to go to a restaurant, cinema, theatre or to attend a concert.
AMSTERDAM HAMBURG
Covid Certificate LONDON
Covid Safe Ticket
BRUSSELS
From 13.08
TOULOUSE
Health Pass
PRAGUE
MUNICH
Entry VIENNA tests
Health Pass
Travelling through Europe is possible thanks to the EU COVID-19 Vaccine Passport. In England, a 10-day quarantine is required for not fully UK vaccinated people and for travellers coming from France.
FRANKFURT
PARIS
WARSAW
BERLIN
DÜSSELDORF COLOGNE
Health Pass
BUDAPEST BUCHAREST
LYON MILAN
Health Pass From 06.08
Curfew in Lisbon and Porto + healh pass LISBON
MADRID
BARCELONA
Local curfew
ROME
Health Pass
Source: Government announcements. The heath pass can be a negative test result, a vaccination certificate or a recovery certificate.
5
C O N F I R M E D D A I LY C A S E S O F C O V I D - 1 9 IS A NEW
WAVE
HITTING
EUROPE
?
Confirmed daily cases in the world Asia-Pacific
Europe
United States
Rest of the World
•
In many countries the number of new Covid-19 cases began rising again at the beginning of summer 2021, forcing governments to slow down the removal of health restrictions. However, the acceleration of vaccine campaigns is now bringing hope and this new wave is expected to be contained.
•
Currently, around 450,000 new cases are being reported each day in the world, after hitting a low point mid June (with 350,000 new cases per day). This new increase may be concerning.
•
As a result of the rapid roll-out of Covid-19 vaccines in some parts of the world, cases started to decrease quickly, especially in the US and in the UK.
•
After a first and second wave in 2020 and a third wave in 2021, confirmed cases around the world decreased between April and June. However, the situation is worsening again at the beginning of July. New measures may have to be implemented to cope with this fourth wave if the vaccine roll out is too slow.
•
Moreover, the emergence of new variants all over the world may now jeopardise the effect of restrictions and of the vaccination campaign.
900 000 800 000
7-day moving average
700 000 600 000 500 000 400 000 300 000 200 000 100 000 0 March April
May
June
July
August Sept
2020
Oct
Nov
Dec
Jan
Feb
March April 2021
May
June
July
Sources: World Health Organisation. 6
N U M B E R O F D A I LY C O N F I R M E D C A S E S IS
THE
70 000 60 000
VACCINATION
PROGRAM
EFFECTIVE?
Number of daily cases
A fourth wave of infection is now hitting Europe as the number of daily cases is increasing again in a lot of countries.
•
The easing of restrictions just before the summer and the emergence of more transmissible variants are driving an increase in cases.
•
However, with the vaccination program across Europe, the number of hospital admissions and of deaths are not rising.
•
As more and more people are now fully vaccinated, the link between infections, hospital admissions and deaths has been broken.
•
However, less than 50% of the European population is fully vaccinated, and with the strong increase in the number of cases across Europe, the race to vaccinate the population should continue to dominate 2021. Moreover, the rate of vaccination has already slowed in some countries.
•
As a result, France is now putting in place a ‘health passport’ that will be required throughout different establishments from August, including bars, restaurants, cafés and shopping centres. This measure is expected to drive up vaccination rates by encouraging people to get the vaccine.
7-day moving average
United Kingdom Spain Netherlands France Germany Poland Italy Belgium Ireland
50 000 40 000 30 000 20 000 10 000 0 March April
May
June
July August Sept
Oct
Nov
Dec
Jan
2020 4 500
•
7-day moving average
Feb March April
May
June
July
2021
Number of daily deaths
Ireland Poland Belgium Netherlands United Kingdom Germany France Spain Italy
4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 0 March April
May
June
Sources: World Health Organisation.
July August Sept 2020
Oct
Nov
Dec
Jan
Feb March April 2021
May
June
July
7
VA C C I N AT I O N I N E U R O P E A RACE AGAINST THE
As of July 23rd
CLOCK
Vaccination around the World Fully vaccinated
First dose
80% 70% 60% 50% 40% 30% 20% 10% DUBLIN
0%
AMSTERDAM HAMBURG LONDON BRUSSELS
WARSAW
BERLIN
DÜSSELDORF COLOGNE FRANKFURT
PARIS
•
•
•
As cases are surging again across Europe, the vaccination pace is crucial. The consensus is quite clear among experts: the only way out of the COVID-19 pandemic is to vaccinate the population. The UK has the most advanced program in Europe, with almost 70% of its population that have received at least the first dose, followed by Belgium, Spain and Italy. However, the road is still long. In Europe, 45% of the population is fully vaccinated against the virus (vs 48% in the US and 54% in the UK).
