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According to JLL, the first half of 2016 in the global commercial real estate invested about € 260 billion, which is 10 % less than in the first half of 2015. This is largely due to the decline in activity in the two major markets of the world — the us, where investments in us dollars decreased by 16% due to stronger currency in the UK (-28 %), which was dominated by the uncertainty in connection with the «Broksita».

Consider the profitable real estate markets of seven countries:

  • Austria,
  • UK
  • Germany
  • Spain
  • USA,
  • France
  • In the Czech Republic.

Austria

Investments. In the first half of 2016 in commercial real estate Austria has invested 1.5 billion euros, which is 8.5 times more than in the same period of 2015. This is because in the first six months of the year was concluded several significant transactions, including a sale of the IZD tower for 270 million euros. On the Austrian market is dominated by investors from Germany.

Offices. Offices accounted for 54 % of investments in the first six months of the year. In Vienna the demand exceeds the supply and empty only 6 % of the premises. Activity on the office market slows down and insufficient supply. The average yield is 4.2% per annum.

Commercial real estate. In the first quarter of 2016 in the segment was invested only 1% of the investment, but in 2015 it has received approximately a quarter of the capital. The average yield is 4-5 %.

Warehouses. The sector lacks a quality product. Customers warehouses, in most cases is their own and not rent. Yield — 6.5% in Vienna and 7% in Graz.

Housing. From 2008 to 2015, apartment prices in Vienna increased by 75 %. Among buyers in the capital market 40 % — foreigners. The average yield on housing is 3.5 — 4 %.

Type of property Rent,
Euro/m2
per month
Annual
dynamics
rent, %
Prices
Euro/m2
Annual
dynamics
prices, %
The yield,
%
Forecast
for 2016-2017
Vienna
Offices 20,8 -0,6 6 087,8 13,9 4,1
Street retail 240,0 0,0 82 285,7 17,1 3,5
Shopping malls 88,0 0,0 20 705,9 2,9 5,1
Warehouses 4,8 0,0 876,9 11,5 6,5
Apartment (long term rent) 14.4 V To 2.0 4 928,0 8,4 3,5
Graz
Offices 11,3 0,0 2 076,9 9,2 6,5
Street retail 88,0 0,0 24 000,0 8,0 4,4
Shopping malls 40,0 0,0 7 619,0 3,2 6,3
Warehouses 4,0 0,0 685,7 7,1 7,0
Apartment (long term rent) 11,3 And 2.8 3 055,0 3,6 4,4

UK

Investments. UK — largest European real estate market. In 2015, commercial entities of this country was invested 73 billion euros, of which almost half occurred in greater London. With 43% of investors are foreigners, mostly Americans. In the first half of 2016, the volume of investments in this market segment amounted to around 29 billion euros, which is 28% less as compared to the same period of 2015.

Offices. In the first quarter of 2016 for offices accounted for 42 % of the investment. Rents are rising, profitability is reduced. Offices the premium segment in London bring of 3.6% per year.

Commercial real estate. In the first quarter of 2016 in the segment was invested 14 % of investments. The rate of return premium objects street retail tend to decrease (of 3.4% per annum in London).

Warehouses. In the first quarter of 2016 to the warehouses accounted for 12 % of costs. The development of the sector benefit from the growth in online Commerce in the country. The yield of the warehouses in London is 4.8 %.

Housing. Since 2007 (the previous peak) to 2015 housing in London has risen by 50 %. In the UK over the same period, the growth was only 7 %. The profitability of apartments in the British capital was 2.4 %.

