Yields in the European office, retail and industrial sectors have all risen 100 basis points or more since mid-2007, according to research by CB Richard Ellis. The broker said the scale of the re-pricing in Europe, Middle East and Africa (EMEA) markets could help to close the gap between buyer and seller pricing expectations and is likely to present attractive buying opportunities for equity-rich investors targeting the commercial real estate market.
Yields in the European office, retail and industrial sectors have all risen 100 basis points or more since mid-2007, according to research by CB Richard Ellis. The broker said the scale of the re-pricing in Europe, Middle East and Africa (EMEA) markets could help to close the gap between buyer and seller pricing expectations and is likely to present attractive buying opportunities for equity-rich investors targeting the commercial real estate market.
Prime office yields continue to be particularly affected by the turmoil in the debt and investment markets and were driven up by 41 basis points in the fourth quarter, according to the CB Richard Ellis EU-15 office yield index. As a result, they are now nearly 100 basis points higher than a year ago. Forty-two of the 47 locations surveyed saw upward yield movements with the largest rises occurring in Kiev and Dublin. A number of other key markets - including Paris, Brussels, Moscow, Vienna and the City of London - saw increases of over 50 bps in the quarter.
The fourth quarter also witnessed yield increases in both the retail and industrial sectors. The CB Richard Ellis retail yield index for the EU-15 area rose by 31 basis points in the quarter, and as a result is 78 basis points higher than the fourth quarter 2007. In the industrial sector, the CB Richard Ellis industrial yield index for the EU-15 area rose by 35 basis points in the fourth quarter, and is almost 100 basis points higher than this time last year.
Richard Holberton, director CB Richard Ellis EMEA Research and Consulting, said: 'The combined effects of the various upheavals in financial markets in the fourth quarter of last year, and the weakening economic outlook, are clearly evident in the near-universal rise in yields. In addition to reduced liquidity, pricing is increasingly reflecting the prospect of weaker occupier demand, and hence lower income growth potential in many locations. However, with yields in the three main commercial sectors now having risen by 100 basis points or more since mid-2007, the scale of re-pricing is also likely to present attractive buying opportunities for equity investors in 2009.'