MUNICH
VIENNA BUDAPEST BUCHAREST
LYON
Vaccination rate (2nd dose) (in % of population) > 50%
MILAN
MADRID
BARCELONA
ROME
45-50% 35-45% < 35%
8
D A I LY A I R P O R T T R A F F I C A C R O S S M A I N E U R O P E A N A I R P O R T S EUROPEAN
TRAVEL RECOVERING
FASTER
COMPARED
2020
REFERENCE DATAPOINT: 12 JULY 2021
1800
2020
2021
2019 (Reference)
1600
•
Eurocontrol – an organisation that manages 90% of Europe’s air traffic publish data on daily airport traffic across Europe, comparing data to the same period in 2019 (pre-pandemic level).
•
The number of flights across Europe are beginning to pick up but remain approximately 38% below prepandemic levels.
•
Domestic flows of traffic continue to dominate with noticeable increases on flows from France-Italy, within France and Germany-Turkey.
•
The busiest airports include Amsterdam with flights approximately 40% below 2019 levels, followed by Frankfurt (-44%), Paris CDG (-46%) and Madrid (-42%).
•
An interesting observation in the latest figures is that business travel is up by 9% compared to 2019 levels, as is all cargo travel which has increased by 5% compared to pre-pandemic levels. Low cost and traditional forms of travel remain down by 46% and 47% respectively.
•
Outside of Europe there has been an increase in demand for international travel however, long-haul international air travel is lagging short-haul European travel.
1400 1200 1000 800 600 400
Source: Eurocontrol
ZURICH
WARSAW
VIENNA
STOCKHOLM
ROME
PARIS
OSLO
MADRID
LONDON
LISBON
HELSINKI
FRANKFURT
DUBLIN
COPENHAGEN
BRUSSELS
AMSTERDAM
200 0
TO
*Total Departing and Arriving Flights to/from the main airport hub in each city. The comparison with previous year is made using the closest similar day. 9
ECONOMIC OUTLOOK
PURCHASING MANAGER INDEX SURVEYS AN
BROAD
IMPROVEMENT
OF
BUSINESS
CONFIDENCE
• The first half of the year has seen a broad-based improvement in business and consumer sentiment in advanced economies. This stems from accelerating vaccination campaigns plus declining number of new infections leading to the easing of Covid-19-related restrictions. It is aided by ongoing policy support, both monetary and fiscal. However, the elevated levels of business surveys may scale back over the rest of the year as the European situation evolves. • The third quarter is expected to see the peak in quarter-over-quarter GDP growth this year. Nevertheless, over the remainder of the forecast horizon (2022) quarterly growth is expected to stay above potential.
Manufacturing
Index 80
Services
70 60 50 40 30
Germany
20
France
Italy
Spain
United Kingdom
10 0 06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
Sources: Markit, BNP Paribas Economic Research. 11
ECONOMIC OUTLOOK WHAT
OUTLOOK
Oil crisis (1973)
8%
FOR
THE
MAIN
ECONOMIES?
World GDP
Oil crisis (1979)
Dot-com bubble (2000-2001)
Great recession (2008)
•
With the new increase in the number of Covid-19 cases, governments are forced to maintain some health restrictions, slowing again the economic recovery.
•
We continue to expect above-consensus growth this year and next. A strong pickup in vaccination rates has reduced uncertainty and cemented our view of a firm cyclical near-term recovery, already apparent in Q2 survey data.
•
This near-term picture is primarily driven by the release of pent-up demand, but signs of strength in exports and investment point to a broad-based recovery. We expect GDP to return to pre-pandemic levels by the end of this year and close to its prepandemic trend by end 2022.
•
Further ahead, we are optimistic about the mediumterm recovery as we enter a new era of policymaking regarding monetary and fiscal policy.
•
The consequences of the pandemic may only manifest themselves over time. The economy could still face headwinds even when the health situation is under control. The impact of ending liquidity support measures to household and businesses is one of the main concerns.