Type of property Rent,
Euro/m2
per month
Annual
dynamics
rent, %
Prices
Euro/m2
Annual
dynamics
prices, %
The yield,
%
Forecast
for 2016-2017
London
Offices 100,0 9,5 33 333,3 17,1 3,6
Street retail 500,0 7,7 176 470,6 15,6 3,4
Shopping malls 415,0 -5,0 124 500,0 0,9 4,0
Warehouses 16,3 0,0 4 126,3 5,3 4,8
Apartment (long term rent) 25,0 6,2 12 574,0 8,2 2,4
Manchester
Offices 39,2 1,6 9 400,0 1,6 5,0
Street retail Of 135.0 5,8 38 117,6 18,2 4,3
Shopping malls 175,0 1,5 44 210,5 6,8 4,8
Warehouses 7,3 4,3 1 581,8 4,3 5,5
Apartment (long term rent) 12,4 n/a 3 402,0 3,5 4,4
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Germany

Investments. Germany is the second largest property market in Europe after the UK. In the first half of 2016 in commercial facilities Germany has invested € 17.5 billion, which is 4 % less compared to the first half of 2015. About 40 % of investors were foreigners.

Offices. In the first quarter of 2016 for offices of nearly half of the investment. In the cities of the «big seven» demand is growing faster than the supply, rent is expensive, and the yield is reduced. Quality offices to bring about 4 % per year.

Commercial real estate. In the first quarter of 2016 in the segment was invested 20 % of the investment. The rate of return premium objects street retail tend to decrease. On average, they generate 3-4 % per annum.

Warehouses. In the first quarter of 2016 to the warehouse had 10 % of costs. Due to lack of quality supply and strong demand yield is reduced (5-6% per annum).

Housing. From 2011 to 2015 housing in Germany rose on average by 55 %, in Munich by 65 %, in Berlin — almost 2 times. Long-term rental apartments brings in an average of about 3 %.

Type of property Rent,
Euro/m2
per month
Annual
dynamics
rent, %
Prices
Euro/m2
Annual
dynamics
prices, %
The yield,
%
Forecast
for 2016-2017
Berlin
Offices 17,8 6,7 5 340,0 20,0 4,0
Street retail 244,0 1,7 77 052,6 9,7 3,8
Shopping malls 92,0 0,0 25 to 976, 5 11,8 4,3
Warehouses 5,8 4,5 1 200,0 13,6 5,8
Apartment (long term rent) 10,3 1,1 3 651,1 10,5 3,4
Munich
Offices 26,8 0,0 8 691,9 4,1 3.7 V
Street retail 296,0 0,0 107 636,4 6,1 3,3
Shopping malls Of 126.7 0,0 38 984,6 9,0 3,9
Warehouses 7,0 7,7 1 555,6 19,7 5,4
Apartment (long term rent) 17,2 2,2 7 353,0 8,9 2,8

Spain

Investments. In 2015, the volume of investment in Spanish property peaked after the crisis of 13 billion euros, 25% more against the 2014. However, in the first half of 2016 in the segment was invested 3.4 billion euros, which is 20% less compared to the same period of the previous year. The number of foreign investors increasing: in 2015, the share of foreigners in the commercial real estate market was about 50 % in the first half of 2016 — already 73 %.

Offices. In 2015, the sector accounted for 43 % of investments. The demand for rental in Madrid and Barcelona was the highest in the last 9 years. Nevertheless, the market is still a high proportion of vacant premises in Madrid are empty 15.9% of the offices in Barcelona — 14 %, the yields in Madrid and Barcelona is 4.3 and 4.5%, respectively.

Commercial real estate. In 2015, in shopping malls and complexes Spain was invested 2.65 billion euros (a record for 10 years). The yield of street retail makes up about 4 %, shopping centers — 5 %.

Warehouses. The demand in Madrid and Barcelona exceeds supply, and the number of vacant sites is rapidly declining. Yield — about 7 %.

Housing. Since 2007, when the Spanish market reached a peak until 2015 (period the bottom after the crisis) housing in Spain fell by 43 %. The greatest potential for rising prices have the markets of Barcelona and Madrid. The profitability of apartments — about 5 %.

