Property values rise 1.1% across Europe in Q1 2015 - CBRE

European commercial property values across all asset classes grew by 1.1% in the first quarter of 2015, according to CBRE’s latest European Valuation Monitor.

The All Property Capital Value Index rose for the seventh consecutive quarter, leading to noticeable yield compression especially for high-yielding assets, said analysts.

Industrial was the strongest performing asset class, growing by 1.7%. Retail saw the next biggest increase at 1%, followed by offices, which grew by 0.8%.

Industrial properties have recovered to around 80% of their 2007 levels, still behind the office and retail sectors which dropped less steeply between 2011 and 2013 and stand at around 85% of the respective figures from 2007.

Germany was the fastest growing market in Q1, with values across all properties rising by 1.7%, followed by the UK and Nordics, both at 1.6%. Values in southern Europe increased by 0.6%, driven mainly by 1.2% growth in the industrial sector.

At the other end of the scale, office and retail values in the Netherlands fell by 1.4%, while the same sector in Central and Eastern Europe saw values shrink by 0.6%. Falling values in CEE were attributed to new supply competing with older stock, forcing the price of existing real estate downwards.

Matthew Edmonds, senior analyst at CBRE, said: ‘Once again, there was compression across the full range of yields as investors continue to seek opportunities further up the risk curve.

‘Prime assets are still the highest in demand, but the group of assets with higher equivalent yields compressed noticeably, confirming growing interest in more opportunistic and value-add properties region-wide.’