•
The changes in behaviour observed with the pandemic may also become permanent. For example, online shopping, working from home, and video conferencing may each have a significant impact on retail activities, office sector and business travel.
Covid-19 (2020)
6% 4% 2% 0% -2% -4%
71
73
75
77
79
81
83
85
87
89
91
93
95
97
99
01
03
05
07
09
11
13
15
17
19
21
GDP Growth in European countries France
10%
Germany
Italy
Poland
Spain
United Kingdom
5% 0% -5% -10% -15%
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
Sources: BNP Paribas, Oxford Economics, OECD. 12
GDP GROWTH IN EUROPE DIVERGENCE
IN
RECOVERY
FINLAND
-2.7
F O R E C A S T ( % ) : 2020
2021
2022
2.7
-3.3
6.0
4.9
United States
-3.5
6.9
4.7
Euro area
-6.7
4.8
5.2
Japan
-4.7
2.2
4.3
China
2.3
8.7
-1.3
8.4
9.4
Russia
-4.5
4.5
3.0
Brazil
-4.1
5.5
RUSSIA
-4.5
These include higher debt burdens for governments and many companies. There is the risk that many people who have lost their jobs or are in furlough schemes will remain unemployed for a considerable time.
•
Given the rapid roll-out of Covid-19 vaccines in some parts of the world and substantial fiscal stimulus, we are now more optimistic about the global economic outlook.
•
In the US, our 2022 growth forecast remains above consensus. We assume a sizeable infrastructure-focused spending package to be passed later this year, partly offset by higher taxes.
•
It is in Europe where we see the greatest room for growth to exceed market expectations, powered by an accelerating vaccine programme and supportive policy mix.
•
Even if the outlook improves, we expect upcoming strategy review to underpin a prolonged accommodative stance from the ECB. Also, the Next Generation EU recovery fund should provide a valuable pro-cyclical growth boost and drive up productive levels of spending.
3.1
IRELAND
2.5
5.0
POLAND
UNITED KINGDOM
-9.8
NETHERLANDS
7.8
-3.7
2.4
BELGIUM
5.1
-2.7 -5.1
3.7 CZ. REPUBLIC
-5.8 FRANCE
-8.0
SWITZERLAND
6.0
-2.7
5.3
GERMANY
3.8
4.2
AUSTRIA
-6.4
2.8
HUNGARY
-5.1
7.5 ROMANIA
-3.7
3.0 PORTUGAL
-7.6
4.5
DENMARK
-6.3 -7.2
•
4.3
3.4
-2.1
5.3
India
The analysis of Covid-19’s economic consequences predominantly focuses on the near term. Yet there will also be profound longerterm consequences.
SWEDEN
-2.9 NORWAY
World
•
ITALY
3.5
-8.9 SPAIN
-10.8
6.0
5.2
8.2
Source: BNP Paribas Real Estate Research. 13
FINANCIAL OUTLOOK ECONOMIC AND
INDICATORS
%
Policy rates
Inflation
% 4,5 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0
FINANCIAL 0,3
3,9 2,7
2,1
1,8 1,2
0,1
1,8
0,1
0,9
21
22
20
United States
•
However, while the markets have caught up with the story, we continue to believe that this rise in prices will be seen only in the short or medium term. Indeed, persistent labour market slack will prevent wage growth from accelerating and structural forces (such as digitalization and demographics) will continue to exert disinflationary pressure, keeping inflation under control.
•
We are not expecting major changes in monetary policy over the coming months. The ECB could extend its Pandemic Emergency Purchase Programme (PEPP) beyond 2021 and increase its total envelope if the financial conditions tighten or if the recovery is less positive than expected.
•
Large rises in bond yields are not expected in the coming months. Along with asset buyback programmes, there is sufficient private demand to keep government bond yields low.
•
Nevertheless, there is high uncertainty over the debt created by fiscal policies that may have some impact in the longer term.
0,1
0,1 0,3
20
The risk of a global increase of inflation figures is now at the centre of all discussions. A mix of ingredients imply a rebound in inflation: higher prices from temporary market factors, stronger overall demand, negative supply shocks and accommodative monetary policies.