Type of property Rent,
Euro/m2
per month
Annual
dynamics
rent, %
Prices
Euro/m2
Annual
dynamics
prices, %
The yield,
%
Forecast
for 2016-2017
Madrid
Offices 16,7 3,2 4 705,9 19,0 4,3
Street retail 204,0 4,1 65 280,0 18,0 3,8
Shopping malls 35,3 0,4 8 479,2 0,4 5,0
Warehouses 4,9 3,5 861,3 5,8 6,9
Apartment (long term rent) 11,8 9,6 2 751,0 1,7 5,1
Barcelona
Offices 13,3 13,9 3 555,6 31,6 4,5
Street retail 220,0 1,9 70 400,0 15,5 3,8
Shopping malls 36,8 0,0 8 832,0 0,0 5,0
Warehouses 4,9 3,5 861,3 9,5 6,9
Apartment (long term rent) 13,9 17,6 3 518,0 5,4 4,7
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USA

Investments. According to JLL, 2009-2015 years, the investment in U.S. commercial real estate grew about 20-25 % per year. In the first half of 2016 this segment was invested 108 billion euros, 16% less in relation to 2015. The commercial real estate market, the U.S. remains the largest in the world.

Offices. Vacancy rate is declining, rent is expensive, the yield decreases in the majority (72 %) markets. The premises yield an average of 4.4% per annum.

Commercial real estate. In Miami, new York and San Francisco are empty for 2-3% of premises quality of proposals is not enough. The share of vacant space in the first half of 2016 had a tendency to increase. The average yield is 4.6 %.

Warehouses. According to a survey by PwC, warehouses — the most promising segment of the commercial real estate market of the United States in 2016. One of the major risks here — wear areas, as half of such facilities in the United States built in the 1980s or earlier. The share of vacant premises in this sector is shrinking, rent is expensive, the yield decreases. Warehouses in the United States bring in average of 5 % per annum.

Housing. Apartment building — with a strong and sustainable commercial real estate sector of the United States. In 2015, the objects of this type have attracted 30 % of the investment. As of 2016, the US prices are still 5 % below peak 2007 in Miami by 22 %. Of special note is new York, where housing is 13% more expensive than in relation to 2007. The average yield on residential real estate in the U.S. is 4.4 %.

Type of property Rent,
Euro/m2
per month
Annual
dynamics
rent, %
Prices
Euro/m2
Annual
dynamics
prices, %
The yield,
%
Forecast
for 2016-2017
New York
Offices 50,2 5,6 14 178,8 11,8 4,3
Street retail 450,0 4,7 154 285,7 12,2 3,5
Shopping malls 51,0 5,4 10 633,0 10,0 5,8
Warehouses 4,8 6,4 1 049,8 13,6 5,5
Apartment (long term rent) 40,9 3,9 14 009,2 7,0 3,5
Miami
Offices 13,0 7,0 3 473,3 18,9 4,5
Street retail 200,0 1,8 61 935,5 18,2 3,9
Shopping malls 68,2 4,4 14 237,2 8,9 5,8
Warehouses 6,2 0,4 1 273,9 4,7 5,9
Apartment (long term rent) 16,1 7,2 2 907,0 5,7 4,0

France

Investments. The volume of investment in commercial property in France in 2015 reached an eight-year high of 26 billion euros. In the first half of 2016 in such facilities here were invested 9.1 billion euros, 16% more than in the same period of 2015. The growth of investment due to the fact that were signed three deals worth more than EUR 500 million. About one-third of investors on the French market are foreigners.

Offices. Quality supply is not enough, demand exceeds supply, rates of return tend to decrease. The offices in the premium segment yield an average of 3.25% per annum.

Commercial real estate. In France built a little shopping facilities, and a new proposal is created mainly due to the redevelopment. Yields are at historic lows (about 3% for objects street retail in Paris).

Warehouses. Investment in this sector is negligible and constitute only 3 % of the total investment. Demand exceeds supply, rates of return tend to decrease. Warehouses bring an average of about 6% per annum.

Housing. The French housing market is relatively calm during periods of crisis. Annual dynamics of prices is in the range from -2 to +2 %. In the first quarter of 2016 prices were 8% lower relative to the peak of the third quarter of 2011. The profitability of housing is about 3-4 %.

Type of property Rent,
Euro/m2
per month
Annual
dynamics
rent, %
Prices
Euro/m2
Annual
dynamics
prices, %
The yield,
%
Forecast
for 2016-2017
Paris
Offices 52,7 0,4 16 853,3 10,4 3,8
Street retail 885,0 0,0 354 000,0 16,7 3,0
Shopping malls Of 166.7 0,0 50 001,0 12,5 4,0
Warehouses 4,6 1,9 947,6 18,6 5,8
Apartment (long term rent) 26,2 -0,8 8 543,5 0,9 3.7 V
Lyon
Offices 18,0 0,0 4 500,0 14,6 4,8
Street retail 175,0 4,3 52 500,0 17,3 4,0
Shopping malls 126,0 15,4 43 200,0 23,6 3,5
Warehouses 3,9 0,0 784,0 12,5 6,0
Apartment (long term rent) 11,7 -2,3 3 052,2 0,4 4,6
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Czech Republic

Investments. In the first half of 2016, the commercial real estate investment in the Czech Republic decreased by 29 % to 956 million euros. Nevertheless, the amount invested in the segment of funds 39% above the average for the last 10 years.

Offices. Demand exceeds supply, rates of return tend to decrease. In Prague the most popular offices of class «A». Empty is 14.6 % of the premises. The average rate of return in the premium segment and 5.5 %.

Commercial real estate. Like the office market, in the sector of commercial facilities the demand also exceeds supply and rates of return tend to decrease. The average yield of the objects street retail in the premium segment of 5.25 %.

Warehouses. Vacancies fell to a five-year low (5 %) and high demand fuels speculative construction. The average yield of high-quality warehouses is 6.5 %.

Housing. Apartment prices in the Czech Republic reached the bottom in 2013 and since then are growing. In 2015 they increased by 4.5 %. About 40 % sold in 2015 in Prague residential units are apartments with one bedroom. Housing in the Czech capital brings an average of 3.7 % per annum.

Type of property Rent,
Euro/m2
per month
Annual
dynamics
rent, %
Prices
Euro/m2
Annual
dynamics
prices, %
The yield,
%
Forecast
for 2016-2017
Prague
Offices 15,2 2,6 3 of 172.2 11,5 5,8
Street retail 160,0 8,1 45 176,5 20,8 4,3
Shopping malls 56,0 0,0 12 800,0 9,5 5,3
Warehouses 4,0 4,3 711,1 8,2 6,8
Apartment (long term rent) 9,2 17,1 3 027,0 4,5 3.7 V
Brno
Offices 10,7 8,3 1 551,5 14,9 8,3
Street retail 70,0 0,0 10 838,7 3,2 7,8
Shopping malls 45,0 2,6 6 967,7 9,2 7,8
Warehouses 4,1 0,0 607,5 3,1 8,0
Apartment (long term rent) 6,7 10,8 1 807,0 4,5 4,4

According to forecasts Cushman & Wakefield, in 2016 the total investment in commercial property EU (excluding the UK market) will be 10% higher than in 2015 and in the UK — 25% lower. The decline in activity of investors in the United Kingdom may be associated with the «Broksita». According to the forecast of JLL, the volume of investments in the U.S. market in 2016 will decline by 10-15% year on year. The main reason is the lack of interesting proposals, and macroeconomic uncertainty.

Yields in developed markets in recent years has tended to decrease because of the high demand for real estate in the premium segment and increasing prices. Experts expect that this trend will continue in 2016-2017. Rents and prices of properties will also rise. According to forecasts by Standard & Poor’s, real estate will go up even in the UK, despite the «Brakit»: in 2016, the growth will be 5 %, and in 2017 the prices will fall by about 2 %.

  USA UK EU
Annual dynamics of investments, % −10–15 -25 +10
Yield Will decrease or will remain at former level Decreases in the premium segment, increase in the average price segment Decreases in the premium segment, increase or remain unchanged in the medium price segment
Rental rates Increase Will remain at the same level in the premium segment Will remain at former level or will increase
The demand from tenants Will remain at former level or will increase Will remain the same or fall Will remain at former level or will increase
Real estate prices

Yulia Kozhevnikova, Tranio