0,25
0,2
2,5
•
21
22
20
UK
0,0 21
0,0
22
20
21
22
20
21
United States
Euro
22
20
UK
0,0 21
22
Euro
Government bond yields
% 8
Poland
6
Italy
4
UK
2
Spain
0
France
-2
Germany 07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
Sources: BNP Paribas Economic Research, Oxford Economics, OECD. 14
EMPLOYMENT OUTLOOK THE
IMPACT
OF
COVID-19
ON
EMPLOYMENT
Employment growth in Europe 07-09
09-11
19-21
•
Persistently high uncertainty is likely to lead to higher household savings and discourage investment. Some sectors, such as tourism and other recreational activities, will be particularly penalised, as consumers will probably remain wary of crowded public places.
•
The bold policy measures undertaken to ‘freeze’ the economy have reduced the impact of the shock on household and business finances but will not fully prevent losses. As the main measures still applied at the beginning of 2021, we expect that the effect of the crisis will remain low regarding employment.
•
We have reviewed our scenario for the next 2 years. The major job protection measures put in place by governments have a positive effect on the overall unemployment rate for 2020 and 2021. However, as the economic shock seems now to be longer than expected, we should see a small increase in unemployment rates until 2022.
•
Indeed, despite the support, some corporates will probably go out of business and the unemployment rate may rise.
•
The employment outlook will be a key variable in the coming months, as consumption will depend on household psychology. A depressed labour market may imply a boost to precautionary savings.
21-23
6% 4% 2% 0% -2% -4% -6% -8%
France
Germany
Italy
Poland
Spain
United Kingdom
Unemployment rate (in %) 20
18%
22
16% 14% 12% 10% 8% 6% 4% 2% 0%
France
Germany
Italy
Poland
Spain
United Kingdom
Sources: BNP Paribas Real Estate Research, Eurostat, Moodys analytics. 15
REAL ESTATE PERSPECTIVES
REAL ESTATE PERSPECTIVES COMMERCIAL REAL ESTATE INVESTMENT MARKETS
I N V E S T M E N T I N C O M M E R C I A L R E A L E S TAT E I N E U R O P E BREAKDOWN
OF
INVESTMENT
€bn 350
BY ASSET
CLASS
H1 2021 vs H1 2020
Investment is reversing the downward trend of the past year
300 250 200
231
-5%
92
-10%
34
-29%
150 100 50 0 08 09 10 11 12 13 14 15 16 17 18 19 20 21 60 50 40 30 20 10 0
53 44
9
08 09 10 11 12 13 14 15 16 17 18 19 20 21
+62%
• Investment was still buoyant in early 2020. Q1 2020 set a new all-time high for a Q1 in commercial real estate investment in Europe. €72bn were invested. It is the last pre Covid-19 pandemic period to be compared. • As Covid-19 outbreak hit Europe at the end of Q1 2020, investment strongly declined. It went from more than €315bn spent on a rollingyear basis at Q1 2020 to only €210bn at Q1 2021 (-33%). • Q2 2021 witnessed reversal of decline in commercial real estate investment, which was created by the positive context of vaccination and release from lockdowns. • All asset classes benefited from this, including the retail segment but to a lesser extent.
-16%
-22%
CRE REAL ESTATE
INDUSTRIAL & LOGISTICS
OFFICE
HOTEL
RETAIL
OTHER 5-YEAR AVERAGE
This excludes residential investment. 18
C O M M E R C I A L R E A L E S TAT E I N V E S T M E N T H1 2021 vs H1 2020 GERMANY
-18%
UNITED
+14%
KINGDOM
FINLAND
1.2 5.9
-30%
FRANCE NETHERLANDS
-53%
ITALY
-21%
-30%
IRELAND
+53%
BELGIUM
-60%
CZECH
REPUBLIC
LUXEMBOURG
1.3
€1-2bn
€5-10bn
< €1bn
(excludes residential investment)
27.8
NETHERLANDS
2.6 1.2
FRANCE
8.8
0.4
23.9
CZECH REP.
SWITZERLAND
AUSTRIA
1.4
1.0
SLOVAKIA
0.7 HUNGARY
0.3
ROMANIA
0.3
SOUTH EAST EUROPE
3.0
0.7
2.0 0.7
0.7
• €105.4bn were invested in Europe in H1 2021, which represents a 5% decline vs H1 2020, a result much smoother than what has been seen over the previous quarters.
POLAND
GERMANY
ITALY PORTUGAL
€10-20bn
UNITED KINGDOM
BELGIUM
-3%
€2-5bn
BALTICS
2.5
LUX.
+27%
≥ €20bn
-5% vs H1 2020
SWEDEN
DENMARK
+12%
POLAND
€105.4bn
11.0 IRELAND
SPAIN
EUROPE – H1 2021
NORWAY
0.4
• However, investment should see more improvement in the next quarters as improvement in the Covid-19 pandemic situation seems apparent in Europe.
SPAIN
3.9
Source : BNP Paribas Real Estate
19
C O M M E R C I A L R E A L E S TAT E I N V E S T M E N T V O L U M E PROPERTY
REMAINS AN ATTRACTIVE ASSET TO
BUY
CRE Investment volume (€ billion) 100 90 80 70 60
57
UNITED KINGDOM
50
54
40
38
30
38 25
GERMANY ADVISORY 8 COUNTRIES NORDICS FRANCE
20 10 0 08
09
10
11
12
13
14
15
16
17
18
19
20 21
• Volumes remain high, especially compared to 2009, as today’s credit conditions are not tight, and investors don't expect major deflation in prices in most markets for secure assets. Last but not least, cash is there and definitely king over this period. • All countries are ticking up except for France, although it should also resume growth by Q3. • The United Kingdom is particularly benefitting from its advanced vaccination campaign. It is back to the top of the European investment podium. • Northern Europe suffered the least from the pandemic, and is even experiencing a surge in investor interest.
Advisory 8 (countries): Belgium, Czech Republic, Ireland, Italy, Luxembourg, Netherlands, Poland, Spain. Source: BNP Paribas Real Estate Research. 20
INVESTMENT BY SIZE BAND
COMMERCIAL REAL ESTATE INVESTMENT IN EUROPE TOTAL AND >€100M SIZE BAND - VOLUME AND SHARE
Mega deals more impacted by the crisis •
•
•
Mega deals (>€100m) volume in Q1 2020 reached a record figure of €37bn, which represents 51% of the total investment, an unusually big share for a Q1. The mega deals had demonstrated an uptick in activity from mid 2019. The volume of mega deals dropped since Q2 2020 and only reached €88bn at Q1 2021 on a rolling year basis, -43% down on the 12 months ending with Q1 2020 figure, versus -33% for total investment. The situation is improving for mega deals as well at Q2 2021, even if slower than for the other deal categories. Big deals are more complicated and require a longer process before signature. The act of signature is a legal formality to a deal already done. This may explain why at onset the corona virus outbreak effect on the investment market impacted smaller deals more immediately. The process for small deals is easier to terminate. Yet as the crisis goes on, the momentum behind getting big deals operational is diminishing because of the problems of lockdown.
€bn 350 300 250 200 150 100 50 0
45%
32%
30%
36%
37%
43%
43%
47%
41%
44%
43%
44%
08
09
10
11
12
13
14
15
16
17
18
19
49%
231
TOTAL INVESTMENT
95
>€100M DEALS
41%
20 21
Source: BNP Paribas Real Estate. 21
CROSS-BORDER INVESTMENT MARKET •
•
•
•
Foreign investment was damaged by the spread of the outbreak through Europe. In spring 2020, most foreign investors delayed their ongoing deals until Europe was open again. Over the last twelve months ending with Q1 2021, foreign investment plummeted (38% vs Q1 2020), but the situation was also improving at Q2 2021. Within foreign investment, European cross-border investment was less affected (-18% over the last 12 months), which makes sense as geographical proximity favoured business during the lockdowns. Investment from other continents was, on the other hand, strongly affected by the crisis. There was American activity during the pandemic, but it was strongly diminished (-34%), with €27bn invested. Investments from Asia Pacific (-33%) and Middle East (-60%) were also strongly impacted. There was almost no activity from both these regions over Q2 and Q3 2020. But at Q2 2021, we observe that both American and Asian investors are coming back to investing in Europe. As observed in 2009, reduction in cross-border deals in European markets benefited from domestic investment. This trend could be amplified as local investors are physically closer to the markets. Therefore we observed an increase in the share of domestic investment during the 12 months of pandemic. When restrictions ease, the share of foreign investors should gradually increase but it may take time to reach pre-crisis levels.
COMMERCIAL REAL ESTATE INVESTMENT IN EUROPE TOTAL, FOREIGN AND DOMESTIC INVESTMENT
€bn 350 300 250 200 150 100 50 0
231 118 113
TOTAL INVESTMENT DOMESTIC FOREIGN
08 09 10 11 12 13 14 15 16 17 18 19 20 21 COMMERCIAL REAL ESTATE INVESTMENT IN EUROPE FOREIGN INVESTMENT DETAIL
€bn 90 80 70 60 50 40 30 20 10 0 08
09
10
11
12
13
14
15
16
17
18
19
52
EUROPE
27 19 11 5
AMERICA ASIA PACIFIC MIDDLE EAST
20 21
22
AV E R A G E P R I M E Y I E L D S I N E U R O P E BASED
ON
15
MARKETS
8,0% 7,0% 6,0%
• After a halt during 2020, office prime yields froze all over Europe, but they seem to be heading back to compression again.
5,0% 4,0%
3,90% 3,40% 3,30%
3,0% 2,0%
• Prime retail yields paused expansion at the end of 2020 and have remained frozen in over 2021. • Prime logistics yields, boosted by e-commerce, continued their decrease during the crisis.
1,0% 0,0%
-0,19%
-1,0% 2009
2010
2011
Office Source: BNP Paribas Real Estate Research.
2012
2013
2014
High Street Retail
2015
2016
2017
Logistics
2018
2019
2020 2021
10-year Bund
Based on 15 cities: Amsterdam, Berlin, Brussels, London, Paris, Dublin, Frankfurt, Hamburg, Lisbon, Luxembourg, Madrid, Milan, Munich, Prague, Vienna and Warsaw. 23
PRIME OFFICE YIELDS
• The downward trend in office prime yields, ongoing for several years, had slowed down or halted in most markets in 2020. In several markets, they have kept going down such as German markets, Paris, London, Milan, and Brussels.
Q2 2021 vs Q2 2020 -10bp
BERLIN PARIS
-10bp
AMSTERDAM
+15bp
MADRID
+25bp
MILAN
-10bp
LONDON
-25bp
LUXEMBOURG
-30bp
BRUSSELS
OSLO
3.20
+25bp
WARSAW
+20bp
5.25
DUBLIN
4.00
4.75
5.75
4.75
3.25
HAMBURG
2.60
3.25
LILLE
2.70
PARIS
TOULOUSE
4.50
2.50
FRANKFURT
2.75
3.50
BARCELONA
PRAGUE
4.25
VILNIUS
4.70
WARSAW
AMSTERDAM THE HAGUE
MUNICH
3.50 2.55
LUXEMBOURG
3.50 LYON
MARSEILLE
4.80
BUDAPEST
3.00
VIENNA
4.20
MADRID
5.25
BERLIN
LONDON
4.15
3.50
5.80
RIGA
COPENHAGEN
MANCHESTER
4.75
4.00 3-4%
3.25
EDINBURGH
BIRMINGHAM
LISBON
≤ 3%
STOCKHOLM
TALLINN
-15bp
PRAGUE
3.20
GLASGOW
=
DUBLIN
• But they are showing upward movement in some markets. such as Amsterdam, Madrid, Warsaw and Prague.
HELSINKI
5.50
3.15
BUCHAREST
7.00
4.30
ROTTERDAM
3.20
MILAN
3.75
BRUSSELS
3.90
ROME
DÜSSELDORF
2.90
2.90
COLOGNE
ATHENS
6.00
3.70
LUXEMBOURG
4-6% >6%
Source : BNP Paribas Real Estate
24
REAL ESTATE PERSPECTIVES OFFICE MARKETS
O F F I C E TA K E - U P I N E U R O P E – H 1 2 0 2 1 18
MAIN
EUROPEAN
OFFICE
MARKETS*
thousand sqm 12 000 Average: 9,406
10 000 8 000 6 000
H1/H1 -3%
4 000
Q2/Q2 +27%
2 000 0
Q1/Q1 -22% 2012
2013
2014 Q1
2015 Q2
2016 Q3
2017
2018 Q4
2019
2020
2021
Average
Good letting activity in Q2 leaves H1 2021 • • • • •
Q2 2021 take-up shows considerable and unsurprising improvement over a year ago. Q2 2020 is the period of maximum impact on European take-up as the pandemic’s first wave started to peak and lockdown more strictly enforced than today. Although volumes are still far from their pre-crisis levels, take-up is recovering albeit in a more protracted manner than expected in December 2020 because of recurring waves of infection. Around 3.391m sqm was transacted over H1 in the 18 main European markets, down 3% on 2020. Take-up gained traction in some markets, such as in Brussels (+3%), the six main German market (+5%), Central Paris (+8%), Madrid (+10%) or Milan (+23%). Other markets are still experiencing decreases in volumes y.o.y. but increases on a quarterly basis, such as Central London (-28% y.o.y. but with a much more dynamic Q2 than Q1)
Source: BNP Paribas Real Estate Research.
* Berlin, Cologne, Dusseldorf, Frankfurt, Hamburg, Munich, Central Paris, Central London Brussels, Barcelona, Madrid, Dublin, Milan, Rome, Luxembourg, Amsterdam, Warsaw, Prague 26
O F F I C E TA K E - U P I N E U R O P E H1 2021 vs H1 2020 CENTRAL
LONDON
EUROPE – H1 2021
3.99M sqm
-1%
BERLIN CENTRAL
-28%
PARIS
+8%
AMSTERDAM
-53%
MADRID
+10%
MILAN WARSAW BRUSSELS DUBLIN LUXEMBOURG
26 markets - 1% vs H1 2020
GLASGOW
EDINBURGH
Rebound in take-up in Q2
MANCHESTER
+23% DUBLIN
-36%
LONDON
+7%
BRUSSELS
-81%
PARIS
BERLIN DÜSSELDORF COLOGNE
-4%
•
PRAGUE VIENNA
MUNICH
+7%
•
WARSAW
FRANKFURT
LUXEMBOURG
LYON
PRAGUE
•
HAMBURG AMSTERDAM
MILAN
BUDAPEST
Take-up at the end of H1 2021 was stable (-1%) compared to last year. Volumes are consequently still well below their long-term average despite more dynamic letting activity in Q2. However, the rebound in volumes was not seen in all markets yet, with some of them still declining while others have seen growth.
BUCHAREST
MARSEILLE
Deals in thousand sqm 500 250 100
BARCELONA
> +5%
LISBON
ROME
MADRID
-5 to +5% < -5% Source: BNP Paribas Real Estate. 27
L O C AT I O N S ( J U LY 2 0 2 1 ) EUROPE FRANCE
Headquarters 167, quai de la Bataille de Stalingrad 92867 Issy-les-Moulineaux Tel.: +33 1 55 65 20 04
GERMANY
Goetheplatz 4 60311 Frankfurt am Main Tel.: +49 69 29 89 90
UNITED KINGDOM
5 Aldermanbury Square London EC2V 7BP Tel.: +44 20 7338 4000
MIDDLE EAST / ASIA BELGIUM
ITALY
Avenue Louise 235 1050 Brussels Tel.: +32 2 290 59 59
Piazza Lina Bo Bardi, 3 20124 Milano Tel.: +39 02 58 33 141
C/ Emilio Vargas, 4 28043 Madrid Tel.: +34 91 454 96 00
Kronos building 10, rue Edward-Steichen 2540 Luxembourg Tel.: +352 34 94 84
57 Adelaide Road, Dublin 2 Tel.: +353 1 66 11 233
Investment Management Tel.: +352 26 06 06
SPAIN
IRELAND
LUXEMBOURG
NETHERLANDS
Antonio Vivaldistraat 54 1083 HP Amsterdam Tel.: +31 20 305 97 20
ALLIANCES
POLAND
Atrium Tower Al. Jana Pawła II 25 00-854 Warsaw Tel.: +48 22 653 44 00
PORTUGAL
Avenida da República, 90 Piso 1, Fracção 1 1600-206 Lisboa Tel.: +35 1 939 911 125
CZECH REPUBLIC
Ovocny trh 8 110 00 Prague 1 Tel.: +420 224 835 000
DUBAI
Emaar Square Building n° 1, 7th Floor P.O. Box 7233, Dubaï Tel.: +971 44 248 277
HONG KONG, SAR CHINA 63/F, Two International Finance Centre 8 Finance Street, Central, Hong Kong, SAR China Tel.: +852 2909 8888
SINGAPORE
20 Collyer Quay, #17-04 Singapore 049319 Tel.: +65 681 982 82
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